it is tuesday, february 25, 2020 "squawk box" begins right now. good morning welcome to "squawk box" on cnbc. we are live from the marketsite on times square. our guest host with us from douglas c. lane and associates wall street waking up with a black eye this morning after the biggest one-day loss in two years. the dow dropping more than 1,000 points the s&p dropping its worse since february 5, 2018 about 5% off record intraday highs. you are seeing we are no getting much of a bounce back after the declines dow futures

indicated up about 40 points yesterday, we did see compressed yields higher prices for treasuries 10-year at 1.36% the two-year at 1.7% in japan, the nikkei falling over 300 points. >> the bond market won, so we are going to have our friend on today. he always says it is going to be because of slowing growth. he seems to get a little bit

serandipitus about it. >> i'll give him credit. the slowing growth caused whatever caused the slowing growth >> gold is up. stock market ignores things until it doesn't hope depot might help. stock called sharply higher after reporting better than expected results i got a 242 bid, 242.50 bid now. right? 228 is 18 cents above estimates. whatyou are seeing there does not reflect what we are seeing same-store sales up 5.2%, which is strong. consensus is at 4.8% home depot announced a 10%

increase to 1.50 a share you can figure out the yield will double every seven years. joining us with immediate reaction, the bottom line beat is big the same-store number is better. that's a pretty big beat >> i read quickly across the board, a very good report. this came and there has been a lot of talk about unfavorable weather. with home improvement, there is a bit of an offset there this warmer weather has done a 5-2 comp with that

housing market getting stronger. we are putting up this kind of quarter in q 4 which is important for spring into the warmer months. >> warmer weather, people buy snow shovels every year and salt, so it does impact results when it is a warmer winter why doesn't it allow for remodelling in the winter? >> it does presumably people are doing projects in the winter they don't in the summer. >> your projects involve bed, bath and beyond. you are in the city. what projects do you do in the

city >> i'm talking about my multiple homes it takes a team of people. >> no, seriously >> appliance companies, other things for home depot. how does that affect those companies? >> if home depot is doing a 5.2 comp, the product they are selling is coming from these suppliers. so they are benefitting as well. definitely there is a lot of concern right now about coronavirus. here, the big positive is these lower rates. >> we got a trade and took it down bring it back up, please we finally got a trade up 1.1%.

that should have boosted the dow. the dow is having trouble this morning. i guess we'll see you tomorrow >> talk about lows >> do you think this reads positive >> i think it does it seems is that home depot is doing well in this environment there is nothing to suggest that they did something smeshl on its own. >> just looking at shares and it is a wait and see. we'll see you tomorrow. >> it will be tough to beat that jacket tomorrow. it is tough to beat that jacket. i got vertigo.

did you shoot a couch? >> you are jealous because he has a jacket >> i brought a jacket today. people to go, places to see. >> the fall out from the coronavirus outbreak we'll bring you the live report from china where the government is urging citizens to return to work even as the virus spreads in south korea and italy and stock futures right now looking like the dow would open up by 21 points higher, s&p off slightly we are back in just a moment >> announcer: today's big number, 26%. that's how much the s&p oil and gas xop has tumbled. yesterday was the worst day since august of last year.

we see heating breakthroughs clearing the air for billions. at emerson, when issues become inspiration, creating a better world isn't just a result, it's a responsibility. emerson. consider it solved.

wthat's why xfinity hasu made taking your internetself. and tv with you a breeze. really? yup. you can transfer your service online in about a minute. you can do that? yeah. and with two-hour service appointment windows, it's all on your schedule. awesome. so while moving may still come with its share of headaches... no kidding. we're doing all we can to make moving simple, easy, awesome. go to xfinity.com/moving to get started.

welcome back master card shares falling after hours warning the coronavirus could hurt first quarter revenue by two to three percentage points selling lower cross board travel and he commerce growth expected there as well.

shares of moderna rising sharply after reporting it shipped the first batch of the coronavirus vaccine to researchers expected to start a clinical trial of 20 to 25 healthy volunteers in april. we'll see how that goes. >> phase one testing >> it is but the stock is up 19% based on the testing >> i saw another company you have no idea you need to hurry. moderna. mode rna that's why it is called that anyway the latest, the cdc is

raising the threat level in south korea and warning americans not to travel there as it remains the biggest hot spot outside of china a cabin crew for korean air has tested positive for the virus. the detailed routes flown have not been made public yet they plan to test more than 200,000 members of a church at the center of the outbreak there. in italy, imposing restrictions on hundreds of thousands of people paramount pictures has halted production of mission impossible 7 starring tom cruise that had begun a shoot in venice. going to eunice now. good to see you. >> good to see you too

the country has a long way to go to get back to work as business as usual authorities have said the resumption of work isn't ideal the ministry of information technology and industry said the resumption of work at small to medium size companies is only at 30%. transport ministry said projects have stalled for railways, airports have yet to recover a lot of those are done by migrant workers who have either not been able to travel or reluctant to travel. the authorities will continue to ban flights in or out of hubei province schools have extended their close yo closures campuses will stay shut while

students can continue to study on line. with cases jumping in south korea, the chinese government is interested in sharing its experience with handling this crisis with the south koreans and japanese, it also at the same time, some local authorities have started to adopt stricter measures at korean communities here in the popular communities that they want to avoid imported virus cases. the people there will face a quarantine as well as other measures one other update is about the wall street journal reporters, the three who had been kicked out. two of them have left the

country. josh chen, he tweeted out, now out of china, can't express the depths of my gratitude to support. he posted a video of his and philip wen's last view of beijing. now wondering what the u.s.'s response could be. there has been some response that the u.s. could concern booting out chinese journalists. >> as people get back to business, what does that feel like on the ground >> you feel that there is more activity on the streets, more people in shops but it is definitely not at the same level as you'd expect. one of the concerns here is once

you start to have a flood of people coming in, do you start to have more outbreaks of cases? that is the main concern >> have they relaxed how difficult it is to go in and out of your housing complex? >> no, no. it has gotten worse here again i just noticed today, we are only allowed to have four people inside the elevator. that was posted today. the restrictions keep getting higher even though authorities here want the economic activity to rise as well >> back to the selloff the numbers are startling. yesterday was the dow's worse day in two years dow and s&p are in negative

territory. the market loss was at $927 billion in one day going to our guests now. here is the question becky tried to ask it yesterday of warren. he's such a long-term thinker, he doesn't always talk about the day to day issues. if you are an investor and you have cash on the sideline, are you supposed to wait or go in now, the lows are in how do you begin to think about this >> i would say off the peek, we are down a quarter percent 14 months ago, we were down 20 if i was a long-term investor?

>> yes you don't even i would take a pe cash aside and put it to work. start putting money to work as the opportunity comes. you'll get preannouncements. it will happen travel industry and industrials will come out and say, we don't know how this will work. buy high-quality put your cash to work. 5% could easily go to 10 >> all of these warnings they don't know what the warning is half the time >> look back at the cycle 10 to 15 years s&p going to ebola to sars if you are looking out 10 years,

you could weigh down 15% not, i need this money >> we are looking at particularly gdp slowing this year that was going to happen whether the coronavirus occurred you had it up again 3.5% in february up until a few days ago. you are looking at 5% to 8% return for the full year you should expect a breather >> that was your expectation to begin with >> we are seeing a slowing economy this year. 5% to 8% would be a lower return >> last year at length, the reason the market went up is from expansion

i think a lot of that is off the table. you are looking now at 2021 for some earnings growth the opportunity to buy is now. you hope when things flat line and start growing. is there anything interesting in >> look at health care stocks, that could be something that some of the stocks like zimmer for the hips j and j, the slight dislocation there, you want to be new value there. >> do you think anybody is getting a new hip if we have medicare for all >> when you look at countries like that, i'm not talking insurance companies.

>> that made no sense unless -- >> unless what >> unless you can tie that to bernie's 60 minutes appearance uh-oh, i'm talking politics. a sanders-warren ticket is up above trump-pence. >> would you touch something in the middle of this an airline >> we own delta. it is at 53, off almost 20%. >> maybe that's the opportunity. go buy expedia now >> i like delta a lot. investment grade i'd start nibbling on it not saying go buy your positions. secure dividends look for companies like that that you can get the opportunity. >> i think the thing you should

do is to have a shopping list. don't try to go around shopping whatever was down yesterday. do your homework ahead of him that have growth and when they hit your targets, buy them when we look at home depot and lowes, strong numbers and housing. begin to nibble. same thing with visa >> even though some are up this morning? >> if you are seeing stocks at reasonable valuations, start with the quality you are looking for rather than try to pounce on whatever shiny object is catching your glance at the moment >> thank you appreciate it. coming up, if you hate waiting in line at the grocery store check out, amazon has some good news for you.

looking at the big losers in the european markets all down 5% since yesterday morning. we'll be right back. ( ♪ ) now you can, with shipsticks.com! no more lugging your clubs through the airport or risk having your clubs lost or damaged by the airlines. sending your own clubs ahead with shipsticks.com makes it fast & easy to get to your golf destination. with just a few clicks or a phone call,

we'll pick up and deliver your clubs on-time, guaranteed, for as low as $39.99. shipsticks.com saves you time and money. make it simple. make it ship sticks.

supporting innovative companies that will shape tomorrow and building workforce development and tuition-free college programs to generate the talent companies need. with a $150 billion investment in state of the art, modern infrastructure, and a nation-leading commitment to low-cost clean energy, new york is doing more than any other state to build for the future of your business. new york state, the state of the future. learn more at esd.ny.gov. [music (plays throughout):le lack of afro - recipe for love]

♪ whoaahoooo oo ♪ ♪ yeahhh aa aa aye ♪ i've got so much love to give ♪ ♪ i've got so much more to give, baby ♪ this is a moment you plan for. to start your retirement plan, find an advisor at massmutual.com [sfx: mnemonic] welcome back amazon bringing the cashierless concept to a bigger stage.

set to open amazon go grocery. about four times of space as the convenience store targeting customers in residential areas no cashiers or checkout lines at all. you need the app i have it. i've been to the other one pretty extraordinary it is spooky you literally walk in and take what you want and leave. >> did you look back and see if it charged the right amount? >> it did. there are thousands of cameras on the ceiling >> how many workers are around watching you do this >> very few. hardly any that was the miraculous part you walk in, it knows who you

are. >> even when i go to the store and i scan every item myself, it messes up. >> i don't know. i think they are catching it as you are taking it off the shelf. then that is good you are there by yourself and not with a couple of kids trying to stuff stuff in and out of the cart >> they have not perfected that. >> this is a thousand times more sophisticated and probably cost them a thousand times more to do it >> juul planning to unveil a new version of the e cigarette

a locking device that would link to a smartphone via blutooth and would only unlock when using a photo and government i.d >> i don't know how that would work my kids can hack into any one of my systems you can show an i.d. >> is it okay to write all of your pass words down >> no. >> and it is not okay to make password with two fives for ss >> i use a combination of my

char children and dogs. >> don't say that out loud >> i make them so complex that i get the highest security, that little bar goes off the charts for how secure yesterday, we were joined by warren buffett one thing we talked about is cryptocurrency he has been a critic the founder of cryptocurrency tron and ceo of file sharing company. he tried hard to convince buffett to change his mind on bitcoin. >> he gave you some bitcoin, how does it feel to be a bitcoin owner? >> i don't have any bitcoin. >> you don't >> okay. >> you don't own bitcoin >> no. i don't own any cryptocurrency

i never will i may start a war on currency. maybe i'll create one and say there will only be 21 million and you can have it after i die but you can't do anything with it except sell to yourself >> that created a lot of controversy. justin said he gave cryptocurrency at that meeting called buffett last night, he did get some cryptocurrency in a wallet given to him but he turned that wallet over to glide, which is the foundation he had been raising money for for that lunchon that he paid over $4.5 million.

all of the money went to glide that bitcoin gave it over to them neither of them was slying justin gave it to him. he was very thankful he gave it to the charity. >> warren is not the quickest to embrace new technology >> no. >> he's never bought amazon. >> no. he's admired amazon and jeff bezos for a long time. >> i wouldn't expect warren to look into it closely there are some people that are not complete idiots that might push back on comments made

blockchain whether you love or hate bitcoin, there are uses and value to a lot of that stuff >> why would you talk to fiat man? >> the point is neither of them were lying about this. >> the kons versy was somebody is lying here. nobody was lying >> yes he said he was grateful. he gave it to glide. >> he didn't throw it away he knew it had value when we come back, we'll talk about the selloff on the last big down day. we'll ask him if now is the time to strike. as we head to break, let's look at the biggest decliners in the s&p and dow.

through the at&t network, edge-to-edge intelligence gives you the power to see every corner of your growing business. from finding out what's selling best... to managing your fleet... to collaborating remotely with your teams. giving you a nice big edge over your competition. that's the power of edge-to-edge intelligence.

we are up triple digits now. back on "squawk box. wall street waking up with a black eye this morning after suffering its biggest one-day loss the dow dropping 3.6%. now lower for the year

what do you calculate last year's gain at >> around 31%. >> if you looked at the points, it was a shocking number i don't think it made it in the top 50 declines. up next, we'll talk to chief economic advisor from allianz. on the last down day, he told us don't buy the dip. we'll dive deeper into home depot's earnings that is a dow component helping things this morning. a reminder, you can watch or listen to us live or on the go on the cnbc app. we'll be right back.

♪ ♪ i got that vibe, got that vibe ♪ ♪ got that vibe, yeah, i ain't petty, ♪ ♪ looking fly, looking fly, ♪ ♪ looking fly, yeah, they ain't ready. ♪ ♪ i can shine, i can shine, ♪ ♪ i can shine. ♪ i'mma do what i'm made to do. ♪ ♪ i'mma do what i'm made to do. ♪ built for excellence. you start from the foundation up. the excellence is reaching dreams and chasing them at the same time. ♪

about a month after the initial coronavirus outbreak, advising he would resist the temptation to buy coronavirus dip. >> the coronavirus is different. it is big. it is going to paralyze china

and cannot be counted as we noted by central bank policies i think we should pay more attention and try and resist our inclination to buy the dip >> joining us now, allianz chief economic advisor looking back on those comments, there is still a lot we don't know about this virus, what would you tell people in terms of this stock market >> caller: i would say continue to resist to buy the dip because it worked in the past. as you say, there are uncertainties. one is the short term uncertainties. how quickly can we contain this virus. second, the longer term uncertainty is what we'll do to china. what does it do to the process

finally, a whole host of uncertainties related to the conditions the global economy and markets have been doubled from fundamentals there is a lot of uncertainties out there. i understand the inclination to buy on the dip i understand with expecting the market to bounce up. i stress this is different >> everything comes down to price throw, correct when you would say it is okay to buy the dip? is that a 10% pull back, 15% pull back? when you say there has been some value here >> of course remember, consensus recommendation was not only buy on the dip but buy the markets that have lagged

buy emerging markets since the highs, in the u.s., we are 5% and u.s. markets are up 10%. just not at these valuations yet. >> these are such difficult things to try. you are a digital economist. we are trying to figure out what countries are doing behind the scenes how do you sum this up or do you stay out of it because it is too complicated right now? >> no. i do a lot of research and talk to a lot of people the many he had call profession will tell you we don't understand this virus yet. there is a lot of uncertainties. looking at the economics of cascading stock. ask, would he go to holiday in

italy now? no he'll wait it will take time. yes, there are so many uncertainties. you've got to collect data and put the picture together that picture is very merky right now. >> who in the world health organization is saying this is not a pandemic when you have outbreaks in italy, iran and south korea and now the threat level has been raised to red, what does that mean do you think we'll be shutting down travel between countries? >> that is the question. the u.s. issued a travel alert on korea today people are thinking about this it is a i deglobalization shock. economic sudden stops are hard to restart

i've seen it because i've worked on developing countries where these happen they don't tend to happen on second largest economies in the world. we learn a lot i would just caution there is so much uncertainty right now if you you are going to buy this dip, you focus on companies with very strong balance sheet, a business model with robust enough business. companies that aren't going to hit like others but don't deserve to be hit. it is very selective not buying indices in the more vulnerable economies >> when you look forward, what are some of the things you look for as indication that things will be stabilizing or getting better >> first, understanding of what exactly is this virus and how to

contain it the confidence of people to reengage look at china, we are getting 20% to 30% of people showing up. this is unknown. telling us when you shock us with something that takes us out of a comfort zone, it takes time the third thing i'm going to look at is how much damage have we created to companies that are vulnerable look at the triple b credit. that can change dynamics look at, a, the fundamentals of the disease. look at the confidence and finally the technicals >> we want to thank you for your time we appreciate talking to you

we'll see you again soon >> thank you, becky. coming up, italy reporting the first coronavirus case in the south just an hour ago a doctor staying at a canary islandresort tested positive and online sales? that's a whole other system... and different regulations. therere'realal eate e crits,s, . and we have no way to integrate all that? no... but bdo does. peopopleho k kno knonow o.

restrictions on 100,000 people in two regions of northern italy

claudia with cnbc italy joins us now. what can you tell us claudia >> this morning there's cases that have been confirmed tha have not been as serious we're talking about southern italy. we're talking about tuscany so there's concerns that this may go further but it's important to note that right now what has been done so far by the authorities here in italy has been very, very aggressive they have been very precautionary. the cases registered are a little over 200. somewhere around the 230 level there's been 7 fatalities and the number is growing at a slower rate than the last 24 hours. it's too early to say, but public places, you know, theater, movie theaters close at 6:00 in the evening and open up

at 6:00 the following morning but people are still going to work they're trying to keep the economy going. people are cooperating very much in the area where there's not the zone because you mention that 100,000 people -- people are in the red zone where there's actually a lock down there's locks and military forces that have been deployed there to keep that area isolated which is where the cluster is. the question is that we don't know who the patient zero is so that makes it harder to pursue the threat and spread could actually have

it's about the 150level. and to try to understand what kind of measurements the government can put into place and in the second day this sort of new situation that we find ourselves in very unexpectedly as a day by day as far as how

the people here in italy are reacting there seems to be, though, the feeling that authorities have stepped in swiftly and checking very carefully that's why you're seeing a growing number of cases. >> claudia, thank you. we appreciate it we also want to thank him for joining us for the hour. >> thank you. >> coming up, we're going to have the former fda commissioner to join us to assess the united states and the readiness here to respond to an outbreak plus a little later, david gerstenhaber will be with us on set assessing the damage from yesterday's session and the market volatility. what you perhaps want to consider doing with your money adg to today's trade you're watching squawk box on cnbc ♪ you can earn more when you invest your cash.

you can get a satisfaction guarantee. you can also wonder why our competitors don't offer that. ♪ schwab, a modern approach to wealth management. ♪ ♪ yes i'm stuck in the middle with you, ♪ no one likes to feel stuck, boxed in, or held back. especially by something like your cloud. it's a problem. but the ibm cloud is different. it's the most open and secure public cloud for business. it can manage all your apps and data from anywhere. so it can help take on anything, from rebooking flights, on the fly to restocking shelves on demand. without getting in your way. ♪ ♪ 100% online car buying. carvana's had a lot of firsts. car vending machines. and now, putting you in control of your financing. at carvana, get personalized terms, browse for cars that fit your budget, then customize your down payment and monthly payment.

and these aren't made-up numbers. it's what you'll really pay, right down to the penny. whether you're shopping or just looking. it only takes a few seconds, and it won't affect your credit score. finally! a totally different way to finance your ride. only from carvana. the new way to buy a car. as your broker, i've solved it. is complicated. that's great, carl. but we need something better. that's easily adjustable has no penalties or advisory fee. and we can monitor

to see that we're on track. like schwab intelligent income. schwab! introducing schwab intelligent income. a simple, modern way to pay yourself from your portfolio. oh, that's cool... i mean, we don't have that. schwab. a modern approach to wealth management.

the second hour of squawk box begins right now. we have a lot of news coming out this morning including quarterly results that are hitting the wires right now. >> from macy's, in fact, hitting the wires right now and courtney reagan joins us with the numbers. >> so this was a beat here for macy's with adjusted earnings of 2:12 better than expected 8.337 billion better than the 8.318 billion. comparable sales this is the business that came in down 0.5% but that was better

than what was expected which was 0.9% of the drop macy's also reiterating it's annual sales and earnings guidance for physical to 20. you'll probably remember they held an investor day the launch of a new format called market by macy's and it's concept backstage currently in a number of stores also by 2021 the top 250 stores will represent nearly 80% of sales. a week ago we should note s&p did cut the debt rating to junk status on doubts about the new polaris strategy i spoke briefly to the ceo and he says the first quarter of this year will expectedly be our worst performing quarter of the

four because the polaris strategy savings don't get traction until the second quarter goes through the year and regarding coronavirus it's not into guidance. there's some slow down into stores that have an asian shopper base whether that's a new york store or tourist based store but also no disruption to the merchandise availability as of yet but still also quite early for this story. >> courtney. thank you. again take a look at the stock now up by 6.8% also breaking news in from mastercard the chief product officer is going to become the new ceo next january first. the current ceo is going to be transitioning to the role of executive chairman at that time. of course we should point out during his tenure that stock has increased more than 14 prior to assuming a role he is going to become the president of mastercard and that's going to be happening on march first. all of this comes a day after

mastercard warned his revenue could take a 2 to 3% hit this quarter because of the coronavirus. some of things that concerned the markets is not only a slow down in terms of cross border and travel taking place but also cross border e-commerce. people being afraid to buy things and have it shipped here as well. you know the story well. >> his own personal story is an amazing story but what's happened at mastercard over the years is an amazing story. having said that it's a bit of a visa story but on a relative basis. there's something going on here and they did a remarkable, remarkable job. >> this is a long transition time and that will probably give -- that will make shareholders look at this positively the idea that this is not happening instantly and he is

going to be sticking around afterwards. >> now interesting that stock off a little over 2%. >> it was down before. i was looking at this this morning. it's been down all morning long and that's about the concerns yesterday with that warning in the post market trade. markets look set to rebound today. we're talking about the dow up 99 points after it fell over 1,000 points yesterday futures look higher with the s&p up about 9 points and the nasdaq up about 50 points he has more on yesterday's drop and what looks to be a turnaround tuesday what do you think? >> an attempt at that seems to be an unsettled market becky it challenged this story of american exceptionalism at work in the market

look at the acceleration and this is the rest of the world. and the s&p 500 really had a pretty gentle angle and the question is, has this been the start of some kind of a period, a real shake out a major correction something like that? we don't really know we'll get a one year chart we had a pretty good flush yesterday and you did get the volatility index up into the mid 20s. that is very similar to the path of august fifth. that was another time when the market had been pretty much near a high and had a big one day

drop >> okay we will be watching. what's the latest? and the ten year treasury yield. we'll have it later at the lowest level since july of 2016 could be headed even lower as gold hits higher according to our next guest joining us now the president strategist global strategies and andrew is the senior portfolio manager of morgan stanley investment joins us on set. all right. here's what i was saying earlier. i don't know if you were watching your premis about lower yields that you have been calling for for years and years going

against the grain has to do with the idea that growth was globally not going to be strong enough to support higher yields and we see the rest of the world some in negative so that has always been it but fundamentals seem to catch up with your overall viewpoint even though you're not a technician the china trade war and now we have coronavirus fears giving you another leg down in yield. you always based it on a sugar high from the tax cut i think in this country in the united states but it just seems to come into your peview even though you didn't forecast why it was going to happen. do you understand what i mean? it happens but not because of why you said it was going to happen. >> yes

it was not luck my view was that the first two components, the global growth simply would not pick up i was going against the grain even in terms of those forecasts because as you know, the consensus was that the global growth would pick up and the u.s. tax cuts would be effective. it's true. but that's not the end of it it's also saying that the fed's policies will not cause inflation. american population is getting old and therefore is not consuming enough and structural

change is not going to go away those are macroeconomic factors and i built into it a global influence. it could be and in this case it turned out to be the coronavirus. you have to build into your expectation that uncertainty contribute to putting it down. would the world become very calm again and i didn't get an answer saying any one of those was likely to happen that's why i was very secure with my forecast for the last three years. >> let me ask you if we go below

one, we might as well go negative >> i think the markets will rally. it's going to be a goodyear for equity and if the market is down on the year then this is a better time to buy than a couple of weeks ago but let's just keep it calm here market is back to where it was at the beginning of the month. you talked about companies reporting bad numbers. but at the end of the day, you're talking about interest rates but the reality is the dividend yield on the market is better than the ten year so to me for equity this is a better time to buy than a couple of days ago and it's going to be

a goodyear. >> you saw home depot talking about a 10% dividend increase. if that keeps happening they eventually force the stock higher and the market said these are going to be sustainable cash flows to be able to do dividends and buy backs for many years to come even stocks like alphabet that don't have a dividend. that being said, you do not necessarily want to see the treasury yields continue to make new lows yes, the backdrop of low yields help support equity valuations the relative yields look good for equities and i do think that's going to be a problem for the market it was in 2016 and last year when we got to this position but if they continue to make new lows everyone is going to say we're in that late cycle vigil and we don't have a backdrop of strong nominal growth around the

world. rates dropped and the market corrected. be wary of too much crowding. >> i'd like to go back to something mike said a minute ago. the economy is not in good shape. the comparison between the dividend and the ten year yield simply doesn't hold. that short-term in which you have this concern about slowing growth and the inability of inflation to pick up

i'm not going to say the bond yield remains low but this has been repeated again and again which is why the factor that the s&p 500 and the comparison with the 10 year yield simply does not mean that the he requesteque superior to bonds at this stage. if you look at what happened in the last two recessions in 2001, 2007, 2009 the equity market reached a record high in december of 2007 at the time at which the recession began. so much predictive power where as both in the 2001 and 2007 recessions that ten year yield as well as the yield curve, clearly it was predicting a recession which was exactly what it's doing again today and that's what is reflective in the

bond market >> okay. thank you. >> thank you very much. >> meantime, jp morgan holding it in yesterday in new york. lots of news expected out of that one wilfred frost joins us with a look at some of the headlines. expected headlines wilf. >> yeah. so the slides for the day ahead have just dropped and the big headline is that there's no change to 20 for targets despite a huge collapse in yields since we lost got targets from them which came when q-4 earnings were reported in january

they put this in front of the presentation on page 2 it includes $200 billion target in green financing this year up from $175 billion last year no financing of oil and gas in the arctic and limited financing currently about 1% of their financing and they won't do any fresh financing in that area but back to the fundamentals for the bank stocks. yesterday they all sold off sharply in line with the rest of the markets. the biggest decliners with this year's biggest winner so far, morgan stanley the bank with the most exposure to asia, citigroup, and the one that seems the most interest rate sensitive bank of america, jp morgan was down as well but only about 2.2% and despite no change in the financial targets the focus today will be on the comments that we hear from the business heads and of course chief among them jamie dimon in terms of the

changing macro environment with the yield curve and the coronavirus. we're due to hear from him at 11:45 a.m. things will kick off at 8:00 a.m. >> before you go in terms of some of the projects that jp morgan is no longer going to finance, is there any estimate on what that will cost today it will certainly cost them something. the critics will argue why not why didn't you do this earlier the science hasn't changed for a decade more detail on that in the day ahead. >> much more on the broader markets and reaction to yesterday's sell off but up next, mortgage rates driving the housing market

higher and home depot is looking to capitalize. we'll discuss the latest report after the break. and then later the white house unveiling the $2.5 billion emergency coronavirus plan and the update on the spread of the virus and what it means for ua b rur mey sqwkoxetns right after this

welcome back a couple of downgrades to tell you about this morning they will beat yesterday for sure downgrading to underperform and concerns about the second quarter could be coming. they see limited impact from the coronavirus but they are concerned about the ability maintain that based on limited

earning. revenue above what the street had been expected and 10% increase in it's quarterly dividend to $1.50 a share. that up 2.4% this morning. that's a dow component helping the dow as well. joining us to talk about the results and the broader retail sector is the ceo and courtney, what did you think of home depot's numbers? pretty strong across the board >> yeah. they said their longer term strategy was just taking a little bit longer than they planned to pay some of the dividends and those results. so some investors are wondering is this going to be an issue going forward but they got themselves back on track here and things look strong 5.2% is quite good we know that the holiday quarter for home depot is not like a holiday quarter for acy's.

home depot did a great job with the business and we saw it come out and we're going to see it continue because interest rates have continued to come down and nothing is really going on right now as far as the coronavirus slowing down the consumer. >> let's talk about the potential threat to retail from the coronavirus and you're right. it's not something slowing down things in the united states but we did hear from mastercard last night. they warned not only that cross border travel is being effected but cross border e-retail. e-commerce or any of those things i don't know if people have concerns about buying things from china right now i had people asking me things on my twitter feed saying should i

be concerned that it's going to live onsurfaces? i have people asking me that at home too is that something that have a potential impact and where could you see the supply chain issues that might show up in the u.s. retail situation we don't know enough about the coronavirus to give anybody an answer on those questions. the last time i was on i said the market doesn't seem to be taking the coronavirus seriously. as of yesterday they were taking it seriously as a heart attack we know it's 40% of luxury goods and they're not going any place. they're not just not buying them in china, they're not buying them nywhere.

way fair is all the way up to 50%. factories are coming back by the way. you mentioned this morning earlier that they're coming back slowly and we see 30, 35, 38% performance. that's pretty low but if they're up by the end of march, i don't think that's going to be a big problem on the supply side i'm much more concerned on the demand side. if we see this spread like we just saw these numbers out in milan, we could see the global market shutdown for goods or the u.s. consumers start to shutdownment thshutdow shutdown that would be a really, really big deal i think that could cause a

global slow down but if it gets broader than that and nobody is going to work and nobody is going out to shop that's a big deal but right now it's a big deal mostly. >> it hasn't happened yet but it's obviously a concern what do you hear from the retailers that you talked about. >> it's interesting when you talk about e-commerce. they're honest with what they're seeing and they mentioned the asian e-commerce business that they do with alibaba, that's been hit pretty hard so i thought that was fairly telling because you could easily order a goose, a canada goose jacket online and get it delivered and potentially not fear going out in public

the discretionary spending has been curtailed regardless of the platform. >> very quickly. obviously it all depends on how long this lasts, how far it spreads but the prices that you're looking at most of these retailers on right now, has it factored in what we know at this point? >> i think it is factored in i think, when i look at these i say if you're a long-term investor you're buying the dips on all of the stocks if you're a trader maybe it isn't all factored in yet. and we're doing a good job of controlling that it's already starting to slow down in china. so i think as far as consumers go and as far as the brands go their buys when they're -- if you trade off the lvma that always trades in a multiple that nobody can afford to buy it, it's a good time to step in

because they're still going to have great business once this is over. >> i want to thank you both. good to see you. >> thank you. >> coming up, america's preparedness for the spread of the coronavirus in the united states if that were to happen and what a quarentine of a major city would look like futures remain up triple digits. up 128 points now. s&p indicated up about 13 or so. nasdaq up 65 home depot continuing to help after a pretty solid earnings report we'll be right back.

we see engineers simulating the future to improve today. at emerson, when issues become inspiration, creating a better world isn't just a result, it's a responsibility. emerson. consider it solved. a new kind of investor is changing things up. [ indistinct talking ] with an app that's changing the way we do money. download robinhood now.

>> and with case numbers now approaching almost 1,000 a new travel warning from the cdc. a level 3 warning meaning avoid nonessential travel due to widespread community transmission of the coronavirus. that's the same level as for mainland china meanwhile the white house sending a request to congress to make $2.5 billion available for the response raymond james analyst says that amount is only about a 6th of

what is necessary to prevent or respond to a widespread outbreak in the u.s. >> thank you so much for more on the coronavirus and the latest on where we are, i want to bring in the former commissioner and cnbc commissioner and he also serves on the boards. good morning. >> thank you. >> so here we are. it's now moving into other countries in ways that we had not imagined there's still questions about what it's really going to happen here are we overestimating or underestimating. >> we're probably just attaching a small fraction of what is going on italy, iran, south korea, japan seems to have more spread than what is apparent right now.

and we're looking at diagnostic tests for a platform and you order that when someone has a serious respiratory issues and they don't know what it is and they don't get back a positive result for anything if you have dozens or hundreds of cases you might not detect a signal that way.

we tested cumulatively and our capability probably isn't more than 50 or 100 a day to the best they all need to be shipped to the cdc right now. we need the five state labs that are doing this but they're small. >> you're saying that it's much worse. >> well i don't think there's thousands of cases you'll see unusual respiratory illnesses being admitted and that will give you the report and go in and test the cases you could have a small low level spread and it becomes harder to put out small outbreaks if you don't detect them early.

and comes back with an immune response and sepis response. >> that might be it. probably it's going to be much lower than the 2%. my guess is .2 to 5% you look at the people and that doesn't mean people are getting sick enough and identified there does seem to be a response here when some people get sick it's easy to see a spectrum of illness. here you either don't get sick or you get very sick. >> yesterday we had warren buffet on that told us he has been speaking to bill gates about this and one of the concerns is that idea that they don't think this is necessarily

killed off by warmer weather >> what do you know? >> we don't know >> when you have something novel it can continue to circulate it could pick back up again. that's what happened with h-1, n-1. it came in the spring and continued to spread in the summer and dropped off and then came back in the fall. >> they'll have a huge business impact an impact on this network and this company an impact on all japan what are you thinking

i don't know if japan is doing as good of a job they can't trace back to a source and that's a signal that they probably have more spread in their country that you're just not identifying. >> we have seen this expedited expedited drug approval for a vaccine. couldn't there be an expedited testing process if we decided. >> it's a challenge. this is a coronavirus. it might be more difficult to make a vaccine we don't have a lot of experience. >> it's tough enough. >> with h-1 n-1 we were able to

make a flu vaccine. >> it's a small genome. >> people can get reinfected with this. >> good to see you, appreciate it thank you so much. >> all right when we come back, airline stocks slammed in yesterday's session as cases of the coronavirus rose out departments side of china. u.s. carriers already suspended service to china and hong kong we'll get you up to speed on the sector after this break and later seeking market refuge from the virus has been tough we'll talk about why he thinks biotech stocks could be a safe haven teafr yesterday's market plunge squawk box will be right back. and ask your doctor about biktarvy. biktarvy is a complete, one-pill, once-a-day treatment used for hiv in certain adults. it's not a cure, but with one small pill, biktarvy fights hiv to help you get to and stay undetectable. that's when the amount of virus is so low it can't be measured by a lab test.

research shows people who take hiv treatment every day and get to and stay undetectabe can no longer transmit hiv through sex. serious side effects can occur, including kidney problems and kidney failure. rare, life-threatening side effects include a buildup of lactic acid and liver problems. do not take biktarvy if you take dofetilide or rifampin. tell your doctor about all the medicines and supplements you take, if you are pregnant or breastfeeding, or if you have kidney or liver problems, including hepatitis. if you have hepatitis b, do not stop taking biktarvy without talking to your doctor. common side effects were diarrhea, nausea, and headache. if you're living with hiv, keep loving who you are. and ask your doctor if biktarvy is right for you. we sunleashing the promisegas of clean energy. at emerson, when issues become inspiration, creating a better world isn't just a result, it's a responsibility. emerson. consider it solved.

we're changing what's possible every single day. and if you run a business, that means a lot. we create financing options for your customers. to help them get the things they love instantly. our data provides insights into what your shoppers have already bought. so you can offer them what they might consider buying next.

our technology and financial solutions are changing what's possible in all sorts of ways. so, how can we change what's possible for you?

>> those flights into the u.s. and europe and vice versa. when you take a look at the u.s. carriers and their exposure to europe this is an area that generates anywhere between 11 and 17% of the annual revenue for the big three u.s. carriers, american, delta and united they also got hit and didn't matter that most of their flights are here in the u.s. southwest, jet blue, spirit they

were all under pressure yesterday anywhere between 6 and 10%. let's see what the stocks do yesterday. already indicating that there will be a bounce back. guys, back to you. >> thank you for that. i want to bring in right now the principle at kaplin research and host of airline's confidential podcast. good morning to you.

and it's going to be a break again on any plane. >> you would have to believe that's going to happen. >> that assumes nothing is happening in the united states and we just heard and he seemed to suggest that this movie is coming to america. >> that's to misappropriate the old saying about the known and unknowns this is some of the unknown unknowns here. which look a lot of things have happened so far that none of us saw coming so a lot of the economic models, the airline association put out forecast last week of what $30 billion in industry impact but almost all of it in asia -- that

was assuming a sars style impact of the virus now they took into account that china is a lot more important to the global economy but in this whole epidemic becomes a pandemic then obviously all bets are off and some of those fears are priced in. >> okay. so you like the point to point airlines in the united states. >> particularly the ones -- i mean, the ones that are least exposed are those that don't have global partners in you're jet blue or alaska you're doing business with chinese and european carriers. you don't even have any of that. so it's limited to people from china that aren't traveling domestically in the u.s. right now. so yeah, if you believe that, you know, the impact is demand from china and demand around the world then those are the airlines on the table. >> let's think about the other permutations though. what other airline or travel

adjacent kmacompanies would you start to think about. >> yes, hopefully. >> so that's a good question >> you see what's happening with the cruise lines they're the opposite of that. and now, it is also interconnected and what is safe right now. what's safe right now other than the mostly domestic u.s.

airlines as summer is coming and the virus itself is helping getting hands around that because this could be a huge opportunity obviously if that's the case i think it's virus news that is going to tell us that it's an opportunity. >> fair enough thank you so much. appreciate it. >> got it. >> you bet. >> coming up at the top of the hour volatility spiking on coronavirus fears. we're going to talk about investing in uncertain times that's coming up at the top of the hour in the meantime, take a look at the futures this morning a bounce back but we should keep it in perspective. it was a decline of over 1,000 points yesterday we're sitting here the highs of the session at least dow futures up by 165 points the nasdaq up by 84. squawk box will be right back. is changing things up.

with an app that's changing the way we do money. download robinhood now.

how you watch it does too. tv just keeps getting better. this is xfinity x1. featuring the emmy award-winning voice remote. streaming services without changing passwords and input. live sports - with real-time stats and scores. access to the most 4k content. and your movies and shows to go. the best tv experience is the best tv value. xfinity x1. simple. easy. awesome. xfinity. the future of awesome. i'm jennie garth, and as a mother of 3, i know kids worry about a lot of things.

getting enough food to eat shouldn't be one of them, but here in america, that is a real worry for 1 in 5 children. this is unacceptable and something feeding america is working to solve. through a nationwide network of food banks, feeding america serves virtually every community in the united states, including yours. see how you can help your community. visit feedingamerica.org. together, we can solve hunger. together, we're feeding america. squawk box is coming right back

♪ ♪ ♪ ♪ don't just plan to retire. plan to live. an annuity helps cover your essential monthly expenses, so you're free to live the life you want. find out how an annuity can give you lifetime income at protectedincome.org

but when allergies and congestion strike, take allegra-d... a non-drowsy antihistamine plus a powerful decongestant. so you can always say "yes" to putting your true colors on display. say "yes" to allegra-d.

>> the dow coming off it's worst day. investors and hedge fund manager. plus a race for a virus vaccine and which companies are best positioned for success >> and pain at the ports, we will take you live to one of

america's most important shipping terminals for an on the ground look at how the virus is starting to ripple through the u.s. economy the final hour of squawk box begins right now good morning, everyone we're live from the nasdaq market site in times square. i'm becky quick with joe and andrew let's check out the u.s. equity futures for this hour. more than 1,000 points for the dow. this morning there say bounce back but it's relative dow back by 165 points s&p futures by 16. the nasdaq up by 86. if you take a look at what's been happening in the treasury markets, yesterday the ten year fell below 1.4%. yield is still there at 1.38% right now. the two year yielding 1.264% we'll start this hour with the

most valuable company in america. apple. shares of the tech giant getting hit hard on coronavirus fears. we asked him if he knows about the impact of the virus on the company. >> no. i don't think -- i don't think i placed a phone call to tim cook in two or three years. no ichblths and t >> guys, it's good to see both

of you yesterday when buffet was talking about that he said that he considers apple the third largest company because the stake they built up has grown so rapidly overtime when you start thinking about what will happen with the bounce back where are you >> it's all the iphones that they didn't buy during this period. >> because they're lost sales potentially? >> they potentially are. we don't know yet about the psychology of the chinese consumer not only does apple have to deal with when do the workers get back in full force but then when do the buyers come back in stores are they going to feel like i meant to buy an iphone a month ago so now i'm going to buy it or is the psychology going to be i need to save a little bit more because i don't know how long this period of uncertainty is going to last. >> you're not talking about apple losing market share

necessarily, so. >> i don't know if people say i'm going to buy a huawei phone or samsung phone instead if they were in the market for a high end phone but even that is possible if they suddenly decide i'm not going to devote as much of my resources to technology. we just don't know yet. >> do you agree with that? >> i agree with that on the other side of the supply chain issue aside from being consumer and supplier, the technology manufacturing industry so, you know, lunar new year a lot of people think china takes a break for about a week or so. it coincided with coronavirus and we're starting to see the effects of that. not just for apple but the back half of the year is going to be pretty bad just how disruptive factories have been. >> factories are coming back to

some extent. maybe 35%. if that's the case and that sticks out and we ramp up from here, is that going to be a huge problem or is this something where you could see a recovery at least for the supply chain. >> i think for recovery it's more likely recovery i think as he was talking about they're buying apple shares every day. he's buying on all the dips. it's actually a good thing and the fact that he finally got some. >> yeah he did talk about that yesterday. a long time user of the flip phone only he has finally transported -- although some people raised the question yesterday does that mean that it's jumped the shark. >> that's what i would think, yeah but, you know, i think there's another question here industry wide about what is happening with 5-g china was on this big push to build up 5-g networks in all the major cities. >> i think it has to you have to be outside to install this equipment if they were going to push all year to do that they probably don't have people up on poles

doing that what does that do for demand for 5-g equipment and devices at the networks that could mean an advantage in a way for apple because there's a number of other players that have 5-g phones out already that might not see that demand come through sooner it might show up later >> infrastructure and devices the platform, we don't know what it is. all we know is its just faster right now for a lot of people. it's fine, people watching netflix on their phones. is there something that 5-g is going to give me that i otherwise would not have been able to get through my phone that's the thing i haven't seen yet. >> the speed you'll want i i see people snapchating here's my download speed and upload speed but what did you get for that >> i think this issue on huawei and china 5-g is important

the u.s. talked so much, the national security conversation about huawei the other piece of it is that we were behind ight if we are behind a couple of months and on the chinese side, once all of this gets cleared up and

i hope that happens quickly, the government does have enormous incentive to push even harder than they might have from an economic stimulus perspective. so it's too soon to say. >> thank you good to see you both. >> an update on the worldwide spread of the coronavirus. the world health organization is now warning countries around the world to be ready for the disease as if it's knocking at the door south korea is aiming to test more than 200,000 members of a church -- 200 members. not 200,000. worldwide fears from china, italy and other countries hitting u.s. stock markets hard yesterday as you very well know with the dow and s&p 500 suffering the worst days in more than two years italy is the hardest hit country in europe with more than 200 cases reported yesterday and

infections now topped 80,000 they say the epidemic peeked there between late january and early february eunice joins us with the latest from beijing. >> thank you so much you guys were just talking about chinese stimulus just now state tv said that china is going to roll out an additional $71 billion to support small and medium sized businesses with loans. they're going to wave the vat for businesses all together that are in the epicenter of the province the announcement also comes right after the authorities here had said that the rate of the resumption of work for smes is only 30% also a transport ministry said that projects and railways and airports as well as highways have stalled

these projects rely very heavily on migrant workers that have either been restricted from or reluctant to travel back to their work places. it has been doing okay and had some positive news is now 7th province to downgrade it's emergency response level as the country attempts to get back to work the province said that it's going to extend it's closures for schools. a lot of people have been watching that. campuses will stay shut until further notice while students resume studies online from march 2nd. hong kong is also going to keep it's school shut until april 20th now with the cases jumping in south korea and the foreign ministry said that china would like to share it's experience to help south korea as well as japan to fight the virus at the same time, china has also -- places within china with big south korean communities have now started to impose

restrictions for anybody who is going back and that's the way to try to prevent a further spread from china that could be coming in from south korea one other update on a completely different story but the wall street journal reporters that have been kickedout. >> we are seeing further

evidence close quarter sales growth will be 2 to 3% lower in previous guidance but we also heard negative comments from apple, united airlines, coca-cola, procter & gamble. joining us to talk more about the potential market fall out from the coronavirus is the howard chief investment officer. macro economist but also a hedge fund manager are you a quick study in epidemiology. >> not as quick as you joe. >> probably not. but you had to be. at least to some extent. >> consensus is that assumes positive things happen in terms of the spread of the virus

>> absolutely correct. but the comment that i would make is its too soon to know if it's going to play out. they shutdown tourism and supply chains and this is different in certain respects than in the past and first of all china is a much bigger piece of the global economy than it was the last time we had something like this. we had been seeing what i think were signs of improving global factor the u.s. is far less impacted by this things were starting to turn in china. so just supply chain worries on the ten year just supply chains

>> for example in europe, god forbid here that's a much -- i don't know where the stock market goes in materials of that that would be a worst case scenario. >> i think that's right and again the point is that we don't know how to play out the general assumption is that you get a big hit to first quarter output in china and asia and they work hard to get things back online which is what seems to be happening already. they told people to start going back to work on the one hand, on the other hand kids aren't going to go to school until the latter part of april. >> that's what we heard earlier. the market is pricing in a cut in the middle of the year in recent weeks and over the last

few days we have seen another full cut price by the middle of the yearment this is against a background where the fed said prior to this well, i hope inflation isn't doing anything one way or the other it's lower than we would like. rates are arguably negative. real rates are negative in the united states so now you have a market that is pricing two full cuts >> in terms of valuation with the stock market you point out obviously rates are low but you make the point and it's kind of an interesting nuisance that i hadn't seen previously that since the market discounts into the future, profit margins probably peaked and wages are probably going up especially in companies that aren't as well managed as the s&p 500 so the market could discount even with low interest rates and maybe no reason for an expanding multiple is that your view? does that sum it up? are you worried about valuation even with low rates? >> it's an interesting trade

off. the lower rates go the more people want to adjust the discount factor but stocks theoretically are pricing future growth >> how much do you really want to pay for that? so we had a market that was over 19% of forward earnings and still in excess of 18 times forward earnings

the yield on the s&p is higher than on bonds right now. so for a competition from capital standpoint do you want to own overvalued bonds or overvalued stocks? the real point is that unless there's a radical shift upwards on potential gdp growth. financial assets are expensive right now. are you saying don't buy the dips we're not an equity fund and we had a single digit return

last year so less than the s&p last year. >> have you gotten less enamored >> yes some what less this is the issue of where do you put your money what assets are you going to own? and how much can you expect to make so a degree of caution is appropriate rather than the expectation from overvalued levels you'll become even more overvalued. >> we should check back in we'l talk about who is in the hunt and how long it could be before

we see viable candidates let's take a look at shares of macy's that company out this morning with revenue beating on the top and bottom lines you can see right now the stock is turned around though. it's giving back the gains we saw earlier when the news was first announced. it's down by 13 cents. also a reminder for you, you can always watch us or listen to us live on the go and on the cnbc app. you're watching squawk box here on cnbc.

>> it's probably not even in the top 100 on a percentage asis

an earthquake happened in l.a. a week earlier we had a horrible earthquake and then this happened anyway, when the dow dropped more than 22%, that is it right? do you think that's going to help your case >> it hasn't stopped people from being in the market. >> we're a little bit more than an hour away from the opening bell on wall street. we're going to start with shares of home depot. 60,000 shares of premarket volume after america's biggest home improvement retailer reported bigger than expected

profits and sales at existing store locations. next up you have shares, this is big. this is the u.s. listed chinese electric car maker it's surging by around 31% 13.5 million shares of premarket volume after it said it was in talks for a new round of nufundn and new facilities that could raise the equivalent of $1.4 billion worth of chinese yuan and that's why those shares are up big right now and we'll end on shares that are also surging by about 15%

that is meant for phase one trials in humans in the united states later on. so again those headlines moving those stocks i will send things back over to you. you look at the big companies that have an opportunity to help us here. let's talk about the economics of doing that. >> good morning. thank you for having me. yeah so clearly the market has been very focused on what players, what companies are going to be involved in. and it comes down to a race. what's happening now is we're going day-to-day, headline to headline to determine or assess which of these companies is going to come out with an

appropriate treatment. so there are many companies on this list that are looking for a vaccine. it just doesn't seem like, you know, we as an investor base really know what is going on until these vaccines are put in humans >> there's no way to handicap which company you think is farther along in the race or more behind for example? >> it seems like they're probably the largest company and they happen to be in the lead by most accounts. the companies confirm that they have a phase one trial in china that could read out as early as april. you're talking about five or six weeks to understand whether they have a treatment that could be a viable option for patients in china. >> now you're talking

therapudics. i thought they were still talking about vaccines >> and it's the vaccine used and there are sort of resurrecting for coronavirus it's five or six weeks roughly before they have the results in china and then moving into clinical trials in the u.s other companies that are experimenting with vaccines in their portfolios as well as regeneron and many other small and microcap stocks that have been super volatile over the past couple of weeks. >> when you say vaccine it could be preventive and a reatment

do any of them seem effective if you already have coronavirus. >> they were trying to assess they're going to be used in a traditional sense or if they're going to be used once a patient is infected in a doctor's office and hospital setting et cetera it will be more of a treatment option and most of the companies are going to be used therapudically. >> maybe that's a question that since we're a business channel,

what are the economics of a successful vaccine like this >> it's immaterial at least for the largest companies you're looking at many countries in the developing world which are susceptible to virus and coronavirus for companies that do more than 20 billion revenue a year it seems to have a very, very small impact on their business as well as most of the other companies we're talking about as well. giving these drugs away for free working with health organizations around the world and this is one of the things that investors seem to be grappling with is the real impact that some of these drugs are going to have on financials. >> thank you for helping us this morning. appreciate it.

at the port of charleston in south carolina what do you have on tap for us >> well, joe already we have seen a couple of ships docked at port here. they're getting loaded and unloaded at the same time with the help of the big blue cranes that go up to 155 feet china is south carolina's biggest trading partner and officials say they're racing for the coronavirus to start impacting traffic here we'll tell you what to expect coming up next quadrupled their money by 2012, and even now, many experts predict the next gold rush is just beginning? so don't wait another day. physical coins are easy to buy and sell, and one of the best ways to protect your life savings from the next financial meltdown. - [announcer] today, the u.s. money reserve is releasing official gold american eagle coins at cost,

for the incredible price of only $159 each. these gold american eagles are official gold coins of the united states and are being sold for only $159 each. - pick up the phone and call america's gold authority, u.s. money reserve. with nearly two decades in business, over a billion dollars in transactions, and more than a half a million clients worldwide, u.s. money reserve is one of the most dependable gold distributors in america. - [announcer] today, the u.s. money reserve is releasing official gold american eagle coins at cost for the incredible price of only $159 each. these government issued gold coins are official u.s. legal tender, made from solid gold, mined here in america, and fully backed by the united states government for their gold weight, purity, and content. do not delay, call now to purchase your gold american eagles for the amazing price of only $159 each.

gold is now on sale at prices unseen in years, and this year could be one of the greatest gold buying opportunities of all time. call now while vault inventory remains, and as one of the largest u.s. gold coin distributors in the country, u.s. money reserve has proudly served hundreds of thousands of clients worldwide. don't wait another minute. call now to purchase 1/10th ounce gold american eagles for the amazing prices of only $159 each.

up 140 points. one of the big winners this morning. s&p up 14 and the nasdaq up about 70 points or so. >> closure of factories is having a real effect we'll be talking to the executive director and came to

us from charleston good morning to you. >> already there's trucks over here that are loading and unloading refrigerating containers and the dry containers and colorful ones that you see, there's about 2,010,000 containers that arrive at this port from china every single week. they take about a month to get here from overseas and they expect the impact of the coronavirus to make a difference here that's when all the cargo would have been here and already hearing reports and ships are coming with little to no cargo and all of that is to dampen what has so far been a south carolina economic succe successful. >> we're sboe grated into the global economy it's probably going to reduce

the momentum that we have achieved going into 2020 and that's autos, planes and tires those are all industries that rely heavily not only to ship their products but also vital component parts in their manufacturing process. so officials hearsay that they are hoping for a snap back once production gets back up to speed in china but guys, now, with the coronavirus spreading throughout europe as well germany is south carolina's second largest trading partner so everyone here is taking a wait and see approach back to you. >> thank you very much let's talk now about the port impact on the west coast for that we're joined by the executive director of the port of los angeles this is the busiest container port in north america. it's estimating that it's cargo

value will drop by 25% over the year over year numbers when the final tally comes in thank you for joining us. >> thank you. >> that's a huge impact to try to think about 25% decline what are you seeing so far what's the day by day on the ground there. >> it's been about a 15% decline. what we're seeing is 40 cancelled from february 11th through april 1stment that amounts to 25% of our normal shift calls. >> 15% impact for the quarter i'm assuming that's not because you anticipate things getting better in march. >> we were down about 5% in january. and you might remember that the tariffs for january first saw a little bit of an up tick. >> that's down 5 approximate kt in january down 25% in january.

>> no, not necessarily we'll see what they look like. but again 40 vessel sailings cancelled from february 1 through february 11 and april 1. >> what are you hearing in terms of things happening on the ground in china and other places where the ships are originating. are things improving to this point? >> factory workers are not coming back to the levels that were anticipated originally. it was extended by about a week and we're seeing them collapse from the normal number down into a viable figure that can collect cargo from other southeast asia locations. >> it sounds like there's problems along the entire path for that with the factory workers not coming back. they're only coming back in small portions at this point even if you had goods at the ports would they be able to be shipped if you have a skeleton crew >> by and large, yes. >> you have lived through this before you were in shanghai during the

sars outbreak. what did you see at that point >> i was in charge of sales for a company overcovering a large swath of china and we weren't moving around domestically or internationally. this appears to be much worse. >> why. >> because of the number of folks infected and the lack of productive taking place throughout the supply chains. >> do you think china is doing the right thing by trying to shutdown some of the affected areas or do you think it's more damaging >> we need to curve the illness first and get people well. i think we'll look at the inventory levels that we had here in the united states and those being down right now we'll have to play pick up soon but we have to get people healthy and back on the drop. >> what do you think as you start to hear about outbreaks in other places italy, iran. >> the next most concerning information was yesterday with south korea. he's a big hub for us as well. they move about 11 million container yuunits a year. >> have they shutdown shipments

coming out of south korea? >> not at this point. >> do you anticipate that will be the case? >> it's over 970 cases diagnosed according to this morning's news we'll see where the path takes us. >> thank you for joining us. we hope you'll come back and give us updates. >> coming up, much more on the worldwide economic fall out from the coronavirus. from factory shutdowns what are the warning signs and which levels do they have their eyes on? it's all just ahead. you don't want to ssmi it. stay tuned you're watching squawk here on cnbc. i have an idea for a trade.

oh yeah, you going to place it? not until i'm sure. why don't you call td ameritrade for a strategy gut check? what's that? you run it by an expert, you talk about the risk and potential profit and loss. could've used that before i hired my interior decorator. voila! maybe a couple throw pillows would help. get a strategy gut check from our trade desk. ♪

try to win by attacking, now, we know the trump strategy- distorting, dividing. mr. president: it. won't. work. newspapers report bloomberg is the democrat trump fears most. as president, universal

healthcare that lets people keep their coverage if they like it. a record on job creation. a doable plan to combat climate change. i led a complex, diverse city through 9-11 and i have common sense plans to move america away from chaos to progress! i'm mike bloomberg and i approve this message. meanwhile they continue to take a wait and see approach. >> it's really difficult to assess it's going to be the path of the virus. the number of cases and the spread as you say and then

there's secondary things like financial markets that we're seeing today a bit as people reassess the risk outlook. >> all right despite the comments let's look where the market is pricing the federal reserve. okay the first cut, 74% probability and now there's a second cut built in that is a probability for september and they're toying with even a third cut. call it about half baked in. a 42% probability for december and writing in the commentary. supply chain disruptions may way on u.s. activity however under our baseline assumption of a sharp reduction by the end we see the impact as limited. so that's the base case for many economists the fed so far seems to think that the effects will be limited either continued market sell offs that is threatening the economy in spending. or a sharp decline in the

outlook for the second quarter that's what will lead you to rate cuts and now the effects of the first quarter in which continue to come down. uncertainty about the second quarter continues to come up. >> okay. steve, thank you let's expand this conversation about the economic fallout of the coronavirus. and with an equity perspective, chris harvey the head of equity vat gist at wells fargo securities i'm going to go to you first since you're here at the table >> all right >> we have all been trying to figure out, are you supposed to buy on the dip is this really a dip mohammed says don't buy the dip. >> so what we say is -- so what you're doing before -- >> bless you. >> thank you. >> i feel fine i feel fine, i swear >> okay. now you're not paying up

we want to pay or we want a little bit of a discount to have that access to the coronavirus we think it's temporary but we're starting to see numbers being cut whether it's apple or some of the credit card companies and it will have an effect but we're just not ready to buy the dip right now >> we're looking for a bigger shift in risk aversion. >> okay. >> we're looking for -- >> what does that entail >> we're looking for somewhere between a 0 and 5% pull back back in december we said we expect to see a 5 to 10% pull back in the first half of this year we're beginning to see that. >> but that was a fundamental call that you were making that had nothing to do with coronavirus, right >> no, for us it's the catalyst. the underlying fundamentals you have fed issues and you have issues with passive and buy backs. you have issues with political

risk you have issue with retail and retail speculation and now what you're having is the coronavirus is starting to expose all of this and people are realizing that not everything is great in the world and we are pricing back in political risk to some degree so you have to account for that. >> psychological call as much as anything else. kevin, help us with what you think -- >> excuse me. >> oh. i apologize. help us with what you think are the genuine economic impacts of this going back to what he was just talking ability in terms of how he's looking at the stock market >> yeah, well, as far as with regard to the coronavirus it's too early to say and to have very much conviction in how much it will exactly drag on the u.s. economy. i think coming into 2020 the economy already started to show some signs of slowing. much of last year's growth was lead by the consumer and i think that the real worry here is that if the consumer is already being -- showing signs of

slowing, that this is only going to kpser baexaserbate the down e it's too early to call that but i think that the u.s. economy is certainly at best 2% top line gdp growth and there's worries that if this were to spill over to the u.s. and so far we haven't gotten any evidence that it's starting to effect the u.s. economic data but the fed is right in that they're carefully monitoring the situation markets are more cautious coming into this year and we started to see some moderation in the consumer. >> i want to ask either of you guys, there's a big discussion

around whether or not fed rate cuts will solve this problem >> you might put a floor under the market and the market might need that and it doesn't look like that. and supply and demand roblems. if china drops by 20% and is impacted by that, the magnitude of the u.s. economy is very small. and this is how recessions happen the magnitude of the tightening and financial conditions could eventually tip you into a

recession. the fed is probably going to eventually have to go with two rate cuts june and july >> markets have to trade every time we have a fear of economic slow down the fed doesn't need to step in. the fed cut three times last year and they increased the balance sheet by 10% there's enough accommodations on the table. so let the markets trade and let the markets take care of it. >> yeah. >> you have to consider it's not what you think the fed should do

but what they will do. we saw this in 2018 the fed still had rate hikesand in january they didn't have a tightening bias or and later in june they teed up. we have a lot of things before the next meeting and we could see a teeing up that economic uncertainty has increased here and monitoring the situation closely. and what makes this different is that consumer spending is such a

large u.s. economy that consumer starts to get spooked. >> thank you so much. >> coming up, key technical levels to watch. all markets all the time and the day after we saw the dow's third largest point decline in history and we continue to monitor the shares in macy's. rose sharply after the earnings and revenue beat and then turned around and the conference call is going on and the cfo confirmed that the guidance issued earlier this month and confirmed it and said macy's expects a small impact on the first quarter sales from the coronavirus. we'll be right back.

welcome back to "squawk box," everybody. been watching the if you thurs morning and they have been higher. the dow is up by 153 points. comes after a decline of over a thousand points yesterday. s&p up by 15. nasdaq up by 75. joe. >> our next guest says that all the factors for market setback have been in place for quite some time. joining us now to talk about whether that's what we're seeing right now is john wolf, we'd be remiss if we didn't start with the s&p 500 and tell us what

technically you're seeing. >> so we had a little break yesterday or a big break on a percentage basis, but it's down 5% from its high. you know, the trend, as you can see, is still up, still supported by upward sloping moving averages. 5,100 in 200 day. this area in mere, roughly let's call it 3,200 or theres about is where we think the support level is. >> so you actually said percentage. on a percentage basis it's not a big gray notday on a percentagef all of of all the markets globally, we think there's tremendous complacency here. we have a 30-week moving after rage. in order to smooth the picture for the hang seng. and when it's sloping downward, down 67% here, 36% here. you can see the average is sloping. so we think that this is where

the complacency is because investors believe china sa going to flood the market with liquidity. unless it turns up, it's hard to be long in this market. >> all right. but should we glean anything from the hang seng about our averages domestically here i don't think that we're going to -- >> is this if you're long in the hang seng? >> i think if you're long in the hang seng you have to be cautious and i think it's because people believe china sa going flood the market with liquidity. >> we talked about gold being way ahead of stocks and bonds were way ahead of stocks as well, if you believe yesterday as a big down move. but let's look at gold. >> gold, as you can see here, broke out of this giant base. we like to call it -- >> this is long term. >> that's right. this is monthly. this is a giant move here. and we think ultimately gold will make a new high above its 2011 high. and right now gold, while it will clear those. this is what the long term looks

like. here's a real giant base here. big breakout here. another base here. breakout. we think it gets above here, make the new all-time high and gold will make a new all-time high in all currencies. that's like a 50-zbleer it's another base breakout, we think it makes another all-time high. >> you didn't bring us anything on the interest rate complex that the point >> assets keeps rates low and this is the way it's going to continue. risk here is that the dollar breaks out to a new high which upsets the fed's apple cart with respect to looking for higher inflation. >> is there a reason that it's not down >> that's a portuguese name. >> so it's roke? >> no. trying to help you out here. >> thanks a lot. >> thanks. let's get down to the new york stock exchange.

jim kramer is getting ready to go with his show. he had this advice for investors earlier. listen in. >> i would say adoin this as hard as that is, to simply -- because it has worked in the past. i think there's a lot of uncertainty out there. i understand the inclination to buy. i understand for this market is to bounce up because that's what it's been conditioned to do. but i stress this is different. >> jim, that sounds a lot like the advice that you've been giving people too. >> yeah. look, i think he is just spot on. look, what happens today if someone from italy comes via milan to jfk and brings the illness? are we ready for that? i would tell you we're not. >> no. >> i mean, i'd like though think we are, that's okay. dr. faust is the best. he's saying, listen, we're trying to slow it down and contain it.

no one's saying we're going to eradicate it. we have to go through the process where we can have something like that. and we have the slowdown that's actually i think palpable at this point. you don't want tosee people stopping to go out in a service economy. why don't we let it play out a little why do we have to buy 300% from the top? i think you let it -- it you have some stuff today that's bouncing, why not lighten up a little we're just too close to the top. the top i didn't like because it was led by the most stocks some of which are coming back today. i don't like to see that. >> david was with us a little earlier and he kind of pointed out some of the same things. if you look at earnings and where we were for forward earnings even before coronavirus, look, you were looking at some potentially rich valuations. >> yeah. look, he was -- hate to be totally like minded with what i heard this morning, but they were all fabulous guests. i think all of them said why not

be careful what's the hurry and i think that that's not i bad view. it's not that the market's toxic, it's just what's the hurry? >> we just don't know yet. >> right. >> jim, thank you. been watching everything you've been talking about. >> of course, thank you, becky. >> we'll siee you in a few minutes. don't miss a first on cnbc later today on "the exchange" at 1:30 p.m. eastern time. stay tuned, "squawk box" will be right back. financial securit. being able to retire. on our terms. no matter what your goals are, our trusted advisors can help you reach them. ameriprise financial.

we were paying an arm and a leg for postage. i remember setting up shipstation. one or two clicks and everything was up and running. i was printing out labels and saving money. shipstation saves us so much time. it makes it really easy and seamless. pick an order, print everything you need, slap the label onto the box, and it's ready to go. our costs for shipping were cut in half. just like that. shipstation. the #1 choice of online sellers. go to shipstation.com/tv and get 2 months free.

quick check on the market given what's happened. let's show you where we stand right now. dow looks like it's rebounding a bit. dow looks like it would open up about 145 points higher. nasdaq 76 points higher and the s&p 500 up 55 points. whether we're staging a comeback or not, staging a comeback i don't know just yet. you're looking at red still across the screen there in europe. >> my wish is that in china that it actually is contained that way it wouldn't matter if we see

these outbreaks in other areas. if china can handle it and control it, then that could give you, you know, take solace that maybe he would could handle it wherever it breaks out. and china 1 point however many billion people, ten of billions is still a small amount and we're nowhere near that. we're less than 100,000. let's stay positive. >> fingers crossed today. make sure you join us tomorrow. "squawk on the street" begins right now. ♪ good tuesday morning, welcome to "squawk on the street." i'm here with jim and david at the new york stock exchange. looking for the bounce after the worst day for the s&p in more than two years. lot of coronavirus warnings this time from master card, united, phillips, home depot is a bright spot. europe started green, currently