good morning it's 8:00 a.m. at intuit headquarters in california, 11:00 a.m. on wall street, and "squawk alley" is live ♪

good tuesday morning welcome to "squawk alley." i'm carl quintanilla with morgan brennan and jon fortt at post 9 of the new york stock exchange obviously a sell-off resuming today. the dow extending losses from a thousand-point drop on monday when stocks had their worst day in more than two years big tech lost more than $200 billion in market value yesterday thanks to the sell-off microsoft, apple, amazon all down more than 4%. dan niles from alpha one capital joins us on the phone. we've been through some challenging times together, you and this network, as we try to address global issues. this is one there's not an easy edge what does the playbook look like from your standpoint right now >> i think the way i look at

this is simple what's your risk/reward at any point in time. there are certain things we know for certain. one, we know for certain the markets are at record value. my favorite measure is i take the valuation of the entire stock market and i divide it by gdp. if you look at that, you're about 1.5 times, exactly where the market was in the late 90s when you had the tech bubble the second thing you know is etf is coming down and global growth is slowing put those things together and for me, that's why we tweeted out on monday, february 10th, that we were starting to short apple and their suppliers and on february 17th we put out that we had those shorts at 50% of our o'al assets. with regard valuations and earnings coming down, there's no -- that's very unbalanced at those levels and it still is we're all sitting here talking about the markets but don't forget, the nasdaq is still up

year to date that makes absolutely no sense and the s&p is barely downless than a percent year to date. that makes no sense either, especially looking at oil and copper and gold and other atsz et classes that are really worried about growth >> be more specific. are you selling anything is there no secular story you would think you'd want to own for ten years that might be at a discount today >> yeah. no, i mean there are a couple stories that benefit from the current environment. off lot of people in china locked down, now people in italy locked down. you don't have very much you can do other than watch tv or play games or entertain yourselves. for us we like a couple of names in china, ten cent, we own companies that allow gaming and, you know, ten cent had their servers go down several times because there are so many people trying to get online and play

video games. we also bought recently, you know, after the quarters were reported, we bought activision and take two, on sort of the same theme there are certain spots we say this is obviously horrible, but, you know, what things can you put in on the long side that you think might actually do pretty well so those are areas that we're look at and some of the streaming stuff too is kind of interesting as well. but you have some challenges around the advertising from our perspective, our funds are in over 10% cash, and, you know, it will probably be even bigger at some point and the market, until it gets to be a point we see like people are truly appreciating the risk, we have no desire to step in nothing was oversold yesterday i mean, everybody's talking about how much the market was down but nothing was oversold. >> dan, to your point about year to date performance for averages

like the nasdaq and the s&p right now, a number of people on our air said given what we're seeing in the treasury market, the 10-year at an all-time yield and all-time low, that that makes equities much more attractive you don't agree? >> absolutely not. the markets are -- the equity market -- okay, there's two different ways you can think abt. you can say, that makes equities more attractive because bond yields are really low. but bond yields are low for a reason.worried about growth ultimately, at the end of the day, whenever that is, stocks trade off of earnings. so if you think earnings are going to go a lot lower from where they are today, you should not be sitting there saying at record high valuations i think stocks make a lot of sense >> dan, what do you think is most at risk in the coming

rationalization that you're expecting? what type of stock >> well, i think, jon, that's a really good question for me what concerns me about today is looking at mastercard, right, because for right now everybody is saying oh, we have problems with manufacturing in china and et cetera. i look at what mastercard had to say, which is they said, look, our cross border growth is slowing down this is not necessarily related to china this is more of a broader view of what's going on with the environment. and that could really worry people because going into, you know, these problems with the virus, global gdp growth was not that great it was 2.9%. you know, the s&p earnings growth last year in 2019 was 1%. and so all the stock names are driven by multiple expenditure china's gdp in the fourth quarter before the virus hit was the lowest in 29 years so to your question, you know,

the cross quarter trade, global trade, global gdp growth, that's the kind of stuff that i'm watching most closely because, you know, stocks are -- you know, could go down 20% to get back to fair value, and that's the stuff that concerns me right now. investors have developed some really bad habits of thinking every dip is a buying opportunity because the central banks keep stimulating and the multiples keep going higher offsetting the fact that earnings are not there >> dan, just a little further, one of the things i track closely is freight data. january numbers for air freight this morning, the coronavirus, for the asia-pacific numbers, already dragging negative economic consequences more dire than sars, could produce short-term economic calamity traveling the 2008-2009 great recession, then goes on over 19 pages to back up that claim with shanghai values down almost 12%,

a chart showing the correlation between the apack air fright volumes and semiconductor billings as well how much worse could this get, especially given the fact that we are talking about supply-chain constraints and in some cases shutdowns all together >> yeah. you know, carl had started this off by saying we've lived through some challenging times together, right? and, you know, you go all the way back to the '90s, you had a ten-year economic expansion from 1990 to 2000 and people were like, oh, this will continue on forever. then you went through a 2 1/2-year punishing drop in the market and that's really the problem. after you've gone up for so long for so much, when things start to unravel it can take a long time to weather out tork out ths i watch the freight data very closely because that gives you the best indicator, much like

watching mastercard, same thing, how much is cross border trading, what's going on there those are things you have to keep an eye on, so in terms of how much worse can it get, we lived through the early 2000s and what happened after you had a global debt crisis it can get pretty bad. i don't see it that way this time because you don't have the same kind of excesses in the housing market the housing market looks really good, for example, but you have corporations that have taken on way too much debt because interest rates are so low. so, you know, that spurs some other taking that isn't so good. so for me, it's, you know, back to risk/reward, try to find the names you think earnings are okay and then for stocks that you think are incredibly overvalued where investors are just buying them because they've been going up, stay short and use that to offset the long positions that you like. don't get me wrong, if the market goes down another 20% or

so to get to fair value, and we'll see what happens, it's never a straight line, everything's going to go down, but the key is, you know, you know, trying to take stock and not just hit the market, which is what most people are doing. >> finally, dan, i'd love your reaction to this one bit of research on apple, out of need ham. they're assuming normal supply by june 1 and they argue anything after that is a greater threat to their september launches including 5g, which is a third of revenue does june 1 feel like a decent maginot line >> not for me. quite honestly, i'm not worried about supply supply can sort itself out i think it will. what worries me is demand. if people do not feel as rich in china or they're worried about things like their health or if they're not feeling good in italy or the other, you know, 25

countries that now have the coronavirus in it, what i'm worried about is the demand side of the equation. so, you know, yes i think by midyear you need to start the production of these phones, et cetera, but, you know, i'm not worried about the production of the phone i'm worried about the demand for these phones, which is a totally separate issue these phones are not cheap this is not like you're buying phones out of china where you can buy a 5g phone for around $300 the multiple is too low. the s&p at 19 times and apple's average is 14 times. apple is incredibly overvalued even warren buffett is selling the stock. he sold it >> a nice gain, too, though. >> that's history. what's he doing the today?

he's the best value investor of all times. he shorts on the stock that tells you how overvalued some of these are. >> dan, thanks for kicking off the hour for us. very helpful as always >> my pleasure, carl >> see you seen. and the ceos of intuit and credit karma are next on that $7.1 billion deal. ♪ ♪

which of your devices are protected by daily security updates? daily security updates...

daily? i don't know. the only thing... i'm struggling with this. some providers you have to manually download updates to each device. comcast business securityedge updates every 10 minutes to help keep your connected devices protected against new ransomware, malware and phishing threats. every 10 minutes feels pretty good. get secure, reliable internet and voice for an amazing price. call today. comcast business. beyond fast.

welcome back all the major indices near session lows, the dow down nearly 300 points. all of the indices off about 1%. this coming a day after big losses on concerns about the spread of the coronavirus. elsewhere in the markets, shares of intuit holding on to gains after earnings posting a big beat on the top and bottom lines, announcing plans to acquire credit karma for $7.1 billion, by far the largest acquisition that company has ever made. joining us exclusively intuit ceo sasan goodarzi along with credit karma founder and ceo ken lin. good morning >> good morning. >> good morning. >> sasan, i want to talk a lot about this acquisition, but first given what's been happening in the markets, got to ask you about that intuit has really unprecedented insight into small and medium business activity.

i'm wondering at this point, given what we saw at the phase one trade deal with china over the past several weeks, given what we're seeing with coronavirus, have you seen notable changes in business activity because of that >> you know, we continue to see strength there's a few things we look at. it's our charge volume, whether or not consumers are spending with small businesses, payroll data, and then the lending that we do. across the board, we're continuing to see strength and no changes >> okay. to talk about this deal now, by my count, by far the biggest ever demand force was less than half a billion dollars this is 14, 15 times bigger, nearly 10% of your market cap, and yet the stock is still up. did you go to large investors before hand and explain this to them because i know your earnings were good and all, but this is a big purchase for investors to be backing you this morning >> yeah, i tell you, we could not be more excited about the

partnership with credit karma. we did not go to investors ahead of time. i think everyone sees that this is an opportunity to grow our tam. it's a strategic fit we're acquiring a company that's accretive to the company's growth and there are things we'll be able to do together for consumers that will be remarkable and power the economy. i think that's the excitement showing up in the stock. >> correct me if i get any of this wrong, but credit karma had nearly a billion dollars in revenue last year, growing 20%, which is about twice as fast as intuit's existing consumer group. you're paying a little more than seven times revenue, and you say this is going to be nongap accretive to earnings in the first full fiscal year of closing. that suggests to me that credit karma was your number one challenger in the consumer space. given what's happening right now with lawmakers and regulators concerned that innovation is being stifled by big companies buying smaller ones, why is this

not that >> you know, we set a goal for the company about a year ago to double household savings for anyone that's on our platform. and the united states today, that's 7%. we set a bold goal by 2025 we want to take that to 14% what this combination does is allows us to create a financial assistant in the pocket of consumers. it puts the power of their data in their hands and creates much more choice and actually much more competition what that means is now that they have their spending data, their income data, their credit history, and their life situations in their hands, now they can get preapproved for car loans, home loans, personal loans, and then going beyond that and getting the best credit card rates, savings accounts, getting early access to their paycheck money this is really about creating choice for consumers and helping them save money. that's nothing but upside for

consumers and ultimately it could continue to power the economy. >> let me come at that another way. you mentioned data intuit has a ton of it what is your promise about with this combination especially how that data will be used, how it will be shared between existing intuit and credit karma in case anybody's got concerns about that sort of thing >> long before we started talking about data and privacy, ten-plus years ago we set in place data principles and the principles are it's the customer's data, not ours. we do not sell their data. we only use their data for their benefit with their consent that is evermore so important today, and one of the many things we love about credit karma is they take customer's data and privacy very seriously. the combination of is why we have such incredibly trusted

brands in the p marketplace and we continue to focus on doubling down on that as we look ahead. >> speaking of credit karma, let's bring in ken lin ken, good to see you you started credit karma in 2007, a year after mint started. intuit bought that in 2009 you're getting 41 times what mint got i don't know if you want to talk patience, adaptability what's the lesson for entrepreneurs here >> well, i think it's certainly around doing something that's important. for us it's about mission and going after that mission and doing the right thing. i think it's important and, you know, build a company that has a goal for us it was never about an ipo, never about getting sold but doing something and fulfilling a consumer promise. that's the success you have a north star orienting to something that's meaningful, good things happen. >> you said the goal wasn't an ipo. you're getting $7.1 billion,

half cash, half stock. i'm sitting on the floor of the new york stock exchange where a lot of people will see this as one that got away. bill.com got away here a at half the valuation. why not go public? >> again, for us, as a company that's focused on a mission, we always said the ipo was a tool in terms of helping consumers benefit. and, you know, we didn't need the capital. at the end of the day, the partnership with intuit, our ability to help consumers and the data that create, that was the most meaningful thing and that's what gets us excited. >> speaking of the future, talk about artificial intelligence. we've talked about it across the whole consumer mission on how that will benefit consumers, pull things forward. what conversations have you guys had about a.i. and how that will grow in this combined effort to benefit your users >> yeah. if you take a look at how banks

are using artificial intelligence modeling, really consumers are at a disadvantage. there are so many variables that go into the determination of what products people qualify for. it's very hard for consumers to understand what is best for them i think between the combination of intuit and credit karma, we'll be able to provide consumers with real certainty on which product theys qualify. we'll be able to simplify the application process and remove the friction that keeps people from doing the right thing for their clients. that's the opportunity here. >> huge day for fintech guys tax season right around the corner sasan, ken, thanks for being with us. >> thank you, jon. >> thank you >> with stocks at session lows, let's get a check on the nasdaq. bertha coombs has that >> started off positive but look at apple over two days, off more than 5% as those coronavirus

fears and volatility continue to weigh on the tech sector, particularly chip sector that is one of the areas that is likely to be along with apple, disrupted by the slowdown and the shutdown of production and china even as some factories do get back under way the semiconductor index is off about 6% in the next few days. take a look at tesla, falling over two days about 12%, now down 18% from its high hit recently so the momentum stocks are the ones that are seeing the big moves to the downside. the travel stocks also experiencing tremendous pressure as well. american airlines among the worst performers in the nasdaq 100 today. and trip.com, which is the chinese travel group, has seen tremendous pressure and

continues to bleed red on the joup side are some of the biotech firms that are involved in trying to find a cure and at least a treatment or a vaccine for the coronavirus. mow d moderna getting a big boost there, saying its drug appears to be potentially something that could work well. back to you guys >> all right bertha coombs, thank you guys, we've been talking about the market action, major indices continuing to find new lows this morning. we're down about 366 points on the dow. that's 1.3%. similar levels on the s&p. nasdaq faring worst of all, down 1.4% bertha was just talking about some of the names there that are suffering the most a few things higher but not much >> the vix almost to 27.

got to go back to 2018 to see a number like that we mentioned the 10-year yield, all-time low the health and health and human services secretary is front of senate appropriations this morning and says there will be more cases of the coronavirus in the u.s. the u.s. has a stockpile of ventilators and masks but not enough for a coronavirus outbreak and you're looking at essentially the worst four-day decline for the dow since 2018 roger mcnamee is here at post 9 this morning i assume was going to talk about something else you know how to trade. >> yeah. >> how do you trade this >> the smart thing is the market in percentage terms hasn't moved that far if you look what's going on in iran or look at what's going on in south korea, in china investors are going, look, i don't know what this is going to do, but it's different

and you have to factor it into your thinking. whether you weight it heavily or lightly is a matter of personal preference, but to me, to ignore it is insane the thing that scares me the most is that we have dismantled the national infrastructure for dealing with public health crises of this kind. we used to have a group inside the national security council. we used to have a group inside, you know, each major agency that touches this stuff and two years ago they got rid of all that stuff. it's like we're blind. now we're going to have to rebuild it, and the money that president trump's putting back into it is a small fraction of what he's already taken away and so i don't think we should in any way feel super confident. there was of a great story, i don't know if you saw it, that someone from north carolina in "the atlantic" said surveillance in china has played a big role in their blindness because, two

things, it made the people at the top too confident that they were v they knew what was going on and the people down below had no incentive to pass bad news up so they waited and waited and waited until it was inescapable and that is essentially what we have in the u.s. we're blind internally and that makes me nervous but not scared because inevitably i think you won't see this till the fall, right? >> your point, i imagine you would argue, agencies, when they want to be, can handle stuff like this. >> absolutely. >> you're not worried about that >> no. what i'm worried about is that we had a whole infrastructure for exactly this kind of stuff, which we have dismantled and defunded we'll haveto build it back up. at the moment, you don't see the kind of signals that say, hey, that's really important. what you see instead is really important people at the top of the stack saying it's you -- >> so you're nervous about fear and consumption taking a hit

>> i'm worried about the psupply chains we look at tech on this show and what is it, three-quarters of the fortune 1000 has tier two suppliers in china everybody in tech has tier one suppliers in china this is a really big deal in china. it doesn't just affect the supply, it affects the demand. the people who work in those companies are also buyers of technology i think you have to factor in without any clue of whether it's actually a big deal or a little deal >> not just china either now everything playing out in south korea as well talking about supply chains. the trump administration has asked for, what, $2.5 billion to counter the outbreak we know we're getting in the next cup ul minutes an update from the cdc as well, so we'll be keeping an eye on that. one of the other things, at least from markets' perspective, in terms of movers today, the moves in the treasury market,

1.323% for the 10-year all-time low. the 30-year -- what do you make of that? >> it's people saying i don't know what's going on and i'm going to move to the sidelines until i have a way better picture of what's going on face it, demand was really good going into this. one would presume it would be good coming out of it if it doesn't last too long. why not spend time on the sideline we'll had a 12-year bull market. >> are you spending time on the sidelines right now? >> i had been for a while because my own risk/reward at this point in my life is different from the market as a whole. jon and i have been debating this for a year. so far the market has proven jon correct, but my point is my risk spectrum is what it is and i lay it out there so people understand how i look at the problem just in case people have the same kind of risk and reward incentives that i have

>> absolutely. interesting now, the nasdaq's three-day loss is the biggest since august of 2015 with that, let's get a news update from sue herera at headquarters here's what's happening that the hour the generic drugmaker reaching a deal to settle lawsuits over its role in the opioid crisis. they will also file for bankruptcy violent confrontations continuing in new delhi over a new citizen law, this a day after seven people were killed and more than 100 others injured in fights between supporters and opponents of that law which will fast track citizenship for some religious minorities but not for muslims. president trump declined to comment. one of california's largest reservoirs will be drained due to earthquake risk the anderson reservoir in santa clara has been limited to about

44% capacity since 2009 after officials learned that dam could fail in a 7.2 magnitude quake. ford is recalling pickups to fix a problem with the daytime running lights that recall covers certain f-150 trucks with l.e.d. headlights. ford does not know of any crashes related to that incident you are up to date that's the news update this hour back to you, carl. i'm going to take it, sue. thank you. sue herera back at hq. bringing in a managing director who released a note lowering eps for apple. laura, thanks for joining us want to get your thoughts on the cuts that you have put in place, especially given the fact it looks like you're maintain agbai on the stock >> yeah. i wanted to add a couple insights to roger's prior

comments one is i think the market is not looking through covid anymore. we lowered estimates but left the september quarter and december quarter intact, but we made the point that if covid goes much past june 1st, the supply chain won't be able to start building new products for the annual apple product release and could disrupt christmas selling season, which would be in the next fiscal year for apple, fiscal-21 so i think some of what's happening with apple is we need to start looking at time frames as this goes longer and figure out at what point christmas gets disrupted and, you know, assign some probability for that. that's the first thing i'd add as an insight to what roger was saying about apple specifically. >> all right roger, your thoughts on this too. when you look at apple, is it a canary in the coal line in terms of supply chain and also demand? >> to me the important thing to

look at is, is this in fact a new flu strain they're talking about the possibility becauseit's architected similarly to the flu, it could come back every single year. it disappears when the weather warms up and comes back in the fall every year. at this point it appears to be more contagious and obviously a lot more dangerous than the flu. so if it comes back in the fall, laura could be in effect getting away with june because it may be that it goes away seasonally but comes back in the fall, and if it does, that's the thing to watch out for because then the spread of it would begin a whole new cycle. and it's going to be super hard if things calm down in the summer to stop all air travel at labor day and, you know, without actual evidence that there's a problem. >> laura, you mentioned june 1st. i'm also thinking about how much domestic travel and gatherings in particular are being disrupted. at what point do we get concerned about wwdc, about

google developer events, and kind of the marketing impactbuie platforms that are so important to these companies granted, they haven't said anything about delaying or changing practices around those gatherings but you have to imagine they have to put out some message about that in the next few weeks >> i think under abundance of caution all those people are online people. if those developers -- it's possible even if facebook or apple held a developer's conference, no one would come and they're all online guys. so they have to stay home a year in order to keep their health and safety, that's a better idea anyway it's more like stuff that requires physical space to sell christmas products the other point i wanted to make is half of our lowering of estimates in march was china demand china is a massive consumer market and those people are

largely staying home right now so we can't underestimate the consumer demand impact on worldwide gdp for lots of consumer products in addition to apple products, in addition to the supply conversation we're having now >> just to dig into that a little more, how much of that could be recouped? i ask because dan niles earlier made the point that if folks maybe in china, for example, are not feeling as rich, what that's going to mean for consumption. we're talking about a higher priced iphone. does all of a sudden the discussion maybe in households start to be do we do something more affordable right now given the dent that pocketbooks have taken from people not being able to go to work, for example >> i think this notion that consumers are digging into savings while they're not going out or earninging as much money could have a longer term negative consumer effect the question is, is there pent-up demand or does demand

not show up ever, and then do you swap out of the apple ecosystem. in the first world, my guess is you probably just push off when you buy the next phone by the way, one of the things at risk here is apple is supposed to introduce a lower-priced se-2 phone in the current quarter and i think people are sure that's not happening. exactly trying to fight what you're saying, which is get a lower priced iphone out there for some of these markets isn't going to happen as quickly, so you end up with higher priced iphones and higher asps at apple than they wanted >> the inflationary dynamic of this supply chain interruption is what we're hearing about. cars, drugs, paper, clothes, phones, construction equipment >> we're in the 12th year of a bull market. and supply chains are global

they're brittle. breaking them is something we have to pay attention to you've described a dozen different areas this is going on it would be naive to say there won't be a profound impact on somebody apple is catching flak but this will be felt much more broadly if somebody said to me trade shows could be entirely online, that would be a huge win >> not going to barcelona. >> how are we going to dothe olympics that way is the question >> the thick thng that strikes roger, we're in this rather of realtime data. this has been going on for weeks now. we have so little good data that's telling us predictably about where it heads next. we talked with sasan goodarzi at intuit, got great data on small

and medium business, not seeing any impact from covid-19, which i find kind of hard to believe that no impact will show up given that so many u.s. small and medium sized businesses are sourcing out of china. china has all this surveillance. we were talking about how that might have inhibited their ability to respond we shouldn't think that artificial intelligence is always smart >> in this particular case, the ironive in of a country with a country with massive surveillance not being able to see something that turned out to be as big a deal as this in their country -- here it's a small deal, there it's jai tgigc they have the whole country on lockdown the surveillance thing may be blinding us in other ways also we need to think carefully about what are the potential blind spots that it creates. >> all right thank you both for this conversation we do see the dow down 278 points right now

laura martin and roger mcnamee >> pleasure. >> i think we're going to check in with seema mody right now >> with this intraday reversal, we're watching the sector make the biggest moves, energy materials, the second worst performing sector from a technical propeck perspective, broke below its 200-day moving average. dupont, mosaic mosaic a couple days ago referenced the supply chain disruptions and said an extended production down-time in china due to the coronavirus, that stock among others like dupont, freeport mcmaran and others down 2% to 3% now it's time to get to the cme. rick santelli has "the santelli exchange." hey, rick. >> good morning, jon before i start, i want to make sure, okay, 1.33 in 10s. we were close to 1.30 at point this is a 50-year chart going

back to 1970 on 10-year note interest rates you can see it's a very unusual chart. i did that for a reason. we had a lot of volatility prior to the crash in '87, and we made a high right around 16%. we came back and made another high around 14%. basically after the crash, the reason i drew it like this, we basically went down a nice angle, consistently, until we came to july of 2012 and july of 2016 okay now we were talking a lot about this one because this was right around 1.35 plus arguably it's a double bottom. this was higher at 1.38. for double bottoms or tops, as long as they're close. i drew this because we may indeed extend a little more, but the way this has gone through now as we trade close to 1.30, it's all about the close if we avoid closing below this double bottom, although i think the chances are slim to none, basically just look for a continuation of this market to keep going down roughly that

same angle i am not confident that rates are going to grab here i'll tell you why. it isn't only because of the coronavirus. i've heard so many people on our channel say yields are low for a reason i've added the "but. this is a huge "but. but there are an awful lot of distortions. let's go through some of these distortions. one, there's basically a detour and the detour is out of stocks into treasuries. how many times have we seen it just like today. we're down 50 or 60 or up 50 or 60 and we've take an reversal or we go down a couple hundred points, what happens to interest rates? it's like a knock-on, knee-jerk reacti reaction they go down because of buying of course there's detours. there's also prior purchases by central banks. they have inventories. why? it's a big "but. the you take some of what everybody's buying and the

supply goes down, the additional effect is i'm pushing rates down it's also ongoing purchases that keep on delivering more size and distorting more. finally, here's something. wow, it's not my favorite number, minus 13 what is that minus 13 trillion of securities. there's $13 trillion of negative securities, ebbs and flows another big reason if you're anywhere near those rates, where are you coming? to places they're higher like the 1.33 10-year note yield. think about postcrisis postcrisis, what happened postcrisis what we saw was that pretty much treasury yields in all the rules on collateral margin changed, incentivizing more storage finally, let's look at the animal itself, stocks. it's all about supply and demand

we know there's been much less supply, and think about demographics for demand. there are a lot of "buts" here to have the one monolithic version that interest rates are going down because growth stinks may be something temporary associated with coronavirus. but the stock market may live to fight another day and that will not only change that first chart we saw but it will be a much more digital reversal when corona is under control and some of the "buts" disappear. carl, back to you. >> okay, rick. thank you, rick santelli here's where we are midmorning the vix is off the highs of the session. the dow is down 327. we're monitoring ongoing headlines from hhs secretary azar around the cdc is having a telebriefing as we speak saying americans should prepare for a possible community spread of the coronavirus. back after a short break

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. another challenging day for the bulls as the s&p is back below 3,190. bob pisani joins us. the action in junk bonds people say has been subdued relative to others >> a tremendous amount of interest in junk bonds and the at today has been these are plays on credit, not a play necessarily on interest rates. you still believe the u.s. is not going to be in a recession, you'll be fichb ne in junk bond but if you don't orb there's a

problem, whatever. the s&p declined 50 in the great depression there's a pretty good correlation. other than that, i would say there's an old saying on wall street, when you don't know what the fundamentals are, trade on the technicals that's what happened today midmorning drifted a little lower and suddenly we dropped below the lows of yesterday, like 1,314 on the s&p, and woosh, you saw in the big effort efl -- etfs and moved to the lows of the day >> the game always becomes kind of, okay, how extreme are the extremes have we seen enough one-sided action for a couple days or not? i think yesterday, you know, it was a pretty big bite to the downside, more than 90% of volume in declining stocks that's a pretty good start but those things happen in clusters typically if you look back to early august, this is going to be a typical 5% to 10% shakeout like we saw then, that first august 5th decline, it was very steep

and the vix went up to 25 like yesterday, that wasn't the end of it. you chopped around, tested it, threatened to go below it for a month. i do think right now we're watching a few things. one, you're not really going to get a headline that says phase one deal reached against coronavirus. right? you don't have this sense out there that there's going to be a news-driven reversal to the upside but what you might get is that bond rally exhausts itself, we might price in a pretty dire scenario with stocks in terms of growth, and then that just in itself becomes too overdone. >> funnive in because the other saying going around today is the fed can't print vaccines, right? >> there you go. >> who knows what the psychological reaction would be if the fed all of a sudden started to kind of jawbone an easing move? but i don't think really that would be that welcome. >> we'll get clarity at 3:15 today. >> it seems a little seen for them to have the ingredients to start talking about it >> i'd be surprised if they said

anything so far, this is a garden-variety modest correction. the s&p is only 6% off historic highs. european union is only 5% or 6%. hong kong is down about 11% from its 52-week hikes. but everybody needs to keep a perspective on this. yesterday was a little traumatic but we're still well within normal trading ranges for a year right now. >> one of the key things in all of this is the fact even though in the u.s. so far the economic data has been pretty solid, when you start to dig through some of the global economic data, throwing this one out there again today, given the fact that the dow transportation average is down 2% right now, is some of that freight data, that air freight data when it's coming out of places like asia-pacific, like europe right now. the numbers are really ugly and they're ugly on top of an ugly 2019, going back to your point about phase one trade deal and how depressed those volumes were given the fact we had that trade war under way.

>> it's difficult to know what levels the markets have come to terms with you could have a half of year at a standstill, in terms of that type of trade activity that's why i think it's about -- we had an overshoot to the upside in january, especially in the big growth january, special in the big growth stocks. do you have to have a mirror image undershoot on this swing swing say fine we have purged enough optimism right now and even bad news won't be taken that badly. >> the thing that doesn't seem pessimistic, it is just one thing, intuit just did its biggest acquisition ever, $.1 billion, 10% of its market cap, earnings were nice but it is up still 1% today if everything were bad, right, a stock like that in that kind of situation, it would be down. >> what's happened here is intuit still see as lot of growth prospects out there, it has been growing for a while

it doesn't believe long term this is going to be a major interruption if history shows correctly they are correct. we know the various outbreaks haven't had lasting impacts. maybe this is the black swan that has an lasting effect i can't arm chair. they have been successful expand asking acquiring new companies the markets were stupidly overpriced we were hitting historic highs 19 times fooshd earnings prices were coming up and earning system were coming down for week people were on the show saying this is crazy. now we had a multiple takedown yesterday. now worry trading at 18 times forward. a little more sensible numbers here, but it was about time. >> right. >> how do you keep going prices new highs, earnings going down >> speaking of earnings, bob, i know you pay attention to the ipo market

virgin galactic after the bell, that stock is up another 3% today. smile direct club, reel reel, those two names are lower right now in the session but given that we are seeing in terms of all the tumult in the market and the names and the performances since they went public last year, what does that do to the pipeline space is the new pot we see these moments where you get interests in particular -- we call it fanatic investing, no matter what it is, whether it is disruptive technologies like robotics or jen of theics or artificial intelligence or space or pot you go through certain -- mania might be hard but all of a sudden you get intense retail interest in something. space is going through that moment we have been pointing out for weeks on the etf shows that communication satellite companies have been big outperformers this year. >> yeah. >> via sat is up today.

>> if you control the peeps -- they are like the cable companies, the communication satellite companies, if you control the pipes that controls data you control the global flow of information, those have been doing well its not just the fact that you have got virgin galactic there is a lack of investable products the same problem that happened with bitcoin, the same problem that happened with pot now this super in space. i think it is wonderful there is interest in space. we will see if more companies go public spacex may spin off the a part of it. >> if you want to see people to continue to be right gunning the idiosyncratic speculative names. you don't want people feeling like their lottery tickets are worth more today this is a company that sir richard branson sold half of seven months ago and it is

pushing $7 million right now that where you are buying it today. >> what is more likely a resumption of chinese production, inventory flow out of china or protecting consumption domestically if we get more cases >> i think it has to be the curve that you see in china, a deceleration of new cases and a return to some kind of business normalcy has to be repeated elsewhere. what is making the rounds is the rest of the world is behind china, we don't know how far behind. >> the broad china etf is up today. that's because the chinese authorities are pushing we are going back to work, and that's the story. that would be very good news the other part is as mike said, we have no idea. they closed down carnival in venice good heavens imagine if they closed down mardi gras. >> mission impossible had to stop shooting. >> that's serious. >> we will have to make due with

only six of those movies >> that's a worrisome indication anyone would say oh, right there. we don't have the fundamentals you don't trade when you don't have them. >> more on today's extended selloff is going to be next. stay with us hello, i saw you move in, and i wanted to welcome you to the neighborhood with some homemade biscuits! >>oh, that's so nice! and a little tip, geico could help you save on homeowners insurance. >>hmm! >>cookies! uhh, biscuits. >>mmmm, is there a little nutmeg in there? oh it's my mum's secret recipe. >>you can tell me. it's a secret. >>is it cinnamon? it's my mum's secret recipe. call geico and see how easy saving on homeowners and condo insurance can be. i'll come back for the plate.

good time too get a check on the mornings biggest movers. seema mody has that at headquarters. >> a number of names exposed to china trading lower, including industrials. eight consecutive days of loss force the sector it is worth noting deer erasing the gapes from last friday when it reported better than expected earnings and referenced confidence among farmers the stock hit a record high. the stock pulling back, down nearly 3%. other pig movers, caterpillar, fastenal, and 3m. >> morgan mentioned some of the rings we are going to get after the bell sales force will be the star coming on the heels of palo alto, john, morgan, i hope there is not too much of an echo koich's take on pallo was brutal arguing it was not about sales and symptoms but a hard rollover

in hardware? we will see. the palo alto saw the hardware troubles coming. they have been trying to pivot their message toward software. but of course message and product are two different things also, the security business itself can be kind of choppy interesting, we talked about how intuit has not been down this morning, which we would take to be a bit of a surprise given a big acquisition. also not down, facebook, microsoft, twitter so i mean the nasdaq isn't fairing well overall but there are a few notable stocks eve of some size that are doing okay. >> definitely also keep an eye on the smh and what we have seen happening with the semiconductor index. matt miller highlights to me that you are now testing the closing lows from january 31st this idea of you could see a lower low, the lowest since december 2018. i will be keeping an eye on virginiain galactic given the

massive gapes we have seen in that stock in recent months? azar on the tape talking to senate appropriations saying the u.s. has a stockpile of about 30 million masks and experts have suggested we need 300 million masks for health care workers. it is a factor of ten. scary when you think about it. >> let's get to the judge. carl, thank so much. i'm scott wapner we will get right to the selloff. picking up steam within the last hour that following monday's trillion dollar wipeout welcome. our investment committee is here josh brown, stephanie link, pete najarian, brent talking bryn talkington the selloff is the bhig story. yields dropping like a stone the ten year hitting 1 2 the 30 year extending its all-time low of 179. >> last week we talked about how