1.32%, a record low. you have a 30 year and a record low, so you have got that whole cocktail to make investors nervous and drop down the averages can you give me a name for the final. >> williams. >> ibe. >> chewy. >> thanks for watching "the exchange" begins now. thank you, scott and welcome to "the exchange" everyone i'mevans call it an early morning head fake, but stocks are erasing all of the gains we saw premarket today. forget about the rebound now we're down 500 points again. now, coronavirus fears are intensifying the big headlines come from the cdc saying it is rapidly evolves and expanding and americans should prepare for it. let's get to bob before we dig into it.

he's got the numbers for us at the new york stock exchange. >> s&p, nasdaq, dow industrials, transports all of them sitting essentially at the lowest. i want to show you a two-day chart at the s&p when you don't know what the fundamentals are, trade on the technicals as soon as we pass the lows of yesterday, a little after 10:00 eastern time, market drew, volume picked up those are people not sure where the market is going. you can trade on technicals, very established patterns. mastercard one of the latest companies to warn on sales and profit forecast down visa down. american express, dow components all down industrials and energy stocks, those are again on the most exposed to the global economy, so you see exxon and 3m to the downside four year lows on yields on the tenure, and a lot of those big banks you are looking at are now

in correction territory, down 10% or more from their high. thank you. >> thanks very much, bob we now have the dow jones industrial average down about 523 points at session lows let's industrial down more on this sudden sell-off our chief investment strategist. jason brady, and michael schumaker. what would you even draw attention to, the stock market today? the bond market? what's the big headline for you? >> well, both. look, what has happened over the last few days has been a pretty rapid spread of the coronavirus outside of china 2,900 cases is pretty much where china was at the end of january. in italy going from 3 to something like 300 over the course of a few days really does suggest that what was likely to be a regional shock could be one that's more global. >> but here is what i don't

understand we knew this was a risk. did anybody think this was not going to escape china? >> it absolutely was a risk. it was not priced as something that was going to involve a global shock let's be clear here that all of the things we do is precautions to keep people safe. that is actually what is holding things back. >> economic activity back, absolutely. >> it will have a very big effect we will not have the economy that we thought at the start of the year we were rebounding from a trade shock, but travel, tourism, supply chains, getting products from factories to consumers, these sorts of things will be interrupted, particularly if we see this move across multiple regions, and that was not what was priced in the market. >> and jason brady, you now have the cdc basically saying to americans work from home plans, check with schools and day cares, check with tele

how much more of a hit are we talking to gdp are you supposed to just ride it out in the stock market or what should investors do? >> look, the challenge with markets today is that evaluations are not particularly supportive and high value cases don't mean we will have any kind of crash it just means that markets are vulnerable what you are seeing is an increase in risks. certainly the coronavirus is a big increase in risks potentially as it comes to the united states and we see some hot spots here but i also point out that the results from the democratic primary race is another risk. >> sure. look at the market, jason, yesterday. the worst performer in the dow was united health care when the major health insurer in the country loses 8% of its market value should people differentiate between stocks that have a longer political exposure and ones that might recover more quickly if they're coronavirus. >> look, we're looking at long-term. what i tell you is that cash

flow generative companies, those are interesting. some of the things that folks believe will be cyclical may be less cyclical. jp morgan, which is coming out with a forecast for 2020 being more challenging, that's been a tough place to be lately but banks will be less cyclical than they were in 2008 i would say at the market level valuations are not particularly supportive. >> right that's the way of saying the market is expensive and pricey with all the risks out there, why mess around? michael, let me bring you in to talk about what's happening in bond markets because it looks like the ten year yield could be going below 1.3% that's never happened before so does that meangoing below 1 is next? >> hard to put a finger on it right now, kelly you think about the progression of the virus i don't think anyone can really handicap it. we're all market people. we don't really know and yet people are saying, gee, i've got this risk from a business perspective if yields go lower, it's a real

problem. it is almost as if people are indifferent at this point. but i want to get back to something steve commented on a minute go. the bond market was pricing a fairly grim scenario a year ago. a week ago the tenure would be 150ish and people would have said it's really low yet, equities were up. we think bonds maybe were a little ahead maybe because we in the bond market are dour. >> but from where you sit, and this is, again, inherent to how things work. you think the stock market is catching up and the bond market we have proven right here. i say to you the bond market keeps moving its goal post a couple weeks ago, we were looking at 1.5, 1.6% what does 1.3% tell you? >> again, no one can really tell you exactly where it's going you think about people, the various central banks, is it a monetary policy?

probably not does that mean the fed comes in? who knows. maybe. it is difficult to think about policy response in addition to the rapidly shifting illness or virus. >> i will ask steve about the fed in one second. but we have a news alert rick, how did that auction go? >> really lousy. you know, but lousy doesn't necessarily mean that there is this tainted view of u.s. treasury supply. it means on a day like today, really, no common sense investor really needs to jump out into an auction when he can go into the secondary market at a time when rates seem really spongy details, $40 billion, the first auction which will end up at $13 million notes. the dutch auction yielded 1.88%, far from the lowest auction. we've had much lower yields at a

two-year note auction. but this is the lowest yield since november of 2016 bid the cover, 2.45%, well below the ten auction average. 2.45 bid the cover and 9.3 on direct, both lousy, were both the lowest since december of '18. the only bright spot, it still was below average was 46.2 on indirects. 29 is auction average. weakest since july so you can see, we priced poorly as well. i was in a generous mood tomorrow it will be 5. followed by 7s but ultimately auctions will get better it is just the nervousness in the market affecting today's kelly, back to you. >> thank you as i said, we started with you let's close this discussion out with you and bring it back to what you think the policy response is here, mike. >> okay. look, the fed is not going to cure this, right but if markets see impact in the

united states, they probably would pull forward that easing into the near term the fed probably wouldn't fight that and say, no, we can't address this right? we need to have financial conditions tightened ultimately, it is disaster response that, like other natural disasters that you have something done, this is going to be done in china to help companies that are affected, that are offline, that have lost sales and have weak balance sheets get them through this it is a fiscal response and it could come to the united states, too. >> yeah. so the markets will push them to respond the fed, you think gentlemen, thank you call. we'll leave it there today thank you so much. coming up, we will hear from larry who will join us with his take on the market volatility. we'll talk about these falling rates and how the coronavirus could impact our economy what the administration is preparing for any business disruptions. as rates continue to plunge,

refi applications have more than doub doubled. as you can see on your screen there, the pain continues in the energy market today. exxon trading at its lowest level since 2005 devon and marathon at lows big, big declines for one of the hardest hit sectors lately we'll be right back. this is "the exchange" on cnbc walkabout wednesdays are back! get a sirloin or chicken on the barbie, fries, and a draft beer or coca-cola - all for just $10.99. hurry in! wednesdays are for outback. outback steakhouse. aussie rules.

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welcome back to "the exchange." the markets selling off for the second straight session, a look at what's happening with the semiconductors today. >> those ship stocks getting hit hard today now trading at kcorrection levels it was a little more than just a week ago on february 14th when it was trading at a 52 week high and video of micron and qualcomm down by at least 2%. micron down about 3.88%. back to you. >> we'll keep watching that. thank you. despite the recent collapse we have seen in yields, j.p. morgan is confident it can meet its previously established targets

no bigger response from jp morgan a little bit of a surprise. >> yeah, kelly as you said, yields have collapsed, particularly since january when they issued their full year. nonetheless, no need to cut those targets. cfo said, quote, we're not immune to cyclical challenges but diversification provides offsets and also to expect growth mix to provide an offset to a majority of rate pressure in 2020. was even able to go from $14 billion to 12$12.2 billion. full year will be lower in 2020 than for 2019. though, that was already expected the main reason for this offset is better funding costs, strong deposit growth, helping to offset that impact of lower rates. now, that theme, though, overall of a tougher year ahead compared to last year was also echoed by chairman and ceo jaime dimon who said we will have a could haver year in 2020 than 2019

he also said they'll have a tougher decade ahead in large part down to stronger competition now from their rivals the head of the investment bank said trading should be up mid-teens year over year and he did suggest that fee compression in the trading division probably is past its worst. now on the coronavirus, we did get a new advisory i managed to confirm from the company. anyone that has recently returned from italy will have to work at home for the next two weeks or travel to italy now needs full further approval. the stock has continued to sell off as it was yesterday. down 2% and now down over 7% year to date >> that's after we heard from goldman and deutsche bank. a big response from these global banks. coming up, how can banks handle the rush of refinancings? two big retail names report how

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make it simple. make it ship sticks. . welcome back to "the exchange" everybody. we're at fresh section lows here the dow is down 550 points after yesterday's thousand point drop. we were briefly positive overnight in the future's sessions but once things opened, we barely hung on to the green for long and it's continued to get worse. the headlines not helps, especially from the centers for disease control today. we have a lot more on what the cdc has said, other authorities and how other countries are responding full team coverage on every angle of this sell-off and what coronavirus is doing the read on retail for us. diana is looking the refis, the turbulence in the travel space and some mayhem for the media

industry we heard from big retail names this morning what do we find? >> actually, not a lot of ripple effects from a company i heard from today macy's reported a better than expected quarter for earnings, revenue, comparable sales after giving investors some clues. shares are moving lower to the yun of 4%. the co expects the current quarter will be the weakest this year as this three-year strategy takes its biggest hold coronavirus isn't having a big impact yet they do expect a logjam at ports down the road once things get back online and we see more being shipped from china to the u.s. home depot beat estimates the investment strategy is paying off both for his customers and operationally and then also like macy's does not

reflect any coronavirus impact this is because on the call, the ceo said that while fluid, the situation, all current quarter goods from china are either onshore or on their way. they feel pretty good about that situation. >> you have to hand it to him, for anybody that watched the show yesterday he said home depot is going to be just fine but i just wonder now that you have these scarey headlines that all consumers will be reading about tonight and tomorrow morning, if that starts to change consumer behavior more, they're saying look at work from home, telemedicine, the kind of stuff that might hurt discretionary demand as opposed to how it is truly impacting each of these retailers right now. >> we appreciate it. now let's turn to mortgage rates falling sharply on the back of the plunge the ten-year yield went to

1.32%. it's caused a rush to refinance. i guess this is a good problem for them to have. >> absolutely, kelly refinance application was already surging last week, but with the latest rate drop, it can only increase. the 30-year fix fell to 3.34% yesterday according to mortgage news daily, matching the lowest level in eight years more than 11 million borrowers can benefit by a refinance that according to black knight the head of consumer banking for bank of america says the demand is, quote, tremendous but he does not need to hire new staff to handle it 45% of b of a mortgage applicants do the process online. >> it enables us to give our clients a good experience and meet surges in demand pretty quickly. >> demand from buyers has not been strong. less because of rates and more because of a shortage of homes for sale >> yeah.

and again, diana, this might be one way the u.s. benefits from everything that's been happening with the plunge in yields and coronavirus scares, but it doesn't help people who can't get access to a home we spoke yesterday about some of the down payment issues and housing shortages. how many people can access a 3.5% down payment for an fha product? >> well, there is no number to put on it obviously, kelby but there are a lot of people who can get 3.5% bank of america has its low down payment loan options, so it is not impossible by any stretch. it's just that mortgage lending is still pretty tight right now. the builders are helping people get into new homes they're finally starting to pivot toward that entry level market, the lower priced homes that they stayed away from after the recession. >> yeah. and home prices have been reaccelerating since the middle of last year we'll see if they move further now amid this drop in rates. we appreciate it diana is in washington.

epedia is cutting 12% of its force work now they have coronavirus. >> kelly, the chairman wasting in time in his plans to turn around the struggling online travel operator, laying off around 3,000 employees that's 500 from the company's brand-new seattle headquarters the job cuts weren't a surprise to analysts after he went off script on the company's earning's call criticizing the culture saying amazon was all work and no life and at expedia it was all life and no work. diller has been running the business ever since firing the ceo nearly three months ago, the 78-year-old media mogul is known for constantly tweaking his media port foal yeah companies, buying new internet companies while spinning others. he made his first invest back in 2001 what are the other changes to

come after these layoffs >> that was a great quote. how many other silicon valley companies might be suffering the same thing thank you. the latest on expedia there. we're seeing coronavirus's impact on the entertainment industry expand beyond china where 70,000 theaters are closed now it is spreading to europe. hi, julia. >> kelly, that's right with over 300 cases of coronavirus reported in italy, the country has shut down cinemas along with live event venues across five northern regions. that impacts 1,800 screens, which are about half of the country's total. it also impacts amc which owns the largest theater chain in italy. we're also seeing coronavirus impact film productions in italy. paramount canceling its big budget three week shoot set in venice for its tom cruise mission impossible movie and this week is the european film market in berlin it is one of the largest market.

a delegation of executives from chinese film companies are not attending the market, which could dampen international film sales. all of these issues are likely to spread along with it. kelly, back over to you. >> great point hadn't realized that either. thanks very much the impact continues to be felt as we track coronavirus worldwide. let's get to the very latest in the cnbc news update. hello, everyone. here is what's happen at this hour mike pompeo blasting china over its response to a wall street journal opinion piece that was critical of that country and its response to the coronavirus outbreak. >> expelling our journalists exposes the government's issue that led to sars and now the coronavirus. namely sen shore ship. it can have deadly consequences. president trump wrapping up his visit to india with a state banquet. the indian president saying trump has been, quote, a friend

of india in every sense, end quote. and oregon ducks basketball star making history. she is the first player in division one history, man or woman, to score 2,000 career points 1,000 assists and 1,000 rebounds she also wrapped up her 26th triple double. also an ncaa record. congratulations to her. >> that's awesome. >> that's awesome! that's a little good news on this down day on wall street. >> yeah. and they're green, too we'll take it. >> exactly back to you. >> coming up, a interview with national economic council director larry kudlow. we'll talk markets, yield, coronavirus and much more. take a look at the airlines today falling again across the board. american airlines down 8%. spirit 6.5%. southwest and united shedding 6% we're back in two with much more

welcome back stocks are selling off for a fourth straight session on coronavirus fears, adding to the dow's thousand point drop yesterday. we're down about 550 points right now. president trump trying to

reassure markets during a state visit to india, pointing out the u.s. in good shape to tackle the problem. joining me first on cnbc to discuss the impact coronavirus will have here is larry kudlow, director of the national economic council good to see you. welcome. >> thank you, kelly. appreciate it. >> let me read the headline from the cdc. man, they will be leading the news they already are "politico" says this sounds really, really bad they quote "the new york times." americans should brace for the likelihood the coronavirus will spread to communities in the u.s. the cdc warned tuesday. dr. nancy saying it is not so much a question of if this will happen but when. they're warning americans for significant disruption to their daily lives, larry. >> well, look, our public health people who are spectacular, the best in the world, are preparing for any eventualities. that's what they should do they were ahead of the curve on the travel bans.

now they're ahead of the curve in laying out the potential emergency plans. that doesn't mean it will go into effect, but they're doing exactly what we're doing we will get a supplemental we've asked for a supplemental on the hill for a billion dollars or so. that's exactly what they were doing. i just want to say, though, as far as the u.s. is concerned, when you look at this, i mean, you have a little higher head count on the infections because of the cruise ship people coming off. we have contained this we have contained this i won't say airtight, but pretty close to airtight. we have done a good job in the united states. hats off to our public health people and the other generic point is simply this. this is a human tragedy. there is no question, particularly in china. human tragedy. but, you know, thousands of deaths god look over them terrible and that's the worst part of this the business side and the

economic side, i don't think it's going to be an economic tragedy at all there will be some stumbles. we're looking at numbers it is a little iffy. we might have a clear picture in the next two to three weeks. but at the moment, the numbers we're looking at on all these federal reserve regional isms, today's consumer confidence number, there is no supply disruptions yet. it may be out there. i don't want to negate it. i'm just saying all i can do is look at the numbers. >> yeah. and larry -- >> the numbers are saying u.s. the holding up nicely. >> that's why i highlight the cdc today. i think this is a turning point. up until now there was little response in the u.s. now after these headlines, larry, you know this will change behavior rapidly here is my concern people are going to look at these numbers in which the u.s. gets 74% of its tylenol from

china. 80% of its antibiotics from china. a construction worker friend of mine couldn't get a face mask this morning all of these shortages will get worse and the economic impact will now start to grow. >> you know, kelly, i -- i think you're making a lot of assumptions there with all due respect. and we will see with respect to supply chains and the availability of pharmaceuticals and other forms of equipment, i know there are issues there, and i accept that. i think we can deal with those issues at a later time when the emergency passes, as it will but i'm not at all convinced that we can't get hold of what we need here in the u.s. we have stockpiles we also have the capacity to produce more in all these areas. i'm no expert in this, but we have seen some of these biotech

companies, gilliad being one of them probably coming up with a vaccine in much shorter time than people realize. look, i don't want to sound heartless or cruel or anything this is a human tragedy. it's mostly centered in china. there is conte elsewhere i understand that. i will say number one the head of the world health organization today said let us not overreact. i think that's an important point. i will make the same point on the economy. that's all i'm capable of doing, kelly. i may not be right here. but i will say this. based on the numbers we know, gdp now is 2.6% for q1 that could change. but that's what we know through february 19. all these regional federal reserve ism reports, they're not hearing chatter about the virus,

and there is no evidence yet. >> right. >> of any supply disruption. that could change. >> yeah. there -- >> i appreciate that but i can only go on the facts of what i know that's all i can do. >> i think you and i would agree. goldman is pretty good as an arbiter of this stuff. they have taken home the blue ribbon on their gdp. they're at a 1% reading for the first quarter. it is not a disaster it is not 3% again, we understand that. that goal remains out there. but as the cdc starts talking about, and this is literally a direct quote from dr. nancy this morning, she says ask children schools and day cares about plans for closures explore possibilities to work remotely options for telemedicine this is going to change -- this is going to have an economic impact there is only a month left of the first quarter. now this could go into the second quarter, larry. >> well, look, those are appropriate planning measures by

the best public health system on the planet absolutely appropriate whether they are put into effect, whether they become necessary here remains to be seen again, i'll make the point, what we know now as of today, this is very tightly contained in the u.s. elsewhere, it's a human disaster as i said before but right here, we're doing awfully well so far. but i don't mind that our public health people who are very knowledgeable with vast experience, they are a model for the rest of the world, this is what they should be doing. this is exactly the planning we did this. we were ahead of the curve on banning flights and so forth and we will try to remain ahead of the curve to protect american citizens it is exact. but that does not mean that all this will come to pass, and, again, i was just interested in the world health organization head who said let's not over react to that.

i would make the same point on the economic side. the human tragedy side, difficult, horrible. the economic side, there is no tragedy in the united states china is going to take an awfully big hit. now, i was interested, too i'm sure you know this the imf came out today and said, yeah, they're going to get slammed in the first quarter, but it could be a v-shaped recession. so look at what i'm saying is in the spirit of trying to stay calm here, take a look at the facts at our hand see if they work or not. the next few weeks will be very important. i just think people should be as calm as possible in assessing this and emergency plans, kelly, don't necessarily mean -- >> i understand. i'm just saying. >> -- they will have to be put in place. >> if the cdc says it today, it is all anyone is going to be talking about tomorrow if they are trying to keep people from overreacting, they are contributing to a larger

reaction >> when i was on your side of the street, i'd look for the same thing. >> right. >> i understand perfectly well but i'm just saying, again, you know -- >> larry, let me ask you about something very well. >> these plans are very important. >> here is the real activity that is going to -- that we have to think about you have japan's economy shri shrinking because of an ill-advised tax increase germany looks pretty bad out there. these are the biggest economies on the globe can the u.s. avoid a recession if there is a global one >> yes yes, we can. by the way, your german news is accurate, but that was true before this virus hit. >> sure, yeah. >> in fact, let me make this point, my disappointment, and i have said this to you and others before, one of the headwinds we faced in the last several years

is essentially a recession in europe and indeed the whole g-7 and you're quite right about the japanese sales tax, which i think was ill-advised. i tried to talk prime minister abe out of it, but i couldn't. shouldn't have done it they're not growing, but they have been not growing for several years before the virus now i'll make a plug the g-7 meeting is coming to the united states. it will be at camp david in mid-june just so happens that yours truly is going to be the sherpa and we are going to devote both days, kelly. we're going back to the old time religion such as reagan and williamsburg in 1983 we will have two days of plenary sessions and we are going to talk about, guess what, where's the growth where's the tax cuts >> i just hope everybody comes. >> where is the currently stability?

>> absolutely. absolutely larry, let me ask you. this is a major, major headline for your lifetime. in this moment as you stand here, the ten-year yield has never ever traded lower. it hit 1.317%. tell us what to think about that, how the federal reserve -- you have people on the street whispering how we might get a half point emergency rate cut. is that warranted? would that even help >> well, on the rate cuts, i'm not hearing that either publically or privately. we're in touch with the fed people all the time. you know, apart from the virus, kelly, i have said i wouldn't mind seeing any friends at the fed be a little bolder in their target rate and their balance sheet. i said that before the virus that's not related to the virus. i don't expect the fed -- i'm not hearing the fed is going to make any panic move. look, the markets, the markets obviously are reflecting a lot

of new fears, no question about it there is a lot of volatility out there. i don't think these are fundamental factors, kelly i do not think these are fundamental factors. now, i believe, number one, the u.s. economy is in very good shape. and i think the recent data supports that. jobs, incomes, housing i think i just saw a big housing numbers that you put on the screen. >> sure, yeah. >> before i came on. that's really good stuff number two, we have contained this virus very well here in the u.s. and all the emergency planning will add to that. number three, the virus story is not going to last forever. it's not going to last forever and that's why i like the world health organization saying, let's not overreact. to me, if you are an investor out there and you have a long-term point of view i would suggest very seriously taking a look at a market, a stock market that is a lot cheaper than it was a week or two ago.

the long-term investor. >> larry, it is cheaper than it was ten minutes ago. we're down 600 points here that's a 5% drop in just the last two sessions. >> and i have no -- not only do i have no power over that, i have no control whatsoever it's going to do what it's going to do until this thing plays out. but i want to make those points again. you have a fundamentally strong economy. we have done well containing this in the u.s. the virus thing will pass. if you are a long-term investor, i think they should look seriously at coming back into buying the market, the stock market for the long run where the great performance has been this different -- you know, we're talking stocks here. that does not negate the human tragedy, which troubles me enormously and should trouble everybody enormously if we're going to talk financial markets, let's talk financial markets. i say this thing will run its course, is what i'm suggesting, and the u.s. is excellent shape and i wish our g-7 allies would

borrow some of president trump's supply side incentive policies on lower taxes and regulations and getting trade barriers down and energy independence. i wish they'd borrow from our play book because we've been growing and they haven't and that's the fundamental longer run issue here. long after the virus passes. >> so one final thing on that front, larry, which is that the borrowing levels in this country are still very, very high. disappointingly high look, it costs nothing to service the debt right now, which makes people worry more about what happens when it is more expensive to service that debt load. so, you know, you look at how cheap things are you look at the deficits that we're running in part to make these reforms happen how does this all -- the timing matters in one sense, which is that the president is up for re-election in the fall and it looks like he might be running against bernie sanders or a moderate right now mr. sanders has a lot of momentum. what's the message how can you get out there and

say, you know, are you worried about the timing in terms of the hit to the economy if this drags into the second quarter, all this coronavirus stuff are you looking at maybe a 1% or 2% economy right in the middle of that campaign when the president has been saying, ook what sets me apart from the other party here and from other countries around the globe is higher growth? >> well, look, those are hard questions to answer. let me just say you mentioned borrowing costs. the treasury department is refinancing and they're lengthing maturities that's exactly the right thing to do like any home buyer with a mortgage if you have low rates, take advantage of it. we're running 5% at gdp deficits right now. i don't think that interferes with growth whatsoever what will the impact be in the second half of the year? don't forget, kelly, we've had two big trade deals, and china in recent weeks, you just saw an

announcement today, china in recent weeks i think unexpe unexpectedly has been increasing tariffs. that's a plus. that deal is going to go through. that means that plus the usmca deal with canada and mexico, you could be looking at a second half export boom in the united states, which will boost economic growth substantially as a consequence of the president's tough trade policies to open markets and stuff on fair practice so that's a counter view. >> sure. you think china can make all those? >> but i think we should consider that. >> larry, do you think that -- >> yes, i do yes, i do. >> will china be able to make all the purchases its promised now that its economy has cratered >> well, it's cratered in the first quarter. we will see beyond that. tough forecast to make i thought the imf had it about right when they said it's going to be a v shaped recovery in

china. but we'll see. i understand there is an awful lot of uncertainty regarding senator sanders who was a frequent guest on an old tv show on your network that i happened to host -- >> i have heard of it, yes. >> -- i think he's a -- you made your start there i think he -- i think he is a man to be respected. i think he has a lot of backbone but i think his socialist policies would do enormous damage to this economy, with or without coronavirus. i mean, i'm staggered. the volume of tax increases across the board come on. investment capital corporations going to raise middle class taxes on payrolls. we know that turning the whole health care system into a socialist government run system, ending fossil fuels, the so-called green new deal, universal payouts whether you work or not for all americans? this stuff is so far to the

left, it does amount to socialism. i believe, frankly, the american people will reject it. and one reason they're going to reject it is our unemployment rates are rock bottom across the board. you know that. >> all right. >> it's the bottom half, the bottom 10% >> yes larry, but, you know -- >> guess what? rapid growth hang on. let me make my point rapid growth, low unemployment with less income in equality less income inequality i think the democrats are in complete denial about that. >> all right. >> and as the facts are made, i don't think that senator sander, who i respect, but i don't think he's goingfrankly. >> larry, you have given us so much of your time today. we really appreciate it. please continue to keep us updated here don't forget your friends here at cnbc, larry

larry kudlow we continue to watch the stock market selling off hard today. we're down 578 points. let's get to phil for a market flash. >> they have moved into correction territory not a surprise given what we have seen in the airline stocks once again selling off anywhere between 3% and 5%. that's the amount of the decline today depending on what investors are looking at and saying, look, i think you have greater exposure in terms of international routes where we might see coronavirus hurt demand and therefore have an impact similar to what we have seen with asia pacific as well as china routes for those big three u.s. carriers that fly over to that region. take a look at shares of american airlines. and we're taking you all the way back to when american airlines came out of bankrupty, merged with u.s. airways and went public back in december of 2013. well, when it went public in 2013, it finished that day trading at just over $24 a

share. it is now below $24 a share, down another 5%, 6% today. kelly, back to you. >> it is below its ipo price >> i have to go back and check what the ipo price was that day, but itthat, bu it finished that day 24.20 it's below 24.20 right now. >> that's remarkable and puts things in perspective. we appreciate it, phil lebeau in chicago today. the global coronavirus case tops 80,000 and cdc is urging americans to get prepared for a potential spread here. hi, meg. >> kelly, case numbers are not rising in the u.s. except for among americans evacuated from the diamond princess cruise ship the cdc's doctor said it's not a question of if the coronavirus will spread through the united states but when and how many people will have severe disease. she said she spoke with her own children this morning, saying she doesn't think they're at risk right now but as a family they need to prepare to

significant disruption to their lives. prepare for potential school closings and investigate the ability to work from home, this as health secretary testified at a senate hearing today that the u.s. currently has a stockpile of 30 million surgical masks but needs ten times that many, kelly. >> yeah. meg, as you say that, i mentioned this but it's not just health care industry that needs or uses these masks. a neighbor of mine that works at construction can't get his hands on one and the whole industry you look online, there are shortages and price gouging, how quickly can we get a supply up to speed here? it seems like it could take a while. >> we hear from companies they are working on increasing their supply, but this isn't just a u.s. problem, this is a global issue. everybody needs personal protective equipment the world health organization is worried about stockpiling and making sure everybody who needs it can get it. it's a problem everywhere. >> the cdc headlines, i asked larry kudlow a lot about what they said. i think it will be on the cover of every nightly news report all

over, people it all over people's smart phones, wherever they get news these days, meg, do you think they're going to not backtrack per se but want to add some context maybe so that -- is there anything they know that we don't at this point? or are they just saying to people, look, obviously the coronavirus will spread to the u.s. now, but that's panicking people, i think. >> it was certainly a ratcheting up of the tone we have seen. the doctor was asked where she made those comments. she said what they're doing is looking at the spread that we're seeing in other countries like italy, iran, south korea, japan and saying base on that spread, it is very likely we're going the see this here. the dr. from the nih was just on msnbc and asked about the comments too he said the risk right now in the u.s. almost nonexistent. >> right. >> but still because we see that spread elsewhere, it's inevitable we'll see it here. >> we appreciate it meg. we're going to take a break. the health insurers got hard hit in the selloff and there could be more pain ahead, not necessarily on coronavirus but

if there's a bernie sanders win we will explore that for a couple of minutes next. first, take a look at the markets where we are near session lows we were briefly down more than 060 points after yesterday's 1,000 point drop the "exchange" will be right back. >> announcer: deeper data at cnbc the january cast fright index plunged. it was the biggest year over year drop in more than a decade and the lowest absolute reading in about three years what do you see? we see a billion more people breathing free. we see access to fresh food being the global norm, not the exception. we see homes staying cooler, without the planet getting warmer. at emerson, when issues become inspiration, focusing core strengths to create a better world isn't just a result, it's a responsibility. emerson. consider it solved.

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♪ welcome to "the exchange" we are near session lows in the market with the dow down 620 points and you can see health care under pressure from two sides in the selloff. on the one hand as we just heard from meg, there's a surge in coronavirus cases. and on the other, the sanders serge. bernie sanders as investors are forced to consider the nomination i'm joined by managing director at raymond james john, when you have united health down 8% in a year, that tells you something there's out there that they didn't factor

in what do you think it is. >> 75% bernie and 25 percent coronavirus. we went and looked at the last flu season '17 and '18, the medical loss ratio went down for two of the four and was only up lightly at united. the only insurer that took a hit was humana >> so you're saying basically the 25% worry, which is about coronavirus, is not really justified. so let's talk about the 75%. people have known bernie sanders is in the race, they know about medicare for all what's changed >> i think the margin of victory in nevada surprised people so, yeah, i'll give you three quick reasons why it won't happen but if it does happen it's a nuclear bomb for the industry the three reasons it won't happen, 80% of americans are happy with their private insurance. 90% of seniors are happy with medicare advantage if we paid medicare rates to u.s. hospitals, most of them would roll out the doors

medicare margins are minus 11% i doubt senator klobuchar wants to roll the carpets up at united health care in minneapolis so it won't happen we put the odds at less than 1%. but it's one of those things 1% chance of an asteroid is still 1% chance of an asteroid. >> it's being priced in say that chance is higher than previous if the public says the health care system is broken. we want a better public option if nothing else f we just advance a better public option, what does that mean for stocks like united health care? >> i think you're spot on. so, if you look at the reason obama care is popular is because it failed. meaning we were supposed to have 25 million or so people on the exchanges. we have less than half that. so, employers didn't dump people on the exchanges willy nilly most people kept their private insurance. people want to know there's something there if they lose their jobs and the exchanges just don't

work very well they work fine for people who get a massive subsidy. people who are kind of making more than 60 to 70,000 a year, i think a public option is a fallback that polls at 70% the last time i looked that's the kind of thing we think is the most likely to happen is a compromise nobody will go to the mat and say, gosh, these exchange plans are wonderful and it's working perfectly. >> sorry we have less than a couple seconds left what would that mean for united health care if that becomes a reality that public option >> nobody really cares about the exchanges except for just a handful of companies so if you look at the insurance companies they make their money in commercial and medicaid the exchanges are a footnote at this point. >> so you would say it's a medicaid expose who had are basically the ones who could get hit by that move to a public option >> right and look, kelly, about 10% of thecountry needs some help at any time doesn't have insurance. i think a medicare backstop or

something like that would probably not cost any more than what we're spending and be popular. >> i want to talk more about this john, please come back we really appreciate it. >> all right >> raymond james health care equity research. that does it for "the exchange" today. thanks for joining me. i'll see you on "power lunch" with tyler kelly, yes indeed, we will see you in a moment. i'm tyler mathson. we start with a market going viral and not a good way they're under serious pressure all the market equities for the second-straight day as coronavirus fears grip wall street the dow sinking another 600 points session lows now 659 points just a second ago that comes after yesterday's historic 1,000 point drop. we'll tell you how bad things might get. plus, how much has to do with bernie sanders and his rise in the polls ahead of south carolina's primary in a debate tonight. we'll talk about that. plus, mastercard, the latest company to raise the red flag about the impact of coronaviru