dow would open down about 411 points down, the s&p would open down 52 points and the nasdaq would open down 189 points let's also take a quick look at the 10-year right now. that's at its lowest level, 1.277 in quite some time join us tomorrow "squawk on the street" starts right now. good thursday morning, welcome to "squawk on the street." the sell-off is set to continue today as the u.s. confirms its first coronavirus case of unknown origin, as the corporate mornings mount and analysts start cutting their numbers. europe is down about 3%. 10-year yield a record low, 1.27 and oil is below 47. we begin with correction watch as coronavirus fears grip global markets. stocks are set to open lower.

>> risk to growth, goldman warning this morning that a further spreading of the virus or widespreading of it could completely wipe out corporate growth this year. on the sidelines why toll brothers ceo tells jim the next few weeks are critical for the housing market so the number to watch is going to be 361 today. if the dow falls by that amountiamount the blue chips will hit correction territory last night at the president's news conference about containing the virus, eamon javers asked if financial markets are overreacting here's how the president responded. >> i think the financial markets are very upset when they look at the democrat candidates standing on that stage making fools out of themselves and they say if we ever have a president like this. >> did it have to do with the coronavirus? >> i think it did, i think it did. but i think you can add quite a bit of sell-off to what they're seeing. >> how much of that explains today, jim >> i think that the most

overshadowing thing is what happened right in the last few minutes of the press conference, which is the california discovery of someone who was in a local hospital they didn't know it was corona, then went to the davis hospital, a very good hospital where they felt that it wasn't corona and then they started treating it as corona so we have to wonder, it would seem that every single person that person came in contact with is going to come down with this. it's certainly not the president's fault. i hear people say if the fed were to cut rates. these are parallel universes this is really about getting sick i can't offer the odds that you're going to get sick you go to harvard public health site and they say 60% chance i do think the goldman piece is valuable, which says no earnings growth and obviously we're not priced for that. i do think microsoft is worth watching because we got a warning there and we talked about microsoft being down a lot ahead. it didn't stop and that immediately spilled over to

apple. we would have thought that has discounted it so the companies that were doing very well have not discounted the decline and just in terms of the personal view that i have, i remember -- i know that people are too young on twitter, but when we had measles and chickenpox, to really default to the personal, my mother and father said you're going to get it and it's going to be bad and then you'll live, you'll go on some people wouldn't make it but this is measles and probably going to get it. you never thought that you wouldn't get it. this is before the vaccine it wasn't whooping cough, but it was measles and chicken bpox an we just said, okay, let's get through it people will say, no, jim, the death rate is blah, blah, blah but i'm talking about the inevitability of getting it. seems likely. >> well, supply chains certainly and the global economy's slowdown certainly seems to be reflecting fear of getting it.

>> exactly >> not reflecting nearly as much here as around the world europe, anecdotal, so much is anecdotal in terms of what people are seeing on the roads in various countries in terms of the typical traffic versus what's going on. >> economic activity has slowed. >> supply chain continues to be an issue, in china as well the number of cases has slowed dramatically. >> right. >> but it is still a big issue in terms of people getting things on time. >> so you have to readjust downward i'm not by any means saying it's the end of the world this is not zombie nation. i'm saying we were priced ten days ago for things going up pretty good. so now we can't just price for things going up not as well, we have to price for things not going up in terms of economic activity again, i'm going to reiterate, hate him or like him, it's not the president's fault. we had dr. fauci up there

yesterday. what did he say? when this started he said you know what, we're probably going to get it. people ignored him he said we're going to get it. so what's he going to do, get up and say we're going to get it again? >> for our purposes, it's about the impact on business. >> right that's really what i want to emphasize. we don't know anything. >> what do you think of the goldman piece here, because they're making some assumptions. one that is bond yields go to 1, s&p 2900, and then they do add a line here, jim, it's striking to see. assuming a recessionary scenario, s&p earnings fall 13 to 148. >> right i thought the goldman piece was very sober and very intelligent. i think that the last part that you said is the one where people will say bernie sanders is going to get the nomination, you'll see claims rise and there's a better chance he wins than not and if that's the case we'll have another leg down. now, i don't think that's that

revelatory >> you just said blaming the president is a parallel you know sglers -- universe. >> no, if we get a recession. >> but that raises that if bernie sanders is the nominee wins. >> but do you think this reflects fears of a democratic president? >> we're getting there, absolutely. >> speaking to market participants, so to speak, there is definitely -- we can't completely excise the impact of a sanders nomination on the market. >> that's how i feel. >> it is not the overriding reason of course not. >> back of mind. >> but there is something there. even a few weeks ago it was not being really reflected in market prices, the idea that he would be the nominee now it's starting to be. >> do you think it's involving claims -- >> if in fact he is the nominee, the democratic party is a 79-year-old socialist, it's unlikely he's going to win.

>> still unlikely. >> you have to start to take into account the possibility of that. >> i remember, david, you were talking about how it's too close, we shouldn't think. i think now it's in the thick of it and we have to think. >> yes it's happening. >> right. >> at the same time, though, that we have this potential global pandemic. >> right to distinguish between hate him or like him, what is the president supposed to say. some people said really he's being complacent again, i want to bring up the measles. listen, you're going to get the measles, okay? what is he supposed to say, you're not going to get it he has no ability. but i think as a leader he doesn't want to say get to that supermarket right now like i did when i heard the initial cdc i told my wife i want two months, i want all the drugs that we have, i need a two months' supply i bought three of the 3m masks immediately. i did all this within an hour of the first cdc comment which basically said, listen --

>> hug the kids. >> it's the cdc suggested it. >> i talked to my kids a little bit. >> i did that immediately. i cancelled my daughter's trip to italy. >> that's it that's all i've done. >> did you not listen to that woman on cdc who told you -- basically said listen, do what you can. she didn't say every man or woman for herself, that's the one thing she didn't say which i'm grateful for the president had to play defense because of that woman. >> i do got to ask you, though, really strong work by "the times" here graphically which puts us on the front of the business section and sort of puts in perspective 10-year gains in the market. the handwriting is there, it's not ours you're investing for this many years and this is a few days how much of that is relevant in today's conversation >> well, i think that if you -- there's two parts to this. i genuinely believe we're going to solve it. if you genuinely believe we're going to solve it, you don't know when it's going to stop going down

it's going to keep going down. what i didn't like about that is the idea what's the next thing after the red? if gilead -- remember, they're giving gilead because they're really trying to -- whatever sticks, okay someone last night on our special said it doesn't matter if you get care. that's completely wrong. if you get care, that chart is going to say why didn't i buy. there has to be some reality just to stay the course. that's not stay the course, that's a sell. that's a get out and i don't buy that. >> even goldman is cutting industrials, cutting banks are they upping real estate and upping utilities >> i think they're underweighting in terms of buying the proctor things. i thought that was -- i thought that was a mistake those are interesting. the reason why those are interesting because -- i do think that decrease in world commerce is what we have to focus on and there is going to

be a decrease in world commerce. watch marriott that's a world commerce play the stock coming down well in anticipation of a slowdown >> anything travel related is getting crushed. >> but david, it was at 120. we read that statement if it's at 110, then the negative is here if it stays at 120 is what i was going to say, which it was i was wrong. >> yesterday, expedia, ual, any of the airlines, uber -- >> they were all going down. >> the percentage of rides originate at an airport. all these things are -- >> nestle cutting international travel that's 300,000 employees. >> and that's happening across the board. at the same time, anything where you stay at home, as we know, has been doingwell peloton had a good day yesterday. >> i do have -- i have eight stocks -- >> you've got a stay-at-home portfolio. >> i've got a solid eight works.

>> is there a new acronym in the works? >> wow sickness >> call it shelter give me shelter. and haonesthonestly, the measles more people die of this than the measles. but all i want to talk about is growth rate coming down. i cannot offer anything like dr. fauci. but i did feel some of the people on the special last night were so in contrast to dr. fauci it made me uncomfortable who doesn't wanting the gilead drug to work who says that's not significant? if you get pneumonia, you want something that makes you so you don't have a respirator. we have people saying stuff like night, i was like wow, come on, get with the program. >> you're right about the global headline flow continues. eunice yoon yesterday tweeted some concerns about people who had recovered and then tested positive again eunice joins us in beijing from all the latest hi, eunice >> hey, guys well, with the jump in cases overseas, the concern here now

is about a reintroduction of infections to places in china that have been recovering. in fact china announced its first case of this such case today. a region said there was a traveler who came in who was sick from iran and so the authorities here are stepping up their efforts to try to screen and pose restrictions on a lot of travelers coming in from overseas, especially from badly affected countries, even though china had criticized other countries for making similar moves. now, all of this of course creating still a lot of uncertainty among businesses the american chamber of commerce and the european chamber of commerce both put out surveys. one said 48% of those polled see a drop in china revenue for this year if business stays abnormal until april 30th the european chamber said 48% of its members see a decline in revenue for 28% or more for the first half of 2020

the central bank today attempted to reassure businesses that it was going to take serious action to make sure, they said, it would reduce the impact of the epidemic as far as possible to ensure that china achieves its economic goals for the year. that, though, has been raising questions as to just how much beijing will be able to adhere to its target approach when it comes to stimulus with unemployment and the possibility of bankruptcies now very much on the leaders' minds one of the top epidemiologists of china put out a projection of when the epidemic would end. he said it could be contained by the end of april authorities here have also been taking very unconventional methods in order to try to get more people to come forward so they could detect more of the coronavirus patients so one of the cities in hubei province has now said they will offer $1,400, which is a windfall for people in this

smaller city $1,400 for anybody who comes forward with their symptoms just in order to put some pressure and make sure that people come forward, they have set a deadline to next monday. guys >> eunice, you know, in this country now we're sort of trying to imagine what it would -- what it will be like when and if seems likely the virus is here in a significant way what can you tell us in terms of your daily life in beijing given you're not obviously near the epicenter but at the same time obviously it is everywhere we've seen you out in the streets with your mask on. what can we expect here? >> well, i can tell you a little bit about my day today so i came to the office twice and every single time now the cars that i've been in are all wrapped in plastic and say that

they're disinfected. everybody that i see is wearing masks. i needed to buy some disinfectant to make sure i'd for the weekend because that's what i've been doing every single weekend is disinfecting my house because there isn't anybody else to do it. so i've got to make sure that hygiene is really important. also i received a package today from a company that was worried about me, i guess, and gave me some gloves. actually these types of latex gloves are really difficult to find these days. so that's kind of been my day. and then the other thing, though, that is quite worrisome is that beijing actually had a jump in newly -- in new confirmed cases. and so the person who -- the people who got sick were all associated with one cleaner who went to the office with a fever. what you see is that there's this pressure for people to go back to work they might be sick, but also they haven't made money. a lot of people have not been

paid for several weeks because they aren't all salary people. and then there's a certain randomness to it all, which adds pressure when you go to the office or when you're walking around because you just feel like you just don't know whether or not you're going to be okay playing the numbers game >> that's a human dynamic that is going to be international in scope and certainly points to the concerns people have about demand jim, i mean it's going to get harder to buy an iphone at the margin. >> yeah. i thought it was very interesting last night when enrique laurel said they're probably going to have an 8-cent trim why? because they have a lot of demand for some of the really nice, new pcs, not printers, we go into that, and they can't meet the demand because they can't get the parts. he said the factories are up and running but there's just not a lot of people, enough people at the factories. i think that's kind of a good example. 8-cent hit and betting that

things get back to normal because as eunice said, they're telling the chinese workers to get back >> yeah. well, if it ends the end of april, as eunice said the authorities are hoping or some of the top epidemiologists in the country are, but right now nobody is consuming much of anything in china. >> well -- >> i mean other than disinfectant and masks and gloves if they can find them. >> yeah. look, i'm nsaying can you stay the course i don't know how you'll solve it i think you're going to get hit. some airlines, travel, no, don't stay the course. i don't want to stay the course in those. >> our thanks to eunice. we'll get cramer's mad dash and count down to the opening bell another look at the premarket. the dow is down 361. we will be down 10% from the highs. oh, hi, samantha.

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all right, we're ten minutes

away from the opening bell let's get in a mad dash and talk a bit about square. >> yes now square is a payment processing company it's doing exceptionally well. they crushed the earnings last night. one of my favorite analysts, she's just really, really good, lisa ellis, she actually puts out a piece saying not only is it good but it's going to be sought after there are many companies that would like to buy it i have mastercard on the other night and they're an inquisitive company. i don't think they need to buy square, but a lot of the travel -- i'm sorry, these companies that are payments, they would love a square a lot of people feel maybe jack dorsey who spends most of the time in africa, it's run largely by the cfo, might want to do something. so this is a piece that says there could be a transaction even without it, you still make money. i like that optionality. could win two ways. >> and dorsey being absent from and/or also having his other job

with twitter. >> stays in touch telephonically david, i want to ask you, do you think a major politician or major ceo gets it and we have to then have another leg down >> i don't know. that certainly is possible if it spreads widely as we expect that it eventually will. >> right just something to think about. >> we have a market so focused on every single headline and some of them are misleading and the algorithms don't read story, they read headlines. >> but as interest rates go down, stocks go down. >> yeah. let's talk a bit about rates when we come back. we've got an opening bell as well but that 10-year, we haven't seen it this low ever. >> ever. >> ever. a lot more "squawk on the street" coming right at you. ♪

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you're watching cnbc "squawk on the street" live from the financial capitol of the world the opening bell in five minutes on another important trading session as analysts start catching up to the corporate warnings we've been hearing as the buzz continues over last night's presidential news conference about the coronavirus. here's a look at how dow futures have moved the past 12 hours we got a bit of a dip -- it's been one of those, again, volatile sessions much like the cash session was yesterday, jim. >> right this is when i think you have to start thinking about, all right, what companies have good cash flow that's consistent, that have good dividends and leg into them don't look at this as the s&p. i know that we've all been taught that you should just do s&p. but this is a unique moment where some of the s&p is not going to be good and the cash flow is not going to be good

i know oil, for instance, has become a much more part of the s&p, but because of the decline of natural gas and because of the natural balance sheets, there's no level that i want to buy those. but there are lots of companies that i think are going to ride through this with good cash flow where dividends will become accidentally high yield, not unlike 2008. this is a biological question, it's not a financial but you might look back and buy some good stocks unfortunately, everybody is s&p and that's tougher to advise. >> you've got the vix above 32, which is -- that's remarkable. >> right the s&p is minus 6, not impossible it could go much, much lower than that. >> and for many quarters now we've talked about u.s. safe haven, right, global turmoil means money comes here what happens now when the dollar is at a three-week low >> i still think that you want to look at companies that have better balance sheets than the united states of america, that are not involved with oil and

gas, that involve a product -- this is why i disagree with the goldman piece, involve a product that you're going to buy anyway. if you can find that, and it's not -- they're not impossible. we found them during 2008. wow, you put them away and you just say, you know what, i just bought some really good companies. i did it in stages there are a bunch of them. just start with the 3.5% yielders. >> you even said on twitter this morning if you bought moderna based on my recommendation, sell half. >> i had teledock on and the stock as at 8. i said these are important if this takes off it took off and i just don't want you -- why don't you play with the house's money with moderna. you just caught a double. >> up another 21% in the premarket. >> who knows whether they're going to say to the w.h.o. we're going to charge a million dollars per vial come on. moderna is a nice one to sell half i really believe in moderna but that doesn't mean you shouldn't

be prudent. >> let's take a look at the 10-year yield. i mentioned this in the mad dash, just to see where we are on the 10-year we're in new territory on yield. there it is. 1.26 >> wow >> obviously the financials have already been reacting to a certain extent to that there's plenty of liquidity in the system, though, plenty everybody read kevin worsh's editorial in the journal today calling for a cut. >> the title is "the fed can't wait to respond. they want an assurance cut here. some say auditioning for the chairmanship one day. >> when you read the entire editorial and criticizing the '18 raise and talking about the cuts in 2019 that took place and the fact that there's notner lny

as much ammunition given where fed funds are, far lower than they were at the beginning of the crisis. >> as we've been saying for a long time, what's left in the toolbox? you look at these reports out of germany today, how they're considering possible stimulus. eunice mentioned the payouts hong kong, $15 billion stimulus in the works. >> all those are great versus getting sick and i think that the slowing commerce is going to overwhelm many of those. that's why, again, i come back we got really good numbers we got a really good report from goldman. i just think that, look, they're going to talk about the fed. and i wish that were in play, but it's not -- it's a biological, it's not financial and what you want in play is gilead therapeutic, you want in play a moderna vaccine, you want in play what tony fauci says at the cdc. the fed is a sideshow here and i know that that's -- it's supposed to never be a sideshow,

but it is. it's a biological problem. >> let's get the opening bell and do this, get the s&p 500 it is coca-cola celebrating the launch of aha, a new sparkling water brand. at the nasdaq it's major league soccer kicking off its 25th season this is a good example, guys, of how it's everywhere you turn even coke has warned that its supply of artificial sweeteners is largely based in china and that could lead to what some argue is going to be an inflationary disruption. >> i read a couple of books about china and pharmaceuticals. what was my reaction i went to cvs and bought all the things that i need for a several months' supply remember they have a gigantic -- wuhan is like the pill capital of china

we let our sales be cooked, almost opiate liked on the chinese manufacturer of pharmaceuticals and now we have to pay the price i bought a lot of vitamin c. i don't have to take any of the cilins we haven't had any penicillins come here since december i would had advise people to be prudent. that's not scared, that's just logical. you're going to use it anyway, so why not get it and pull it forward. david, what's the matter >> i'm just looking at various parts of the market right now trying to ascertain what we can expect today. >> i thought you were on amazon buying some of the things i suggested. >> no, i haven't yet no, i'm not prepared i don't know when i will be. >> well, i think you should -- >> i know where i'm going. >> where's that? >> your house. >> which one they're all stocked. >> they're all stocked >> we should make note of the fact that these levels are not an accident really

3051 is right above the 200-day which people have been talking about is the support for a while which would take you right around 3047. so sort of a decisive moment, wouldn't you say >> yeah. i just think you have to wait it out here again, if you have anything that involves travel and leisure, you want to make sell some of those, take a hit and be ready to buy these individual stocks with great dividends. don't chase. there's some people who are chasing 3m today because of the -- they're sold out of the masks. i don't think that's a great idea there's a lot of other problems with 3m that are masked by the mask you want to wait and find things that have good dividends that can pay them and that's just a good strategy. it worked in 2008 when the world looked like it was going to collapse this is not like that. again, this is biological. but i don't want it to be -- anyone to think, at least for stocks, that it's as bad as 2008 i don't want to be glib about it at least for stocks that's

worse. i let the faucis and ccs hit the human side but the human side is not as bad as 2008, but i think it takes out all these levels. but look at microsoft. >> it has capacity in china. if you're 3m also, you've got long-term customers, hospitals and people who always use your products that you have to try to fulfill as well. >> what happened to all the other products they have that have been dogs >> yeah. >> right but look at microsoft. that's a very good example stock is down 20, it was up too much, priced for perfection. they did what i regard as a very minor revision, very minor because it's one part of their business and it's down six. so if that's the best of the best, do i really want to say, you know what, i'm drawing the line in the sand on nike i know they have problems in europe, i know they have problems in china, but 90 is my level. i come back and say why?

who does that in this kind of decline, 90 is my level? >> the problem is models that analysts are running on microsoft in particular, and rbc is doing a stress test where they see a bear case, eps down 21 the stock is not ready for something like that. >> no, no. that was -- that is extreme. >> yeah. they say this would be draconian. >> that's extreme. look, i'm not bullish at all, but that's -- it's a great company. it slows, but you're going to use the product. but look, there are people who want to come up with doomsday scenarios. i think that could be a good one if it comes down, the dividend is good. i think satya nadella is good. that's an opportunity, but not yet. let's wait a little. >> it's definitely taking some of the air out of the high flyers we were talking about in january. virgin galactic is down essentially 45% in a week. >> what the heck was that?

>> a week from today. >> that was an example of the stock that told you that we were in top mode. it just got that momentum. what's the matter, that stock should be -- look, the stock was at 8, 9. >> yeah, no, i'm fully aware by the way, you can't -- the number of hedge fund managers or other participants in the financial markets of the size who want to start spax, i'm going to start a spac. i could raise 400 million. this was one, it's extraordinarily successful he was on yesterday on "squawk box," paul -- >> paul hapatia. >> thank you but it is the thing. hedge funds are like really, i don't want short equity, forget that, but i can start a spac and control my management team and pick my company and it will be

so much better. >> did you know doordash files draft ipo. yes, i want some doordash right here the pe funds are buying oil left and right. now, david, why are they doing that >> because they see value there. what do you mean they're buying oil? what are you referring to? >> distressed properties they like i think chesapeake is going to have a lot of things for sale and not all their assets are bad. continental resources, when the stock was at 70, remember harold hamm said oil is going to 100. that was ill advised >> jet fuel, weakest since the crisis this week. >> and yet the traffic is so weak that you don't want to buy -- i did a piece this morning for real money about why southwest -- more than 40 years and i've never had a loss here they did have a loss in the quarter in 2008 but i wouldn't buy that yet. >> based on domestic exposure. >> right

they have texas exposure, max exposure and warren buffett on monday said, look, he said he wasn't going to buy the rest of the company. i thought that that was a buzzkill david. >> jim i'm here for you i'm here don't worry, i haven't gone anywhere. >> do you think tesla was too high in retrospect >> who can say what was too high or not we're dealing with something and this is part of it that we've never really -- >> a biological crisis. >> -- dealt with before. >> 2003, 2004. >> yes, anthony fauci joined us yesterday. he was reassuring in a way. >> because he's not crazy. >> there aren't answers, and the fact that the incubation period for the virus can be so long so many people can be asymptomatic for such a period of time. >> some people will get sick and may not even -- >> yes but you ask if tesla was too high i don't know

>> thank you for looking at your screen. >> you're welcome. >> let's talk about 2003, all right. we got some -- a good analogy with sars. the s&p fell nearly 200 points in less than a month when we first heard about it and then when it kind of was really right here, we had another leg down that was pretty severe we ended up being -- we went from, wow, we went all the way down we had a big decline dow jones transports hit the most falling nearly 1,000 points, close to 12% yeah, we can see the transports from that period, 2013-14 but the transports were covered in a v-shape. again, i don't want to tell people to sell when sars got cured and people felt sars wasn't going to get cured. see, look at that. where is sars? where is sars there? you can't really see it. >> that's one thing about this particular episode is people looked at priors and said stocks

really didn't -- they just moved through it. >> yeah. and that's what i -- i think could happen look, the s&p finished the year up 13% during this period. and so i'm hesitating to say, listen, i want you to sell things i think that travel and leisure are not good i think that if you have nothing and you haven't bought any s&p, that's probably a mistake. you don't know where it's going to go -- who thought they were going to solve sars? who thought they were going to solve it i sure didn't. >> sars did not spread in any way as quickly >> but it was deadly it was so deadly >> this is far less deadly. >> right so i think this is a good example. we actually had the market down pretty badly, and i think that that's a good example of what can happen that's why you wouldn't necessarily be a big buyer here. >> you talked about -- you got something, david >> no. i just wanted to come back to my old area here, media the traditional media stocks,

obviously our parent company continues to suffer, comcast nbc universal down 1.5%. disney, another day of losses there. that as much though not about the ceo transition one would expect as it is about parks. chapek, who is now the ceo was running, given what you'd expect in terms of disruption for disney parks but that's getting hit and discovery reported earnings this morning i want to monitor the conference call and see what they had to say about guidance $2 billion buyback they did have a nice free cash flow number, but their adjusted operating income before depreciation and amortization may have been a bit below what some anticipated it's been a horrible sector, led by that that shall not be named by mr. cramer. >> geez, don't name that. >> you mentioned our parent, comcast. people are watching the olympics the president of the international olympic committee today said he's fully committed to the games, although at the same time shinzo abe, prime

minister of japan, is closing the entire japanese school system from march 2 until their spring break later in the month, which would be the equivalent of, i don't know, new york, california, put a few states together that's literally all the way to 12. >> japan schools will be closed for a period of time the olympics start when, carl, july >> late july. >> late july in tokyo. >> it's interesting. >> amazing facilities that have been built for the games. >> look, i'll give you an example. would i buy microsoft right here down 4 i would buy a little i would. it was at 190, now it's at 165 that's pretty good buy a little here, it goes down to 155, buy a little more. i want to be a little like buffett. i don't want to be, you know what, i'm scared don't be scared. there's some good levels here. i like microsoft down 5. i like it. >> we mentioned the call, goldman's call on real estate today, and jim did talk to the

toll ceo last night about potential coronavirus impact >> so what happens if we do have the epidemic that you and i don't want will people not even look at homes if there's bargains and interest rates are so low? >> i think people will be on the sidelines for a while. >> you do? >> particularly with the stock market if the stock market does not stabilize. >> right. >> then i think there's going to be a lot of people that will wait and see but i think owning a home is such an important part of one's life that i don't think if you are ready to move, you're ready to have your family move up in life, that you're going to sit back because of the coronavirus. but we do have to see how it plays out. >> right. >> i think the next couple of weeks are critical in terms of the impact it has on the market and whether we make some progress on controlling it, so we'll have to see what happens >> see, i thought that was shocking also that they have an area in the southwest,

california, where they have asian buyers traditionally and they have all cancelled. i know doug was very upset with how his company did. he was more upset with himself than he's been in some time. at the same time, i've found are people going to pause with interest rates this low? i found that to be unnerving i thought it was unnerving, the intervi interview. it made me disconcerted. >> it did? >> yes. >> any concerns about materials and things of that nature? >> yes not that much. >> that's domestically sourced >> what really -- they had some weak sales in a bunch of areas, a bunch of areas i didn't expect with interest rates being so low. but they did not execute well. i just did think it was important to talk about the spring selling season. my first reaction was i was attempting -- i was getting a house at the beach i now realize i paid too much and i haven't closed on it, but i'm an honorable person. >> another house what >> talk to you offline >> real quickly, i mentioned

discovery. let me just come back to it because on the call the cfo of discovery communications reported earnings this morning, stock down fairly sharply. they basically said they're providing slightly detailed guidance for revenue line items where they have come to the conclusion it would be much less helpful than in the past given what they're saying is the backdrop of some uncertainty that's what i can share on that. >> all right so we have gone from a record close to correction in ten sessions. >> it's unbelievable >> and for a moment there, the dow's loss for the year was greater than any since '08 let's get to bob pisani. bob? >> ugly open here and we're drifting towards the lows right after the open but not as bad as europe we were down 3% to 4% in europe overall. let's take a look at what we're doing. typical movers here on the coronavirus. semi conductors, banks weak here, energy, 10-year lows in the xle, industrials down 2.3%

it's amazing to look at some of the moves here on the s&p 500. we were at historic highs one week ago it was actually on friday if you look at it here. the global markets are entirely in a takedown mode everything is down essentially 10%, 11%, 12%, right across the board, it doesn't matter hong kong is 12, europe is 10% shanghai, japan, united states now essentially down 10% it's remarkable. essentially global investors have decided this is a global event. they have taken down the entire stock market all over the world. you can take a look at some other things here. here's the s&p 500 remember, historic high last wednesday. that 10% decline in one week, sam stovall said that is the fastest decline from a high to a 10% correction since world war ii, that's how fast the markets move these days. take a look at some other things everything is down 10% all the big movers for example, the faang names here, 10, 12, 13, even 15% in the case of facebook these are all from 52-week

highs. remarkably consistent numbers at just taking down multiples essentially for stocks around the world. even the major sectors that you're looking at right now. we talked about banks and semi conductors and industrials and their impact same situation here. everything down 10, 11, 12, 14% in the case of the banks which have been really hit as we hit four and five-year lows on the dividends there. finally, a lot of questions about what's been going on with goldman sachs commentary this morning. david constance talking about 0% earnings growth in 2020. the street has had 7%. but we've been doing this the last several weeks these numbers have been rapidly coming down in the last few weeks so it's not like wall street has been asleep at the wheel. they have been coming down i'm giving some credit to the analyst. costin also says 3400 for year ending for the s&p 500 that's about 9% higher than where we are right now so it's not as if they're bearish in the long term on the markets they think short term there's a

notable impact on earnings finally, a lot of questions on dividends. you see these juicy yields these energy stocks hit decade new lows here. look at these dividend yields. 8%, 7%, 7% exxon is at 6.5% just be very careful on this baron's and other people have been pointing out chevron, exxon, conoco, they all need higher prices for oil than we have right now in order to cover the dividend payments from their cash flow. if they don't, they either cut the dividend or they have to borrow of course that adds more pressure on them so every time i get emails saying what about these dividends, remember, there's a little bit of risk right now with oil below $50 guys, back to you. >> all right, thank you very much, bob pisani you mentioned oil a moment ago i thought it was going to hold 47. >> no. when those dividends -- this isn't like 2015, 2016 where it was a blip and they were able to cut back these guys are all pretty stretched. so you want to be very careful there if you're reaching for

yield. bp has been terrible, not as bad as backish, but it is bad. that's the viacom ceo. i point out they raised the dividends and you can't give the stock away what are you going to do with these ones that don't have that kind of balance sheet? the answer is oil, travel, leisure. wrong. those are wrong. take the money out of those and reposition into after faang goes down more tech i think tech is a survivor because we are going to go 5g. >> it compounds what we had already been talking about for months, which is the phenomenon of esg. >> right. >> i know you saw moody's projection of auto sales globally this year they're looking down now 2.5. >> demand is really a factor at the l and g demand. i look at some of the stocks like chevron mike worth is a very good man.

>> yes. >> and they have a good balance sheet. >> yes stock is down 21.3% this year. chevron. >> because we're going toward divestiture. it's happening. >> we are. yeah, the incremental capital, will it be there beyond -- move the stock higher that said, chevron is $94, $95. >> so what what does it mean if you're religious about climate change >> what if you're religious about yield? >> what if you're religious about finding value and the fact that i've got news for you, renewable energy is not replacing gasoline any time soon. >> it has nothing to do with that. >> it doesn't? >> of course not >> last i heard that's what they take out of the grounding for the most part. >> david, david, that's not the issue. altria, people smoke all the time there are funds that won't own those. >> understood. they are only growing and they will continue to it's an important story that we're following here, although

there's plenty that's misleading about esg funds as well. when you look at their holdings, it's always surprising to see what qualifies. >> but no, i think mike worth and chevron are doing a terrific job. then i follow up with, you know what, i don't care i'll give you an example let's be away from -- care let's look at skt. okay this is a company that just literally said great things and raised the dividend. right? >> the outlets >> yes tanger outlets. tougher times. people need a bargain. yields 12% what does that say 12%. >> yield >> it has very good occupancy but is trading as if there are a couple companies that are a little small here, washington prime group, they just cut their dividend it was 21. one of the most legendary real estate investment trusts when i grew up was a company called penn real estate investment trust. there is a company now at 250. yields 33% which is obviously not true because they have to do

restruck malls, i'll distinguish china properties they have terrific ones but some of the smaller real estate investment trusts, shopping centers so to speak, they're struggling struggling to stay in business even though they've been seasoned operators i'm not saying tanger. i think tanger is very good. but the stock is saying, don't buy. right? >> understood. >> with that yield >> pfizer, j & j, gilead, clorox all in the green >> clorox, why because they are unlike 3m you can move the needle with clorox because of the primary business. after the cdc gave that warning i went and bought as many clorox wipes, i got a lot of clorox bleach >> you bought a lot of stuff >> yeah. well, david, when cdc comes on and says we're going to have a major interruption in our lives, i'm not clorox but i sure want it bought a lot of seltzer by the

way. >> we have broken the 200 day on the s&p now along with the dow only the nasdaq of the major three remains above. let's get to the bond pits and rick santelli. good morning, rick >> good morning, carl. treasury rates keep going down because we see that we are peeling back the onion, deconstructing the equity rally. why are we deconstructing it well, many strategies like risk parity have built big positions on calm waters and equities and the machines are fast. bob said it's fast of course it's fast. many of the same artificial intelligence that trades the market permeates many similarities across platforms. it moves quickly it is coming close to the end of those numbers. we'll have to see what is on the second chapter look at october, 2016, two year. haven't been at these yields since november this week in tens it's been a nice, orderly slide. here we sit down nine basis

points 2s are down a dozen basies points what is going on overseas in bunds? look at a july start because it was thereabouts we made our all time low negative yield close at minus 71 it's currently trading minus 55. whereas the long end in states of course is in record guns hot negative territory with respect to never closed or have seen these yields before. the dollar has lost a lot of favor this week. it makes sense the rotation out of many markets globally has just taken the appetite away for now. look at a one week of the euro versus the dollar. look at one week of the dollar versus the yen we see the dollar index now should it close here would be at an exact three-week low going back to february 6 ultimately the yield curve continues to steepen and there was a great op-ed about the fed can't wait i agree the fed can't wait they just can't wait to ease carl, david, jim, back to you.

>> thank you fed fund futures, 90% chance now of three cuts this year. we've talked about the potential -- yellen talked about the potential of the coronavirus to push the u.s. into recession. take a look at that. >> we could see significant impact on europe which hasbeen weak to start with and it's just conceivable that it could throw the united states into a recession. i think if it doesn't hit in a substantial way in the united states that's less likely. we had a pretty solid outlook before this happened and there is some risk but, you know, basically i think the u.s. outlook looks pretty good. >> all right jim, i mean, at some point you got to wonder how helpful it is to say that out loud >> well, i think that with the

president so upset at chairman powell and obviously chairwoman yellen would have been more aggressive cutting the only reason you should focus on that is as someone who is i love with stocks is again because these yield, the stocks, companies that have really good balance sheets, good yields, are creating bargains, accidentally high yield and i want you to pick at them i'm sorry. a little positive there. i was incredibly negative for heaven's sake. i can't stay as negative as i was. i don't want to get the disease. honestly hey, jimmy, you're going to get chickenpox i was an alarmist. >> poke a little fun at you for it but you ended up being right. >> thank you i remember the week before i got chickenpox my mother said you're going to get chickenpox everyone's got it. you'll have a really high fever. if we have to take you to the hospital we'll take you to the hospital >> well, i remember the chickenpox epidemic and it was not so great >> make sure you get the shingles shot. >> i had the shingles shot >> i got to get that >> david, you just got to come

to my place, man >> i don't know which one to go to >> i did not buy a gun because i don't believe that it's going to be walking dead. i didn't buy a crossbow. >> you told everybody who wants to come and find you >> all i did was buy supplies. i didn't buy anything. >> throw clorox wipes at them? >> everything the cdc says about someone my age says i got to do this they're not alarmists. do i want to do it do i want all this darned clorox in my house? come on. >> you're going to have a show tonight. aren't you >> i am? thank heavens. i didn't last night. >> you were on, though >> yeah but i was an appendage a useless appendage. look at that >> i watched your interview with enrique lores. >> thank you trade desk work at home etsy one of the most remote players in the world

and workday saves money. i think these are worth listening to >> great guests. >> thank you they may even be worth buying some of the stocks look, it is not the end of the world. i had the chickenpox by the way, 104 degrees. but i never missed a day of school not one. >> chickenpox -- >> that is not the point i'm saying everybody got it. >> yeah. but it didn't kill anybody >> yeah. that caveat. great. this one doesn't kill younger people to any great extent >> see you tonight "mad money o" at 6:00. dow down 500 as the worst week thgrt naiacrisl is continues.

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and committing to low-cost clean energy. with infrastructure built for the future, the companies of tomorrow can thrive here today. see your future at esd.ny.gov. good thursday morning welcome back to "squawk on the street." i'm carl quintanilla with sara eisen and david faber at post 9 of the new york stock exchange the sell-off continues on this thursday as the cdc confirms the first u.s. case of coronavirus of unknown origin. give you a sense of the sell-off here down about 600 but we have broken the 200 day moving average on the dow and the s&p

this is the worst week since the crisis we've gone from a record close to a correction and about ten sessions, guys >> the risks continue to pile up clearly a psychological turning point was the news out of california the cdc confirming the first community transmitted case of coronavirus. in other words, they couldn't track that case to necessarily china or a trip abroad and that sparked some fear that it is going to spread here and the economic fall out on the united states is very much in focus you played the janet yellen warning that it could possibly tip us into recession. the economic data has been relatively good. new home sales a surprise upside in durable goods, for instance jobless claims continue to remain low i think all of that is looked at as old news until we start to factor in the fears of coronavirus coming here. >> also keeping an eye on things of course in the bond market, ten year yield at a new low. and the move in oil prices has been pretty dramatic as well wti down more than 5%.

commodities overall, sara, in decline as your beloved dollar >> correct which we'll talk about in a moment a lot of people are looking at the gold-to-oil ratio where gold has been spiking, oil is falling. that is the key cyclical indicator of fear and concern and a lot of people see that as the leading indicator for the stock market david rosenberg for instance who is bearish tends to look at things like that as a problem. which are flashing warning signs. >> speaking of of that data we got more crossing the tape we'll go to diana olick for the numbers. >> reporter: hi. more strong housing data pending home sales jumped 5.2% in january, month to month up 5.7% annually. pending home sales measure signed contracts to buy existing homes so an indicator of future closed sales in one to two months this is much wider than the street expected. they were looking for about a 2% gain demand being pulled forward in january, because of such tight supply of existing homes for

sale, people trying to get in early on that spring market. and here's the evidence of that. we did see sales up across the board except in the west they fell 1.1% month to month but we're still higher year over year the big jumps were in the midwest and in the south that is likely due to warmer weather as well. also the chief economist for the national association of realtors saying it is exceptionally low mortgage rates and good economic back drop pushing sales higher we should see closed sales moving higher in the coming months back to you. >> thank you stocks near session lows right now as the coronavirus fears fuel another steep sell-off for the market. stocks now seeing their worst week since the financial crisis in 2008. the s&p, nasdaq, and dow now down in correction territory which means 10% off the highs just days after hitting the record highs joining us now is chief strategist at bny, as well as the chief market strategist at national securities art hogan. what are you telling your clients as far as what to do

with stocks this morning >> we're saying right now the main enemy of the market right now is uncertainty you can't actually model this. we've only tested 500 patients in the u.s. overall which i find kind of shocking particularly when you think about the large communities here but we're telling clients to take some risk off the table because if you think about it there is sort of a consolation of uncertainty here. there's the democratic race. there is the course of the virus. and what the containment efforts for this, due to the economy, i'd just like to point out the market has gone straight down since the fed minutes came out in february 19th, and the market has gone down basically 10% since those minutes were released where the fed said they're going to stop their purchases in april on the shortened. that just adds another piece of uncertainty. if you thought the market was liquidity driven that is another piece. >> art, what is your level of

uncertainty around this market >> i think one of the things you said was very interesting. we are 10% off our all time high by the way the all time highs happened last week so what we have to look at is how much of this correction is driven by the uncertainty over the economic damage that will clearly follow in the wake of this coronavirus and how much of this is this market has been looking for an excuse to pull back as we've been directionally higher since october of last year i think there is some combination of both. right now what we're forgetting is we're starting this epidemic at all time highs so obviously the initial damage is probably going to be a whole lot more than the other 11 global health scares we've seen over the last 20 years but the other important thing to note is in all of the other cases three months and six months down the road global markets were higher. we'll find containment at some point. we're just not close to that process right now. >> alicia, how do you look at history? can you really compare it to other pandemics and the way the market reacted >> i don't think you can compare it to other pandemics because

this tends to be much more contagious and we don't have a real fatality, mortality rate here i suspect as we get more diagnoses the mortality rate will come down with that the efforts to contain it may be less severe like what we saw in china so then the economic activity is not so curtailed. we do think six months from now this is behind us in terms -- >> how can you say that? >> because ultimately this will run its course i do think if you look outside of china the mortality rates are actually much lower. so there are suggestions in the data that as this spreads globally with better health care and better sense of warning that it's coming that you may actually have lower fatality with that i think they're hit -- our basic scenario is the hit to the economy runs its course by june/july. >> you think in that time, in six months, behavior adapts to a more positive picture?

>> behavior adapts because the fear will be lessened as we get more information not an expert but the data suggests the mortality rate is lower outside of china so do we get a v-shaped recovery or a u-shaped recovery the market is pricing right now into something of a u-shaped recovery >> what if we get a w-shaped recovery >> you could get that also the longer it goes on, how you price in what the recovery looks like changes in the end services will never be replaced on a one-to-one basis. you don't go to starbucks ten times in may because you didn't go at all in february. all of those trips that are canceled will never be taken you could see some rebounds on the manufacturing side but less likely to see it on the services side you have a permanent down draft to what your gdp and output is because of this. >> art, how do you approach your portfolio right now? looking to trim cyclical exposure and get more defensive? what sort of recommendations are you making

>> i think that is a great question, sara the way we look at this is if you're a long term investor you probably don't make an adjustment if you are going to i would tell you to raise cash. i think all of the trades are very crowded whether you look at gold or utilities or the treasury market. i would also tell you that, agree with what alicia is saying, six months down the road we'll look back and what is going to react the most viabilitily to the upside if we get -- violently to the upside if we get any good news and containment outside of china china is slowing down new cases but the global new cases will peak and start slowing down at some point i think that is interest rate sensitive. i think we see the treasuries and interest rates move higher i would also tell you technology and the delayed consumption versus destroyed consumption will probably be the second place to look. where i would avoid for a long period of time is what alicia just brought up. those things that won't be replaced the permanent economic damage. the destroyed consumption. that is all of the travel, leisure, restaurants, gaming

stocks i think they'll be under water for the balance of the year. >> do you agree with art that the safety plays are getting too expensive and therefore you should avoid them -- gold, treasuries, i don't know, clorox is up 7% so far this month >> when people are willing to pay a price and a heavy price to get in safe spots. >> if you have fresh capital you should be suspicious of this we know there will be some reversals. if the play isn't already there you probably missed it is our take to what art said, this is really interesting because this is a supply shock as well what the market is pricing in is that in the end central banks may not be able to do anything about the supply side. in the end easier policy helps the demand side but it's the supply side and the destroying of supply chains and what that does to manufacture. so it really is a multifaceted problem. it is just not a linear thing where you throw this in.

okay we have a recovery in april and it's fine. it has tentacles >> have we ever had a supply shock like this? >> we've had supply shocks like for instance in the oil market right? so you've had something like that in the past what this will do is if the worst case scenario happens then what you'll wind up having is an acceleration of the trend toward deglobalization and more nationalist, economic policies which you really saw over the last couple of years since the peak trade year of 2017. >> and politico has a piece on that how navarro they argue is trying to size teize the moment in ther words and accelerate the migration of supply chains isn't that inflationary by its very nature? >> yeah. it is also impossible to do in the short run. we've seen that since the beginning of the trade war everyone is trying to unwind some of the complex supply chains but you can't do that we've built this up over two decades and can't change it over two years. i think where our biggest exposure to that is actually showing itself in this particular epidemic is in

pharmaceuticals and pharmaceutical production being so concentrated in china in a place we never thought would be shut down for a month at a time. i think that's it. everything else just takes time. if you want to disentangle some of your supply chains from a single place that's been happening over the last couple of years it just takes much longer to unwind that. it is easy to say but it is much harder to do in real time. >> art hogan, alicia levine, thank you both the president meantime trying to ease coronavirus fears with the white house briefing last night got a couple of good questions in and joins us from d.c good morning, eamon javers >> reporter: you are exactly right. the president was clearly determined to calm some of the fears around the coronavirus in the briefing last night. even though you had this moment where some of his health and cdc officials were at the podium with him yesterday suggesting americans ought to brace for an impact here from the coronavirus, the president, himself, struck a slightly different tone here's how he responded to a

question about whether spread in the united states is inevitable or not >> i think the financial markets are very upset when they look at the democratic candidates making fools out of themselves on that stage. they say we ought to have a president like this. it is always a possibility it is an election. >> did it have to do with the coronavirus? >> i think it did but you can add quite a bit of sell-off to what they're seeing. >> that is obviously the wrong peegs of tape there of the president. the president said he does not believe the spread in the united states is inevitable, quote-unquote. he said we'll see what happens the president, they're trying to tamp down fears. i followed up and asked him about the sell-off in financial markets over the past week and the president really reaching there for a different explanation for the sell-off than the virus he suggested that the sell-off there is a result of the democratic primary debates that we've seen over the past week or so when i pressed him on it he did acknowledge as you saw that, you know, there is some virus concern here but he is much more focused on the democrats being to blame for

the sell-off than maybe a lot of analysts you guys are talking to, carl >> we're hearing it a little bit as well, eamon just wondering what v.p. pence is doing in his new role being sort of the point person on the coronavirus. >> we know he'll hold his first meeting with the task force today over at the white house so we know that he is getting started immediately. look, the vice president's taking this over indicates the administration is ratcheting this to a higher level they've been holding these task force meetings on a regular basis for weeks now and the president said he believes his early decisions to curb some travel to china and other things have helped prevent the virus from getting to the u.s. until now but they are clearly aware they need to be seen as doing a lot on this. so the vice president will take a very hands on role as early as this afternoon, sara >> eamon, thank you. dow is down 618 points the dash for safety is on in

global markets watching currencies, david, you mentioned because something interesting is happening and very different today worth pointing out the dollar is actually weaker. why? the spotlight has now turned to the u.s. with the spread of coronavirus and with that, weaker u.s. growth prospects after all the hand wringing about china and europe and global growth the u.s. is now the market's worry also odds are spiking for the fed to cut interest rates with the bond market swaps now fully expecting it to come by april. rate cuts and easy policy also weaken the dollar. and the traditional safety plays are shining. yen from japan, the swiss franc, traditional places to hide out during panic moments in the market there is another factor at play. president trump in that coronavirus that eamon mentioned, update to the nation last night, the president took a swipe at the fed and the strong dollar listen >> we've been hurt in my opinion very badly by our own federal reserve, who has also created a very strong dollar there is something nice about a

strong dollar but it makes it much harder to do business outside of this country. >> the president has been effective at driving down the dollar with his words before and threats that he might do something about it like direct the treasury to step in and weaken the dollar to help the economy. we haven't heard those threats yet but the mere complaint about the strong dollar definitely spooks the bull. add it up and you have rare weakness for the dollar. maybe a silver lining for those worried about earnings this year but the bottom line, guys, is the dollar is up sharply this year about 2% and that is going to cut into corporate results for any company that does business abroad we'll watch it because it is an indication that traders are really focused on weaker growth protestants pek prospects here in this country >> you have the weaker dollar, lower rates, moving lower all the time an enormous amount of liquidity. i know the german bund hit, the ten year hit the lowest level since october in terms of the negative territory >> they're all negative, the

whole german curve >> there are some positives you can draw from that i guess >> so -- >> no? well, coming down to, gasoline prices dropped >> i like the intent it's good. >> you have to ask why they're coming down. >> yes >> lower rates are stimulative for the economy unless they're falling so much that it is really sort of a panic kind of mood >> those who would try to draw parallels to the 2008-2009 period i think are specious. it is not a financial crisis in any way even if we hit a recession our financial institutions are so over capitalized i don't think those are fair comparisons >> ultimately if you look at global markets the u.s. still has higher rates despite the fact they're falling every day, better growth prospects, and more room for policy maneuvers at least monetary policy >> which is a good point powell has been preaching fiscal, fiscal, fiscal for so long are we at a point now, again, more reports today out of germany, do we really believe

them this time >> that they are considering stimulus >> yeah. >> maybe but any good news is being over shadowed by the fact that the u.s. is potentially the next place to spread this infection and there is just not much that can be done. yes, fiscal policy would be great. and could help even in the u.s. we could have promises from president trump of tax cuts even if the house won't pass them. that could help. but we have to get past the uncertainty of what it is going to look like here, how many cases are going to be developed? what consumer behavior is going to do. >> can i leave the house >> right >> speaking of that, coronavirus cases passed 81,000. the fda announced earlier this week it has temporarily halted inspections of medical products in china amidst reports the fda has compiled a list of about 150 prescription drugs at risk of shortage if the outbreak worsens. joining us now to break down the possible impact the former fda deputy commissioner from global regulatory operations and policy, howard, nice to have you. should consumers here in the

u.s. relying on prescription drugs in part that are made in china be concerned >> consumers should not be concerned about the safety of the drugs that are in their medicine cabinet or they're getting from doctors and hospitals or the effectiveness of the drugs >> not talking about that. i'm talking about shortages, the ability to manufacture the drugs so you can buy them. >> i think that if the situation goes on, for many, many months, i think the shortage issue is a very real one. >> you do. >> it could affect lots of different drugs. >> how, can you give us some sense as to how significant it is or how much we rely on china for different parts of the components of drugs and/or the entire manufacturing of them >> sure. basically, drugs are made of active pharmaceutical ingredients and they are the parts of the drugs that, you know, to put it simply, cure the diseases china is a leading supplier of

active pharmaceutical ingredients for a lot of drugs in the united states they also make what are called finished dosage form or the final drug, itself, for different types of drugs. so the problem is that as production is shut down in china, it can affect the supply chain across really the world and affect the supply of drugs in the u.s the thing about drugs that's different, that are different from other products, are that you can't switch a supply chain quickly with drugs drugs are highly regulated so as an example if you're getting your active pharmaceutical ingredients from china, it's hard to just snap your fingers and get them from another country because the place that makes the active pharmaceutical ingredients has to be a place that fda believes can do it effectively and in a way that promotes drug safety. so it's a more difficult situation. another issue to keep in mind as this goes along longer, drugs

that are imported into the u.s. basically come from a few places they come from china, they come from india, and they come from western europe and a little bit from japan, australia, and canada as well if this situation and the virus spreads in a large way, to india and western europe in addition to china, then the risk of shortages just magnifies significantly. >> how much inventory do the drug makers hold before we actually get to start talking about things like shortages? >> it varies it varies a lot by drugs so it is hard to give a general answer and the types of drugs that rely on the chinese supply chain are really quite varied. a lot of antibiotics come from china but you also have active ingredients in cancer drugs, and drugs for cholesterol, for high blood pressure, for gastrointestinal disorders pretty much you name it.

>> what about the inspections that the fda is not doing? >> right >> is there a concern at all on the safety front over time, or is this not something to really be concerned with short term >> short term it's not a concern. and the reason i say that is that the inspections that are not occurring now are called surveillance inspections they are the regular type of inspections that fda does, often every couple of years. think of it as your annual medical checkup. and the fact that if those are delayed by a few months that really isn't going to affect drug safety very much. that, in fact, happens in government shutdowns when the fda doesn't have the resources or ability to conduct inspections. what is different here is normally in other types of emergency situations when there is a need for a for cause inspection, when fda getsa signal that someone got sick from a drug or they learn of information about the safety of a drug, they can send an inspector immediately to inspect. here they wouldn't be able to do that what they would probably do is

simply bar the import of that particular drug. they have that legal authority and it is legally very easy to do but it is something that fda no doubt is, you know, trying to manage right now >> why aren't drugs made in this country, howard? how hard would that be to do >> that's a long story driven by economics. one of the reasons is the repeal of the tax credit that used to incentivize manufacture of drugs in puerto rico which used to be a large center for medical product production in the u.s. that got repealed in the '90s as a kind of corporate welfare measure it was thought of. and the economic incentives for drugs are challenging. i mean, we think of some drugs have high prices and people focus on that. generic drugs by and large don't and have small profit margins. and that puts a lot of economic pressure on where the drugs are going to be made

so if one wanted to bring drug production back to the u.s., that would be a complicated issue. because it is something that's been developing really for decades. >> yeah. interesting. howard, we appreciate you joining us thank you. >> thanks very much for having me shares of microsoft remain under pressure this morning as thecompany warns the coronavirus will hit the window segment. the company issued a statement saying the supply chain is returning to normal operations at a slower pace than anticipated. we do not expect to meet our more personal computing segment guidance as windows o em and service are more negatively impacted than previously anticipated. like apple, didn't give a new range because who can? >> yeah. >> although analysts are running some truly dire models today >> they are. interesting, nine days after apple's warning we get this one. from microsoft if we had been paying closer attention, maybe we would have listened a bit harder to hp, i think's conference call.

they also talked about supply chain impact from that but with all the xerox stuff also swirling around hp and the fact, well, you expect some impact maybe we didn't focus as much on that we're going to get some commentary from dell later today. that will be important as well hp and dell both being important players in the overall pc ecosystem. but microsoft saying it's not just the devices they make themselves also the ones from oems like hp and dell so i think we were talking last week about how much we have to wait for actual data to come in to know how broad this impact is going to be. this is still the leading edge of those data points because the companies, themselves, are saying this is worse than we thought but we're not giving you a range yet on how bad it is >> well, they can't. they don't know what the trajectory of the virus is going to look like john, you've mentioned a lot of concerns about the supply chain disruption have any of the companies started talking about demand impact, the appetite for corporations, to spend on enterprise

>> they're talking about demand impact in china. but as we know, we're starting to see more outbreaks happening outside of china talking about south korea, talking about italy, talking about brazil yesterday just starting to talk about california so this story continues to evolve as we get new information and the companies that are giving us information about how it is affecting them seem to be lagging by a couple weeks. we just talked to intuit's ceo a couple days ago. i was asking whether he is seeing small and medium sized impact because from quickbooks they get that immediately. he is not seeing it yet. i have a hunch that is not necessarily because it isn't happening. i was at an event yesterday at nasdaq where a small business owner was talking about how he couldn't show at fashion week because his supply of garments from china wasn't able to get in so that was affecting his business so he is probably not the only one >> can we argue the effect on cloud is maybe significant as well but less so >> i don't know about that because i have a feeling this

has to do with volume. depending on how much inventory you've got and how long your customer is willing to wait it might have a different impact on your cash flow so apple, they're making millions of iphones a week and they've got a very vertically integrated organization they're probably going to see things a bit earlier than somebody who's got to deal with a bunch of partners to put something together so higher volume, more vertically integrated. you're probably seeing stuff sooner the more dispersed, the more high ticket and maybe lower volume the item is maybe you don't report it as soon. >> the other thing we have to talk about as far as stock price reaction, it's happening along with the broader market. this is a group that was sitting near record highs. pretty much all around and the context is key >> it is so we talk about panic and we don't want to do that. the antidote to any panic or hype is data but the data is so difficult to deal with because

it is lagging. i think we have to rely on, well, we saw what happened with apple. nine days later, a few days later hp now microsoft. we'll hear what dell has to say. we'll hear about demand from chip makers. one of the things hp said that was interesting was, well, we expect this will push out some of the windows 10 upgrades so that might actually be kind of positive for the second half assuming as everyone hopes that this gets under control. little bits of commentary but nobody is willing to be nailed down on this yet >> dow down 3% now, 800 session lows this is so different from the conversations we had about tariffs. where all right. you want to diversify your manufacturing, maybe take a look at vietnam, take a look at taiwan japan. clearly viruses don't respect borders. a much more -- much more 3d chess. >> it is carl, one of the things i've been thinking about as we continue to cover the way this is impacting business and more important the way it is impacting people, this fits inside the broader narrative of

globalization versus protectionism and nationalism. people move. railro goods move no matter whether you are a globalist or not this is the reality we're talking about right now. and whether you like it or not, we are in a world where data moves, goods move. people move. you have to deal with consequences the eu dealing with that right now as well seeing some headlines talking about do they close borders? well, you know what? i mean, even if they do close borders, the fact that we're looking at this in the u.s. right now i think so etmuch mor seriously has to do with the fact there is a lot of people traffic between here and europe regardless our borders aren't wide open you really can't contain this sort of thing very easily and business especially has to do with crossing borders. that's how it works, right >> see you in a few minutes. john fort. time for our etf spotlight today taking a look at xly down 9% this week

currently trading lower by less than 3%. as for some of the travel related components, hardest hit, marriott posting a quarterly revenue miss saying it cannot fully estimate the financial impact of the coronavirus. that stock is hanging in there booking holdings on the rise after beating on both the top and bottom lines, the parent company of priceline did issue lower than expected current quarter guidance as the coronavirus outbreak impacts travel demand. maybe it was already in some of these stocks which had born the brunt over the previous sessions because they are relative standouts in what is a sea of red here technology as john was talking about is the second worst performing group down almost 4% with energy getting killed again today down 7% as a group >> i am seeing some of the other travel related names that have been weak. expedia, united airlines down more than the market decline at this point uber by the way is down 10%, worth taking a look at shares of uber i mentioned earlier and i think a lot of people have done work

on trying to determine the percentage of overall rides that originate at an airport for example. you've mentioned this, too, sara, as well, in terms of getting in an uber and germs people are worrying about these kinds of things. people are worried about any business that relies on the congregation of people to make it go or service economies overall where people need to report to work you are starting to hear those things and getting a lot of texts as we continue the show. that is reflecting in part on what is going on in the market >> plans are changing in real time i've been talking to the imf for instance they have the big spring meetings in april. huge international crowd they're evaluating their options as well as what to do, whether to scale back or cancel it anything, the go outside kind of stocks, like uber, leave your home stocks have been hit especially hard versus the stay at home stocks like peloton for instance which has done better >> uber at one point in february was up 38% year to date. now up 4%.

>> there have been some dramatic declines in a lot of the names the move down in the yields, sara, i'm curious, the fed here, there are times in situations like this where we immediately turn on, would expect perhaps a cut that would help. what is your take? morris is talking about it in "the wall street journal" this morning. what are your thoughts given how little ammunition there really is >> first you look at what the market ispricing in. we're looking at three cuts and one coming as soon as potentially april. they're starting to even increase the odds of a march cut. we're not there yet. clearly, there is an expectation the fed will cut but everyone is saying that that's not necessarily going to be what is going to help the economy here on a supply driven shock i would also look overnight to south korea. the expectation is they would cut rates. they didn't. and the currency strengthened on the back of that central bankers are still sort of holding their fire and want to see like everyone else what the impact is going to be on the

economy and whether there is anything they can do to help but the market is pushing the fed no question about it. >> down 850 and s&p 3019 let's get to sue herera for a news update. >> good morning, carl. good morning, everyone here is what's happening at this hour john was talking about trade just a few minutes ago the british government is now publishing its opening demands for trade talks with the european union and making a very blunt threat to walk away from the negotiating table if there is no progress within four months >> the british people should be in no doubt, at the end of the transition period on the 31st of december the united kingdom will fully recover its economic and political independence we want the best possible trading relationship with the eu but in pursuit of a deal we will not trade away our sovereignty >> at a hotel in spain's canary islands several hundred guests remain in lockdown for a third day due to the coronavirus

four italians who had been staying there tested positive for the virus and have been moved to a hospital. pope francis skipping a mass in rome today due to illness. francis was seen blowing his nose yesterday during the ash wednesday mass and vatican official ls say the pope had a slight indisposition we wish him the best all right. that's the news update this hour guys, a lot of news that relates to corona and the markets out there as well. so we're following that for you. sara, back to you. >> sue, thank you. we are about an hour into the trading session getting a quick check on the markets another ugly day dow down 900 points. down at session lows 3.34%. s&p 500 down 3.3%. and the nasdaq is down 3.7%. technology getting hit especially hard along with energy sixth day in a row of declines looking at our worst week since october, 2008. our next guest says the sell-off we've seen this week is quite rational given inflated valuations in the market

joining us now for more is the partners group adviser partner and former institute of international finance ceo, welcome back to you. >> good morning, sara. good to be here with you >> what do you mean? how are you seeing this sell-off as it relates to expectations for what the economy is going to go through here? >> well, let's face it moving into this crisis, sara, market values in many corners of the market were inflated i think not fully supported by fundamentals and had been fueled in part by the lev taitation bye federal reserve and other federal banks. i think it was inevitable some factor would come along and cause a correction this has been the factor the question now is how to stablize market confidence as well as deal with some of the very difficult supply chain and related issues >> how do you do that when this is such a moving target with so many unknowns? >> well, i think there is a growing need for coordinated action it has to be coordinated across

the major central banks but not just the central banks but the major governments. let's take an area like health care policy. i'm not sure at all that consumers around the world have built confidence in the w.h.o.'s leadership in this respect what about creating a war room in atlanta beside the cdc where health karau figurescare officit come together and share real time information and coordinate policies on the ground there it seems to me something like that is needed beyond that, however, i think there is a real opportunity and need here for the u.s. and china to show global leadership. if my good friend and your former colleague larry kudlow is listening, why not immediately within a matter of days roll back all of the tariffs that have been raised during the trade war? the tariffs even as they stand today after some of the pullbacks are still well above where they were two years ago.

both sides need to say, what can we do to provide a jolt of confidence to the markets? now, this is not going to correct a lot of supply chain problems >> not even close, right >> but it will send a powerful signal to the market that the two leading economies of the world are working together in an extraordinary time to find some ease of market pressures >> charles, even as we speak here, there are certain parts of the global economy far outside of china right now that are being paralyzed as a result of people are just not doing things and business is not getting done i mean, nestle has banned all travel for 300,000 employees not all of them are getting on planes all the time but it is so difficult it would seem to have any sense as to what the real economic impact is going to be of this fear of the virus. >> you're right, david but don't under estimate the potential of coordinated action. i would say that your point and what sara was talking about earlier underscores the need for a serious look at some coordinated fiscal policies.

what country is better positioned in the whole world to join china today with fiscal stimulus is germany. strong fiscal position and europe now is facing its own supply chain problems. that is very clear the lombardi region. sixth largest region in europe is now under tremendous pressure i think we need to think about coordinated fiscal policy as well as, yes perhaps some coordinated monetary policy. but let's keep in mind that further interest rate reductions in europe are going to put further pressure on the banks there. there will need to be some special programs to take off some of the burden of bad loans off the balance sheet of the banks here if this continues for some time because we'll see this accumulate >> what you say makes a ton of sense except the world is moving in the other direction not coordinated policies but they're moving toward their own policies and putting up borders and travel restrictions and dealing with their own

problems away from international institutions isn't that more the trend? >> well, it is, sara you know, some coordination doesn't take getting on airplanes. the fact is look back at what happened in april of 2009. it wasn't central bank coordination that shocked the markets back into -- >> g 20. >> it was the g 20 and the multitude of measures they took at the time the same with the accord 35 years ago. it was a coordination across a range of policies. doesn't require you to get on an airplane okay vice no one is going to do that now >> the question is how much institutional erosion has there been because of trade tensions, geopolitical tensions, the way we approach nato, g20, wto, china. how much of it can be repaired or does it need to be repaired >> that is a good question this is an opportunity for repair in my view, carl. the u.s. has got to recognize at some point here that allies are

critical we can't fight this coronavirus ourselves. it is obvious. so this is a great opportunity to show that despite all the tensions that have grown, despite the strategic rivalry the u.s. and china can find common ground to work together we need to do it obviously with japan and europe as well i think unless they seize the opportunity here, we're going to be getting closer and closer not just to and china weak spot which is already upon us but to a global recession >> how do you think powell is going to react >> tough question. tough question you know, he is obviously sitting there thinking, but let's think about it the next fomc is almost three weeks away that is too far out. it's why, again, i would call -- >> three weeks can't wait three weeks for a cut? >> look at what's happening in the market place here, carl. i think that there are times when central banks and other government officials and i don't want to put the central banks in the bulls eye here even though that is the tendency we all have because i really think that they have done so much already. there's not much ammunition in the powder room at this point

for them i think the fact is that they do need to look at coordinated action and it would have a greater effect if they step out beyond their own -- >> what about action rate cuts? >> you could consider rate cuts but another action would be one unified statement they will all take necessary measures to inject liquidity in the markets and support their financial system according to their own circumstances. that may sound a bit too nuanced but the fact is everyone is in a slightly different situation >> so are we there we're in that crisis moment you think where they need to come out with a show of unity and say we're going to inject liquidity? >> i think they need to be seriously considering that right now, sara. i really do. i would not do that independent of getting some coordinated fiscal and health care action as well the world needs some signs of confidence that policy makers are working together here. and aside from all of us getting off airplanes and all of the supply chain disruptions that are happening and it is not just supply changes disruption but service and maintenance disruptions. every machine made out of china today has a service technician

behind it who is based in china. no one wants to see that >> but closer to a response to a financial crisis than economic crisis we don't have a financial crisis >> no we don't we have a financial system that certainly in europe and japan has some weak spots. yes, capital, the u.s. financial system is here remember we also deprived policy makers as a result of our wisdom after the global financial crisis of the ability for governments to step in in some circumstances and stablize individuals financial institutions we don't have the financial crisis but we need to anticipate some confidence boosting measures into the markets, into the economy, a collection of actions here you know, some guaranteed credit coverage for the npos that are going to go drastically in europe and china are really needed because that can back into the banking system before you know it. >> you will hear two things. one that the emergency measure spooks the markets in the short term what are they worried about that

we don't know yet? and the other is that what if -- what if we've seen cases roll over in china, right what if the same happens with an echo around the rest of the world and this does come under control? how do they reverse that will they have over reacted? >> perhaps so. but it's a calculated judgment call it is a difficult call i mean, you know, the spread of one community case has sparked another round of anxiety in the u.s. today the number of cases in italy are growing. the travel restrictions and other constraints on the supply chain have now severely impacted the global economic outlook and commodity market i think right now the risk of -- is greater on the delay side than it is on the action side. particularly when it comes to using some coordination. let's find the phone number, get some stuff done. >> larry kudlow, are you listening? thank you. >> a pleasure to be here with you. >> meantime, wall street sell-off putting more pressure

on the fed chair to cut rates. yesterday former fed chair janet yellen did weigh in on the virus impact the potential impact to the economy. >> we could see significant impact on europe, which has been weak to start with it's just conceivable that it could throw the united states into a recession i think if it doesn't hit in the substantial way in the united states, that's less likely we had a pretty solid outlook before this happened and there is some risk but, you know, basically i think the u.s. outlook looks pretty good >> our steve liesman joins us to weigh in on that how you doing? >> good morning, carl. pressure is growing on the fed chairman to react to the mounting threat of the coronavirus. former fed officials as you just heard, the president and especially as sara was talking about earlier markets, here is the probability now of a rate cut in march or the march

meeting just a few weeks away. it is skyrocketed, doubled in the last day or so now it's a 75% probability so the fed going into this meeting with a more than likely chance or the market pricing it for a rate cut, 51% of a second cut in april and by july already the market pricing in a third cut. this is a potential problem for the fed chair. throughout the crisis, fed officials have said it is too soon to tell if the virus will change their outlook enough to warrant the rate cuts. they have said they would change their policy if the outlook changes meaningfully but this morning in "the wall street journal," former fed governor kevin moore said the time has come. he said the federal reserve should leave the world central banks -- lead the world central banks in immediate action. the window to contain the virus in china has long since closed and window for effect on the rest of the economy remains open but not for long the president in his news

conference yesterday once again urged his fed chairman to reduce interest rates into negative territory. >> we should be paying the lowest interest rates and when germany and other countries are paying negative rates, meaning they're literally getting paid when they put out money, they borrow money and they get paid whoever heard of this before it is a first. but we don't do that so i totally disagree with our fed. i think our fed has made a terrible mistake >> all right with only a few rate cuts in his arsenal the fed chairman jay powell faces a series of daunting questions first should he act preemptively before the effects of the virus show up in the data? second, when to pull the trigger and whether cuts would do much good in face of a problem that at the moment is a supply problem from china and not yet an economic problem here in the states >> and i would add a third, steve, which is how much market pain can this fed tolerate we've seen before that it is vulnerable when the market starts plummeting like this to changing its policy. >> yeah. >> so are we at those levels

now? >> and i think it is well to point out, sara, it is a great question that i think powell thought he was in a good place in a lot of different ways, which is one he had kind of had the market at bay. no longer chomping at the bit for another rate cut they had gone, remember, a tightening bias into easing into hold three different phases in the last, say, 12 months or so now he is at a point where he has to hold it at bay and wants to see the data. he may not get the luxury to wait for that. where the market is priced i don't think he wants to add to the down draft in the market essentially by not fulfilling what the market expects. if we go into that march meeting with the 75% probability, i think, sara, it may be time for the fed chairman to talk again >> yeah. our guest just told us they don't even have the three weeks until the march meeting that we're getting to real loss of confidence levels into how to

ring fence the financial market losses >> i know, charles, the way you do for many years, and he talks a lot of sense so does kevin warsh. if there is going to be a reaction to take a play out of the financial crisis handbook which is a coordinated, global way which will have greater impact and tell the markets that, hey. the fed is onboard the fed is watching. the fed is responsive here the problem being every time you have a downdraft in the markets the markets become conditioned the fed is going to step in and rescue >> steve, thanks >> as the sell-off gathers steam we are joined on the cnbc phone line by the president and chief investment strategist of yardeni research and not surprisingly his name is ed yardeni good to have you i think you previously identified 65 panic attacks during the bull market >> right >> this long bull market you believe that coronavirus may be the 66th.

is it fair to say it is? >> absolutely. there is no doubt about it as a matter of fact, we first started to talk about the possibility that this would be the 66th panic attack the first day of trading on february and that was after the late january sell-off we just said that it could be. and then -- and at the beginning of february we actually listed it as a panic attack number 66 the question is whether it is just a panic attack which means it will be followed by a relief rally and is actually just a great buying opportunity or whether this is the beginning of a bear market. i'm still in the panic attack camp >> you are what about the impact of the fear of the virus, which clearly is impacting economic activity around the world >> yes >> and causing a potential recession? >> well, the pandemic of fear is really what is driving this stock market downward. the reality in terms of the data

is that so far covid 19 as the virus is called is much less severe than a typical flu season and that yet the fear of covid 19 is spreading faster than the flu. that we see on a regular seasonal basis so there is a lot of fear and i think part of the fear is being fanned, fueled by the government reactions, which have been extreme. but then again, the fact that the governments are acting with these quarantines and rapid fire announcements that, you know, we all have to be careful, people are flying less. people are interacting less. businesses are canceling meetings so this pretty significantly i think increases the odds that this, too, shall pass. just the way other flu viruses, coronaviruses have passed like sars and mers and so on. so if we start to get more evidence of that and there is,

you know, nobody trusts the data coming out of china but there is some evidence that maybe the worst is over there. i think as we see the government actions are working the pandemic of fear will abate and the market will come back. >> so what type of earnings of fear will abait ate and the mar will come back >> what type of earnings are we looking at now >> very important question because as you know, last year we had a great this up in the stock market, started right after christmas back in 2018 the p/e multiple back then was 13 1/2 and we've soared to like over 340%, up to 19 on the forward p/e multiple, and now we're down to 17 1/2 we had a p/e-led up, because we had an earnings growth recession last year. there was no growth in earnings for all practical purposes part of that was it was tough to

compare earnings last year to the year before, which had this big boost from the tax cut but we were all -- not we were all, but the bulls, including myself, were expecting this would be a good year for earnings and everything started to kind of line up that way. the economic data for january has been very strong, broadly speaking but then the virus hit and it looks as though we're going to continue this earnings growth recession, which i guess is actually an optimistic outlook, because some people would say we'll have an outright recession with earnings taking a dive. so to your point, analysts have been cutting back earnings expectations pretty dramatically and now they're expecting basically close to zero in the first quarter year over year percent change >> shouldn't we be talking about beyond that? >> you're absolutely right i'm watching the quarterly estimates. they are lowering growth estimates for all four quarters

of this year, but they're still sequentially looking for an increase they tend to be optimistic and they're not as fearful as maybe they should be, but i would expect in the next few weeks they'll cut estimates. >> a lot of people know you, you're sort of famous for the bond vigilante we were talking to charles delaura. is there a point at which you can have an equity-type vigilante situation to push governments to coordinate health care policies more, to push central banks to coordinate monetary policies and for governments to ask for a fiscal action as well >> one of the things that's disturbing about panic attack number 66, this one is not clear that policy response is out there that can do much other than what it's been doing in terms of the health care response of governments, the quarantines, and the warnings. you know, i heard -- i watched

the conversation about the fed cutting rates here, and, you know, they may very well be forced to cut rates, but let's face it, the fed can fix a lot of problems and they've tried to fix a lot of problem, but this one you can't fix. you can't make the virus go away pouring more liquidity into the economic system and can't make people go to work if everybody is in panic mode >> ed, all right pan sick the woic is the word, . >> yes this too shall pass. >> good to hear. we should point out the s&p is off the lows of the session, now down about 2.3%. we had been down as much as 3% >> crazy moves here, down 900 on the dow, now down 630, which looks a lot better than where we were meg tirrell has the latest coronavirus headlines. >> that patient in california who may be the first person in

the u.s. infected through community spread of the novel coronavirus wasn't tested for days that's according to the university hospital treating the patient. that's because the person didn't fit the federal criteria for testing. the news comes amid calls for broader testing in the united states health secretary al aex azar telling lawmakers testing capacity is expanding. the who whov who has the virus has pandemic potential the w.h.o. says it's working closely with the international olympic committee noting previous olympics have proceeded during epidemics of zika and sars >> let's get to the cme and talk with rick santelli and get the "the santelli exchange." >> peter chur from academy securities, et's get right int it so many strategies have been born over the last handful

offensively years, things like risk parity, where traders and large managers load up on equities during periods of low volatility, volatility being the trigger. do you think that many of these strategies along with machines have contributed to the way markets now respond? >> they definitely do. i think you're seeing that as you get these unwinds. one thing that concerns me most is a lot of these strategies have been relying on you own equities or risky assets on one side and treasuries on the other side for the last couple weeks, they've moved in lock step that balancing allows people to keep their portfolios. we've seen stock weakness and treasury weakness in the past couple days, and that's a recipe for disaster anything that stops bonds from rallying when stocks sell off, you get more selling they'll have to go from dwe v e

derisking to are tedeleveraging >> things like etfs have many huge benefits to many investors, but sometimes during periods of big volatility, like we're in now, they create these negative arbitrages you've written about them. give us a quick explainer. >> so right now the high yield etfs, for example, trade about a half a percent cheap to fair value. in theory, that should look attractive but the arbitragers come in, sell bonds and redeem the etf. that's why you're seeing those investment grade, and that creates a negative feedback loop because the selling of bonds puts pressure on the bond market and is disproportionate to the relief given by buying etfs. it's technical but it forces this algorithmic selling i don't think we're close to

being done in the high-yield space. >> not being done yet, much of this may be exaggerated by the interaction between large institutions and large speculators regarding the end of the month rebalancing. it's going occur and the indexers get market on the close tomorrow, but do you think rebalancing would happen to be at the inopportune time or something that should be looked at to get these institutionsto find better methodology? quick answer >> i think they should rebalance over the course of the month pick some other day during the month. you're already trying to squeeze a needle through a -- just too little liquidity and too much volume going through rebalancing is smart, but don't do it at the end of the month. >> peter tchir, thank you for your thoughts. >> thanks a lot, rick. >> carl quintanilla, back to

you. i eel take i >> i'll take it, rick. one stock that is a great beneficiary of what's going on is alpha pro tech. a very small company, but they do make proprietary facemasks. the stock is responding. >> they probably can't get them anymore. >> probably not. they do make them all in the united states. sourced domestically >> probably having supplies problems >> sara, obviously the market is going to be the key as you're following on "the closing bell." we follow all day into that key hour >> the most important hour of trade. boy, has it been dramatic in recent sessions. we'll be all over the sell-off for you. we have a great lineup guest to help you navigate including

blackrock managing districter to rick rieder. we'll ask him about the moves and what the level of fear is in this market. >> see you later on. we should mention s&p is some 40-some-odd points off the session lows good morning it is 8:00 a.m. at microsoft headquarters in seattle, 11:00 a.m. on wall street, and "squawk alley" is live ♪

good wednesday morning welcome to "squawk alley." i'm carl quintanilla live with jon fortt at post 9 of the new york stock exchange. the sell-off continues as the market is facing its worst week since the great financial crisis tech sector's off more an double digits from its most recent 52-week high bob pisani and mike santoli are here to conduct off the hour, evaluatin evaluating, characterizing various asset classes. how is junk? >> it's sloppy today it's held in very well credit spreads have been okay. but through the etfs you can see people who are pulling money from that asset class. that's another wrinkle where you're starting to see the kind of radius of stress expand. we've been waiting for the market on a short-term basis to get to further extremes of being oversold, vk a lot of fear, accelerating to the