good morning i'm becky quick along with joe kernen and andrew ross sorkin. let's get to the markets because the dow just had its biggest point drop in history falling 1,191 points the s&p 500 had its worse day since august 2011. 10% drop from the highs in just about six days showing you where things stand now, dow futures indicated down

by about 414 points. things have bounced around rapidly. we've seen the volatility. part of that was the big selling that happened. nasdaq off another 140 poijnts. looking at the 10-year trading down talking historic lows every day when the 10-yearwas above 1.2% on the ticker, i was looking for it this is an important time to

watch that, didn't you think >> it is crazy it's a new time line to look at global rates we never thought these type of rates would get to us. they are still higher than the rest of the world is at. it is still staggering it is unbelievable and shocking on the daily basis. providing the context. it does not happen often they are usually tied to an event. 1998, it was the collapse of the he hedge fund in 2010, resulting in a drop

2008, the financial crisis led to a four-day decline of more than 1,500 points. and now the coronavirus with a loss of 3,200. >> the big one was 1987 that wasn't really precipitated by any other event other than insurance. 22% in a day i want to make a point about all of these in virtually every instance there was a firewall the fed announced different plans. factoring in long-term capital there was a piece of news which seemed to provide some confidence back into the market.

so the question in this instance is what could that piece of news be or do we continue to go south. we are on a friday are people going to walk into this weekend wanting to hold on to stock because who knows what will happen over the weekend? >> i've already gone past that this market hasdo downgraded a lot. we are looking at a negative gdp in near term do you really think that's going to happen? >> i can give you a lot of optimistic pieces.

>> that should be good the problem is if you have something with very concerning symptoms >> with sars you had 10% ebola was a 90% mortality rate >> i thought this was a big selloff. what happens if you start to see school closures? >> i think the market already reflects that. >> you know you will if schools don't close, they'll be on the line >> nonessential international travel, no nonessential domestic travel, no

good when does that news roll off >> you brought up capital, a hedge fund goes up there is no magic bullet there is a magic bullet. we are on with kevin to talk for a few hours. one more point >> by definition, if you go 12% from the highs the market is discounting something really quickly and also, i'm not looking for silver linings short, sharp corrections typically are ones that are eventually settled by remaining. >> i believe there is a hockey stick at some point.

>> i'm worried about a big u you looking for a v? >> a hockey stick. what is the thing that is going to flip it >> did you ever know what the thing was before >> no. it was tough there was real fear in '87 all the dow components were single digits. >> you weren't around for that >> no. i was in high school >> andrew will make the joke how does it compare to 1929. i was not there. i was there as a stock broker in 1987 it was horrific >> you don't know the black swan event or the white dove event. >> american express down 18%

>> if you look at the charts for the week, it is crazy how much money has been lost on paper unless you took the lozs the question is were we trading too high before? >> they felt stupid about holding stocks everyone wanted a better entry point. >> i'm trying to engage the friday, we could have 1,000 cases over the weekend you don't want to hold that, i'm trying could offset the perception that this may be seriously overdone there was a thought to be a

vaccine. you are going to get one of those. maybe you get that type of event. i would think most people think you are not going to get the rally back on the friday before what could be terrible news cycle on all the sunday morning shows. >> that's what jim said. you don't typically see a turn on a friday. >> do we believe china when they say it looks like the severity is lessening >> do you believe that or do you believe as they say, look, as we are sending people back to work again. >> if you stopped it near 70,000 to 80,000 in a country with 2 million people >> i think the measures they took, now they are worried about

the economic impact and sinding people back to soon. >> i went to the gym i told the guy there, i hope you saved some money because in two weeks, no one is going to be there. all the machines, people sweating on the machines, you think people are going to go there? >> in my mind, i've already discounted it. >> you are right >> joe is ahead of this, he stopped going to the gym two years ago. >> i was there yesterday, i just said i couldn't help but thing, if you were there, you'd be like this >> i do. i wipe things down but it is like this thing will pass. >> movies and restaurants. >> did you see the woman from

starbucks who sent the note out. she was wearing a mask through it i'm sorry, if you've got to wear a mask, i'm not going to starbucks. >> the long-term chart is down on average 10% per year. you have to say, do i buy into it or hold in the long run >> giving you a quick round up overnight. issuing profit warnings including finnair and iag which owns south korean airlines hyundai closes a factory after a worker tests positive for the virus. tokyo disney will close through march 15 take a look at shares of disney

down about 17% to date new zealand confirming their first case of the virus, china reporti reporting march -- march >> a town in germany quarantined. >> a lot of this stuff is deleveraging where you have trigger effects where you have to sell. this is not the individual sitting home saying i don't want to own stocks anymore. you are not seeing that. >> the first 1,000-point day was unsettling you get a couple more. that's incredibly unsettling when you are doubting you'll get

the first 1,000-point day. aren't you discounting something serious. i know it is a friday. >> people aren't realizing how much it is electronics and algorithms that are triggering off of moving averages where the market spits out the sell orders that's what happens with the marketplace. we have to keep watching the 10-year. i don't know whether i should hope on friday for stabilization. >> what is concerning is hearing new so many the governor from california saying we only have so many kits if they could get more kits out that would be reassuring

>> we've talked about how many the flu kills every year in china, every day from pneumonia, there is a lot of elderly people that just -- >> if you are healthy, like with the flu. if you are healthy, you should not be passing away from this disease. when you look at 2% or 3% mortality rate >> the flu kills 0.1%. if you don't know what the mortality rate for this is yet the lowest number i've seen. new york times had a number 0.4% that is four times what the flu takes. if it's above 1% or 2%, i think you you are talking about an issue. >> i get what you are saying >> if you have parents or anybody older. this has taken people in their 30s and 40s.

>> i get it. this is life i'd rather pick this over ebola or a host of other things. >> ebola never made it to our shores >> it almost did if it is a very nasty case of the flu, that will make you feel better unless it shuts down a lot of activity in the united states >> you don't know how many people if they are underestimating. >> the lowest i've seen is 0.4%. even though the traditional flu is more widespread >> coming up, we'll have more on the selloff and talk to the market watcher after the break

the focus now turns to the fed what if that cut doesn't work. do you wait until monday do you do it at all? we have the guy some people think trump would like to replace jay powell with, kevin warsh will be on two hours >> he hasn't been on in a while, not since 2018 >> a friend of the show. >> too young to be so important. we take a look at the biggest decliners of the nasdaq 100 this week we'll be right back.

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the losses this week have been brutal. the dow swinging widely and ending yesterday with the biggest point drop ever. as we pointed out, at these high levels, a point drop isn't what it used to be but shakes the

ground >> i have to say, i watched cnbc all day yesterday. i was glued to it to see what was happening. >> a correction this fast has only happened four other times since world war ii i would like to be having the 10-year note go by >> joe, i don't see any bounce in yield coming anytime soon even if the fed cut twice at 25 basis points, it has already been impacted in the market. one of the things most interesting is, you know, i deal

for the most part with large money manager institutions i've been able to take profits in this market i'll tell you where. yes, last hour you had people talking about high yield spreads. investment grade bonds the absolute value with the 10 year at 119. i've been able to take some properties my strategy is to take in the bonds. i'm taking in profits and the bonds right now without the sales and getting ready at some point for taking in some opportunities but i don't think we are there yet >> we talked about the selloffs we've had in the past.

in hind sight we've identified, something that happens or at least changes the sentiment. we don't know how that happens in early stages of the pandemic, are we stuck with a month or two months or six months of uncertainty where we will not have any resolutions or can the market get to terminal pricing quickly i was making that point that it is discounting, i think, a lot of the worst cased scenario. >> here is my view, you've got to separate the most important thing which is people and their lives and their health you've got to take what is happening with the coronavirus and look at what it is doing to

business and gdps across the world. airlines, travel companies, cruise lines, shipping companies. the companies and the sectors being affected by coronavirus. i don't think that will hlet up any day soon the snap back will be as sharp as the selloff if that is something that will last for years or quarters. if we knew this was going to quiet down in the summer, you could handle one month or a quarter of tempered business activity you'd look beyond it >> you are right if we knew that. none of us know that

what we know is that this virus is having significant impact in china, they are running their money, their cash through ultraviolet machines because they are afraid the virus is being carried on other things other than people. it find out that boxes, shipping paper, boxes and money are able to infect people i'm not making a judgement but saying at this point in time and so uncertain that the sell off is normal and what should be going on but if you have some kind of balanced portfolio, you are getting a terrific

opportunity to sell bonds and profits. i don't think anybody is talking about it all they are focusing on is the carnage and quity, which is true the silver lining is the bond markets would you could raise markets and make money we've had dozens of 12% corrections that didn't involve a pandemic maybe it needs to be more than 12 i could argue both sides of all of these issues. if we were to stop at 12 with the potential pandemic, it makes you wonder what caused all the other 12% breaks this seems to be more obvious than that. 25, 30 is the real selloff do you foresee that?

do you think it is 50/50 we go into bear market territory >> joe, i think, if you want a number from me, i think it is 60/40. >> 60/40, we do? >> we are going to go lower in equities, bond markets will go higher i've been on wlg street for years. this isn't a similar situation this is a possibility of a pandemic affecting people and their lives and a huge effect on businesses and supply changes and a wide variety of interests and i don't think many people

are focused on how dismal it is getting. >> how low do you think it will go if bond prices will go higher we are already on the 1% for the bond year. it looks like two rate cuts are baked into the market. i think this is going to earn here senior's pension funds because of the absolute value. >> the technician that was on yesterday, saying does it really base the on. it does still. if you believe that. if you believe the market takes

into account so many different things, even ai, we are unable to do that at this point maybe it does matter with such an outliar >> technicals have been impacted by the great unknown >> you still might benefit from paying attention to some of that stuff. maybe not? >> the issue with technicals is that no one knows where this will go. we know the levels on the charts when people want to set their buy or sell levels, they can't just set it at the market. so technicals are more important now than if utd a fundamental

case in the market >> they gauge how people feel. people's feelings are still affecting where the market is headed valable to thank you, mark. more coming up on "squawk box" this morning more on the market selloff we'll talk about the big drop in the faang stocksing. the impact a krolgts cross the fund we'll go to london for a live report >> announcer: 3,225, the amount of points the dow has lost so far this week. ♪ ♪

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good morning and welcome back this morning. we are live from the marketsite in time square you are looking now, the dow would open down about 440 points, the nasdaq down about 47 points the nasdaq down about 120. the dow had the biggest point drop in history, falling 1,190 yesterday. and having fallen 3,700 points this week alone.

major indices across the world falling. we'll go to london now for more on the big market moves. willem >> you can see the major equities, all four across the continent here well into the red. it was worse a couple of hours ago. the outgoing bank governor of england talks about companies like iag, the airline giant, warning about the adverse effects. in germany there, a town under quarantine with over 1,000 people there with 14 cases that came up overnight. in italy where we still have around a dozen towns under quarantine, new cases in venice.

seeing where the pain is felt the most, resources down 3.6%, technology down 3% big questions about supply kmans. retail, food and beverage in europe, you might think they wouldn't be that affected. even they are affected across all of these sectors >> thank you we'll focus on what is happening next our contributor will help us look through some of this i think we'll take a two or five year look at this to get a sense of where we are. put this in context for us >> sure. these are the key levels you want to watch here

the 2,350 level. >> this was in november of 19. everyone is talking about this runup. i'm sorry, this is 18? november 18. >> when we look at this to put it in perspective, as andrew said, you have this tremendous run to all-time highs here you have to look at retracement levels when i look at this chart. this level, yes, it is important. look at that if really rome was truly burning. what you want to keep an eye on now is the 2,855 level the october level. >> why is it why that october and not this one >> there is a move that started here but this move is most

recent move. if you want to pair it back and say, okay. i want to take a real macropicture that will be more gappy if you took the move from october for me, the more significant move is here this is a collapse these are one off events this is where the real move started higher for me. >> we had the collapse move, the rebound where we are higher here >> if you look at this type of decline here, this is a dramatic decline. >> where did it happen this happened at these levels, this level where did we come from >> right but this was fear that the economy was going to turn south? >> sure. it was fear.

my point is for you to look at the replace many levels. this is rear window. focus on 2,855 if that doesn't hold, then we can discuss rome burning again >> let's look at the vix gauging fear in the marketplace. >> this is just a crazy chart. when we go back here these type of things when you look at the vix, people offset now than they used to set it back at these levels here this is more of a standard approach looking at the vix, we are at 40.47. i believe in the crisis, we can't see the level where we are at 44.

is this a financial crisis level we are talking about i don't think so where did we come from a couple of months ago, you could have bought the vix around $12. where do you think the retracement here, the important level for that will be 25. you are looking at retracements. technicals become more important because people can calculate the 50% moves from the major moves you've had that's what people put there >> let's look at the two different stocks let's look at apple. they've been hit and hit hard all week every day is a worse situation >> i'm long apple. the 100-day moving average is basically around 280, around that level on the down side, it is 240.

if we have another biting selloff in the name, it is right here so basically, you what nt to see this level hold. if it doesn't, this is where you load up. i would not buy more i will not buy anymore i'd rather see buying on momentum than weakness i think it is a prudent strategy >> you are looking here. this has been the same story >> same story. this is an important level the 100th day. if you look at the 200th day, you go to 145. microsoft is sitting here. i'm long it. i would not buy anymore until it trades above 165 >> the number to beat. >> you either buy on momentum

here if it goes below 145, buy it on weakness you are caught on two levels >> steve, thank you. when we come back, we'll look at which companies could benefit from employees working remotely >> don't miss our exclusive interview with kevin warsh he'll talk to us about what is happening. as a remainor. you can watch or listen to us live on the go on the cnbc app we'll be right back. is changing things up.

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after the biggest point decline we've seen in one day taking place yesterday, you are looking at the futures down yet again today. we have seen the dow down 3,225 for the week futures down another 426 points.

looking at the s&p, the correction taken place here is the fastest in history six days where you you are seeing down 10% is a huge pull back we are really back at levels we saw in october a very important week. what unto one to be watching looking at the 10-year, back above 1.2% at 1.208. we have seen levels below that, 1.17 was the lowest? >> it might have even been below that that's progress. >> to be back above 1.1% >> stocks are following bonds this morning >> bonds are bigger market you need that to stabilize and probably don't need a big strong

up opening today >> i'd rather see what we are seeing right now where we are seeing the weakness with some sort of a rebound before 9:30. then everyone starts to get sucked in where you have a close. you'll see the fade. if there is another fade and strength >> i'd love to see the rebound >> the truth is, going around this table, there is not one person going around this rebound makes me think there is some sort of news headline coming out regarding the federal intervention the mere fact that no one expects it today makes me think it could happen today? >> fridays have been bad and produced a really bad monday

monday do be bad very few people are calling for a rebound on monday. jim is putting money to work now maybe i ruined it. >> now it is on. i think you have a better shot of rebounding next week. whether monday, tuesday, middle of the week, those are key days you think the market can have a substantive bounce off the bottom this is such a headline risk market swroo you shou >> you should be buying stocks right now. if you are a long-term investor, you are putting money in the market on a monthly basis on a regular basis so it smooths all

of the these points. >> looking at potential impactly stocks the first anybody asks about is netflix's. >> there is absolutely no exposure to the virus there. you'll be sitting home streaming. the problem is, if everything happens the way we are talking about, if we get a rebound, all of these safe havens will ol off and see this go lower. we could see a reverse by disney if this reverses >> you like zoom why do you like zoom >> i do. i was a germophobe for years

>> with that dirty beard >> who says it is dirty. i take two showers a problem wir you can't shower every day multiple times but i take two showers a day i digress. >> i do it more, actually. sometimes i go home, take my makeup off, go to the gym, have three or four. it's crazy >> when you're in the shower, where's the hair see, a best defense is a good offense with joe you have to keep him on offense. >> you played that well because you're only here for another ten minutes. >> quick, say something, becky >> a weave, you can actually leave on and we digress did you see that

>> so i guess the takeaway is watch out for the safe haven plays because if the market reverses, a lot of safe havens will get back a lot of other runup. pelotin, it's trading around the ipo price. >> coming up with more oil stocks taking it on the chin, but our next guest has a reason for buying them now we'll talk about that. clerin took at the biggest deins he dow over the last week. stay tuned you're watching "squawk box. we're back in a moment don't just plan to retire. plan to live. an annuity helps cover your essential monthly expenses, so you're free to live the life you want. find out how an annuity can give you lifetime income at protectedincome.org

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welcome back to "squawk box. the energy sector has been beaten and bruised and just about every adjective you can use. the oil prices tumbling farther.

32% below its 52-week intra day high hit last april, but a number of energy stocks have very high dividend yields. we'll look at a couple and talk about how to play the energy market given the dip, with rob good morning to you. you actually think you should buy right about now. >> yeah, the energy sector has been beat up you're right and you know, there are companies out there, though, that have resilient cash flows energy is essential. we're going to continue to use energy energy demand dploeb alhas increased 36 out of the last 37 years and throughout that period, we had other instances of virus outbreaks there's been sars, mers. energy is so essentially and it's very cheap from a valuation perspective. >> you're looking at chevron, bp, exxonmobil are those the stocks you would

buy? >> those are the biggest energy companies in the world we like more of the midstream. energy infrastructure, more than the producers. because in energy midstream, those are where the resilient cash flows are bp, chevron, exxon, all have commodity price exposure in the energy sector today, really, the most precious commodity, and people that are generating cash to buy back shares and pay dividends, and in the case of exxon, they can't do that chevron and bp can >> since this is going to follow what happens in the global economy, what's the firewall for you, what's the bottom >> well, you know what, i would hope like the entire market, multidecade low, frankly, if you look at the sector index, so we're really close to that i would hope to say, and like i

said, i think cash flow growth in the future going up significantly. >> thank you so very much for joining us this morning as we try to better understand this market selloff steve grasso, thank you for hanging out with us. >> good luck today >> good luck to you. >> you were a value added. i'm not saying we should be calm, but there are times where you don't want to be running around with your head -- with your hair on fire. i didn't like the hair comment >> not at panic mode, and usually in the wall street business, when other people are getting nervous, you have to stay steady. i think that's what makes a better trader. i'm not prone to panic and i'm notpanicking >> for the rest of the show, making waves with his op-ed in the journal this week, calling for the fed to lower rates immediately. former fed governor kevin warsh is with us he's famous for a lot of things. you won't want to miss what he

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siegel, where investors are turning now as global markets hit correction territory "squawk on the street," 10:00 a.m. eastern today and history making week on wall street. and it's not over yet. stocks are getting rocked. the february selloff

intensifying as the coronavirus spreads. the dow falling 1200 points yesterday. the biggest one-day point drop ever that brings the total point loss for the week to 3200 s&p 500 is down more than 10% for the week, the fastest ever correction from an all-time high we'll help you to novemberigaav of this with insight you can only find here this hour, we have the perfect guest host, amid all the turmoil. a man many people think will replace jay powell, kevin warsh is here. the second hour of "squawk box" begins right now. >> good morning. welcome back to "squawk box" here on cnbc i'm joe kernen along with becky quick and andrew rauch sorkin.

will you call them stabilizing they were down 600 at one point. they're down about 468 >> down 468 is not stabilizing >> it's not 1,000. >> it's half a thousand. >> maybe if everyone is thinking that, maybe it doesn't have -- as we know, it depends on the ten-year take a look at the ten-year, which i saw as low as 1.17 we just saw it back above 1.2. every little basis point -- back below 1.2, there it is, but every basis point i see, i feel a little better. you wouldn't usually want yields to go up, but we want yields to go up if you want stabilization in the stock market, i think >> our guest host this morning is kevin warsh, former fed governor and visiting fellow at the hoover institution, and also the editor of a "wall street

journal" op-ed that was published yesterday that got a lot of attention u.s. central bankers should lead a global response. kevin, great to have you >> thanks very much for having me >> we spent a lot of time on air yesterday talking about your op-ed, the markets, i think, took it as a signal as to what might be coming. in fact, very early yesterday morning, you did see the futures, the fed futures indicate we could see a cut as recently as march. let's talk about why you wrote this right now, what you're seeing >> so i wrote it because i'm not in the middle of these things. chairman powell and his guys are. it's a tough moment to be at the federal reserve. in the middle of a week like this, all you want to do is get to the weekend, get to the weekend where you can have no markets trading or sit down with your kitchen cabinet, ask hard questions and think what to do i thought it was good advice the sort of advice we got in the darkest days of the crisis

i remember a great friend and mentor who when we were trying to figure out what to do, we were at jackson hole they need to cut rates materially, they need to do it now, and we said that's not so helpful, but he made us think again about where we are and reassess things. they know more than we do about the state of the coronavirus certainly have had discussions with their counterparts around the world. that's my unvarnished view get them to the weekend, let them take stock. this gloss of history forgets all the mistakes we made early in our crisis. i think get to the weekend and think about what the path is and what markets are telling you >> why do you think a coordinated global rate cut would be useful at this point? >> so, i think it's likely to be a gun fight out there. when i look at the world's big central banks, not a lot of them have guns. maybe the fed has a bigger done than everyone else, but the fed probably has a knife i wish they had a big, powerful

gun coming into this moment. i wish they had more mmunition i wish for the discussions we had on the show over the last nine years, they had prepared themselves for an exogenous shock, because we didn't know this virus was coming, but complacency sets up the market with the fed you've got, not the fed you want they've got a knife. there's a gun fight. you might as well find some friends who have knives and see if you can do it together. >> you think there are knives, not guns, because rates are already so low, and negative interest rates in many parts >> yeah, this is a time where the country needs to come together, where has-been general bankers and central bankers need to withdrunite, but the feds fed

to restock its tool kit, shrink its balance sheet and prepare for whatever big shocks happen what we find is that opportunity was missed over the last nine years. the fed will be successful here. i'm not doubting them, and believe me, we made plenty of mistakes early in our crisis if this thing manifests itself in an ugly way, chairman powell needs to reach out to his kor counterparts in the rest of the world. >> you say if it manifests itself in an ugly way, meaning we're not there now? >> i think the sooner they cut, the better if i were giving them advice, i would say reach out, starting at the close of business today, to the world's central bankers. at the very least on sunday night, before markets open, have a unified statement from the big central bankers in the world that they're all over this they're closely monitoring the situation, they're prepared to take whatever action is appropriate in their jurisdiction just to see if they

can't buy some time and learn more for the markets, it's a signal to businesses out there that they shouldn't decide to give up on 2020, give up on the growth projections, pull back on their cap-x, that a little time can be bought that's what central bankers can do we can buy a little time i suggest they bet door it sooner than later. >> you think that creates a firewall in terms of the market? we have been talking about what is that inflection point, piece of news that would have to come, likely from a government entity or potentially from a vaccine emerged that would change the direction of the market right now. >> given their tools, i wouldn't call it a firewall, but it could be a period where they can learn more about the disease, learn more about the economic impact, and make it such that negative financial markets don't become a self-fulfilling prophecy and find their way to the real economy such that when -

>> we have been asking the question, what's a quarter point got to do with curing the coronavirus? and just making the point it's not going to be just a panacea it's not going to inoculate us, but i think that's the answer steve has been looking for a detente buys us time >> an admission it's not in the economy, this is a market. >> i'm not so sure about it. we're not seeing it in data from the bureau of labor statistics, data from commerce, but of course, we wouldn't. when you talk to business executives, they're taking stock and making decisions about earnings and investment in the next couple quarters so it's in the real economy, certainly in places like asia and southeast asia, certainly in europe, and it's finding its way into the real economy today >> if you're a ceo today and had a big cap-x plan, you're planning on building a factory or whatever it is that's on your

agenda, and right now, there's probably a handful saying maybe we should hold off, wait, push it off a month do you think that a decision by the fed to lower interest rates is going to say to them, actually, let's not hold off i think they're still going to say, we have to hold off until we understand what's going on here they're still going to say, nonessential international travel, nonessential domestic travel, folks, let's like -- we're not doing that right now don't you think? >> where they're holding back a decision, but we might find ourselves in six weeks where we would say we now understand the science of contagion we understand the effects in the u.s. i think for purposes of administration of a central bank that cares about their domestic economy, they don't want the ceo to put that cap-x project on the shelf until 2022 now they want them to wait four to six months to make that decision i think it's awfully important because the global economy is at

a very important moment. >> there are times where if you lose a certain amount of gdp for one quarter, you might get it back the next quarter, and there's times it's gone for good do you have a feeling we could get a snapback where we regain some of the lost ground, or do you think some of it is gone >> in economic models that are used in prominent central bank institutions and academia, it's gone one quarter and appears magically the next that's not my sense of how the real economy works the path to bring that project back online, to getting your animal spirits back, takes a bit of time. it's a problem that will not be miraculously solved in q2. it takes longer than that for global supply chains to adjust and the world to get comfortable in a new environment >> there could be a bad outcome with no therapeutics and no vaccine, or it could be long

lasting if we can develop something quickly or get a better idea of what the eventual pandemic is going to look like it's a difference, what happens from here. it's part of the uncertainty >> at a certain level, the pain at this moment is inevitable the suffering is optional. what i'm trying to suggest is the fed should buy a little time, see whether they can -- and i think international response as soon as this weekend would be good. i don't know what the tenor of things are inside the federal reserve. >> no? >> i don't really have much of an idea. i'm calling this one from the bleachers. they might know things we don't know they have this regularly scheduled meeting on march 18th, but if i were them, this would not be the time to say i'm going to present this. last fall, they used a bunch of ammo when the markets were melting up, in retrospect, and for those of us, that didn't seem like the best time to use

it again, it speaks to what you think the job of the central bank is. my view is the job of the central bank is to deal with big, ugly, unanticipated tail risks. at which point, you should be aggressive when you're in normal peace times, my view is not central banks should be preoccupied with moving inflation up a couple tenths of a percent. maybe i'm too scarred from the crisis of a decade ago i think things should work >> you mentioned they may know things you don't they certainly know things we don't. if they move and take your advice and do something quickly next week, is there the concern that that would actually panic markets too? that oh, my gosh, they know something we don't >> that was a question that was deep in our minds during 2007, 2008, and 2009 is this aggressive move going to scare people into thinking something is a problem almost invariably, the real world understands what's going on and they want a response.

there are some really bad outcomes i'm sure they're thinking about that, but this thing is moving pretty darn quickly. at the very least, i think a statement on sunday night before asian markets open would buy them a little time and let us all learn a little more about where things are if it turns out, becky, in six weeks there's a magic vaccine, that this is contained, that we have been overestimating, and we could have easily done before, which is if they buy insurance, take it back, but there seems to be some asymmetry to how they thought about insurance the last couple years >> are you troubled by just how polarized it feels like the science is you hear from experts on one side who say that this is an absolutely terrible situation. the world is falling to pieces, then you talk to other people who say this is just like the flu, and the front page of the "wall street journal" today --

>> i'm looking for some silver lining mild symptoms, i understand that's causing it to spread much more quickly but this could say severe symptoms, like ebola or something, and then -- >> it depends on who you are >> you want to learn about the science. what's so troubling about this is it doesn't seem clear for some reason. >> we should all be pretty humble about what we bow that fight, that polarization is happening in economics this piece that i wrote, half the emails are like what are you talking about. everything is swell. the other half said 25 basis points aren't enough i wouldn't call this polarizati polarization i would say necessary humility in times of uncertainty. that's why we all need time to step back. i'm sure my former colleagues are pleased it's a friday and not a monday this has been a very tough week. >> kevin, i want to get into what a lot of people have been

saying since they read the op-ed. i think you answered a lot of reasons about why you wrote it yesterday, another fed official was on cnbc with scott wapner. here's what he said about writing that and who was reading that op-ed let's listen in. >> with regard to kevin, there's a word for the op-ed, and that's the president of the united states he could possibly be the next chair, if mr. powell is not reintited. >> you did just say you thought the fed maybe did the wrong thing when it lowered rates earlier this year. you're not talking about lowers rates all the time, which is what president trump wanted to do, but what do you say in response to comments like that i heard it from a lot of places yesterday. >> for those of us who were in the middle of the last one of one of these wars, none of us covet the seat of jay powell today.

we all still have scar tissue. that's the kind of divisive rhetoric, the sense that politics enter everything we do that is dangerous. the good news is for those of us who went through a real war, we learned to block out noise, stay focused on what you know, make your best judgments. the truth is there are plenty of areas of disagreement i had with the administration, all sorts of things and i don't think they would be a surprise to people on the inside >> you would not have necessarily cut rates quite as aggressively because you would be saving them for a moment like this >> just to give you an example, i don't think negative rates are useful in the united states or most of the major economies around the world i think they're deeply counterproductive. so my judgment of what to do at different points would be quite different. but i think from 2007 and '08 to the decade that's happened, i had very strong views about when

policy should be quite aggressive this is one of those moments, and to be totally candid, i had very public views about when policy needs to sit back i see a lot of policymakers that look to me like they're oversteering raising rates one month and then cu cutting them the next. that's not my view of how monetary policy should work, but when you're going down a road like this and the steering wheel is in front of you and you see a big 18-wheeler coming after you, this is not a time to be hesitant >> kevin will be with us for the rest of the program. thanks >> coming up on "squawk box" this morning, stocks to watch. we head to a break, take a look back at similar four-day routes in the dow and what they show. they're usually tied to an event. take a look at this, 1998 was the collapse of the massive hedge fund long-term capital and the russian financial crisis in that case, the dow lost 1,063 points or 12%. in 2001, the september 11th

attacks resulted in a 1200-point drop, also a 12% drop. and then in 2008, the financial crisis led to a four-day decline in the dow of more than 1500 points then today, it's the coronavirus, and a four-day loss now of more than 3200 points or 11%. we're going to talk about all of it and try to understand where 's headed and where it's going. "squawk" returns right after this

welcome back a look at futures after what has been a market selloff. no other word for it, all week long right now, the dow looks like it would open down, the nasdaq looking to open down about 92 points, and the s&p 500 looking to open down about 36 point, extending those losses i want to get over to dom chu with a look at three market charts every investor needs to look at this morning >> andrew, you were talking about some of the massive frdro in the dow tied to big events. we wanted to put up a chart of the volatility index we don't often show the vix in terms of the overall scheme of markets, but today it kind of matters. as you can see, we're right now up about 2%, a modest gain, but we're above 40 at one point intraday, we got above 47 on the vix. the level of elevation is now

the highest level, higher than, by the way, the way it was in all of the market turmoil in the fourth quarter of 2018, and also higher than it was at one point during all of the market turmoil in the beginning of 2018 when valuations and programmatic trading were blamed for a lot of the drop may this be the capitulation we'll see what happens we focus so much on the long bond the 30-year bond and ten-year treasury note. the 2-year treasury note is at the lowest level going all the way back to two years ago at this point, as it hovers right below the 1% mark. then, to end, in a curious trade today, gold prices, we know, have been catching a bit because of the safe haven demand, but look at today. despite the market down a percent, so as this trend has

been higher over the course of the last couple months, it's now taken a turn for the worst in the last couple days we'll see if that trend continues to play out. three charts that are interesting to keep an eye on today. >> yeah, i missed that $11 vix little did we know how beautiful that number was. >> insurance was cheap back then, right? >> certainly was thanks coming up, we will continue our discussion on whether the fed and the world's central bankers can fend the global economy from a global pandemic here's a look at the week's hardest hit stocks "squawk box" coming right back >> time for today's aflac trivia question opd?h was leap year first adte "squawk box" continues

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welcome back, everybody. let's take a look at futures this morning the pressure continues, but believe it or not, we're off orworst levels i have seen down over 650 points for the dow futures this morning. right now, we're indicated down by almost 300 points this comes after we lost the most points ever in a single day for the dow yesterday. over 1100 points, almost 1200 points and it comes after a week of pretty significant losses. the s&p right now is indicated down by 31, and the s&p by the way, has pulled back more than 10%. that's the fastest correction we have ever seen for the s&p 500, and pressures also mounting on the federal reserve to lower interest rates you can see what's happening with futures this morning. interest rate also have been closely watched with ten-year trading below at times 1.2%. steve liesman is here. he has much more with what's being considered >> we had to change the charts again. there's been a dramatic change in the outlook for the federal reserve with the question now whether the fed will cut in the

upcoming march meeting, but now by how much. we have to do a new chart or a new form of the chart, is now we're looking at a 100% chance of a 25 basis cut. >> you never put march on until yesterday. >> never put march on alone until yesterday. now because of the craziness kevin warsh started, a 47% chance -- i'm only saying that half jokingly. 47% chance of a 50 basis cut of the fed acting and now it's in play in the futures market remember the 50-basis point cut. now, there's an 80% chance of a second cut in june a 62% chance of a third cut in july, and this is also new, a fourth cut being built in. so a full percentage point now being built into the probability. the fed has not affirmed this market sentiment you could almost argue they're leaning against it yesterday, chicago's fed president became the latest fed

president to assert the it's too soon to tell policy. it would be premature to tell before we have more data on the forecast of the monetary policy action if we see something that needs adjustment, i'm confident we'll give it all of the consideration it needs that's really a great three screens there explaining exactly where the fed is it's unclear right now how fed officials feel about how effective a rate cut would be. while there's pressure on jay powell to act, there's also skepticism one writing this morning there is nothing that will be stimulated already from a rate cut or two that isn't already stimulated by the low rate environment. one issue for powell is it would represent yet another regime change, and i think we have a screen that shows the different periods of time that we have been through on this if you take a look, we had -- there it is, the hiking regime then you were cutting, and now we were in this holding hregime

>> but you have a total different scenario the coronavirus is an unknown factor, something that couldn't have been predicted and is affecting the globe. >> agreed. the question is -- i think powell agrees with kevin, and we'll get to kevin on this issue of it would be great not to change policy at every turn. that if you could have a length of time where you were at a certain place, they're waiting for the moment, and that moment, they have done it in coordination, and i think you have been vauinvolved in that it takes some time to put everybody together with a big question.

4. >> last week, sharing information, that's a deep relationship and once you get to a weekend, it is not difficult for them to find common language in which others can sign up to about what each of them can do to support their economies. of course, as you suggest, having negative rates already in europe makes it more difficult to find ways to stimulate the economy. but i don't think it's more difficult to buy some time christine lagarde is a fabulous leader i knew her well at her old job while they're in the middle of a comprehensive review, the facts on the ground are changing quickly. >> i mentioned you because you rhetorically follow us all week long with the question of what does a quarter point have to do with stopping the pandemic kevin made his case. i don't know if you were able to

listen to all of that, or where were you for the last half hour? >> this point is if central bankers all talk this weekend, come up with a concerted response to buy some time and a detente to just maybe put things on hold for a while to see exactly how this plays out that's your answer on what a quarter point would do would you like to push back on him that it actually wouldn't help >> joe, put it this way. i'm more skeptical about the effectiveness of this rate cut than i have been about others. and the reason is because i think about what level of interest rate would cause me to want to go to a concert and possibly get coronavirus the demand that would be stimulated from that -- now, i think i get everything kevin is talking about, which is the competence effect and the idea that somebody is on this and i was just going tose sort f throw it back to you is it statement enough or do they need to act

a statement that we're monitoring this, we will act if necessary. is that enough or do they need to do it now >> two things. first, you said you were skeptical of the benefits of that rate cut. that skepticism is rightly held. but i think there's a better case for this rate cut than there certainly were in the three rate cuts last year. stock markets were moving higher, animal spirits were moving higher. there's a better case, it strikes me today, than any rate cut in this regime since i left the fed in 2011. what needs to be done this weekend, this is both substance and, to use language that secretary geithner used to use, there's a little theater to this, too. it has to be backed up by substance. i would prefer that the world central banks make a joint statement and the fed adds a quarter. the fed takes 25 basis points off to show this isn't empty rhetoric, but again, i think moving together, having a coordinated statement is what is

necessary. if it doesn't happen this weekend, my judgment is it will happen >> you're the one who asked the question earlier in the first hour, what if it doesn't work? if that is a problem for powell, when you shoot, you want to hit, right? >> i don't expect it to be a panacea, as we said, but every time the fed cuts, we have to question it. what if it doesn't work and what do they know that we don't know. >> steve, the only other thing i would suggest is they need to be working on plan a, plan b, and plan c as you're moving on this, the other discussion that needs to begin in washington if it hasn't already is a fiscal response the administration, the federal reserve, key leaders in congress, it's not too early to speculate about what could be done you need to use those moments to work on plans instead of sitting on your hands. >> the first is everything that kevin said the other is you have the supply

problem with china that doesn't bring any supply over you have a decline in demand, and what you were talking about earlier, kev nl, is well, you would get people to make investments. should they be making those investments if demand has actually declined? the other argument and the other side is this, since you have this decline in investing and in the neutral rate, and that means the fed is too tight, so the fed is literally behind the curve here if you look at the three-month, the ten-year, those are reasons i think speak to what joe is talking about and what you're talking about, which is -- and i think mark grant said this morning, even if the fed cut twice, they would still be below the two-year >> right >> above sorry. >> the business here shouldn't be chasing markets, but it should be listening to markets markets are sending a signal about the real economy when ten-year treasury yields are maturely lower than they were in the darkest days of 2008, when they're materially lower than 2012, they may be

wrong, but i'm willing to give them the benefit of the doubt and act now because the risk/reward strikes me as compelling >> i feel like i'm convinced >> when i listened at the top of the hour, talking about his reasons why, explaining how, and you would take the cuts back quickly if it clears up rapidly, so not locking yourself into a situation like this. >> the purpose of insurance, as they taught us over the last couple years as we were buying insurance against the u.s./china trade war -- >> i think the only question i have, the idea of the ceos sitting there thinking, okay, i can either postpone my factory installation a month or i can just postpone it for a year, that -- you think -- why would you, without intervention, push it out a year completely why wouldn't you just wait a

month or two >> so -- >> you see what i'm saying >> i see what you're saying, but we're not in the world of perfect. we're not in the world of how do we take this economy and have it turn back on a dime and reaccelerate, but we're in a world, andrew, in the united states where the initial conditions have been quite strong >> right >> we came into 2020 with labor markets the strongest they have been in 50 years business investment that had slowed considerably over the last 18 months, but if you listen to executives like i do, and i'm sure you do, 2020 was an opportunity where they could invest i don't think they're throwing in the towel yet, but if we waited six or eight weeks, i think they would throw in the towel on 2020 investment >> they're ready to invest because of the china trade deal being kind of tempered asthis point. we're not looking at bistensions, but this has put everything on hold >> they saw a truce and they wanted to see what would be done there. the u.s. economy is strong enough, but this gives them an

additional reason to sit on their hands. >> i'm just going to make a practical suggestion and use the olympics as an example the olympic committee has until the last week of april to make a decision about what to do with the olympics then there's a secondary issue, when would you, if you were going to delay the olympics, when do you do it? do you do it in this calendar year, push it out a year there's lots of factors about when to do it that have nothing to do with the actual economics of it. so i think people would do as much as they could do as quickly as they can do it, but i think it actually has to do with the practical concerns of timing and everything else as opposed necessarily to whether the fed is going to step in. i'm just positing an idea here >> i haven't convinced you, but i'm convinced. >> you're convincing becky and steve and joe. >> i think you guys are talking about the conversation earlier, what would it take to me, and maybe it's just me,

it's data. i think the absence of -- we're still having this conversation about what is the morbidity rate, what is the infection rate how does this compareto the flu? >> the biggest thing i think is the idea that the cdc has to get the tests out there. if you have 840,000 people, i'm sorry, if you have 8,400 people you're monitoring in california who have symptoms, but you can't say no, it's just the regular flu or just something else, if you can't test them and run through those issues -- >> the human race has learned to live with disease and infectious disease. somehow, we prospered to overpopulate the land with 9 billion people on it the markets have prospered amid these infectious diseases. >> is the world overpopulated? >> we'll see >> maybe you want to do a one-child thing. >> you probably do >> one-child law in the united states >> i'm sorry if i distracted you with that comment.

>> he's lost every argument. >> he has. i mean more from an environmental standpoint >> well, if you take that tack, we're all going to be dead from climate change, so why worry about coronavirus, right, steve? >> joe, i was trying to make a positive point that we have in fact lived through this. i think people need the data, and they need the language >> i think we have to see some positives emerge from china, too. if they really do manage to get -- and i don't know how we know i don't know whether we would know whether they get a handle on it, but the seems the cases are slowing in terms of how many are added per day. if china is able to keep it at 100,000 in a population of 1.4 billion people, this is not the epicenter of the united states maybe we can try to -- >> my hope is on italy, which is -- i mean, it's a western country that will impose, i believe, kind of transparent and scientific rigor over what's happened in italy.

and when we get that data, i think it will give us something here to say okay, if it comes here, here's what we can expect. i think the absence of that has been part of what's been behind the trade fear, which is there's no way to even compare this to other things >> i suspect steve is right that if the data were obvious, the fed's move would be obvious. my judgment is if the fed waits for the data to be definitive, there will be more suffering than is necessary. central banks get paid to make tough decisions with imperfect information. >> they don't get paid a lot >> don't get paid much >> why he's not going back we have a lot more coming up on "squawk box" this morning. >> the blame that you take relative to the salary that you make, the ratio is out of whack. >> that's why we have to unite around the chairman now, because this is a time of testing.

>> when we return, a continuation of this conversation and so much more. new zealand and niyegeria reporting their first cases of the coronavirus, and the odds of a pandemic have doubled to 40% we're going to speak to a doctor right after the break on what you need to know about the virus outbreak >> plus, much more from former fed governor kevin warsh the futures at this hour, on a percentage basis, this isn't the end of the world right now, but dow looks much better than earlier. >> you have to watch the ten-year it was moody's analytics, not moody's. we're going to be right back, and a reminder, of course, you can always watch us live, especially right now live on the go, matters re tmohan ever if you have to head to the office, get on the cnbc app. we'll be back in a moment. at today's best western,

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when we return, more from former fed governor kevin warsh, and take a look at the ten-year note at this hour. higher yields might help and we're at about 1.21. we were at low as 1.17 cooperating. futures aren't quite as bad as we have seen not the worst levels, but the

premarket session. we know what can happen between now and 4:00 p.m basically anything, but we're down about 300 coming right back. >> don't forget to subscribe to our podcast. you'll get interviews, original content, and behind the scenes access look for us on apple podcast or on your favorite podcast app, and subscribe to squawk pod today. but it can help you pick your room from the floor plan. can the hilton app help us score? you know, it's not that kind of thing, but you can score free wi-fi. can it help us win? hey, hey! we're all winners with the hilton price match guarantee, alright? man, you guys are adorable! alright, let's go lose this soccer game, come on! book with the hilton app. if you find a lower rate, we match it and give you 25% off that stay. expect better. expect hilton. acan not only recognize finayou in a crowd, but recognize what's important to you in terms of your goals get 1-to-1 goal-based advice where and when you want and real-time goal tracking online.

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welcome back to "squawk box. america scrambling to address the mounting coronavirus outbreak in china, the death toll has climbed to over 2700 we're joined with an update on the outbreak and what's happening in the medical community. meg. >> goon, andrew. case counts now topping 83,700 worldwide and more than 2850 people dead, the world health organization saying the virus has pandemic potential it continues its march to more countries with the first case reported in subsaharan africa. the world is reacting. switzerland banning gatherings of more than 1,000 people, including next week's geneva car show, and jpmorgan is joining other corporate giants in limitic international travel broadening its restrictions to avoiding all nonessential travel and in the united states, with the first case of suspected community transmission, the cdc broadening its guidelines for

testing. now, anyone who is hospitalized for fever and respiratory problems who has traveled to areas of concern or disease isn't explained by other diagnose will be tested. >> for more on the coronavirus, let's welcome sarah, senior director of new york city's health and hospital systemwide special pathogens program. she's also a principle investigator for the center for global health care pathogens preparedness she was featured in a netflix series "pandemic" and it'sigate to see you thank you for joining us lots more questions people have about how prepared we are for this what would you say to this >> everyone across the nation is ramping up their preparedness. this is something we know is very concerning. china has given us this windy of time, if you will, and we need to make sure we're using this window of time very effectively. everyone has to look up and brush up on their management plans, need to make sure they

have good staffing, systems, processes in place to be able to care for patients that will present with coronavirus we don't know how many are in the united states. the first case in california was a wake-up call, something we were expecting we don't know how many more are out there, we need to ramp up diagnostic capabilities and we're glad cdc has finally brought in their clinical case definitions and clinicians can now test people who they think are coronavirus without a very narrow process in place. >> meaning you could only test someone before who had come back from an affected area? >> exactly, a very narrow clinical case definition we know there are over, you know, three dozen countries reporting coronavirus disease outside of china and in fact, if we look at it today, there are more cases mounting outside of china than even inside of china and so, you know, broadening the clinical case definition, it should have happened weeks ago, unfortunately, but we're glad it

finally did happen >> doctor, what's your professional judgment whether the arrival of spring will do things to take the case numbers down will warm weather do to this virus what it typically does to the plu? >> i think a really great country to look at is singapore. singapore, obviously, you know, if you look at the temperature there, it's almost summer. and there are still cases that are coming up in singapore, which shows that even with warm weather, this virus may not actually go away so with seasonal flu, we know it's more common during the winter months, during the cold time it's actually around all year long, but it's more common during the winter months i think in singapore, you're seeing the cases are still arriving we can't really tell, but singapore is a country we should continue to look at. >> one of the things we have talked about is what the fed can do part of the argument is what the fed can do is try to create space, a pause button so the medical community and the rest of the world can try to

understand this disease -- i shouldn't say disease, but understand coronavirus better. the question is, how much time do you think it would take for us to understand this? because you do have so many different views about the severity of the situation. >> so it's very important to get the full picture in order to understand what we're dealing with however, at the same time, the more you wait, the more human toll is going to mount and so we need to continue to look at public health measures and implement public health measures at the same time, we need transparency in data to understand what is the severity. >> you think in two weeks you'll know we'll have a really meaningfully better sense, is it a month, six weeks, eight months? i think that's what we're all trying to get a handle on. >> the timeline is very, very difficult to establish we're only two months into this particular outbreak, and if you look at previous outbreaks we usually don't know the full effect until after the entire outbreak essentially is over and that's when you're able to

look at the totality and the overall case picture of how many deaths are associated with this particular disease, so right now, everything is a guess right now, even though we're seeing 2.3%, that may very well change tomorrow or the next day. at the same time, we need to rely on information coming out right now and making the decisions based on science we're seeing at the very moment because we need to make sure we have a good pulse on the human aspect of it, the societal aspect, and the economic aspect of it. >> doctor, thank you very much for joining us hope you'll come back again soon >> absolutely. >> when we come back, we have much more on this week's selloff and how it's going to affect you and your portfolio let's take a look at some of the stocks extending their losses in the morning's premarket trading. dow, which has been the biggest laggard for the week today, down another 2.6% this morning. ngff 2%, same for microsoft and apple. we'll be right back.

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ever the s&p 500 is down more than 10% for the week that's the fastest ever correction from an all-time high our mission this morning, to help you navigate the steep and sudden selloff with insight you can only find on cnbc. the final hour of "squawk box" begins right now. . >> good morning. and welcome to "squawk box" here on cnbc live from the nasdaq market site in times square. i'm joe kernen along with becky quick and andrew ross sorkin we couldn't have a better guest host a man, we'll say it again -- >> don't say it, joe >> a man the president actually called out, president trump, and as a potential replacement for chairman jay powell. we can't change history, kevin

that actually did happen not saying you would take it, if something were to happen to jay powell, but you could conceivably be offered the job at some point in the future. you would at least acknowledge that >> i could conceivably say no, jay powell is the fed chairman in all candor, this is a time where the country needs to rally around the fed chairman. this is not a time for divisiveness good but for people who don't know who you are, and you look like some handsome young guy, you are there during the financial crisis you were on the fed, and you are very frequently mentioned as maybe even heading up the fed. so there, said it again. you all right with that? >> you didn't want it, but you did it anyway. >> u.s. equity futures down 350 points on the dow. they have been down 600, been down less than 200 we're really keeping a close eye on the ten-year note, which got as low, maybe even below 1.17. that's the low i saw on the

ten-year we're at 1.21 this morning, and if you're not following things that closely, when people are really scared, they rush into safe havens, and the more scared you are, the lower the yields go fw it comes back a little, it would be a positive. higher rates on the ten-year so we're hoping it stabilized. i would like to see 1.35 by the end of the day what do you think? unlikely >> i think it's unlikely i think it's going to be a difficult day, but as you said, when i say it's a difficult day, maybe i mean you can only hope meanwhile, stocks have been falling across the board with a n number of indexes falling. mike santoli joining us with a look at charts that investors need to be following now >> yeah, andrew, aside from the levels, just the steepness, the velocity, the intensity, the indiscriminate nature of the selloff, pretty historic, but it's worth comparing to prior instances.

look at the chart of the s&p 500, we were at an all-time high and vertically went down more than 10%, resembles this 2018 drop why is it relevant a couple reasons, because it started at an all-time high, and what happened after that is usually what happens you're seeing a lot of the kind of oversold indicators, the fact there's been nowhere to hide everything that you would want to say in terms of a cupitchulative type of action is lining up. you see this chopping action, even if you have the meaty part of the decline in place. the cautionary thing is what happened later that year, september, october, this looked like it was going to be the same kind of deal, then you lost it again. why? the market lost confidence that the fed was offsides and we know the history there. that's obviously the downside scenario, but really, we have done a lot of work on the downside so far this week. now, this is one issue that has also popped up, the high yield

bau bond etf, a comparable treasury. when you see treasuries rallying, that means they're going down, you have seen a rush out of high yield x. credit spreads are widening out. the record outflows on a one-day basis from this fund yesterday, you were talking about what the fed can do. this is one element of financial conditions and dislocation that a fed rate cut arguably could help because that's going to feed into corporate confidence and behavior if in fact the markets on the korccorporate sie start to deteriorate >> also with us, krishna, and kevin waursh rsh is with us you have been calling for a pullback you thought we would see 10%, but we got there awfully quickly. >> i have been the longest bull who showed up on your show in

the last ten years, but this time, it was different it's different because we're talking about a disease that has a significant impact on the activity level that cannot really be changed. i think that is the key point. everyone seems to be focusing on the infection, but real issue for investors is the impact on activity so if things are going to turn around, it's going to turn around because we are seeing a bottoming on the impact -- a bottoming in terms of the activity level >> and the economic impact >> that is not going to come from what's happening in california or italy. that's going to come from china, because china has dealt with this situation the longest we'll get chinese pmi, if the pmi is close to 30, i think the market bottoms out, but we don't know that yet. as an investor, you're in a risk management mode. what risk management requires you to do is pull back and stay alive to play another day.

>> if it does look like the instant is peaking, and it's hard to believe they're not testing everyone, obviously, but if you do start to believe it's peaking, and president xi starts what he started last weekend, that is talking about sending people back. we need to get these things reopened we're going to do it either way, so if both of those things happen, that could be a model. >> that's exactly -- if the market is going to turn around, it's not going to turn around because we found a magic pill for the infection, so all of a sudden things die down i don't think that is likely to happen what is likely to happen is the impact on the activity level starts bottoming out >> can we say, though, china took some incredibly severe restrictions by really quarantining millions of people and tying down those areas if we are watching it be effective with china coming out of this and saying they're not seeing lots of new cases, we still have to live through that here potentially >> absolutely, but the difference between china and the

u.s., italy, for example, or other countries is we're aware of what the potential is therefore, the effective steps people are taking more severe, which kind of counterbalance that i'm not an epidemiologist, but what i can tell you is if things are going to bottom out, it's going to bottom because things are not as bad in china as they looked a month ago >> kevin, let's talk about what mike was just mentioning, what could be useful from the fed is you have seen the high-yield bonds that had investors pulling back in a big way from them. if the fed cuts rates, that supports that issue. but i start to think about it. i mean, i have thought that high-yield bonds have not been given enoughscrutiny by investors for a while. that they have been riding along at the same rates. is that a good thing or bad thing? >> there's been a lot of complacency broadly across these markets and to some degree, that's been encouraged by central banks, but the complacency gets destroyed pretty quickly it's been a tough 36 hours,

especially in the high quality names as was referenced earlier. central banks spend a lot of time thinking about what's happening in credit markets, seeing it, and they have to be troubled >> wondering about potential deals in the works, how many are just frozen at that point? >> first of all, just to stay with corporate credit, there was no issue in the first three days of this week, which is rare. it's been a wide open market you're starting to see it almost immediately. we're not seeing ipos. i think that does go on a standstill, and it does speak to the speed with which we have repriced these markets it's similar, like i said, to what happened in 2018, but almost more so i think the issue is, we're not waiting for the soothing headline that tells us everything is okay you're waitish for the market to rush to a place where it's already priced in something really nasty and then we get something less nasty or time goes by. if it's close, it may not be

close in price maybe you have to scare more people i think one of the issues that's also knocked loose is that you had people here, investors overcommitted to a subset of stocks that are being completely exited you have microsoft gets to 185, nobody can find a reason to sell it, it's in the 150s right now not really because of the coronavirus, but because people own too much now, that kind of idea that, oh, volatility is low, rates are low. we can own more equity risk is going in reverse >> i think two observations on that count i think credit markets have certainly priced in a bit of the downside, but i think relative to what the potential is, they are nowhere close. and i think from that standpoint, to mr. warsh's point, if the fed wanted to arrest the down trend, they actually have an opportunity and that will have an impact on the credit market. the second thing, as an equity

investor, i want to believe what mike is saying, but i can't. i don't know >> why not you want to believe which part >> the fact that it is close to the bottom >> he didn't say that. >> i think it's a plausible place, but we overshoot all the time >> absolutely. i think if this were really driven by analyzing what the fed is going to do or what the u.s. congress is going to do or what president trump is going to do, we can speculate this, we cannot. so i think that's the difference of about this relative to every other point. >> i agree with that, except that we have always said these situations before. we had wars, we had 9/11, where you had this incalculable set of possible outcomes and nobody had a feeling you had to grasp on how it was going to go, but the market, you know - >> you're absolutely right you're absolutely right, but that is evidence, we don't have yet, and it will come from

china. >> we keep talking about this firewall, a idea that a piece of news or inflection point, is that what you're waiting for or is it a herd mentality where everyone is going to go okay, this is where it is? >> what i'm waiting for is what the actual impact of all of that is, all of these things is on the activity level that gives me -- if china -- the chinese pmi is coming out next week so i think we will get - >> what day? >> we'll start getting evidence. if it is in the 30s, then we have huge issues if it is in the high 40s, then we can look at it and say look, you know, things can get really bad, but they can come back. we don't know that just yet. >> by the way, when i'm talking about these tactical conditions, what you typically will see is a crazy rally off the low that gets a lot of kind of momentum behind it, and then it fails or then you have to rethink it or then you have the information that comes out that we were afraid of at the lows, and we

have to have - >> i think there's a risk of that happening with the fed rate cut. so that is something that we have to be somewhat mindful of that the fed cuts, let's say this weekend i'm speculating. if they do something - >> or come out with an announcement the way kevin has talked about >> but i think that would give a temporary relief to the market, but i don't think that can be sustained. for it to be sustained, you have to have a good handle on what the impact is on activity level. we don't have that just yet. >> you know, kevin, what you have talked about, this idea of stepping in and trying to take a forceful stance early and calm some of the fears, it strikes me as very similar to what scott gottlieb was here talking about yesterday from the medical perspective, former fda commissioner who said look, this is not a time for fiscal austerity, fiscal conservancy, you have to step in now, act

very quickly and that's your only way to tie to arrest the problem before it becomes a worse problem. it sounds like that's the same advice you're giving to the federal reserve. >> it's particularly true when your tool kit is not as full as you want it may sound as if you don't have too much left, you better hold on. it's quite the opposite. you don't have much in the cabinet to use, you better use it early and find some partners along the way. >> yeah, isn't this what you're saving the 150 basis points for, something like this that we're seeing >> or at least some of them, not necessarily -- >> not everybody >> and also, i know you would have made this point, but you know, the markets were soothed with words for months last year. before there was an actual rate cut. there was a kind of rhetorical change in posture or a commitment that was sort of put out there in the world to say okay, now we're leaning in one direction. the markets had a new high by the time they actually cut rates. >> are you suggesting even the stance, even just changing the stance to say we're not in a holding pattern anymore?

>> perhaps, what have they been leaning on undershoots of inflation targets. that hasn't gotten any better. you see what's going to happen with oil, what's happening in the inflation expectations of inflation in the last few months it's gone down, not up >> my point is the case is there. >> again, i would urge a bit of caution on that. i think from this standpoint, that is as the fed looks at this, and they want to unfold whatever is left in their tool chest, they have to be gradual about it, because if they shoot it in one goal, let's say 50 basis points, and things go down in a meaningful way, we have a problem. we'll have a larger problem. i think what they're probably better served is if the trump administration starts making contingency plans on the fiscal front. if there is a correlation that kind of can get to that point quickly, even if the spending is later on, the impact of that would be far more meaningful

than a fed cut >> what's your response to that? >> this is one where you need all hands on deck, becky we don't know the contour of this monetarypolicy is not well situated to deal with it alone, and moreover, the rest of the world like europe is closer to a recession by far than the united states the global response doesn't have to be limited to monetary policy this is the moment the world's leaders from all agencies to stand together and step up >> you think central banks from places like europe where they are looking much more closely at a recession coming soon would be open to this idea right now? >> i don't know, but i think there are still quite a few things they could do to support the economy. it's more likely to be dominated by fiscal policy as mike said earlier, if you weren't ready to send in the strength now, i don't know when you would be >> i want to thank both of you guys for being here today. kevin is with us for the rest of the program. >> we want to get to phil

lebeau, because airlines have been the hardest hit sectors today. the arka airline index down 25% in the last five days, and coronavirus fears have sparked the selloff, it follows months of bad headlines on boeing this morning, we're hearing from spirit systems, and phil lebeau joins us from chicago. >> not a surprise that we see a loss for the fourth quarter earnings reported by speirit thi morning. the estimate on the street was for the company to earn $1.65 a share. it came in earning 79 cents a share. revenue coming in at $1.96 billion. in the fourth quarter, because the 737 maxx production schedule had been cut by boeing, that meant spirit aerospace took a $34 million hit in the fourth quarter. remember, they're building the fuselages for the max at the company's facility in wichita, kansas they have about 100 of these that have been built but not yet delivered out to boeing in the

pacific northwest. their 2020 guidance, they're not giving it right now, given all the uncertainty surrounding the 737 max. as you take a look at shares of spirit, no surprise here this stock has been hammered we're looking at it trading around 2016, 2017 levels they have a plan in place, an agreement with boeing to build 216 737 max fuselages this year. speaking of boeing, you mentioned earlier, it is under pressure premarket, down in the 281, 282 dollar range. the last time we saw this stock trading at this level, guys, we have to go back to maybe november, early december of 2017 >> yeah, what boeing needed, phil thank you. thanks for that. our guest host this morning, kevin warsh. president trump mentioned kevin during the signing of the u.s. china trade agreement back in january, saying kevin should

have fought harder for the fed chairman job >> kevin warsh kevin, where is kevin? i don't know, kevin. i could have used you a little bit here why weren't you more forceful when you wanted that job why weren't you more forceful, kevin? you're a forceful person i thought you were too forceful maybe for the job. and i would have been very happy with you . >> ears are just burning a little bit, but do you think he meant by that? he wanted to keep rates high at some point or were you arguing for -- when did you push back? what do you think he was referring to >> i couldn't speculate that, could you? >> i could come up with a few scenarios, i think but you have been made a very forceful case today for some easing globally, i think, with central bankers. even though we're already negative in most places.

that is not what i necessarily would have thought your tack would have been given some of your previous comments that we should have been raising rates through a lot of the last three or four years. >> when the facts change, we change that's what we're supposed to do there's too much discussion about who's a hawk and who's a dove the best chairman bankers react to changing circumstances. >> and react quickly, i would suggest, too >> absolutely. they react with imperfect knowledge, because that's the nature of this business. and they react with all the team members they can find, especially when they're running low on ammunition. >> does total debt levels before coronavirus aside, i mean, we were in a precarious position to start with do you believe that? or not >> there aren't that many left that do economics that are concerned about levels of deficits and debts i am an old-fashioned person and i still am on a relative basis, the u.s. finds itself in a very strong

financial position on an absolute basis, we find ourselves in a weak position so it reminds me a little bit of the financial crisis, when most if not all of the banks were insolvent, but some were going to be the last ones to survive similar to the u.s., the u.s. certainly has all of the capability, all of the flexibility to do what's necessary if this turns out far worse than even current expectations to expand with a large fiscal package >> if the fed doesn't do something sunday or doesn't get to the weekend, or doesn't announce something monday morning after you have been so outspoken about the need to do something like that, would that -- are the markets listening at this point to you, to the extent where they would be disappointed on monday if something happens? >> they're not listening to me they're listening to chairman powell and his colleagues. i don't think it's really a question any longer of what will they do. i think it's a question of when. they have a regularly scheduled meeting on march 18th, but

there's a lot of time between now and then, and the data and information can come in on both sides of that. i wouldn't want to prejudge it, but you heard my sense, which is in the crisis, we probably didn't act soon enough the gloss of history suggests somehow we nailed it, but we had a hard time finding our feet at the beginning of that, too, and i think the fed will find its way. i think they will navigate us out of this successfully, and this will show a period where the fed can go back to what's an old fashioned job, to dealing with tail risks rather than the new fashionable job of trying to micromanage an economy during peace and prosperity >> what kind of political pressure do you think is going to be on jay powell and the fed this weekend meaning, we talked about political pressure, and you have lived with it, with the president calling you out publicly, but in terms of the political pressure on jay powell, the white house, and others from treasury calling jay powell, do you think that's happening right now? >> i don't know, but i think jay powell has handled that very well it's not helpful for the institution that we all care

about for the administration to be taking shots at them. fed independence is up to the fed. i have a lot of confidence that chair powell and his colleagues will call it the way they see it, and it won't be because of political pressure >> have you spoken with president trump about your op-ed since it came out? >> no, i haven't i scarcely have spoken to him since the interview, which you referenced at the beginning of this >> kevin, when did you feel like this was developing as a crisis that needed action i mean, this is something that's changing pretty rapidly on a day-by-day basis >> my views on this probably changed a little more than a week ago and there was some hesitancy before i decided to put pen to paper and put it in the newspaper and come on this show. you know, quite frankly, i didn't want to make the job of the fed any harder but i thought about what marty feldstein did to us, he was a mentor and a great man and a

fine economist, and we miss him at a time like this. and he gave us tough love at a conference in jackson hole, and we didn't want to hear it, but he made us think that was in the back of my mind, and i thought i can't sit on this anymore, and maybe i'll prod institutions to think more aggressively >> what kind of feedback have you gotten from fellow economists >> it's been reasonably divided. i received a lot of emails from the op-ed, both from the left and right. some saying i thought you were a hawk others saying you're not going far enough what will 25 basis points do frankly, this discussion is the right discussion that needs to happen in the economics profession good economics isn't about what's fashionable it's about wisdom from the last 100 years and wisdom says go early. >> what would ben bernanke say >> you should have him on the show, i don't know but i suspect, this is just a suspicion, and ben bernanke did an exemplary job in the crisis he's a meanter and friend.

i would be of the view he would think that acting sooner is better than acting later >> as you're just waking up, i want to get you up to speed on where the markets stand at this point. look at the futures, right now, the dow futures are indicated down by about 360 points we have seen down as much as 650 points this morning but also down by less than 200. this is looking to be another volatile day, at least before the opening bell you can see the s&p futures are down by 42 the nasdaq off by 118. just to put this in perspective, yesterday, the dow was down by almost 1200 points, the biggest one-day decline in terms of points we have ever seen an additional 4.4% on top of all the losses we have seen all through this week. right now, the s&p futures indicated down by 43 the nasdaq off by 120, and if you take a look at what's been happening in the european markets that are open now, there are red arrows across the board there, too declines of 3% for the ftse.

it's a decline of 3.25%, but none are off by less than 2% also watching the ten-year closely because the ten-year, the bond market has been the one pushing the stock market around. right now, the ten-year is yielding above 1.2%. those are historically low levels, but better than we saw earlier this morning when they fell to 1.17%. so right now, 1.218% on the ten-year >> even a casual observer has obviously seen what has happened this week. you don't have to be an avid stock market aficionado, even if you have a 401(k), i'm sure you know what is happening the markets in many widely held stocks has dipped into bear market territory many people may be worried about retirement plans and investments. joining us is j.j.kinehan. and in the past, i have seen times when the average investor and people not quite as close to

the trees in the forest have actually fared better and maybe not panicked as much as the professionals. what are we seeing this time around >> i think you bring up an important point. we always hear, don't be emotional about it and it's kind of interesting that most of the people i hear that from all managing other people's money instead of their own. the one thing i would say is the first thing is, people do get emotional about money. i just read recently, it's the number one cause of fights in a marriage but taking a step back, if you are nervous, don't think all or none i think that's the mistake people make, joe they get nervous and they sell off their whole portfolio. that is a huge mistake in most cases. you know, if you are really that nervous about it and you have to sell something, make it a small percentage in fact, longer term, what tells us is these are often nice times to buy, not saying you had a great discussion just a few minutes ago with mike about is this the bottom, isn't this the bottom nobody knows for sure, but you know, i really think the

partial, if you will, mentality, thinking about buy a little here if we go lower, you still have money to spend if you still like the stock, et cetera if you have to sell, sell just a little bit right here. overall, that's one of the biggest differences between professional and retail environment. >> when we look at sentiment and things like the vix or put call or all of these things you have watched for years and years and years, what are you seeing, and it's been very sharp, but it hasn't been that long of a time. we pointed out again and again, this is the quickest correction that we have seen in many, many, many years, from the highs have we done enough work instilling fear at this point to make a trade bottom, do you think? >> i think we haven't, joe to your point about it being so fast, it's also been -- you have seen many selloffs it's been incredibly orderly besides yesterday on the close, when there was so much stock to sell, and they really slammed them, and you guys were showing

the fair value, and you see how much the s&p 500 closed under fair value, there was just so much to sell on the close. outside of that, this has been a very orderly selloff and with that, you know, we saw gold and we saw bonds. two of the three sort of, you know, merxs of risk in my opinion, then along with vix, all starting to go up. but with that, they remain elevated many of our clients are turning toward more, i guess, risk-off assets the way i'm looking at it right now in a sports analogy, the defense has been on the field all week, pretty much, and i think the defense may stay on the field for much of today. the thing i'm most interested in today, you know, before we talk longer term, is can we muster some sort of a rally before the close? because i would think people want to unwind their positions who have shorter-term positions on the close for those with a 401(k) and longer term positions, this is a blip on the radar. if you're nervous, look at how you have done the last two to

three years. i'm going to guess overall, it's been pretty good if you stayed invested don't let one week change all your decision making >> jj, i want you to stay with us we have economic data crossing the tape january personal income and spending, rick santelli is standing by the cme in chicago rick, sir, the numbers please. >> well, andrew, we're expecting a number on income that's roughly up .4, maybe a little lower on spending. we end up with another set of better data points up .6 on income, up .2 on spending, arguably spending might be a tenth light in the rear view mirror, we gain a tenth on spending from up .3 to up .4 from december and lose a tenth on income from up .2 to up .1. bundle them together, pretty good if we look at the deflater month over month, that's up 110, that's .2 less than december year over year, 1.7.

.1 hotter than december year over year, core, 1.6 versus 1.5, slight revision we also have advanced goods on the trade side that's minus 65 billion. that's about 3 billion light of expectations of course, a minus sign, but it's a bit smaller minus sign than we were expecting we still have inventories just popping up on wholesale inventories for the month of january, down .2. we're expecting an up number there, so that may have implications for first quarter gdp. and especially in the first quarter gdp, you know, yesterday we saw the gdp now move up 2.7 versus february, i think up 2.6. while all this good data is going on, we traded 94 basis points already in a two-year note yield, and we settle at 1.47 last weekend, a ten-year now at 1.21, and i believe it

was down to 1.15 earlier i guess becky, andrew, and the gang, the way to look at this is we're now at extremes trying to find a footing in treasuries, and until the equities lookmor stable, it's probably not going to happen. the machines will rule, you know, just watch that 200-day moving average i do i think it's the best day to trade things like s&ps. it's a tool, not the greatest tool, but when it comes to the machine, things like that are important. you break a threshold, machines turn on. nonemotionally becky, back to you >> we have been talking so much about the ten-year yield today, and watching that tick by tick i assume you're doing the same >> oh, yeah. absolutely doing the same. and i'll be quite frank. yesterday i thought we would get, you know, that midday bounce i got carried away, thought it would carry us farther, but i thought it was a learning lessage because the treasury market once again, the bounce was so meager, i really do think

there's a good chance, this is not rocket science, but the 1% psychological, whether we slice through it a little bit or get closer to it, but in the end, we shouldn't lose sight of the fact that much of what's pushing the rates down has less to do with us and more to do with the rest of the world >> rick, do you think this catches up in the mortgage rates at some point? i actually called yesterday, and theysy no, you're in a decent rate right now don't get excited about this, to try to refinance does that show up at some point where it actually gets significantly lower for people >> you know what, the correlations, of course, are always spotty, but they're high with regard to ten-year note yields and your average 30-year fixed mortgage when you have active weeks like this, that's going to have to catch up a little bit. i would put it this way, if we all have friends and relatives or associated thinking of refinancing, i think there's a whole lot more that would tell me to tell you to refinance than not to given how much more you can gain with lower yields and

how much more you could lose with higher yields having said that, i don't see over a five-year horizon i'm going very high, but i think it's a green light if you're looking to re-fi don't hesitate, make that phone call >> rick, thank you great to see you >> thank you >> steve liesman joins us now with more on this. what do you think, steve >> quick on the data, going into something like this with better income numbers is better than going into it with worse income numbers. again, we're going to start to measure the impact of this, we believe, in february perhaps would be the first data we get maybe we'll get some in the first part of march for the late february data. that will tell us the initial impact, but i want to tell you about a poll about chief financial officers finding the effects of the coronavirus already being felt and more to come the poll of ceos find different amounts of connections to china, but not one executive reported

their business has been immune to the business so far 100% said they have made changes to their business because of the virus, and 63% say there's been an impact on either the supply chains or demand from their consumers. 63% say demand for the products and services they sell in china has declined since the start of the year just 22% say hey, there's been disrupti disruptions, but 38% are saying it's too soon to tell if we may have a problem there are differences, you want to interrupt me for something? >> sounds like we have breaking news right now on united we want to get to phil, if you can pause for a moment phil, are you with us? >> yeah, i'm here. we have breaking news from united airlines. not a surprise, given what's happening with the drop in demand completely going away for china, and falling more than 75% to transpacific routes. united is going to be reducing the number of flights going into tokyo, osaka, singapore, and seoul. i'm not going to go into

specifics with each of those markets, but suffice it to say, united bringing down the schedule, not canceling outright, but bringing down the schedule it is extending the length of time where it will not be flying from its u.s. hubs into china. that now has been extended out until march 30th so united reacting to the fact that there's no demand for flying into china right now, and a severe drop in demand in terms of flights over to japan, singapore, south korea, that's why they're reducing flights to those destinations >> this is a demand story. there's no - >> not a safety issue. >> no, it's a demand issue, guys it's a demand issue. and this was a smart move, if you're united, if you're delta, if you're american, if people aren't going there, if they aren't booking the flights, don't go you know, sit the aircraft down. it costs too much money to make these flights. >> we have been talking about this this is the piece that i think

the fed can't sell no matter what the fed does over the next week, if they do something on sunday night, monday, if they don't do anything, no matter what they say, it's not clear to me people are getting back on the planes >> i don't think that's accurate it requires me to have a conversation with phil that i don't think we want to have. which is in this world today, when airlines are not supposed to be sitting for three minutes, the idea these planes are idle means tremendous losses to the outlook, and whether or not there's a lot of debt out there in these airlines, so if this becomes an issue of refinancing debt, of an inability of an airline, this is the part you don't want to discuss. >> none of these airlines are in that much trouble. >> a great time to refinance >> okay, phil, is there an issue about sustainability i don't mean of united, but of any of these airlines, they may not have a lot of debt relative to what they used to have, but

running an airline requires an awful lot of debt out there. >> i understand what you're saying, steve. should people be worried about the u.s. carriers? no, their balance sheets are in good shape >> burerkshire hathaway owns 10% of almost every one of these companies. >> this is a low barrier of entry to get into the airline business rich people do it all the time, i'm going to go out and buy some planes norwegian air, perfect example of an airline that does not have the strength of a balance sheet that you see with the united, delta, american. >> let me follow up on that. >> the drop in demand happens, you'll see the impact. >> the airlines have been smart, and a lot of debt that finances the airline industries are with leasing companies. >> right >> the conversation right now, steve, just so you know, the conversations i have heard from people in the airline industry, those who are with leasing companies, is that those leasing

companies are already working with airlines in some cases saying okay, do we have to defer a payment over a month, two month, three-month period, or buy a particular aircraft. we'll buy it from you because you don't want to sit there and deal with it, then we're going to lease it back to you. which is a favorable term for some leasing companies those conversations are already taking place >> sure. i would also say, again, not knowing anything other than what warren buffett told us on the air monday about berkshire's ownership of 10% of all these companies out there, they need money. they have a pretty safe place to go with somebody who has a whole lot. >> i don't think the idea is that the fed is going to have the answer for every isolated problem and issue and demand shortfall. it's offsets the fed can affect some parts of the economy, it can encourage more home refinancing, all the other stuff. it's a buffer, not a targeted solution >> you know more than we do on this >> so, phil's report, that's

what counts for data in a period of stres like this that's data that should find its way into thinking among central bankers and economists steve's survey, that's what called data now. it's not perfect, it's not scientific but it's the best you can do amid uncertainty, and both of those are inputs that tell me two things one, the chinese economy is slowing and almost assuredly had a negative first quarter and it's deeply related to the rest of the global economy we should all take note. and second, the report that we got earlier in this segment, personal incomes are strong. that means the u.s. consumer is in better shape than they have been for a long time, and pulling back on their spending over the course of the last three or four months means they're being prudent and cautious >> let's go to the way-back machine to 2008-2009 it reminds me of the thing that really bit the economy, that really spooked the market, which was transparency

we didn't know where the debt and the obligations were held. and the market just decided, we're going to sell everything and i'll worry about whether or not lehman and goldman have a problem later, but right now, i'm going to sell lehman and worry about that later to what extent are we in a similar position in that a period of low rates have created leverage the banks, we know, are in better shape, but it was one of those things when the tide ran out, we realized we were not wearing a swimsuit i don't want to create a panic where it doesn't belong, but it's one of the pieces ofida da we might not have. >> that is the tide going out, right? >> the tide going out and whether or not long short equity funds. >> that's where you want the leverage, though, in a sense if it's going to be somewhere, you have just seen them unwind the funds that do that stuff, that say oh, things are calm, rates are low, i'm going to lever up my positions in stock,

they're flat now that's 12% down in six days was. is them backing away as opposed to, you know, securitized debt that was basically pinned to household income >> that's not the transparency we're worried about now. it's that they're not testing. it's whether is china coming clean? do we really know what's going on >> i think that's a piece of the transparency it was mohamed el-erian yesterday who in a tweet said he heard some banks were pulling out from their lending facilities for hedge funds to be saved. that's the kind of thing where you find out what's really been going on in the economy. >> there's a million businesses that are going to go under if they don't get help soon >> no question the u.s. banks have much more capital and much more liquidity than they did in the way-back machine of 2008, but we don't have a perfect understanding of the

interconnections and the domestic banking sector. if i'm half right that the chinese and asian economies are suffering from this first, that the european economies will suffer from it next, if we look to some of those financial institutions and some of those connections, there's still a great veil that is difficult for us to assess and what do markets do amid periods between fear and greed, they run this is where it's an opportunity for the official sector to try to pull back the curtain because in all likelihood, the truth is better than markets fear. >> the truth is better than markets fear >> on the sustainability of the banking sector on questions of leveraging off balance sheet vehicles again, hiding from that is never a good thing and for the official sector in china, if american health care professionals were there and could attest to what was actually happening and the data, that could be comfortable both for the financial markets as well as investors in the chinese

economy. >> is phil still with us >> i'm here. >> in terms of the way the airlines are thinking about the next, say, three months, because i think the next three months, the people you were talking to internally, what kind of projections are they genuinely making about the falloff in both international travel and domestic travel? >> domestic, they're not worried right now. they're not seeing that in terms of falloff in demand they're really not seeing that at this point. in terms of international, forget about china and asia pacific. we just talked about that. china has no demand. asia pacific is falling off, 75%, 80% for the carriers. trans-atlantic is the big concern right now. what we have already seen are the waivers for many of the places that they fly to in northern italy, some in the southern part of italy their concern right now is what happens if we see some of these virus clusters pop up, let's say, near geneva or near paris,

someplace else then you have corporate travel really doing a reassessment here in the united states do we send our executives, do we want to send our executives? the geneva motor show announced today it's canceling the show that was supposed to start on monday now you have people, and i heard from people in the auto industry who are like, i'm not really sure if i'm going to go. now, obviously, they're not going. that's the concern for the airlines it's trans-atlantic right now. >> phil, i want to go back to our cfo survey guys in the back, if you can call up that wall. we asked businesses what changes they made so far 91% of our 30 cfos said they restricted air travel. >> i'm sorry, when were these results? >> the last 24 hours we just did it >> to kevin's point, when you're talking about and what phil is talking about -- >> 63% said that they have made efforts to allow employees to work from home more. in other words, more virtual

work 75% said they had have done health and hygiene matters >> what does that mean wash your hands? >> basic stuff i want to get to phil on this 91%. these are the people that travel in business class. this is the biggest hit to the -- >> yep >> this could be half of our respondents were north american, the other half from outside north america. how does that play out in the outlook for airlines >> domestically, they're not seeing that. including corporate travel i talked with a couple people at the airlines over the last couple days who said look, we still see strong demand on the corporate side here in the united states. now, does that shift over the next week or two if we see more concerns about coronavirus it could but the real focus right now is the trans-atlantic routes because that really is the bread and butter for the big airlines in terms of corporate travel i mean, that's really where they make their money it's not on you and i booking a leisure trip over to paris or to london i mean, yeah, that helps a

little bit, but that's not where they make their money. >> do they give you any guidance at all to say okay, we're off 10% in bookings domestically, 5%, do they say anything or just say it's not a big deal? >> not enough that we can hang our hat on it and say this is what we're seeing in terms of demand i have heard, becky, and i can't stress this enough, the domestic demand is stabilizing. it's strong. it has not fallen off. there may be concerns out there, but we're not seeing it in terms of what the airlines are seeing when it comes to booking >> okay, phil. thank you. we're going to reset things quickly. if you're just tuning in, let's get you up to speed on the markets. the futures right now in decline again here the dow down 511 points the s&p is indicated down, nasdaq as well we have been down 600. we have been down around 200 through the morning session.

i would assume that the volatility would continue on a friday all the way up until 4:00, obviously. when you have two weekend days to hear more about new cases from anywhere in the world, people might be hesitant to stay too long over the weekend. we probably ought to show you the ten-year quickly as well things -- we pointed out and jim pointed out, stockerize keying off the ten-year note as well. it's been anywhere from 1.17 on the ten-year, now 1.20 it was almost 1.22 each little basis point all of a sudden makes a difference. who would have thunk other market charts, must-sees right now, and dom chu joins us now back in ec with some of those. >> i'm going to dovetail in a second on one of those interest rate discussions you had about the ten-year note yield. we'll start with the week that was with regard to stocks. the s&p 500 during the course of

the last one-week period, you can see here, down 12.5% we talked about the correction mode, down 10% or more energy, the real standout during the course of the week, down 18%. the real, real loser in terms of the overall sectors in the s&p 500. meanwhile, consumer staples only down 9%. yes, terrible, but believe it or not, that's the best performing sector in the s&p on a one-week basis. to your point about the ten-year note yield, we have seen it fluctuate quite a bit. we're near record levels, but one thing to pay attention to that maybe a lot of folks aren't watching is the difference between long-term yields and short-term yields as evidences in this case by the difference of two-year treasury notes and ten-year treasury notes. you heard that referred to as the two-ten spread banks look at this as a way to gauge their profit margins at one point, we were negative going towards the fall of last year we got as high as about 35 basis points believe it or not, in the last

few days, we have actually seen the yield curve or this particular spread widen out a bit. that indicates that things may be getting back to normal-ish on a relative basis, but maybe that's an early sign of some positivity if you're looking for one. then one thing to end on, we don't talk with it as much, those prices in some market stress a place for alternatively placing your happen, bids happen much like it would for gold this time around over the last few weeks we've seen bitcoin prices take a move lower as well indicating that people aren't even looking there by the way, we were not just a long time ago around $10,000 per bitco bitcoin, now down at 86. it gives you the idea the selling is all over the place, not just in traditional stocks, even bitcoin is not as attractive these days for some of the folks out there, who look towards it as an alternative place to park their money. >> dom, thank you very much. let's get down to the new york stock exchange, jim cramer joins us at this point jim, i'm watching you nonstop,

watch ted th thed the entire shd you've been a calming voice. it gives you solace but this is a fast-moving market, down 570 points on the dow again. talk us through what's a panic and what's rational at this point? >> well, look, i think there are people who genuinely believe that we're going to get a sweeping public health issue in let's say a lesser developed world. there are people who believe that leaders are going to come down with it, there are people who believe that schools will close in various areas and then there's me i think that we're building in some pretty much pretty great negativity, back to that ratio as joe and you, becky, know, late mark haynes said you have to do some buying whether you like it or not which is 10:1 negative to pass fiositive. if you're 401(k) no one wants to hear this i think you have to i

would buy, buy some. i thought that when i think about what to do, i say you can't sell unless you have travel leisure, those aren't going to work, autos won't work. clearly airlines won't work. so if you're full up and don't have any -- to sell those, you have to be ready with some index buying here just because it's the hardest thing to buy in the world. everybody feels that monday is going to be worse than today i can't take that view i have to just be automatically putting 401(k) money to work whether i like it or not, because i don't have any, i haven't put any in, in the last year and a half. so got an opportunity if you have cash. if you don't, sell some of those stocks that aren't doing well but pretty soon we have to not be able to sell anything so make sure you're a little liquid in case monday's bad. i think it's about leaders getting sick and about it's about the lesser developed world getting sick >> and school closures here, i

think that's the potential thing. >> that's what scares people. there's one of two things, dr. fauci apparently, i don't know if he files silenced, no one trusts any numbers in china. the one thing we know if you smoke, if you have diabetes and over 65 you're very much at risk there is a remarkable group of people who aren't at risk which are younger people we've had a lot of babies die of flu in our country dying of flu is much harder here than with a disease, but it is rather remarkable. we have a lot of people who didn't get the flu shot and they died in the united states. so i think that shutting schools is not necessarily a way to go unless you're worried about the teachers but i believe there is a lot of his tierious now. wh when you get that level of selling i default to what mark haynes said, he was able to call the bottom when everything was not great. i know it's hard to come up with

what to do in a biological crisis it's not financial the emphasis on the fed is misplaced. it doesn't matter. >> i'm with you on almost all of that the only thought with closing schools kids are carriers and if they could g to school and pick it up and bring it home, you worry about the older people at home, not just parents but grandparents, anybody else who might be around. you can be concerned and do preparation and say stocks are off 12%, looks like a good place to jump in >> i look at apple and think why necessarily at this level? if you look at the ten-year chart you're buying at the wrong level. there is a level to buy apple, people have given up on it microsoft the level to buy it, quantified there's issues with downside retail is very hard because we don't know whether people are shopping but i think that to get, if you're going to be selling the stocks that are at under book value when the book value is scrubbed in the financials that's a mistake. i think that tech can bounce

back i gave you ten tech stocks last night that really only work best when you have to work at home. now zoom has been up, ring central sup, going higher. i think zoom could go remarkably higher >> jim -- >> someone downgraded teledoc. how can you do that? it's pretty good >> i'm trying to understand, if and when we start to get earnings from these companies and i know we have a ways for that to happen, does everybody discount these things as a one-time situation >> no, that's the problem, andrew >> or not? >> no, that's the problem. the reason why i mentioned microsoft and apple, at least they told you. when you have companies that -- watch columbia sportswear today which a company i never cared for, big lots and wayfair, put out bad numbers. if they bounce it's a little built in but my bet, i hate to say bet is they won't bounce and

you got to let that filter through. >> thanks, we'll be watching closely >> absolutely, have a good weekend. joining us is kristen bitterley, here you were listening to what jim had to say agree, disagree, have a different nuance >> so i agree in the sense i'd rather be a buyer tomorrow than a seller today in this market. in terms of trying to call the bottom that's a hard thing to do a couple of things we're watching right now, we actually maintain a bear market checklist which is a series of 18 different criteria, which is trying to tell us right now it actually tells us to buy the dips but a lot of that information is based on the strong consumer, it's based on leverage, it's based on debt service ratios that are actually relatively healthy we also have a panic four-year model we look at and we haven't quite reached that panic territory yet. once we see the panicked sell-off that would be a clear signal to get into the markets

>> is it possible to just be a purely analytical economics business type person here and say i'm looking at the effects on the economy or don't you have to take into account just the fear and this being human and the idea of a pandemic >> it would be amazing if we could say this is all fundamental and economics based and you see some of that in terms of people looking at earnings growth and revising earnings estimates down. we did that in terms of looking at zero earnings growth or potentially negative for this year, global growth as well, but when you're looking at panic headlined risk and it's not just about coronavirus. we have the elections coming up. we have super tuesday coming up that could introduce more volatility into the market so i think it's really a combination of those things, and you add on, i know you guys were talking about this a little bit earlier. a lot of the selling that we're seeing is not from our investors. i don't have a lot of investors out there that are panicked.

it's more the machines and the prime ministeratic trainiding ad you can see that in the gap downs in the market. it's not individuals like us or long investors that are saying i need to get out. >> kristen, thank you very much. >> thank you >> kevin warrish is our guest host as we're headed into the end of the hour, the end of the show, again the conversations that you think are and should be taking place at the fed with other central bankers this weekend >> so i don't know what discussions have happened or are likely to happen i think it would be wise for u.s. officials to hear what's happening on the ground among key allies in asia, what's happening in global supply chains, what's happening to transports, what's happening to the exports, because we have a global interconnected economy whether we like it or not, and weakness over there, finds its way into europe first and finds its way into the u.s. second so at least the sharing of data and a sharing of tools and how to

handle what's likely to be a volatile period ahead. i think for u.s. policymakers, the thing they should find great comfort in is the u.s. finds itself economically in a strong position to be able to withstand the shock, a stronger bottoms-up economic position than almost any of our big trading partners around the world, so over the medium term, this is going to be okay but that doesn't mean that policymakers can sit on their hands. >> you also talked about a coordinated effort with the central banks. who are the banks sitting around the table, keeping in mind interest rates are negative in many other areas of the world right now? >> they are negative so there's not a super strong deep tool kit, but every time the world central bankers are asked to imagine what would you do next, there's been no shortage of imaginations that's true for when ben bernanke led the fed in 2008, true at the ecb throughout a very rough period over the last several years. christine lagarde is a brilliant tactician, a very capable leader

and i expect the ecb along with the fiscal authorities could come up with things that would matter to the real economy and in so doing matter to the financial markets. >> do you think the benefits would outweigh what it would indicate if they did this sunday night, you think it would be better than people saying oh my god -- >> exactly the truth is if it turns out in six weeks we wake up and this was all hysteria not based on reality you'll be glad you did it and take it back. >> kevin thank you for being with us. clearly the market is still on edge, dow futures down 607 let's hand it over to "squawk on the street." good friday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber futures are down 500 plus, ongoing fears, two-thirds of the dows gains from all of last year are gone europe down 4%