good morning welcome to "squawk box." we are live from the nasdaq marketsite in time square. i'm becky quick along with andrew ross sorkin and joe kernen right now we are looking at the dow futures indicated up by 518 points a lot can change close he closely watching what has happened in the market >> how we got here at 10:00 a.m. eastern, the fed cut half a percent from the key

fed funds rate the chairman talking about the action and admitting that the cut may not be a cure y'all, so to speak >> we do recognize the rate cut will not reduce the rate of infection or fix a broken supply chain. we do believe our actions will boost our economy. avoiding a tightening of the conditions that will help boost household and business confidence. >> then stocks whip sawed with stocks ending down yesterday, the yield dropping below 1% for the first time ever take a look where we stand now at .94 as we speak >> quite a bit lower quite a day. >> you want to get ahead of these things but can you

>> we were up 1,300. >> i know. >> i'm not listening actually i do want to know your predictions. >> he would shave to do it at some point >> i think there is no winner here >> exactly if they didn't cut, you are skpengting why didn't they cut and the markets go down? >> what do they know nobody else knows. at this point, it is pure insurance trying to loosen liquidity. you look at people looking at mortgages. >> i locked in a mortgage rate on saturday. >> saying, look, things are going to get cheaper if you are locked in for a 10 or 30-year mortgage >> up sharply today.

maybe biden or sanders we are not going to nationalize everything maybe enough people over 35. >> did you see he won. i still think it has something to do with the gains today, by friday, let's see what the fed cut is >> i think yesterday, the knee jerk fell on the news. it will be helpful to stabilize. >> do we have a jobs number on friday >> we'll have to look at global coordination if the rest of the world did and the fed didn't do anything, we'd be looking at it >> the market had to move. we know the economy would impact we are seeing things from people

eating out to driving. >> conferences and it is happening now. >> these are frightening times i tell my self it is ridiculous to be thinking about all of these things during flu season, if we were rushing to talk about how many people died, we would be doing it all of the time even now in china, you are talking about less than 100,000 total cases. weigh don't need to do the math. every time someone dies, it is oh, no, another person died. if we did that with the flu -- >> scott gottlieb will be with

us and said he suspects there are thousands of cases already here >> don't you think that in the next week, we are going to hear big numbers? >> we never got big numbers in china, you think 80,000 is a lot in china >> i don't think that is down, we are not going to be able to do that, that is true. there will be more cases here. is it worse than a nasty flu >> i don't think we know until we see bigger numbers. >> statistically, it should be >> we don't know because we don't know the denominator yet it is one or the other we'll get through this and it is probably like a really bad flu

season >> of the 70,000 they studied from china so far, there is an article in the china cdc, they found a 2.3% death rate. that is substantially higher than the normal flu. >> 10 times higher similar to the spanish flu >> what happened to my -- i had a read they got rid of it >> do you want me to tell you what it says >> we were going to do a sound bite -- okay i've been practicing how to toss to this sound bite voting fomc member said the emergency rate cut wasn't driven by the stock market but it was taken into account on cnbc earlier this morning, take a listen.

>> the risk around that outlook have gone up significantly you don't respond to market volatility per se but if investors pull back as much as they were showing they did, that also influences business and consumer sentiment >> anchor school 101 the next central bank to watch is canada. the next banking decision is due at 10:00 a.m >> first we are going to check on global markets. >> when are we going to get to the experts? >> you can see the nikkei closed flat, the hang seng was down, shanghai composite was up. in europe, green arrows across the board. >> okay, now it is your turn

>> our guest host this morning. >> what nuggets do you have? >> you were. we don't know how many cases we are right now. in the urs, we've had 120 confirmed cases we hope that number will go away. expect that to go up to the thousands and the death rate

will go down we've seen not just in the u.s., in europe and japan get so far negative. extremely low reads. you get a snap back and right itself a little bit. >> 2%, 4%, whatever it is. if they start closing schools. if you do see a lot of things empty. i saw some costco stores empty >> if that gets more widespread

in movies and et cetera, did the big selloff last week already discount that much dampening >> when you had sicka and sars, you had more we were down 11% if things get worse, you could see. the selloffs throw >> do you think that throws off literally what is happening. every other hour, something canceled or conference happening. >> i would argue, if yes over the next two quarters we have a slow down, the markets are discounting not just that but a year from now things get back to

normal future cash flows from one to two years out. all that will happen talking on friday but weather they consider that one time. >> in all of that, to your point the denominator. the active case has become inactive, in the short term, it is so easy to sell, just to get out and feel better. >> in the duration, it depends on how much of the gdp we recapture. do we lose it, do we get .3 back >> if you don't get the washer, you may get it in three months but do you skip the vacation >> are you shopping at macy's?

>> were you already shopping at macy's >> to sell the market, there is so much less friction to say sell the market than the individual company like in a casino you don't use cash, you use poker chips. there is less friction i think this knee jerk reaction is more trading. this is looking bad. the headlines are looking bad so people sell. if you look at cases like sars and ebola which may not be as bad as the coronavirus, within 80 trading days, the market had already recovered. >> got any bonds do you do that >> we look at the bond market and focus on we can witnesses primarily. treasuries are up 25% in the

last year, when you look at that, it has only been the following seven times. >> before the rate cut, there were yields above the 10-year. >> that was before yesterday so just look at what's going on? >> 70% before yesterday? >> yes >> chicken little bond traders need to grow a pair and get this 10-year back above 1%. they are petrified this will pass what are we at 70 basis points does that make sense or is that an overreaction? >> i think it is an overreaction >> we have to get above one. let's go it's their fault they are so petrified. they are usually right

that's what scares me. >> in the short term, that's where the fear is. the bond market reflects fear. >> the bond market is what do we not know was it .7? it was low it got even lower yesterday. >> do you think he would be right this quickly i tell him this time you are definitely wrong >> could you not tell him that today? >> maybe that will help. maybe he could explain the bond traders. >> has he lowered his guess again or does he think that this is it? >> all right the wait was completely worth it for you, paul. >> i only speak when i'm spoken to >> is that true?

>> youngest of seven kids. >> i bet you eat really quickly. my youngest brother eats fast. >> if you butt it in front of me, i'm going to get it. >> you can tell i'm an only child. i have 10 half siblings now, i found my birth parents 10 or 12 how many in your family? only two >> you and your sister >> i thought you were talking my children super tuesday, what joe biden's big win means for the election and your money. first, check out the biggest dow winners pre-market stay tuned you are watching squaurk on cnbc in

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. welcome back to "squawk box. the futures are solidly higher

this morning up 483 now the s&p indicated up just under 50, the nasdaq up after a volatile session yesterday >> if you saw the dow indicated up 500 points, can you imagine in the space of a week and a half >> we never say enough about that market. >> yesterday, with he were down 200 points indicated a little lower. you gave back some but are still

up quite a bit it is all relative >> let's talk super tuesday and what it means for your money vice president joe biden winning nine states. virginia, alabama, oklahoma, arkansas, massachusetts and texas. bernie sanders won in his home state of vermont >> looking good. we are very much alive make no mistake about it this campaign will send donald

trump packing. >> tonight, i tell you with confidence, we are going to win the democratic nomination we are going to defeat the most dangerous president in the history of the country >> we haven't mentioned michael bloomberg so far the idea that biden was going to win is fair to say, a surprise for many it is not just a biden

w win. it is a complete collapse. never have we seen so much money spent for so little outcome. it is prove message matters. character matters. in our focus groups, we could see people switching from bloomberg tobiden.

frankly, i think it is a two-person race right now. >> do you want to handicap that two-person race? >> i can't i talked about bernie sanders. he's going to win the lion share of california the two will be in a dead heat. in last week's debate, he will be a front runner. this will go all the way to the convention feeling like a rational way to pick a better chance to get to the white

house. competing on environmental, tax. not just a reaction. investors are looking at the possibilities now biden is more centrist less likely and puts forth the economic policy. they want biden, they don't want sanders. some of this is good when enmass, the democratic population suddenly sees the

real possibility of the predicted markets at 65% it will be bernie sanders and becomes a possibility it is a reality. i think that's what they saw sort of unthinkable. i don't know why you nominate someone who can't win. why would you nominate a guy who would be mcgovernored from day one. they came back and were excited about all the other candidates.

democrats will not vote for billionaires >> i thought you said, don't estimate it, money will go a long way >> not in advertising. you have to go long in debates he aggravates people the focus groups we've been doing with democratic voters those groups were showing up people were leaving mike bloomberg in droves for joe biden. they found biden particularly over the last week >> just because of the debate performance? >> debate and the speech he gave last week. we saw joe biden hitting his stride >> he's just as likely to have the same gaps he's had in terms

of public speaking that's not going away, right >> that's why i'm telling viewers to watch the debate in arizona. at his best, he is a very strong candidate and delivers a strong, powerful speech. looking at the polling data and response, biden is on his way up and sanders might well have hit his peek >> what does this say about spending a lot of money. is there a walk away lesson this will happen again. republicans don't hate millionaires, democrats do they just won't vote for you

if they fell out of a boat, they couldn't hit water in terms of what was going to happen here. they go from what is going to happen. >> i'm glad we have agreed none of it ever came true. >> i think you grew that beard, so people would remember you are the same guy >> tough guy thank you for waking up early.

>> when we come back, the latest on the corona outbreak including a seattle employee at amazon testing positive for the virus anthem and cvs health gone up. more on cnbc at synchrony,

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>> the who says the number of cases surpass the number globally the death toll is now 3,100. in the united states the total death toll here to nine. amazon employee in seattle tested positive at the south lake union office in seattle the worker has been quarantined. lawmakers are reportedly finalize a $7.5 billion emergency bill with the hopes of pushing toward the end of this week >> ge announcing more detail ash carter going to be nominated to the board

then the company is also updating its outlook, 2020 outlook, reaffirming the following for full year 2020 with additional commentary on the impact of the virus. industrial revenues to grow in the low single-digit range adjusted to grow from 0 to 75 basis points adjusted earnings to 50 to 60 cents. >> the street is at 60 and ge cash flow from $2 billion to $4 billion. went on to say compared to 2019, outlook assumes lower outlook due to its planned disposition as well as reduced cash.

offsetting these effects for the head wind. less than four to one less equity >> just some headlines the first quarter is anticipating the negative impact of $300 to $500 million. net impact because of the virus. they say this is an evolving variable b incorporated on the

adjusted range to 60 for the first quarter, they expect 10 cents adjusted per share negative $10 million of cash flow that incorporates the street now at 13 that tells you what they are anticipated with the virus it is all coming keeping the guidance to the rear end. those numbers have not been updated. everybody knows hearing what they b anticipate. >> this year will be like, hey,

we got inflated multiples going on the companies that can access markets will be doing so the company $will do that. they'll see those pop up because of the discounty rate. more of an accounting issue. >> if you are anticipating 7 or al terms >> you have to bring back all of the future reliability >> looking at interest rates getting exercised even further >> your minimum payments will be higher >> want to talk about global markets continuing to focus on coronavirus outbreak

china's central bank to take action eunice yoon with a look at any of those steps are actually working? >> that's right. this morning, i ended up spending the day with a small manufacturer he said that easy money is good if you need a cheap loan but so much more needs to be done >> radio manufacturer was fretting about his company's future until the government came in to help with 125 stores in 180 cities but the jaw break impacts sales. on line sales dropped in half. the government stepped in offering him tax cuts, rent break and cheap credit

the credit came on time. >> he no longer has to pay pensions or other incidences but so far a third of his workers are being kept away from the factory. >> material costs are up 5% to 10%. workers haven't come back. that impacts our ability to deliver. he hopes the government can loosen restrictions on consumers. what worries me most is how tough measures can img pact. it takes time to influence the confidence >> consumer confidence is needed to rebuild this economy. >> thank you, eunice

trading app robinhood with another outage yesterday stocks fell after the surprise rate cut the trading app now faces regulator scrutiny joining us now to discuss the impact he is business editor at axios robinhood has been the darling you see this happen, what does this tell you? >> it is a disaster for them and for their high-volume users. they experienced an outage but weren't necessarily trading. for regular users, it is a mess. it has a really clean interface and people love that a big piece of it, that $0

trade. you can go to another user and get the same benefits. >> what was the problem? too much trading activity? >> we don't know they original said our systems were having problems communicating with each other. they took about 24 hours to come out with a statement that said their dns didn't work. they got overloaded by the activity there was a bunch of years that were questioning that. there will have to be a third-par third-party. >> all of this is caused with zero trading a year from now, do you think robinhood still exists >> i think it is

the question is, is someone going to buy robinhood when morgan stanley announced the deal, they said, you'll have to try robinhood it grew faster in kw4 than in q3 it was a wonderful acquisition for someone that wanted to rival what morgan stanley did. >> what do you think regulators will do? >> theres a i law on the books and regulators will have to take

a look at this what robinhood has so far doesn't cut it they are known as a focus company. >> do you think they still would be an acquisition target >> we'll be talking longer term. i don't have anticipation for anybody going to the talks tomorrow i don't know how you are going to make trades if you didn't get to play on the biggest gain for the dow, you have to think there will be a class action lawsuit. >> anyone who fried to log in that kay and couldn't has a

clap >> you don't even know what they were going to do just to answer your question, it is a little over 10 million users right now. >> substantial >> what's worse, not getting in that day or in '87, no one was picking up the phones. >> it came back on line after a couple of hours. if you couldn't get in on the upside, you couldn't get in on the down side. >> you missed the whole turn up and down >> dan, i like -- you are so corporate now. i like the new look. >> i don't have the tie or the hair >> is it the new employer has a code >> i asked for the kernan and

this is what they gave me. >> you look so much younger but still so knowledgeable >> thanks. means a lot. >> coming up, dealing with the coronavirus. we'll talk to former commerce second. >> first, take a look at the biggest dow losers pre-market. stay tuned >> announcer: don't forget to subscribe to our podcast you'll get interviews, orinagil content and subscribe to squawk pod today.

>> welcome back. back above 500 points. 550 on the dow s&p indicated up about 54. nasdaq up sharply. after the session yesterday that ended on the loss. come on. almost over one, that's how i'm looking at it. i'm looking at it half full. >> you are just saying bond investors get out of here? >> yes stop being so afraid look into the abyss. turn on the light. you'll see there is nothing fear but fear itself.

>> meantime, markets going on a wild ride with a rate cut. joining us now, our guest, former commerce secretary and former ceo of you saw what the fed did yesterday. you saw what the president said about what the fed did yesterday. what do you think should have happened and what do you think needs to happen? >>. >> if you take the coronavirus in isolation, i don't think an interest rate cut is going to do much to get people back and i think we have to realize that the virus hit on top of an already softening world economy. and every major economy is being revised downward now the odds of a recession now

with the impact of the virus whether it be short-term or not go up dramatically the policy that was chosen was monetary policy. also at the same time we're driving investors toward more and more risk. so we just have to keep our eye on what we're creating not just getting through the next six months but it kind of bubbles. >> if you were in government right now, what would you be doing? is there a physical stimulus policy that you'd be putting in place? do you think there's something realistic that could happen between now and the election >> fiscally perhaps an easing off on tax payments for some companies. things of that nature. >> you say some companies, would you do -- would it be reasonable to have some kind of tax policy that helps people in the hospitality travel industry but not others. >> let's just say you did it across the board and we don't

have to get into picking winners and losers our deficit as a percent of gdp is over 4.5% that's big so that is a big issue it's not like we have a lot of options. we do have a trade poll sand ice have to remember that we're back to our trade policy and that's also -- that is what has made many of the economies soft i'm not convinced at that point they were going to be downgraded by people watching in fact some of the easing of the trade tensions thought that maybe we'd see a slow rebound from the head wind for 2019 and then something else that you said, that we're driving people

toward more and more risk, that and -- i don't know how you -- when you have interest rates out low where do you go for yields >> this just for safety. you're not going to stay in fixed income i think that's a trend that's been happening just pushing and pushing people toward higher risk but this is why equities respond. money goes into equity and higher yielding instruments and

we're going to see that. phase one was not a big deal it's almost going back to where we were. they're going to buy some soybeans and take some tariffs down it's not taking place or being implemented. >> it was a truce. but now let's think about it this is a good conversation. and the u.s. and china, what can we do together to help out on the coronavirus situation. should you take tariffs down and we will correspond with that so that you can get products at a better price that didn't happen what did happen is the private sector stepped up as always. and that's been the one area that has responded japan has done everything

possible to help china i wish we would have used this opportunity to show that we can also collaborate in the meantime instincts are coming out it's a pretext we want to put tariffs on the other country so after coronavirus and all the damage that it's doing because let's not minutes words this is having a devastating impact on supply chains after that goes away and the damage is still around because this isn't a light switch. it doesn't go on and off it takes time. we're still going to have to deal with the trade war and an expanding trade war. we still haven't gotten to germany. we still haven't gotten to europe, france so that is the part that i worry about in the future and i'll tell you something else, the next four years, maybe not six months, the other thing that worries me isimmigration polic because we, the more i talk to people, i realize that we are

missing workers. we are missing talented people all the way from the top to the bottom and that could be an issue as well for the economy, for inflation, i think there's a lot of things out of balance. >> we have to run but i just have one final question which is your reaction to super tuesday's results and what you think it says about where the democratic party is at this moment. >> i tip my hat to the democrats. i don't know if this is a coordinated result but it was wonderful and it also helped the markets respond. i think that tempers the market so it's been very good. >> do you think that biden has a better chance of beating trump than bernie sanders? >> yes than bernie sanders. i would have thought that mike bloomberg has the best chance but that didn't look like an option anymore. >> don't tell us that carlos

>> that's no longer an option. biden versus sanders i'd put my money on biden. >> >> thank you for joining us this morning. >> thank you.

>> can the company avoid an iphone short fall? we'll talk supply chain disruption with an apple bear. and why there's still time a the second hour of squawk box begins right now good morning, welcome back here on cnbc

>> take a look they're up and they are up nicely open up 57 points higher nasdaq up about 169 points higher we can debate and talk about whether that's the function of the federal reserve or whether it's a function of biden and sanders. i don't know. >> or just swungs in the market as the market tries to catch it's equilibrium too massive moves to the down side but the federal reserve cutting rates by half a percentage point. this comes two weeks before the fed's scheduled meeting. only nine times since 1998 and the financial crisis has the fed had a rate cut like this the last time was 2008 and the lehman brothers collapse. >> in the wake of that emergency rate cut we went into the field with a cnbc fed survey

got 41 responses from economists, fund managers and strategists and the ink is barely dry on the results. a strong 62% majority approved the fed's rate cut 25% disapproved but only 32% think it will be even some what effective. he writes in the fed needed to do a confidence restoring move however we're in the middle of a problem that starkly reminds even that monetary policy cannot be expected to be the sole solution to every problem. even after the rate cut the probability of the recession has surged to 41% and that's the highest percentage we have had in probability in the nine year history that we have been asking this question.

a recession is on the horizon. .6% off of gdp. they see a rebound of just a tenth which i'm surprised about for next year. feds fund rates declining about 50 basis points down to 0.7% by year end the average year end forecast 3.098 and that's about 3% higher from yesterday >> rising slightly from where we are ow

>> they had to do it or it's a confidence measure a lot of comments about needing fiscal response the decline of economic activity can limit the spread of the virus itself not saying that you want a recession but you don't necessarily want people to do some of the things that they might do and spread the disease. if you start talking fiscal it doesn't have to -- in a month or two months it says we're going to build bridges or do a tax cut. we are going to do something to restore confidence that there's a global coordinated effort.

>> that would be a great way. >> when he talked to them all of them had great one. >> i still maintain the idea that thinking about it as a major natural disaster in the sense of is there a way to target stimulus and fiscal health to the good businesses that could go out of business if not for the coronavirus. i don't think you have a moral hazard situation here. this is not the way that you want to do it but there's a good argument here for in the travel industry, the small businesses that might go out of business. >> let's bring in another voice. david wilcox is non-resident

senior fellow at the institute for international economics. let's get your first thought on this >> i think it was an important move i think confidence is what it was all about. jay powell himself said that central banks don't have all the answers in this situation. look, if this were a movie we'd be talking about central banks as essentially the supporting actors the show can't go on without them but really the lead actors, the ones that were going to drive the plot line forward are the public health officials. they'll determine the contour of how the disease spreads and what the social impact is fiscal policy makers are second in line they really need to step up and show that they can put in

place a timely and well targeted action. >> i want to point out that the dow futures are now up by 620 points. >> we know that you guys look at the markets and some people criticize the fed for looking too much at the markets. tell us how they're going to internalize yesterday's market action and let's go back to friday at 2:30 the chairman comes out with a statement saying we're going to use it signaling the rate cut monday and that by the way puts a little flooring right there because you ended upcoming off of the bottom. and this morning it's up how are they going to view the effectiveness of the market. >> they're not too concerned about what happens

their job is to promote a set of longer term objectives and point the economy back to a stable place while at the same time clearly communicating that they're on the job and they're actively monitoring the situation and what was important yesterday was the simple fact that actions speak louder than words. >> do you think that it pays off longer term? >> i do. definitely so i 100% agree with what david said this is not the primary -- this is not the primary response to the virus crisis that's public health that's fiscal but monetary

policy helps so let's enumerate some of the ways it does help. it leans against the tightening of financial conditions. secondly it validates the move down in long-term rates. that's going to provoke mortgage refinancing. putting cash in the hands of consumers and help the home building industry. look at the dollar it's really important that the fed keeps the dollar moderate. and enable more aggressive easing actions to boost growth around the world. >> you said keep the dollar moderate you can't let the dollar get too strong and basically make sure that they're aligned with what other central banks are doing so it doesn't move too far one direction or the other >> i'll tell you something even more than that which is you're

worried about the exchange rate. more opportunity for you the emerging markets to cut rates. so you're not just getting a boost at home. the fed is also enabling others to act to support their economies too. >> is this is the last word from the fed here there's been a lot of discussion about other administrative measures, supervisor regulatory things that the federal reserve could do i guess your former colleague that talked about lowering the discount rate and extending the firm and other things this could do to help grease the wheels in the financial system. >> i don't think this is the last word steve. there's a range of other actions that they can take but i really don't want to lose site. i want to come back and re-emphasize, fed's a supporting actor here it does have a role and has to continue to monitor carefully that the financial system is

functioning well i don't think we have an indication yet to the contrary on that front but really at this point, all eyes need to be on promoting the maximum extent the public health efforts and getting the fiscal package that's implemented, timely, well targeted and tailored to the unique characteristics of this really unusual situation. >> so a question to both of you, globally yes we have seen what central banks can do but fiscally what do you think governments could do that could provide what would be some confidence to the global markets? because once you get that, then i think you could provide some type to these markets. >> first of all -- >> so i think there's really two -- dave, why don't you go ahead? >> i think speed is of the essence and there's something to be said here for pulling a play out of the play book that has been executed. there will be a tremendous

temptation to get fancy and design something that is very narrowly targeted to this particular situation that's great i think we ought to move on two channels at once we can multichannel here we ought to think about providing support for example for workers asked to stay at home because of the infection. at the same time, putting broad based cash through some kind of payroll tax cut. >> last word on that >> yeah. so look i think that makes some sense. there's two areas that i would focus on

that includes the need potentially for credit fwaurn te -- guarantees and then the question is the aggregate demand stimulus we think the fed is going to go more we think the fed will cut another 25 in marchand another 25 in april and then face a moment of truth around june where they have done enough or have to kitchen sink it down to zero but what is true is the fed needs all the help they can get so it's time that fiscal stimulus also steps up here. >> thank you very much and good to see you. >> this is good to be with you. >> is it jobs friday. >> it is jobs friday with a wednesday adp coming up at 8:15. adp is coming. >> i want to run to the refuge of your economic data. i do. >> the trouble is if becky is going to diss me. >> i'm not.

>> you are you have been doing it >> we need to know what the levels are above hand. >> it's important to know but you're also right in that all of this data has to have an asterik with it. >> this is why we're great colleagues. >> we listen to each other. >> we get back to hours work instead of infection rates it's not irrelevant this is significant. we talk about why the fed wants 2% inflation and why it wants to be at 2% growth. the reason is because you want

positive growth and positive inflation. >> the further we are from zero in any metric the more we can say the economy is less likely to contract. >> that's like they had in the last hour which is what was the trajectory of the economy before it came along. >> not as excited as joe >> some countries that were coming down and some countries that were coming up the u.s. was on the cusp. >> carlos is a single issue voter. carlos the republican and it's about trump. >> i shouldn't have brought it up it's my fault. >> >> will adp or the jobs report show us any inkeling? because these numbers are through last week? or what are we talking about >> they would be on the week of the saturday that includes the 12th

we just had a little bit of it in there but it was worth it. >> we're hearing from general electric. >> i blame myself for tossing to you. we're hearing from general electric the company is holding an investor call at 3:00 a.m. >> i think mark is here, yeah. >> cash and profit targets but it expected to hit 300 to 500 million to its first quarter cash flow from the coronavirus outbreak don't miss squawk on the street at 10:00 eastern. >> they also said for the adjusted numbers looking at 10 cents and the street was at 13 but that tells you how the street recognizes the moves we have seen over the last week and a half by burning things down. we know these numbers are going to have to be guided and adjusted based on the

coronavirus so the numbers that you're looking at, those aren't the real numbers. >> it's an interesting story too because so much needs restructuring anyway so you're really looking through the first year of what's happening. you add this to it so it's kind of like the economy you're looking at now is saying if you have confidence in ge a year from now and confidence in our economy to invest in stocks. and i believe that you do. that's what you have to do at times like this. >> one upside to all the market volatility mortgage rates dropping sharply and that showed up in the applications >> it's a huge week for the mortgage market. ending last friday according to the mortgage bankers association all thanks to mortgage rates that caused a big spike in refinancing. the average rate with confirming loan balances fell from 3.73%. that's for loans with 20% down

now that drop caused a 26% surge in weekly refinance applications that's big compared to a year ago refinance volume is nearly 224% higher i read that right and a spokesman said they will be updating their annual forecast later this week calling for a big up tick in refinances this year now i spoke with the ceo of quicken loans late yesterday and he said they had a record day monday and likely tuesday of this week as well for application volume and one new tool is helping them handle the surge. >> the way that we leverage technology to communicate with our clients to make it easy for them to make a mortgage application for our underwriters, we can scale very quickly which helps us when we see increased volume like this

they were 10% higher compared to one year ago they're also up against a historically supply of homes for sale. >> let's do regular consumer economics here what's the number? is it half a point i know that becky is skipping down the sidewalks here. she is so excited. >> it's part of the numbers, right? >> you come in in the morning and she says 3.1. >> 3.125. >> 110 basis points from a year ago. now any expert in the mortgage market will tell you that you need a reduction of 75 basis points to make it worth your while. >> not if you don't plan on moving you don't. >> well, but if you're looking at maybe going -- >> interesting debate. >> your arm that could be lower or your 30 year fixed which is longer. >> 20 year fixed it does depend >> it depends on what your cup of tea is but rates are incredibly low right now and

when we asked will we see them go much lower, there is going to be that tipping point where investors and mortgage backed bonds are going to say not worth my time and that's going to hold the rates where they are >> they have made it easy. >> technology has really streamlined the process. >> so you're sticking with 75. >> i'm not sticking with it. that's what the experts tell mement they say 75 basis points makes it worth your while. anything less than that you'll be paying more >> i'm calling my guy. >> call your guy. >> it's the upside for retail investors looking at the declines in their 401k the upside is you can check it out and save a lot of money on what is most people's biggest investment in their home it's a great thing >> make the call.

>> make the call >> avoiding an epidemic in america. there is time but full containment is likely impossible he joins us in a bit as we head to break, here's today's aflac trivia question. what was apple's market cap on this day last year gotoe tht bwiin three decimal points the answer when squawk box returns. r questions. aflac is auto insurance, right? no. uh uh. is it homeowner's insurance? no... uhuhuhuh! is it duck insurance? nope. ahhh! do they pay me money directly when i get sick or injured? yeah. aflac! you got it. you know aflac! boom! get help with expenses health insurance doesn't cover. get to know us at... aflac dot com.

should they downsize? nesters now. probably. will they? not as long as thanksgiving is a holiday. planning for the future is about more than just money. let equitable be your guide.

here's the answer to today's aflac trivia question. the answer is $829 billion as of yesterday's close market cap was $1.26 trillion let's take a look at what's been happening with the markets this morning. been watching closely but this is something worth paying attention to dow futures right now indicated up by 667 points

but this morning this morning is no exception overnight in asia, you did see a number of things the nikkei was closed flat and the shanghai up by abou about .6%. in europe the major averages have all been in the green. >> keep going. >> wait for it. >> what we're all really talking about. pressure ri yields at this point. the ten year falling below 1% for the first time. >> it's above one. they're doing it. >> rooting for it to go back up and it's come back above 1% and we have seen the futures take off quite a bit more

>> it's the most important thing. >> when we come back, apple supply chain and what it means ua b bmpy.an sqwkoxack after a quick break. a! that's incredibly valuable! a! ...i...i don't know...able! when did we introduce siracha? not soon enough. these are our sales... by product, by region... ...set against evolving demographics. you can actually see taste- trends. since when can we do that? since we started working with bdends. (announcer) people who know, know bdo.

welcome back to squawk box major iphone manufacturer saying it's factories in china are set to rebound in the coming weeks as the country tries to recover from the coronavirus, joining us to talk more about how the virus is impacting apple, he is the managing director. good morning to you. >> good morning. >> so there's two issues that i think people are trying to grapple with one is when all the stuff comes back online what the supply chain disruption really means and the second is on the buying side which is to say chinese consumer, they're going to be buying apple devices and what that means. >> sure. just the latter part because the first part is really noise. >> it's noise because? >> it's noise because you already have channel inventory and there was channel fill there and therefore you get it and the fact that it's coming back i would say by the end of this month here, that is what i think

some people had feared at the end of april >> okay. >> so it was there and provides that buffer in my opinion. the question on the demand there, if you look at it from a long-term oriented investor most investors are looking at what's the annuity of the user. you can think about that in terms of retention rates does a retention rate change because of an outbreak of the virus? either for an android based phone or an iphone the answer is no and does that shift out demand in a material way. now you have gone basically three months further away from the beginning of the product lifecycle and if you're looking to buy an iphone in the june quarter and you know that you're at the end of that, close to the end of that product life cycle you might want to wait an extra three months to get the newest and brightest iphone that's why we shifted about $11 billion out demand out of fiscal year 20 and fiscal year 21

it doesn't change the retention rate and it doesn't change the value but the last thing that i would point out is at 25x earnings there's an expectation of a significant growth in the annuity of an apple user and that probably assumes close to 100% attachment of air pods and watch to every existing iphone user. >> you're saying you think that's built into evaluations. >> you think that's aggressive. >> i think that's -- >> way too aggressive? >> it's not beyond the scope of believability but that's definitely very rich >> the new ipods >> the air pods. >> i have not acquired them yet. >> i have multiple the other one. >> i know. >> should you build into any of your bottles the potential delay of purchases

not just because of inventory but because of a lot of consumers saying i don't know what's going to happen the next couple of quarters i'm just going to push out the next phone that i am going to buy. >> that's the chinese consumer >> yes what about the u.s. consumer >> so as far as i can tell the supply hasn't been protected. >> i'm talking about demand. whether you think people will be walking into apple stores at the same velocity that they do today or that they did two weeks ago. >> are you saming are consumers going to pull back on spending because of a potential hit >> yes. >> understood. no, i have not taken that into consideration at this point in time. >> because. >> last time i updated was about a month ago when they did provide the update and whether or not we were going to see a

true whether we would see a true slow down. >> that's still to be determined though it does seem to be a more likely scenario at this point. >> the other question that i was going to ask you as relates to all of this is in terms of commentary around new products and new product launches do you think that everything that was on was going to get out the door the way it anticipated >> referring to the iphone se whether that's going to get out the door. >> or a new ipad. >> there's been talk about a new ipad that i desperately want there's going to be a track pad involved have you heard about this? >> yes that would be a game changer. >> why >> because if you want to use an ipad as your replacement laptop that will change the whole

dynamic. >> that will make it much microphone limore like an ipad. >> i have been campaigning on this for five years. >> it's working. >> i don't want to claim credit. >> it's going to replace the pc. and that's a bit of a driver there. but look, they are guidance for the march quarter. whatever they put up for the march quarter that's already going to be giving a pass and that all gets caught up either in the june quarter and especially with iphone that gets caught up in the december quarter. >> thank you so much. >> thank you. >> good to see you. >> coming up when we return, wall street's wild ride looking to continue for a tenth straight day. he delivered that fed first emergency rate cut since the financial crisis much more after the break. a reminder you can always watch

us live. right now you can do it. you can go on the bccn app we're back just after this hat hf and in life. i'm very fortunate i can lean on people, and that for me is what teamwork is all about. you can't do everything yourself. you need someone to guide you and help you make those tough decisions, that's morgan stanley. they're industry leaders, but the most important thing is they want to do it the right way. i'm really excited to be part of the morgan stanley team. i'm justin rose. we are morgan stanley. and when you open a new brokerage account, your cash is automatically invested at a great rate. that's why fidelity leads the industry in value while our competition continues to talk. ♪ talk, talk

it's not necessarily. >> a little bit more calming. >> yeah. >> back above 1%. >> see the ten year below 1% for the first time ever. let's get to mike that has more on yesterday's wild market moves and maybe a little bit of speculation about what we can expect today too. >> just to put it in context this futures move we're seeing would get us back almost but not quite to monday's close.

you can go back to friday's low and we did hold it not even approaching it on the sell offs this week. yesterday as dramatic as the melt was in the middle of the day it never really got below s&p 3000 for long and we're seeing if that's going to provide cushion now you were talking about the ten year yield right now the s&p 500 yield is twice as high as the ten year yield. this is not a magical relationship it's really much more another sentiment indicator. people are just rushing for the certainty of ten year treasuries

and that is extraordinary. it's really happened in many decades. maybe we saw it on the virus front. a lot of other elements besides just the disease we're trying to handicap here. but you could make the case that there's a public saturation here now. >> for more on the markets big swing and what investors should expect let's bring in jack the equity portfolio manager at jp morgan private bank. our guest host continues with us

we have extended you santoli is here and he doesn't get any extra. extra money. here >> this is the new one have you seen that money? >> i thought that was wiping your hand with purell. >> that's what the kids do they do this. >> i thought that was bloomberg buying some ad time. i don't have bills that big. anyway, caffery. >> joe. >> what do you say my man? >> every time we go up 700 and down 700 do you change your story? or what should we be doing here? >> i think ultimately we need to be humble about the difference between what we think and what we know. we should be less confident in what it is we think we know. with that said, looking at the overall economy and i do think

that we're going to struggle to make sense of what has happened from an earnings perspective and but if the irrational fear is going to cause people not to go out and do anything then it's not an irrational fear it's a situation that you're dealing with that's what makes this so different. >> to your point it's self-correcting. it will panic is getting people to not interact and it's going to diffuse the worst fears it gets to the missing element of this which is time. i can point to the charges and

say it seems like we had a kind of climax of fear and panic and rushing and liquidation of equities in response to a lot of these things and by the way a huge mix of issues that we know now. but we haven't had the time where you have people reassess the situation and reabsorb the evidence of what the economy is going to do and see if we properly accounted for it in the price. and maybe we should keep them in mind in terms of big rallies and all the rest but it's not a script. it's just a guideline. >> jack. we have heard that most years, what's the average correction that we have 10%? high or low. >> 10% every 18 months. >> so is 12 enough for a global

pandemic >> is that enough? >> it depends on how bad. >> you're back to what do i know what do i think? >> it would be nice to know whether we put in a bottom. >> well then the alternative is what do you do whether you go to a 1% bond or cash. >> it's 1.1 by the end. >> the yields are setting up the yields are setting up. >> that's an option for a lot of people. >> but your real rate of interest is zero at that point so you're keeping upright now. >> right but the market is built to give you your return xpectations.

what do you like >> our favorite part of the market is technology that has been subject to a lot of pressure of late and ultimately that winds up being confidence reinforcing overtime. >> thank you for being with us this morning is this really good-bye? >> you have gotten a little bit of what is it? a gift >> a gift. >> see if i do this it's ones. >> i'm giving you this here. >> when other people do it

it's -- what's the biggest denomination you can get? he says there's time but full containment is impossible. the measures taken by the government they had more on their visit coming up in just a bit.

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that's the very first time now they have seen the largest outbreaks outside of china scrambling to find enough

hospital beds for patients cancelling friday prayers with the death toll jumping to 92 amid 2,922 cases now making it the highest proportion of fatalities we have now seen outside of china and finally the world health organization saying the global death rate is 3.4% this is making it deadlier than the seasonal flu that has a rate of just about 1% we have had that debate now several times. fortunately the who saying the coronavirus does not transmit as easily as the flu does. >> let's get right to our next guest. in a wall street journal op-ed this morning he says there's still a chance to delay the coronavirus epidemic in the united states. he joins us right now. he's the former fda commissioner and cnbc commissioner and sits on the boards of pfizer and alumina. it's great to see you. >> thank you you point out that people may

have to start working from home because while we have only seen about 100 cases you say there's thousands of cases in the united states. >> there's thousands behind that we have evidence that two different chains of spread in washington state. >> what do you mean? two different places. >> one was a new chain that probably came in from a traveller from europe. we have four cases now in santa clara that we don't know how they rose. we can't trace them back to sources in the community so it does appear that you have outbreaks underway in those regions. perhaps large outbreaks given the number of cases presented and the people presenting with a serious illness. so we're days away from steps in those regions and it's probably the case that we will have an epidemic here in the u.s. but we can effect the contours of that. and maybe having certain people

work from home closing schools needs to be considered. >> closing schools everywhere or where the outbreaks are occurs. >> you want to target the places where you have uncontrolled spread to try to mitigate it there's epidemics floating around among officials both inside and outside of government and if you implemented the mitigation steps early you can dramatically alter the contours of the epidemic. how large it gets and how long it lasts we need to start thinking about these measures in the region where there's spread right now we could assume they would not have been this successful. >> in terms of mitigating flu? >> something that doesn't transmit as easily as flu. >> china could not have been so

successful in stopping what they did. flu will be in millions of people. >> i'm not so sure that you can draw conclusion based on the fact that they were successful at altering the evidence. >> do you think they can stop the flu there? >> if you take the measures that they took you can alter the trajectory of lu and that's why it's important to be very aggressive early on. >> but people can voluntarily take away a lot of the liberties. >> sure. when you talk about cancelling large gatherings is that also only in the affected regions or for a lot of us in the business

world we're seeing conferences cancelled routinely and gatherings cancelled dinners cancelled. is that the right steps to be taking right now >> you want to target places where there's outbreaks and you have evidence of spread. >> places like south by southwest where you're bringing in people. >> they haven't cancelled that yet. the problem is we don't have good surveillance so we don't know where the pockets have spread out you saw new york state take much more aggressive actions than washington state so far based on one case >> i have a very practical question it effects the sorkin family but families across the country. schools in two or three weeks are going to start to have spring break and people are planning to travel some are should they be traveling >> i wouldn't alter travel plans. as long as you're not going into a hot zone the risk here is probably equal

to the risk in other parts of the world right now. i wouldn't alter plans unless you're in an area that you know is affected. >> why wouldn't you think the west coast because of the travelers coming from asia >> yeah. because we don't have the testing yet. >> this would be sort of microcosm. >> times square. the worst place. >> we need to get in place better screening and one of the things going on is they're having their big conference and the management is going to be meeting at the department of health and human services and taking place at the white house. i do think they need to step up and have the capability and help in a moment of national

challenge. >> are they more alarmist than the cdc? they get a little bit more hyperbolic do you believe it? i don't. do you >> no the number is real but it's a skewed sample setting we have about 100 cases. almost 100 cases and nine deaths it's not going to be a 10% case fatality rate here in the united states >> if every person is tested there's how many more cases? >> thousands of cases. >> there's thousands of cases. >> but it's a big country. >> why won't that spread >> it's going to spread unless we take mitigation steps. >> we don't know the thousand. we don't know where they are or who they are. >> we have to do very aggressive

testing where there's outbreaks and identify the cases and start containing people. the hope is that we don't do it too late where the curve starts to change. >> what is a large gathering is that a concert or your kid's basketball game? >> in italy they capped it at 5,000. they said 5,000 was a large gathering. probably we would draw that line somewhere else anywhere there's hundreds of people is a large gathering where you have the chance to catch something. >> do we do the show with the three of us from here on out or all remotes. >> you said there's a better number what is it >> probably less than that again i still think the risk, the actual risk to an individual in this country is low because it's a big country there's probably thousands of cases.

but if you're going into a region where the cases have been identified and there's a large outbreak going on the risk is higher. >> yesterday the other thing that i saw that concerned me was just warnings about the ingredients to make lots of our drugs. >> right. >> we're going to be getting less than we have for india in the past what will that mean in terms of medical shortages. >> some of these were important drugs. india is holding on to the ingredient that goes into drugs because they're worried about their local needs there. it shouldn't have been a surprise for anyone but these can create shortages here in the united states. >> what kind of drugs? >> antibiotics, vitamins, hormones critical antibiotics were on that list. >> when you look at things, how concerned are you overall? obviously this is changing probably not just day by day but hour by hour you see good news and bad news

>> my concern is going to grow if we are complacent and don't implemented very stringent measures up front to try to affect the contours of the epidemic we had a window of opportunity with testing and we missed that window >> thanks a lot. >> we are approaching 8:00 a.m. on the east coast and you are watching squawk box on cnbc. >> wall street prepping for another big day. futures surging following a wild 24 hours an emergency fed rate cut and a big night for joe biden on the campaign trail. >> bond yields plunging after the rate cut and we have the guy who called it early. >> i had expected it to go to 1% for quite awhile my next target is 75 basis points and we will speak with texas senator ted cruz

the final hour of squawk box begins right now. good morning and welcome to squawk box i'm joe with becky and andrew that's not a big move from one way or the other we're seeing quick trading here. nasdaq indicated up 175 and s&p up 58. look at the treasury yields. the ten year exactly 1.00. it's about 1.01 -- i'm sorry

1.1. 1.09 we're actually talking in individual basis points and trying to take some gratification or satisfaction out of one basis point moves. >> okay, we're going to start this hour with the economic fall out from the coronavirus and the fed's emergency interest rate cut it was the first such reduction since the financial crisis in 2008 the fed chair acknowledging though the limits of monetary policy when speaking with reporters right after the cut. >> we do recognize that rate cut will not reduce the rate of infection and won't fix the broken supply chain. we get that. we don't think that we have all the answers but our action will provide a meaningful boost to

the economy. more specifically it will support acome day tif financial conditions and avoid a tightening of financial conditions that can weigh on activity and help boost household and business confidence. >> it was to ending the day down more than 700 points and continuing an ugly week for equities say for monday. things look to be turning around this morning but steve joins us now with more on what the rate cut can do and nervous about the coronavirus. and the fed chairman just said a strong 62% majority approve of the rate cut and 25% disapprove and only 32% believe it will be even some what effective 43% say they'll be slightly effective. still, another 50 basis points of rate cuts are expected from the fed this year and 35% of

respondents think the fed could go to zero in the next 12 months it may seem like high stakes compared to the reduced interest rate environment on the horizon. 59% probability of not a recession in the next 12 months and that would be fair the survey was mixed in it's assessment of the fed. it sends the message that we're in an emergency. it does provide support to the economy. forecasters estimate the coronavirus will save .6% off of growth this year and there's a low number of just .1% next

year that's not what we meant. >> save for monday if you want to do five trading sessions so we're -- >> i love you looking at it. >> i heard you say continuing an ugly week and it's like it's wednesday number one so we only have two days. and when one is 700 and one is 1,300, let's get this right. >> steve, thank you. >> thanks, steve. >> that's really kind of you. >> you didn't write that

>> no, that's not me. >> the fed's emergency rate cut was designed to save investors but ended up spooking them dropping sharply to 0.906% it's back below 1% at 0.996% we were told right here on squawk box that sub 1% rates were coming. who told us that the president of global strategies he joins us once again he's the chief investment strategist and joins us with a look at the stocks that have the greatest upside potential once the market bottoms with k to both of you. we have to start with you. when you called interest rates being between 7.5% and 1% not only did we give you grief we had no idea we were going to be there so rapidly here you are the same week that you called

that what do you think? >> i didn't expect it to go down so swiftly and i think in terms of the shot fall we owe it all to a bad move by the federal reserve and press conference by fed chairman powell. we can almost certainly bank on the misqueues and timings. essentially the fed said they were cutting but didn't think it would effectively put an end to any of the problems for the market but they thought he had to do it anyway. and that kind of a press conference was a major factor. it happened so sharply in a few minutes that it's all due to the fed as the chairman. >> i was going to say look at

the economic impact in a place like china and italy that just announced its going to be closing all schools and universities all over the country because of the coronavirus outbreak until mid march. we're watching this happen real time >> all of that is happening and none of that is going to be corrected by the fed action. and on research and testing and not on cutting interest rates. this would offer a shock proof situation and all the other things had to happen too i thought that is what he said. >> yeah but on the other hand he doesn't even remove the shot that comes from it the investors couldn't believe

that the fed was doing an emergency cut even though mr. powell thought it was not going to be effected so essentially he undercut the move and i don't think there was a boost to confidence that came from the move either in other words it was a total failure. >> i'm confused is the move the problem or what he said about the move the problem >> both are problems they're not mutually exclusive. >> so should have done the move and lied about it's effectiveness or not done the move. >> i'm sorry that it was not clear to you steve i'm saying that monetary policy is ineffective and it doesn't matter when it is done it is always ineffective so i'm not saying that it was a

special day to be ineffective. there's no move at all. >> it's okay to fall the way it fell even prior to the rate cut and for the fed not to validate that and keep it's short-term overnight lending rate what would it have been? 60 basis points higher than the ten year >> i have been saying this to joe over the last three years. the reason the ten year yield falls has nothing to do with the fed action it has to do with the inflation and the expectations and expectation of real growth and he said it best talking about the need for skilled individuals, you need to make structure and changes. you need to make training in order to boost the economic growth rate and that will increase the ten year yield.

>> let's talk about stocks poised to increase. >> we were down 12% at the worse and the question people ask is stocks could do fairly well. so i did a simple search looking for the stocks that are ranked buy or strong buy that then have very high differential between the target price differential. interestingly enough a lot of the companies were relatively small but a majority of them came from the industrial sector followed by energy and materials not surprising this morning i added looking at stocks that have very high quality meaning consistency of raising earnings and dividends over an extended period. so you have companies like disney and like united health care universal health services you also have financials like jp morgan chase et cetera where these are high quality companies

that have been beaten up by 20% or more that our analysts do believe are good investment opportunities. and a medium pe of 16 times. that means we should be coming down on the s&p 500 which would represent a price decline. 7% from where we are today and 5% from where we were at our low. if, however, we find out that earnings end up being dramatically cut for 2020, and we end up with no growth whatsoever, and even lower pe of 15 would bring us into a bear market territory down about 26% to about 2,500 on the s&p. >> we thank you. we'll talk to you soon. >> i'm not -- after last week,

that was a very brutal week last week we lost 12%. this week if we were to open up 500 points this morning, we'd be up 1,000 points for this week. let's speak. s ming up, adp's february look waout in just minutes. when squawk box returns. 1000 points. you should be mad at forced camaraderie. and you should be mad at tech that makes things worse. but you're not mad, because you have e*trade, who's tech makes life easier by automatically adding technical patterns on charts and helping you understand what they mean. don't get mad. get e*trade's simplified technical analysis.

these are our sales... by product, by region. you can actually see taste- trends. since when can we do that? since we started working with bdo. (announcer) people who know, know bdo.

>> the january payroll was revised to 209 but apparently it's a new model so we're going to come back to that the good sector, 11,000, that's good for the good sector

services up a strong 172,000 the non-farm payroll estimate 175 so the adp right in line with that. let's take a look at job growth by business size up 24,000 for small and large doing the bulk of the work there. up 133,000 these are the numbers before we probably see any impact of the coronavirus but take a look by sector here. this is a little bit of information here education and health 46,000 but break that down and it's all health services with only a little bit of education. we might see some impact of the coronavirus in education hiring. also leisure hospitality hiring is another place you might see some impact. construction strong. we had good weather. up 18,000. trade transfer 31. manufacturing down 4,000 i can't tell is that trade tension overhang or is that coronavirus early indications? >> right

steve, thank you stay right here. for more, let's bring in the chief economist at moody's analytics. what do you think of the question just posed? is this overhang from the trade talks? is this early concern about the coronavirus. >> it's based on a survey done that includes the 12th of february and the virus was out there but it wasn't a big deal it was on our radar screen that's trade war trade war damage is quite significant and continues to linger this number just to the point of interest is also by weather. we had a really strong number in january that was weather related. you can see in leisure hospitality construction underlying job growth is between 125 and 150k per month. >> have you seen numbers already that would reflect coronavirus how recent numbers have you been able to get ahold of >> i haven't seen anything to indicate that there's any impact on the labor market in this point in time. if we're going to see initial claims but i have not -- we'll

have to see but i haven't seen it yet nothing has shown up you're hearing anecdotes in some of the surveys, people talking about what the impact might be but it's just anecdotal. >> one report showed a big decline in imports and a smaller decline in exports. >> it may be because things weren't getting shipped from china where it had a huge impact already there. >> i guess a question a little bit understating that in that the knock on effect of that is twofold. one is that consumers can't buy and retailers can't sell stuff they don't have and producers in the united states, many of whom rely upon products from chin can't sell stuff they can't make so it's bad that it's not coming in and actually ends up in a weird way increasing gdp where you take it away is on the back end on consumption perhaps and on manufacturing. >> we're going to get much weaker job numbers going

forward. they're still important because you want to know how much cushion you have >> how would you assess the state of things before we try to pile coronavirus on top of it. stable unemployment. that's 2% gdp growth as we have been getting now for a year. if you see anything that goes south of that, particularly we go south 100k. unemployment will rise

that is recession. that's why recession risks are as high as they are. that's why economists are saying probability for recession is close to even because they understand once you go potential unemployment starts to rise that's the foundation for a recession. >> mark, very quickly, our cnbc fed survey has an average impact of gdp of .6% this year and only a small bounce back of .1% next year from the coronavirus, could you quickly give us your numbers? >> yeah, that's about right. that was a baseline kind of. >> right we're going to get a fair amount of growth. >> stronger bounce back then. >> i'll be surprised if we don't get some bounce back but one thing that i will say is economists like everybody else have a really hard time saying over 50% probability of recession. i assure you that almost every economist out there is thinking

over 50% probability. >> mark, thank you steve, thank you. >> coming up, a lot more on squawk this morning. finding the silver lining in financials the sector got hammered yesterday's sell off down close to 4% as the fed slashed interest rates by half a point but that doesn't mean all the opportunities have vanished. we'll also be talking to texas senator ted cruz major airline's response to the coronavirus as they get set to meet today airline stocks have been hit hard this morning you can see they're trading up across the board. looking at jet blue, it's up over 3% right nowme stay tuned a lot more on squawk ahead now you can, with shipsticks.com! no more lugging your clubs through the airport or risk having your clubs lost or damaged by the airlines. sending your own clubs ahead with shipsticks.com makes it fast & easy to get to your golf destination. with just a few clicks or a phone call, we'll pick up and deliver

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>> s&p 500 looking to open 54 points higher. >> that headline took a little bit of the air out we're back up almost over 600 points. >> but, yeah, get used to it

and then why does it come back after that i guess it's the need and we'll see if it does. by 4:00, would you make any prediction. >> would you make any prediction by 9:30 a.m. >> not even 9:30 bank stocks get hit after the fed surprise rate cut yesterday. the s&p bank etf fell close to 4% it's now down more than 15% in the last 8 days. joining us is the director of bank and equity strategy we look at how the financial does and we say yeah, credit quality must be good because we're in such a good economy low rates and worries about a slow down, see how you can make a positive case for banks just based on the most recent events, or can you

well, you have the interest rate impact and the credit soide. the interest rate impact is real so earnings are going to be unfortunately impacted by 3 to 5% more so we had earnings going down in this sector. the short-term rates are moving lower. we just saw that employment was going period up. our credit cycle monitor said that we had some cushion so there's some strength in the economy. so there's some shock absorber on the credit side so we're not really seeing that the credit has to materialize and that's the bigger shoe to drop. so as long as we can keep credit in there, valuations are already starting to discount the fact that thet cycle is going to start to kick in and we have seen this a couple of times before when that did

materialize. >> we just heard every single economist has a forecast for recession greater than 50% just heard someone deposit that factually. so if the credit cycle hasn't turned yet it's guaranteed to do so so you have two strikes against the sector at this point you have the lower interest rates and the credit cycle. >> that's exactly right. >> if we do see the credit cycle now begin to turn, then that's going to be an additional cost that will drive our earnings down even further which is why the banks react the way that they do. they're the canary in the coal mine when we start to have the fear of recession that we had in 2016 and 2018 and now we're having in 2020 the banks get hurt the most because everybody is wanting to avoid 2008 so we start to see valuations which back in december we downgraded our stocks because we were looking at the sector and building in all the good things and all the bad kind of fears were kind of working out and now

what we are seeing is its on the other side so a risk to return back in december was less than one we had more risk than we had return now given where the valuations are our risk to return metric is up to over two tops. so the valuation piece of this is pushed in between interest rates and credit and that's what we have to see is its a perception it's not the reality of credit just yet. >> okay. good so then that's interest rates, credit cycle and valuation. >> that's right. >> one we know, the other one we're not sure and the third we know, so things are cheaper and this is not great for the yield curve for people that lend long and whatever it is the yield curve is bad for bank profits right now, right >> that's correct. but you have an offset that

hasn't been played into yet. deposit rates did not fall on the first 75 basis points that we went hrough we already see dividend yields start to creep back up again and what we'll have to watch for is this whole credit side. >> when will we -- it all depends doesn't it it all depends. >> unfortunately it does it depends on the virus and the amount of fear and then the credit quality can be impacted in fairness, i think that we're closer now to the recession than

any time what was that? 8, 9, 10 years ago when they were ramping up based on nothing. >> based on passage of time. >> we're inevitably closer than we were 8 or 9 months ago. >> but just in terms of -- i mean, i understand the. >> this is from real economic activity. >> this is based on what you are seeing globally so there's potential economic impact. it's not like it's going to bounce back that quickly so we can watch it materialize and then we know if we then see the virus start to wayne as we get closer into the summer then we know the relative value built

into these banks gives you the opportunity to rotate back to them but you have time and patience on your side here so there's no rush to have to do this. >> thank you we appreciate it >> still watching the futures. we're just one headline away from if something is going to be that way for that long. >> nothing to panic about. and then there's that. >> when we come back, airline executives heading to the white house as the coronavirus wreaks havoc with their business. we'll also be speaking with texas senator ted cruise he is set to lead a hearing on capitol hill today on the airlines response to the virus we'll hear what he is thinking about. right now though as we head to a break, let's take a look at the futures. dow futures up by 550 points nasdaq up by 138

the s&p indicated up by almost 50 points. this comes after yesterday's 785 point drop for the dow continuing a streak of extreme volatility for thend requawk box just ahead the barkins are empty nesters now. should they downsize? probably. will they? not as long as thanksgiving is a holiday. planning for the future is about more than just money. let equitable be your guide.

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welcome back to squawk box we're live a couple of stories investors will be following today. general electric is holding a shareholder call ge is reaffirming it's target for the full year but ge does say it expects a hit of 300 to $500 million to its q-1 cash flow from the coronavirus outbreak you don't want to miss the first on cnbc interview. that's going to happen at 10:00 a.m. eastern time. we continue to watch the global response to the coronavirus. the country now plans to close schools and universities across italy until mid march as it tries to contain the outbreak. that's going to have a bit of an impact and people are looking at that and saying is that going to come to other countries as well. a stock to watch today, campbell soup shares are rising the company raised it's full

year profit outlook and i'll bet you lots of people, you go to the supermarket and soup, anything canned right now. they were trying to get away from soup and get into all sorts of fresh fruits and things. >> designer soup. >> soup is good. >> chicken noodle. >> they're scheduled to huddle to talk about the coronavirus crisis they're starting to see a bigger and bigger revenue hit phil is starting to join us on that story. >> this is the gut punch to the revenue screen for the airlines. how much will the airlines be hurting as the cancellations mount? well it depends on how accurately we get this data and the most recent data from a couple of weeks ago from the international air transport association. they said that global traffic would drop 4.7% in 2020 and it would cost the airlines about

$29.3 billion in lost revenue. but as you take a look at the airline index keep in mind that that estimate that was from two weeks ago and we have seen the cancellations pick up since then this is why analysts are saying for the airlines it's all about managing cash flow right now >> it's looking to see how they can manage their cash. i suppose that you could say well at least there's a silver lining with the oil price coming down but if you're not getting the revenues in it doesn't matter how low the oil and fuel price goes it's going to be a cash flow issue for many airlines. >> take a look at the four largest carriers, delta, american, united and southwest the ceos of those companies will be here at the white house

today. but at the end of the day, i'm not sure what the white house can say to the ceos short of we'll do something to help you out financially which i don't think is going to happen because if you help out the airlines do you help out the hotel industry and other industries that are suffering because people are cancelling their trips right now. and the seats are just not being filled on these plants to the degree they expected a few weeks ago. >> i guess what is unique about the airline industry is they collect the fees up front for the tickets that you're telling. so in a certain sense it's like the float the insurance industry uses. >> we'll pay the $200 to cancel the ticket

but those are in certain areas what's interesting here is that their cost don't drop. let's say it cost you $300,000 a month. you have to come up with $10,000 a day in revenue one way or another and if you're not flying it as often it's going to be tougher to come up with the $10,000. is liquidity an issue for the large airlines not right now. the issue is with low cost carriers particularly with southeast asia they don't have the liquidity that you see in the u.s. as well as in europe. >> okay. thanks, phil. >> in addition to today's airline meeting they'll be talking about the coronavirus this morning and containing the spread of the disease.

texas senator ted cruise joins us now he's the chairman of the aviation subcommittee. we were talking about deciding to go abroad. >> and their international spring break programsand the president says that staff and students really shouldn't travel overseas >> who would go overseas now senator? and not only that but how do we help the airlines? what are you going to be looking for today as far as questions from the executives. >> well, the risk profile varies depending on the geographic area that you're looking at what's important is that we do everything that we can to contain this outbreak and prevent it from becoming a full pledged pandemic the numbers are voutroubling an we're right to be concerned. as we sit here this morning we

have over 93,000 confirmed cases of the virus we have over 3,100, nearly 3,200 confirmed deaths of the cases of the virus we're sitting at just 127 in the united states. so the bulk of that is overseas and the overwhelming majority of that is still in china that's good news to the extent that it's been contained you look at where else it's spread heavily it's spread heavily to iran and south korea and italy so all three of those are dealing with significant challenges t to bring in the cdc and center for disease control and department of transportation and customs and border patrol to listen to the experts and understand what's going on a lot of people are concerned but it's right not to panic and not to give in to hysteria but to be driven by the facts and

hopefully get it behind us and once we take care of threats to human life the next stage will be the economic implications of what the slow down means and in particular right now the inability to travel back and forth to asia and to china in particular >> by definition, the migration to just about every country in the world now is it 100% mediated through someone on an airpla airplane we can assume that this moves globally from the airline industry that's the first place that we should look. they should be doing things to try to stop this from happening. what do we need them to do >> and that's something that the trump administration acted wisely when they stepped in early and halted commercial air travel back and forth to china

and when they set up a quarentine regime for any americans that were abroad in the afthed region fected regione both extraordinary steps it's been a long time sincewe have seen the federal government do either one of those listening to the health experts, i was listening to the head of cdc yesterday. the health experts are telling us that doing that significantly slowed down the spread of the virus. if we hadn't done that, if there had been unrestricted air travel back and forth from the time of the outbreak until now that we would be looking at a significantly larger number of cases in the united states it gives you time to develop vaccines and treatment protocols and the administration is meeting with and met with pharmaceutical ceos earlier this week and is meeting with the experts at the fda and the cdc and working to getting testing

kits out that's one of the significant steps next week. a substantial number of testing kits are being sent out so that by the end of next week they're expecting to have the capacity to conduct over 1 million tests. but a lot of people are wanting to get checked out and get the test and they're stepping forward to get those tests out and available. >> people are still coming in from around the world though and if they're asymptomatic or if we don't have tests, i don't see how we can expect to be screening people we're not screening people, are we >> it is a challenge we're certainly screening people if they're coming from china in particular we're not allowing commercial air flights so that limits some of the flow. >> now we have italy --

>> how many places >> should we be screening people from washington state going to other parts of the united states >> when we say screening we're just talking about seeing if they have a temperature. we're not seeing if they actually have the coronavirus. >> that's right and part of the challenge is that the incubation period we don't fully know we think it may be 14 days although there's conflicting evidence on that that's going to be one of the questions that we'll address at the hearing today so one of the questions that we're trying to ask people that come in is have you travelled so any of the affected regions not just on the plane you're coming from right now but in the past two weeks have you travelled there? and getting those questions, you know, i met with the head of the airline association yesterday and they were talking about some of the challenges they're finding implementing what the cdc is asking for in terms of getting the full travel history of every international passenger and i think that they're working hard to do that. one of the challenges is also

that cdc is wanting airline employees to take temperatures of passengers before they board. airline employees are naturally hesitant to do so. they're not health care professionals and so some of the ticket agents are saying wait a second, why am i taking a temperature. that seems a reasonable question for an employee, an airline employee to be asking so how we get the necessary protections in place is going to be a challenge going forward. >> we spoke with the head of the airline pilot's association. i guess it was just last week. things were happening pretty quickly. they had some concerns about pilots being asked to travel some of these routes they may not feel comfortable with traveling and then what happens to them if they get sick is the company going to be responsible for that a lot of them in some particular carriers don't offer a whole lot in terms of security on that. >> so look i can give a personal example of that. my cousin is married to a captain for delta and he was just flying to japan and i was talking to her a couple of days

ago and she was pretty worried about him and i said look based on the number japan has some incidences of the virus. he needs to be careful my advice to him was go straight to your hotel and just stay in your hotel don't go out on the town while you're there go straight to your hotel and come back. the odds are still pretty limited of exposure but they're not zero so you have to take them seriously. >> today is wednesday, right so super tuesday was yesterday. >> right. >> was it not? so we saw what happened in the great state of tex as you have spoken passionately about cuba and your feelings on the castro regime are you glad they gave him a big win or would you rather have him face sanders where are you on that? the enemy of my enemy -- i don't know how to view it. >> i'm certainly grateful that

texas didn't vote for we arebere i served with bernie he's a true believer but he is a socialist and you mentioned cuba he has for decades gone out of his way and fidel castro and whether the soviet union and one of the things that i did last month during the impeachment trial is i started a podcast it's called verdict with ted cruz and i went from being nonexistent to it became the number one ranked podcast in the world. and the latest is i actually flew my aunt from dallas up to d.c. and i interviewed her because she was in prison and she was tortured and most

downloaded podcast because of the chance and what bernie is saying with cuba is the socialist paradise is just utterly false as anyone has lived through. >> some of those cars are pretty cool those old, you know, like a 56 ford or chevy. so what did you say? did you say you'd rather have the president face bernie or you'd rather have to face vice president biden? >> you know, bernie scares me and the reason bernie scares me -- i know a lot of republicans that are celebrating every time bernie wins let us run against bernie he's so extreme that trump gets reelected. the thing that scares me about bernie is we're a divided country. there is a chance this country could elect a wild eyed socialist and you want to see something that would do devastation to our economy and

to people's lives, that worries me a great deal. i'd rather not even roll the dice so personally i'd rather biden because he's at least slightly closer to rational he's still very liberal. what qualifies as moderate in today's democratic dramatically. >> guns, that's telling right there. >> that's exactly right. >> all right, senator, senator cruz, thank you. >> always a pleasure >> i might listen to a tom cruise podcast, i don't know what's the name of yours again cruz on -- >> "verdict. >> you have more listeners than the "squawk" pod i don't -- we have a podcast >> not only that, we passed joe rogan, rose to number one been >> when you pass "squawk," i'll see it no, you probably are good luck. >> thank you under an hour to go to the opening bell on wall street. dom chu has a look at the biggest stock movers >> for the record i am an avid

smauk p "squawk" pod listener, i find it enjoyable. shout out to that one as well. look at the movers because of super tuesday and what we talked about, there is a lot of movement with regard to green on the screen, on health care related stocks. first of all i'll show you what's happening with some of the big insurers united health one of the best performers in the s&p premarket up 10% similar tight moves seeing play out for anthem, cigna, humana on some of the idea the handicapping of odds for medicare for all may be slipping just a little bit more, insurers a focus but not just the insurers, also names across the health care spectrum, from drug companies, to hospital operators, take a look at some of these names because you're talking about names like hca, you're talking about names like am amerisourcebergen and farmly benefits managers like cvs health up 4%, to 5%.

cvs health and mca up 5% and amerisourcebergen up 4%. over the past year health care as a sector has become an underperformer versus the s&p 500. if you look at the chart, over the course of that span you've seen numerous times of gaps in performance. some of the widest areas in temples of gaps in performance between the s&p and the health care sector overall have been 8% to 10% you can see right here so far that gap has narrowed considerably as we look at health care that might be the catchup trade and the political developments, andrew, could be the catalyst for health care versus the s&p 500. >> thank you want to talk about technical levels investors need to be watching this morning as they search the market for a little bit of yield here. joining us is robert schlumr from fund strategic global advisers >> good morning. >> tell us what we need to know. the s&p you say it's deeply

oversold what are the levels? >> joe asked me a question last thursday when i was on, do technical its matter at these levels i think they do. couple of levels, this level 2855, right exactly at the october 2019 lows. we bounced off that, hovering around the 200 day moving data all the rsi data is oversold that needs to get worked off and i think the market is trying to establish a low around the levels it's going to be a trading low let's move on to the long-term >> just to be clear you think we've hit a bottom >> a trading bottom. the point i was trying to make last week we think the market will take quite a few months to consolidate in base before it moves higher let's move and look at the longer term chart. say the 2855 lows don't hold, right around the 15-month moving average. a great proxy for the long-term trend. say it breaks. people will panic. next key level 2620, which is around that four-year or

200-week moving average, a key long-term support level. saw it at the end of '18 and 2016 and 2012. >> 2620. >> the next major level. looking at the nasdaq, speaking of technicals matters the nasdaq coming off the 200 day almost to the point. it was exactly to the point, and that's the relative leadership we still think a lot of the tech stocks have come back down to support levels so many names bouncing off the 200 day. we think that's holds where people will buy the names, a lot of tech names in the support the last point and really is a lot about the bond market, this is the tlt etf that tracks the long bond data, had an interesting long-term technical point. rates starting to fall below 1% last week. this is key in the next couple of days in my opinion. >> we'll keep our eyes on all of that appreciate it very much. becky? >> andrew, thank you down to the new york stock exchange check in with jim

cramer how are you feeling today? >> well look, i think that i'm the ten-year and if the ten-year is flat i'm okay i think that plus biden obviously very strong. senator cruz had some interesting things to say, of course now i have to watch "verdict" and listen to "verdict" whatever, but as long as we're in a situation where it's status quo bonds and we don't have bernie leading, meaning that bernie could be poison for the stock market i think people feel a little better all we're waiting for is the next coronavirus news. >> what do you make of what happened in italy? do you think that's coming here? >> italy lost control of the situation rather rapidly italian health care system by the way is very good so i don't know if it's coming here they do z not cid not contain in didn't contain it. all you do contain is slow it down they're overrun. is it coming here? if you have a cluster, it will

be, they will overrun things but we don't have any cluster that's anything like what they had. milan, i go to milan a lot and milan fashion week was just a week where the world descends upon milan and it seems like when the world came back they got a lot of people sick italy is extraordinary i think they're trying to beat china. >> given that we've done so little testing here, why would you notbe concerned this is th next place >> because i think that this thing is -- you know, look, i don't want to jinx this, this is not uniquely 15-5. we have to be much more serious who dies and doesn't it's age related no one wants to talk about it but it is age related and not necessarily the right thing to initially go off to the schools. i think you have to do a lot of desocializing. i think that's better than the schools right now, but maybe i'm being too not cautious enough. >> jim, see you in just a couple minutes. thank you.

>> okay. >> just no contact >> you're already there. >> i'm there, except for dogs. >> i won't be shaking hands for a long time. you always give me a hard time >> i'm kidding, love people. first on cnbc interview with the managing director of the international monetary fund coming up on "squawk alley" at 11:30 eastern time 're prepared for tomorrow. wow, do you think you overdid it maybe? overdid what? well planned, well invested, well protected. voya. be confident to and through retirement. ♪ ♪

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watch the ten-year and heard jim talk about it as well and make sure you join us tomorrow "squawk on the street" is coming up right now good wednesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber at the new york stock exchange. trying to claw back the nearly 800 points we lost even with tuesday's emergency fed rate cut. some observers are pointing iio biden's comeback in the super tuesday races. can our ten-year yield hold 1% currently around 101 our road map begins with the market whip saw, global stocks rallies with u.s. equities set to open sharply higher as investors continue to cope witho