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 with

coronavirus induced volatility plus quarterback buoyed by a string of super tuesday victories for the former vice president. is the contender for the democratic valuation former investor jeff ubben, never seen anything like this and says why it makes value investing impossible the fed announced a 0.5 rate cut. stocks looking to recoup most of yesterday's losses which includes a drop in the dow of 785 points jim, once that ten-year broke 1%, wow. could you not take your eyes off of this price action >> look, i think that i was struck by the rate cuts. i didn't like jay powell you can't say listen, the fundamentalless as are sound bue need a gigantic rate cut that means the fundamentals

aren't sound i didn't know we were that bad off. people either way we are bad off or powell knows something and to see that you get a biden victory and maybe things bounce back a little is encouraging and mostly because it's just about the ten-year the ten-year drops to 9.8, then everything you see on your screen that's green will go red. we are in a dangerous trading market wait until it's down, don't buy it up because you might be let's say have to buy more it's a discouraging moment i find because i don't feel that anyone really has a handle on corona we'll speak to larry kulp, trying to get a hold of it like anybody else >> everybody's trying to understand it and it still lacks a great deal of understanding given we don't have any facts. mr. culp will join us an hour, hour and a half from now they're having an investor call ongoing at ge.

we'll bring you updates from that as well jim, no shortage of questioning of the fed i think yesterday somebody just saying really, why? why? and only coming back oftentimes to is it really just to help the stock market and if so, is that the relationship that should be foremost i'm just asking the question i can hear liesman or sarah saying no, financial conditions. >> i don't want to debate it it's a biological crisis i said it have the beginning, it is not a financial crisis. we have a sound financial system we can create one having the fed tell us things are worse, they have to take action or we can recognize look, don't touch your mouth or face. these things are so etherial but the fed came out and said we'll wait until next week but he understand this is a fluid

situation which is code for we don't know, that would be better than doing these actions which basically says we do know and it's really bad. there is no demonstration but the fed had no business doing this they don't know more than larry culp does. what are you doing taking dramatic action when you could really just say listen, it's a public health issue and we want to throw everything we can at making sure that your company, if it closes, you get compensated, so you can hold over this period >> some reuters had a piece about the fed tapping into private data, trying to understand what's happening on the ground through companies like first data and others, so i don't know maybe -- powell seemed to, and his answers were so short and so couched and qualitative versus quantitative >> it was really disciplined i figured he knows that adp is going to turn really bad we have 183,000 job increases. certainly didn't know that i thought it was fatuous

i know david's right we have people who talk about the fed all the time but the other thing people talk about is i don't know, i'm none an epidemiologist. you don't need to be an epidemiologist to know which way the wind blows i'm tired of hearing people talking i'm not a virologist listen to dr. fauci. he is. he's the foremost and saying two things, one, a year and a half from now and two no reason to be optimistic in terms of a vaccine. why is he saying that? >> we had yesterday a gentleman with meg and kelly and i listened closely and hoping august they could actually start to be in trials but it will still be a year from now >> i speak with them and hoping what they would do is the chinese would actually accelerate their process because we are so safety oriented in this country china has not distinguished

itself as being completely safe. organized knowing what you're going to do and where you'll go, they're much more it desocializing, making sure if you're sick you stay at home >> that was part of fauci's point. they have arrested the caseload because they've taken social distancing to its furthest extreme. we're not going to do that >> he says we're not going to that they basically said is look, why is this novel? because we have no natural defenses against it. there's no people who are immunized naturally against this now, i have to think that we don't have that many deaths yet, yet, but then all we hear about is wait, we'll be iran iran seems to have decided let it rage and see what happens >> talking about china for a moment, where the cases continue to drop, new cases drop dramatically, in part because of measures they've taken >> right >> do we have a good sense yet as to the true impact on the chinese economy and what that's going to mean around the world

>> believe it or not, larry culp has the best handle on it. >> he may very well. "the journal" writes the story as so many others are focused on it as well in terms of trying to understand what the impact has been not just in hubei province but throughout the country, given the lack of consumption and a lot of people not getting paid, even if they are showing up to work, because small and medium sized businesses are under pressure >> i thought secretary mnuchin would come out with a bold plan to say listen, this will tide you over >> you're talking here >> yes, here that would require them to admit it >> that's the thing. plenty of story this is morning how the president's balking at major stimulus, will leave it to congress if they want to do a payroll tax cut. not rolling back china tariffs why is that, jim >> well, i think that it is an election year and also i think the president wants to come out and say i'm worried. does he want to do what the fed

did? the fed made me feel listen, i used some props yesterday. let me make it clear yes, i do have the 3m mask yes, i have gloves why? because i'm being told in everything i read that you should do that don't touch your face. but these are things, i mean let's face it. what we're trying to do is lower the odds for getting it ourselves. >> yes >> if that's what we're talking about, i'm spending more time lowering the odds than i am trying to figure out whether the raw scores are any good. people are trying to lower the odds than they are going to a conference to try to close a deal, and so there is this sensation of commerce where the president and the trek rear secretary should be well aware of if you say everything's fine >> i tried to talk to a number of investment bankers every day whether they have anything going on or not, they're not getting on planes. and activity is not occurring that otherwise would >> right >> as a result of that even right now in this country, and just looking at notes

yesterday from a couple of conversations i had, caution is the word meetings are being canceled all over if you you are long-term, on a fixed income, 401(k) or i.r.a. that has a lot of fixed income in it, pension fund trying to meet your 7.7 bogey, 2% on the ten-year didn't help you but below 1% is truly shocking but it's even beyond that. i had an opportunity this morning to sit down with jeff ubb, founder and long time chief investment officer at value act, now he's actually the portfolio manager of their so-called spring fund, that's the name of it, an esg focused fund. ub ubben has been around as a activist he made a connection between the

fall in the ten-year yield and value in investing take a listen. >> we have gone to the longest duration asset in priced as if it's always going to be this way, and it's been going on for five or ten years so it's kind of the death of value investing to a certain extent because the world becomes kind of valuation a agnostic what is intrinsic value if terminal value is discounted back at 1%, right? >> right >> once you lose that, though, you kind of as a value investor with a bunch of baggage you kind of lose your bearings. >> he admits he's lost his bearings as to many other value investors i've spoken to recently say similarly >> i spoke with one of the more thoughtful people in the oil business, mike wirth yesterday, the ceo of chevron and he said listen we have the greatest growth profile we have the best balance sheet we've got the most solid

dividend we have the most solid buy-back. what happened, boom, they actually their balance sheet was better the next year he said he's got one of the best profiles for all growth companies. david, no one will touch that stuff. >> no. i want to share this later because ubben was here because spack yesterday, vetro iq, steve gurski ran that. >> small fellow from the auto business he knows gm better than anyone >> hydrogen cell fuel stations and the trucks that will go through them, we did a long interview which we'll make available later and share some of it. that's why ubben was here. we talked about bp as well, jim, you'll want to listen to that. >> valuable company. >> buying the thing at three times eebitda but ubben talks about the new world and what the companies need to potentially think about doing. >> my travel trust owns it, we go every morning stocks we think are idiots should wear post-its.

and bp is on there, it's been back-ished >> was that a new verb >> don't make that a verb. >> a new verb? >> it's new world. that's the ceo of viacom is that a value stock? >> never stops -- it is a value stock and keeps getting less and lessable ha less valuable. >> isn't that part of what we are talking about? >> it's down 45% for this year this year is only two months and a few days old >> you search for when you're really stupid, you don't listen to jeff ubben. jeff ubben is telling you, you want to go to the morgue viacom i've been to the morgue when i cover homicide i don't like it. >> five times ebitda and now selling it at four >> morgue. better than back hsh -ish coronavirus on the travel front corporate news meg tirrell for the latest

>> for the first time, the daily number of new deaths reported outside of china surpassed those reported in the country, suggesting as the "new york times" put it that the front line of the epidemic may be shifting experts are cautious though about declaring china out of the woods and are closely watching what happens as restrictions return and people are back to work south korea reporting more than 5,600 cases and iran almost 3,000. in italy, with more than 2,500 cases weighing plans to close schools for two weeks. india reporting its first cases yesterday, a traveler from italy and six of his family members. today the count of infections climbing to 28 in the u.s., more states reporting their first cases along with a report from new hampshire that a patient with the disease broke self-isolation and attended a party this as health officials still trying to get a handle on the key characteristics about this virus, including the fatality rate the world health organization

saying globally about 3.4% of covid-19 cases have died compared with far fewer than 1% of people with the seasonal flu. the difference they note is people haven't built up immunity to the new vir's and susceptible to infection and for some severe disease. guys >> 3.4% has gotten some people's attention in negative ways, higher than what we'd anticipated originally how accurate is that that's above where the spanish influenza was in 1918 i believe. >> yes, it's considered an early estimate that is really just where we stand right now, and what a lot of people are saying is especially as we are starting to see new countries reporting cases, what are getting picked up are the more severe cases so the death count is going to be sort of artificially high, until we start detecting all of the mild cases as well, guys inside china, we'd heard more of a fatality rate of about 2% and really what experts will tell you, it's important to break this down by age, people who

get, are older have a higher death rate younger people not so much >> meg, in every pandemic of any major proportion, including the 1958 incredible flu season, there's always tremendous number of people who die overseas in the public health system, it's just so poor overseas and so many countries it's very bad in italy, even though i thought northern italy had dealt with that pretty good can we start gishing between the re -- distinguishing between the rust of rest ef the world aof td the united states. i really think that the w.h.o. particularly done a terrible job, is scaring the heck out of people when they're not distinguishing between asia and not distinguishing between countries. >> of course it's going to be different wherever you are, how old you are and underlying conditions you have. smokers, people with chronic respiratory conditions, those are the people who are facing worse outcomes potentially from this

80% of people will have a mild case, if thedata from china stands up around the rest of the world. >> big piece of that puzzle is enlarging the denominator. we will have clinical labs meeting in d.c. today for their convention, airline ceos meeting with the vice president and a lot more thanks, meg. we'll get cramer's "mad daush" and larry culp, ge chairman and ceo, stocks on the rise this morning. premarket a lot more to get to this hour. "squawk on the street" continues straight ahead ♪ ♪

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welcome back kind of feels like we've already had an entire week, given the moves in the markets, but it's only hump day or otherwise known as wednesday let's get to a mad dash. we start trading about ten minutes from now united health care going to be a feature. >> yes >> joe biden i would assume -- >> this is biden's poll numbers. this is how relevant biden is to the conversation it trades one for one. it will be up 10%. they did have a meeting with

citi and saying our coronavirus exposure is limited. medicare, the medicare advantage continues to show solid growth medicare advantage program is a very good program but david, this thing would have been down 10% had it not been for texas, and minnesota, whatever you'd like keep close to this this is the stock if you want to monitor who is going to get the democratic nomination, this one is the big money play on who gets it. because bernie gets it, they don't exist! >> if he were to get his health care plan passed. >> biden favors universal health insurance and bernie favors no health insurance >> right >> you can say that's better or look at the italian health care system today how are they doing i thought their system is good because they have a lot of good doctors but you know what? they've been blown up by corona. >> this is not the only name

responding positively to biden >> no, centeen and the mckess mckessons, carrion and vultures of bernie are considered the way of doing business. i want to say one thing i'm solicitous of everyone who comes to the exchange and i want to thank them but i'm not going to shake anyone's hand during this crisis because you want to get it, shake hands. >> it's time for our psa, we do every day. don't shake people's hands it's a little odd in the social interaction to say no. >> used to be. there's a way to show you have no weapons i have no defense. >> give them the peace sign. >> i like that >> or thumbs up. >> or dr. spock maybe? >> or this >> live well and prosper i'm not a meanie as my 8-year-old would say not a meanie anything but a handshake

>> stick around, ge's ceo larry culp in the next hour on "squawk on the street. i

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and she wants one too. geico. fifteen minutes could save you fifteen percent or more on car insurance. . a busy day as we weigh the coronavirus headlines and political implications of last night's super tuesday races. the imf is on the tape we'll talk to later on this morning, china productions restored to 60% hopes to move to 90% in the coming weeks of course, imf and world bank have canceled their spring

meeting in d.c they will make it a virtual meeting. >> larry culp i think will come up with a similar figure i get this figure over and over again from people that china is better or worse, making them come back, 60% which is up from 30% but we still get those images satellite images of pollution in china, relatively pollution free which says not everybody, the numbers could be overstated of who is coming back to work. what a terrible thing a way to analyze it, how much bad air they have. the bad ware is one other thing, it is so in play when it comes to the death rate because it's respiratory illness. s >> having spent time in beijing. >> heavy smoker, terrible pollution, doesn't help. >> men are dying much more, about 56% men versus women and it's 5-1 smoke in china, men versus women obviously smoking matters. we have to start distinguishing in order to make it so furor

doesn't reign, because again in the 1958, you had 2 million people died of the flu 33,000 died here >> we just need to, we need more data we need more data. first of all, nobody's getting tested in this country or just starting. >> crazy what a breakdown we had. >> people already had it and gotten rid of it >> good point. >> a difference between fear and planning >> right >> reuters has a piece about jpmorgan today, they'll ask thousands of their employees in the u.s. to spend a day working from home over the coming weeks to test the contingency plans, should they have to require it >> do i need a teller? a teller no one of the things bank of america has done is figured out how many transactions can be done online. will this be the death nail of people who turn out to be a little bit unnecessary wouldn't that be something, in a world where zoom video which reports tonight basically makes it so you can do a lot of

business at home >> right >> do we have to have -- >> right, what behavior also chan behaviors will change as a result of this >> stay at home is cheaper jpmorgan may have to fundamentally reevaluate i'm not trying to scare people but there's a lot of excess people if you work at home >> they're building a giant new headquarters are adding to their old one on park avenue >> really? >> i don't think they're expecting to have people not come in to work. >> they're doing well. >> spending billions of dollars on a beautiful uilding >> my state at home index is soaring which moderna the football stock dr. fauci liked mod rn gen a yesterday today moderna is another stock that takes the temperature of things so does the ten-year put together the things that take the temperature, and right now the ten-year is boring the heck out of us and if that means boring the heck out of us -- here goes the ten-year rate started to go down. >> doing wonders for mortgage

refis, up 26% week on week overall applications up 15% >> that's good for wells fargo and chafrlie sharvcharf. >> what are you supposed to do in this environment with the ten-year at that level really you go to cash now? >> no. >> eventually, you are now because -- >> the fed wanted wealth effect. >> is anybody able to get a return jeff ubbn's point how do you value an investor when value has no meaning any longer. you discount things at a 1% rate >> i totally agree buy coca-cola. >> the president may want negative rates that would be horrible >> well, he's so wrong about that it's painful. that says our country is weak, and that we shouldn't have any money coming here. our country is strong and i'm surprised our president opts for

a strategy which says our country is weak. that's not the way he usually acts he needs to be i think schooled on this. he should not be saying make america weak again why is he doing that why is he saying he wants to weaken our country is that his game plan to make it great? >> the banks obviously are not beneficiaries of this rate environment, yesterday the yield curve steepened early on wells fargo down about 25% so far, stocks lost a quarter of the value this year, bank of america down 21% >> the loser in this low rate environment. you want zero rates? >> do you take the chance and buy the bank here? >> no. >> no? >> because you have a guy coming on named jeff ubben, those are value plays. value means sell look at this my travel trust has goldman seven times earnings i hope it goes out because it has a credit card business [ cheers and applause there you go, a lot of students here today >> you could work from home and still use your credit card

>> the savior for goldman will be the apple part. the savior for mastercard is a better run company than goldman. it's time to buy mastercard. [ bell ringing ] david, i come back to coca-cola, great balance sheet, nice yield and i think people are going to be drinking coke in an atmosphere where they may not trust the water even >> there is the opening bell the s&p 500 at the bottom of your screen gfl on the big board, canadian waste management company celebrating its ipo today. >> interesting choice. >> nasdaq national simamedia, advertising network celebrating its 15th anniversary >> we're so oversold i don't want to tell people to bail out but i think everything's being taken up by the s&p. good time to sell travel and leisure. >> today >> oh yeah if you're canceling the

conventions, chicago, 78,000 hotel rooms. >> the housewares show >> you want to buy that? no look, there's some things that are going up that make plenty of sense, drug companies, but then there's airlines i know warren buffett is buying an airline he doesn't care if they have a shortfall. obviously he was saying last week just as good a time to buy as any if i said that, people would say where did jim go, the coronavirus or was he removed? >> you guys did unh at the te telestrato telestrator. campbell's beats on surging sales of nonperishable foods >> my wife bought the chicken noodle soup. >> and i went back to the old staple the chaunky used to be my meal for dinner. ravioli. >> he-man? >> no. >> we used to buy swanson, thought that was a uxury >> you got buy a lot of food to prepare for a long period of time too much, way too much >> really? >> we're going to be able to go by the day

i think we got a day's worth. >> that's silly. >> it is >> we got a pantry that looks like costco. >> giant hydraulic lifts helping you move food around >> and the tp are you okay on that >> those i think i could have -- let's not go into it way too -- no, i've got to tell you, it's not a bad idea -- again, it's not a bad idea to stock up who is saying that the doctors. i mean again you don't have to be a doctor to say what a doctor says do i want to stock up on campbell's chicken noodle? i'm listening to my doctor you got to stock up on chicken no, i am brave i don't care i'm going to weather the virus no that's the iranian way how is that doing? how is the iranian way handling? >> iran is a very interesting -- >> why, because they chose not to care? >> the impact the virus will have on the social fabric there, on perhaps the government. it's not to be ignored either.

>> i don't think we'll go up as much as we went down yesterday, by the way, just so people know. if you want to lighten up, change some things, do it into the strength >> we did lose 785 yesterday so we're trying to reverse all of those losses tom lee had a good note overnight, looked at the number of instances in which you had six straight days of less than 10% of the s&p below the ten-day moving average on day seven all four of the instances you rallied. so the point was if we don't rally today the market is in his words extremely not normal >> wow look, the s&p oscillator that i use other than thefinancial crisis, i'm looking at 20 years' worth of data, of the financial crisis we'd bounce today >> i'm sorry, looking at 20-year says that we should bounce today other than the financial crisis. which was also an extremely not normal market. >> right that's what we should do, but i don't like the ten-year. the ten-year is starting to go down in yield and the ten-year

is just, the s&p futures common stock trades off of that you don't really need to see much so if the ten-year continues to go down in yield, then we'll reverse this move. there's really, we're an algo-driven -- algorithms are selling stock when the ten-year goes down in yield oversold blah blah, blah, blah, that's what will happen. >> did you ever think the ten-year with a 0.9 in front of it >> no, there's a sign there's a cre cessation of business and total fear flight to safety people don't trust any financial instrument >> by the way, jpmorgan says 50% chance of zero rates this year, it's not their base case they still see 130 by the middle of the year and 160 by the end of the year. we would take that, right? >> yes, we would, but i'd rather know that gilead's palliative,

whether the drugs work i don't care about any of this nobody trusts anything, because everything is fluid. >> we don't have enough data >> right now why is that? >> because we just don't know anything >> it's too early? >> yes >> no natural defenses >> too early to measure, i think. china is still unclear in some ways >> right >> questioning it. i mean south korea certainly more so in terms of at least trying to understand, but we don't. >> look, i do think if you go back to the higher yielding stocks, i know it's really boring, okay, and i'm using coca-cola as a rubric, but this is when you buy coca-cola, and there is no doubt about it that james quincy is doing a good job. they had very good organic growth, the yield is fine. it's a buffett stock no one ever got, no one ever made a mistake buying it it's not going been a performer of late but james quincy is

doing a good job so there. >> coca-cola >> what about dividend paying stocks what is exxonmobil's dividend? >> david, you're doing oil and gas and in the esg world >> i am, 6.8%. >> well, yes but so what? >> so 6.8 times the ten-year yield. >> there's chevron, has much better coverage. >> right >> and chevron's got better growth, got better balance sheet and yields five. you could buy it but then you're a pa ryia. you have to hope robin hood stays town >> would you buy chipotle on wells going to 1,000 for may 68? did you read this one. >> i love chipotle why recommend a food stock you might get a better chance to buy lower. remember, you have to go and be with other people when you buy they have great takeout, great delivery they make money. >> by the way, what else, nomura

ups home depot >> mat tell has a $16 price target i met with management. hasbro has fallen down on the job switching to little theat c theatrics. chipotle talked about how much money they make on delivery to homes so that call may not be so bad. that is the stock up the most in the s&p so why would you go after that >> an investor willing to look past what is some economic dislocation, why not buy things that are historically cheap right now? why not? >> why not >> yes >> because they could get historically cheaper that's why >> all right >> historically cheaper. i'd rather buy hershey's >> on that note we talked a lot about the oil companies, of course, which -- >> you're caught up on them. >> i want to share thoughts from jeff ubben again because we talked about this a lot. he runs an esg fund and ubben is buying bp.

major oil and gas company. >> he's right. >> listen to what he said and i want to get your reaction afterwards >> i was buying bp yesterday or two days ago at 30 bucks a share, three times ebitda, and i'm like this is ridiculous. it's really hard to get off oil and the company has done a great job in the last three years financially. the balance sheet's fine they can be part of the solution they can move that to carbon capture and hydrogen and other things with their capital spend to become a company of the future, but i'm sitting there saying, you know, who -- what fundamental -- usually i could buy a stock below intrinsic value and add intrinsic value, that's my business who am i going to sell bp to, really >> wow look he's so right why did we buy bp for the travel trust? we figured we'd buy it at 7% yield and then we buy it at 8% yield, someone is going to come

in and want that yield and they haven't yet. bp upped its dividend. bp has the best plan for how to be less carbon oriented. they're a remarkable company, sold enough assets that their balance sheet is good and yet i was wrong. it was wrong i think you have to say i'm not early, it's wrong. i believe all the things we create interest and it didn't, which is one of the reasons i was so tough on mike wirth yesterday, the ceo of chevron, because i was looking at bp, they went to 7.7 and they're pretty good company. chevron not go to 7.7? jeff's right what an honest guy thank heavens he didn't say i own bp and they got a great yield. no it's good to have a little -- >> he's always in forward-thinking thautful intfo ing thoughtful >> you like that, not afraid to say -- confident, onneshonest

they sold microsoft way too early, took that position 2013, microsoft sold it in '17 >> trump is having an important meeting, he's meeting with, what, kim from north korea, who is he meeting with is he meeting with, oh kim kardashian, sorry. i thought it was -- >> are you being serious well, i guess we'll find out in good time. you mention ubben. david ackman with news on our website how he's taking steps to protect the portfolio from downside, seeing substantial negative impact from the attempts to mitigate the effects of the virus, jim. i see fitch is on the tape talking about restaurants and how they can expect more restaurants to be in distress. >> yes look, i think that anyone who has been with a number of restauranteures given what i do for a living and i got to tell you something, we are without a doubt in a challenged industry >> are you seeing a reduction in

any -- >> no. >> you're not. people are still going out >> really good bookings and i attribute that to the fact that people are still confident to go out and haven't been scared to, but i think if -- you talk to cisco, they're not seeing any. let's be serious, trump meets with kim kardashian to discuss criminal justice >> not her first visit >> you don't want him consumed by the coronavirus she's been a great spokesman by the way the president has been very good on recommending that you hire people who come out of prison and we've done that, and it's loyal people who were in prison for things that aren't criminal now. so i didn't mean to be too hard on the president, i just thought it was, you know -- there's a lot going on

kim kardashian >> i don't follow kim, up like most of america. >> 24 million followers. >> many more than i do >> get with the program. >> not my thing. >> how do you feel faang versus fang oil fang versus facebook, netflix, alphabet. >> you know, jim, one thing they've got attention today at&t accelerated buy-back >> wasn't that something >> sort of flies in the face of this theory if corporates are under real stress they're think being cash flow, inventories, working capital, do buy-backs take a hit >> yes, i think they do, but chevron said jim, you're wrong, when you have the cash flow, you do them. i think at&t was a statement buy-back there's the tug-of-war between the good people at elliott and good people at moffit nathanson. moffitt in a thanathanson is th sanders of at&t >> they're not positive on the

future of the company. there's a great debate out there in terms of the success. >> do you think they can c conserve it? >> they generate free cash flow. they target a certain amount return to shareholders there is still a belief out there i think and part from the likes of moffitt nathanson and other investors that at&t will come under some pressure >> it has a great yield. >> what it's going to see there in terms of the lack of success, directv the continued subscription defections. they launched their at&t now product, remember replacing the directv product. >> yes >> very recently >> david, when you mentioned at&t is something people to buy and i've been recommending it to people, the first thing they say is come on, that yield can't be, dividend is not to be trusted. why would you buy $4 billion of common stock if you're worried about your dividend? >> i think there was concern sometimes about it, but last few

quarters i don't think that's the case the wireless business is still fairly strong and the question becomes if we have a real recession, people get laid off, are they somehow not able to pay their wireless bills, does that result in reduction? >> i think that's the long thinthinlast thing to stop. >> market pmis and a few minutes ism are important. we talk to rick santelli in chicago. good morning, rick >> reporter: good morning. well not only do we have a non-manufacturing ism, we also have the markets version and that would be coming up shortly. very quickly let's look at what's going on with the markets. two-day charts seem appropriate. two-day of two-year, obviously we're extending, we're only one basis point away from the historic trade yesterday down minus, down at 62 basis points, which obviously is the lowest level going back to '16. if you look at what happened to two-day and tens, their low yield which is historic all-time was 90 basis points.

we're six away so you can see there's curve implications going on finally, ye-to-date of ten-year note yields i'd like to draw your attention to something important. the first trades of the year were the high yields of the year i know the coronavirus is accelerating the moves here with flight to safety, but we've been somewhat rate doomed ever since the first trade. here we go market, service sector number pmi, 49.4, exactly as expected, exactly as in the rear view mirror and happens to be of course the lowest level ever for this series, and this is the final read of course, and the reason i say it's the lowest read for the series is unlike the next number we're going to get that may have a longer history in terms of non-manufacturing sm this series goes back to march 2017 and the 49.4 is the lowest reading in that time frame

let's get back to the charts quickly. so we are talking about the year-to-date of the ten-year, first trade of the year was the high yield, we've drifted lower. look at the dollar index basically the first trade of the year was the lowest and continues to accelerate. we come back town getting closer and closer to testing it the point of the matter is that many of the variables that were exaggerated recently whether it was due to the fed action or not, they seem to be just adding to what was long-term trends that have been with us not only for 2020 but beyond, and at 10:40 eastern let's discuss all these topics with jean-claude trichet, former ecb president. carl, jim, david, back to you. >> rick, thank you see you in 15 minutes. bob pi san see, dow is up 505. >> ybanks are lagging, gold is down health care a big leadership group, semis doing well.

utilities bouncing on the yield still staying down getting a bounce industrial about in line here. again you see banks doing nothing right now. if you look at some of the big banks that are out there, no bounce at all today and no bounce in the yields either, so there you go this is zero, doing absolutely nothing. jpmorgan is a drag on the dow jones industrial right now we talked about this yesterday, but bears repeating again the triple whammy as i like to call it with the banks, rock bottom rates, low enloan grove possibilities and these are possibilities of higher default rates. triple whammy hurting banks. the banks are getting really cheap again like cheap on back three, four years ago here, so nine times forward on bank of america, this was 13 six weeks ago. citi 7.6, it was ten six weeks ago. fifth, third, 8, 8.5, these were around ten six weeks ago so nobody's doing any big calls

buying the banks because the pe ratios are down but they're back in the really cheap areas we've seen several years ago health care stocks all huge today and obviously unitedhealth here, 12 points there, a big part of the overall move here that we're seeing in the, 32 points up, the big reason why the dow is up so much, anthem, hca, all this on biden's victory. if you look at the futures here, i want to show you this, what happened last night overnight. as we got trickles reports here, here is the futures at 7:00, when the first results started coming in about super tuesday. you could see the market moving up throughout the day as we got headlines on clear biden victories in a number of key states and the upset win in texas. it's hard interpreting the impact of elections on the stock market this is very difficult, a lot of people having a hard time with it raymond james had a point out as good as any, remember that whole thing about sanders, the surge

of sanders would be good for the markets because he would lose against president trump and that was the initial idea so the markets kind of ignored a lot of this the coronavirus created a higher chance of sanders winning, and of course that created a lot of uncertainty and may have contributed to some of the market turmoil in the last week. this is hard to push out and figure out in a clear way. biden says super tuesday wins lowered sanders' chances overall. now you have a possibility of the market being okay with biden going here this is hard to figure out here but this is raymond james' interpretation i think it makes some sense. we're just off of the highs for the day. the dow is up 512 points >> jim, we didn't get a chance to talk retail to the degree that can reflect what's going on urban was a miss goldman adds target to the conviction buy list. >> it's interesting, you have a tug-of-war there a price target cut there by bimo now i would say that target had, i read the target comp. score i

thought brian corn ell was optimistic kohl's i thought looked like there was a decent quarter, raised the dividend. the stock gets pancaked. nordstrom stock gets pancaked. people don't want the standalone second tier retailers. tier ret. they have decided -- you know how the oil companies -- >> nordstrom, eric nordstrom taking over as sole ceo. they had a joint ceo structure >> that conference call was disjointed and i saw no reason to buy the stock the kohl's conference call was over and over we screwed up, we screwed up we're going to get better. thejudgment has been made by the market they are irrelevant. target is not irrelevant i think that matters i think brian cornell is going to recover did not have a good quarter. the one if you really want to be in it go back to costco. there is no doubt we're about -- no doubt that the future, if you

want to hear a conference call, someone would say what is so good last time he said, seed cucumbers. cucumbers. he has -- he is so good. i want people to listen to his call it is calming. he is smart. it's a great retailer. and it's where you go to stock up costco is where you go >> for sure. still to come, ge's larry culp will join us with his strategy to turn around the company in this volatile market environment. you have the dow up 480. ten year trying to hang on to one. vix actually down two points back in a minute there has never been a better time

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in this group i think and ivy says listen if you believe in this buy horton. let's go over again the short rates have not really influenced mortgage rates i'm getting 3.18 went yesterday to try to adjust it what are you, kidding me looking at the bonds yeah so let's not get all excited but there are people -- ivy is really good and willing to say maybe you want to buy horton stock has done quite well this year but i also point out that the ceo of toll brothers said he wasn't sure about the spring selling season because of, yes coronavirus. yeah >> on the material side -- supply issues? >> people want to stay home. >> ah. >> just open houses. forget it. >> yes >> with the 30 year? >> david, 30 year versus getting sick you know >> you get sick, you're most

likely going to get better >> isn't that sage-like? thank you. >> just trying to make a little sense. >> 3% versus 1.4%. i don't know go see a house >> how about tonight >> okay. i got dollar tree which a lot of people feel i think agree with it could be the bottom in this very tough period. what can i tell you? a work at home situation zendesk. then my favorite mark bristow. i like gold here so much i could scream and he is the best gold miner and the stock is down. he doesn't want me to call him doctor anymore he is the first guy who told me don't shake hands. where? when he was in the middle of an ebola crisis trying to negotiate a deal over a gold mine. he is a visionary and he is not inep de an epidemiologist and will not play one on tv remember what he called me assistant. >> don't go anywhere

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eisen and david faber live at post 9 of the new york stock exchange markets trying to get back what we lost on tuesday in the wake of that emergency rate cut from the fed. up about 400 points here two big buckets of news. of course super tuesday the big story along with coronavirus headlines, more news about cancellations, corporate guidance from ge, and campbell's and now ism services let's get to rick. >> yes, this of course is a very important read february reit, 57.3. this is a really nice number much better than expected and 57.3 will take us to the way back machine we have to go back to, hum pretty good. we have to go back to february of 2019 exactly one year one year might not sound like much but do keep in mind on the ism services this particular number, nonmanufacturing, this number series started in 1997. the market one we had earlier that was the lowest ever has only been in existence since

march of 2017. we have much more history. traders are much more comfortable with this number and it did have a nice bounce. having said that, i see 61 basis points last on two-year note yields, which means we took out yesterday's 62 basis point load for the cycle and that is significant should it close here, it would be the lowest close since july of 2016 we want to monitor it. 90 was the number for tens on intraday low yesterday six basis points higher gives you some idea of the curve implications going on. sara, back to you. >> rick, thank you let's get to our senior economics reporter steve liesman with more reaction steve, it is sort of surreal to see the really good data points coming across when the market is in correction mode and the fed is doing emergency rate cuts >> let me give you more details. and quickly button up the idea you just had there, sara, which is the idea that the number was very strong. the new orders index at 63

there was a strong number on employment almost all of it was strong. it did say, however, most respondents are concerned about the coronavirus and its supply chain impact we do some of the responses here that come with it from the respondents. the coronavirus has increased lead time for critical items, in the construction business, first quarter numbers slightly behind. mostly positive comments right now, which is good and the reason is this if you're going to go into something and have a shock you want to be in the best shape possible, the economy in the best shape possible to with stand it and i think the adp number this morning up 183,000 on the private sector job growth estimate and then this strong number for services. it is a good way if you're going to have to go through something like this especially hopefully if it's temporary you're going with a strong number our flash cnbc fed survey finding wall street thinking

unbalanced the fed -- on balance the fed rate cuts are positive but won't be enough to address the total economic fallout from the coronavirus a strong 60% majority approving of the fed rate cut 25% disapproving only 32% think it will be somewhat effective but 43% say slightly effective and 23% saying not effective at all. still, there is another 50 basis points of rate cuts expected from the fed for this year and 35% of respondents think the fed could go to zero in the next 12 months some of the commentary we got, the chief economist at stifel says buckle up yester year's low rate environment may seem high stakes compared to the reduced interest rate environment on the horizon. then even after the rate cut the probability of recession in 12 months has surged to 41% the most we've ever seen in the nine years we've been asking this question commentary accompanying the survey was mixed in the assessment of the fed. joel naroff says they botched both the timing of the move and

the messaging. from oxford economics, she writes while not a virus panacea it does provide some support to the economy. finally, forecasters estimate the coronavirus will shave 0.6% off growth this year what i find curious though is they think it's just a 0.1 percentage point rebound next year >> yeah, not exactly a "v" there. what are the expectations in the market and from economists now about what the fed is going to do next including in that meeting in what, less than two weeks? >> the last i saw i believe there is a 25 basis point rate cut being built in for the march meeting and if you look at the trajectory both in the market along with this survey, by the end of this cutting cycle they will have done a full percentage point, down a 0.6, sara. i don't know how long you've been around. i know i've been around long enough to think i don't think i'd ever have seen this not only just once but then twice getting down to the lower levels in the

single digits of the fed funds >> that would be something thanks a pleasure for more on the markets qma's ed campbell is here and, david, you've been one that is worried about the economy even before the coronavirus scare. do you think these rate cuts will help ease some of the pain? >> well, i think it's a double edged sword. what was interesting yesterday with that aggressive rate cut was the near 4% decline in bank stocks so, you know, the temptation is to say, well, this is going to help risk appetite this will help the home builders you saw the great numbers on mortgage applications. but it is definitely not good news for the banks any more than the ultra low rates have been good for the banks in europe i refuse to believe you can have a healthy economy if you don't have a healthy banking system. the lower rates will help some

parts of the economy but my big concern at these low levels is it will hurt other parts of the economy and comes out as a wash. whafrjts what do you guys think >> i think the rate cuts are necessary but insufficient they're not going to fix global supply chains. they're not going to get scared consumers to venture out into sporting events. i do think they'll help market sentiment on the margin and keep credit flowing to the degree that we have broader fall out from the virus and it causes demand destruction, i think it will help support the recovery once we kind of get past the worst in terms of net new cases. i think it is something that has to be done but is not going to fix our problems >> as for the rally today, up 400 points on the dow. i mean, clearly. the talk is biden and the boost of the moderate candidate into front-runner status. do you see this as any sort of

lasting help >> we have a cross current we have the push and pull of the negative impact of the virus and the positive impact of the policy response we're seeing not just in the u.s. but around the world. as you mentioned biden had a lad russ-like reemergens on super tuesday and this decreases the possibility that a democratic nominee is going to be a socialist and all of the negative policies associated with that. i think that is definitely helping today. >> what would you buy on that? >> i wouldn't buy solely on that, no i do think the whole situation is generating a buying opportunity but i don't think we've seen the maximum drawdowns as of yet. we could see another 7% down turn. >> from here >> just associated with the rising probability of the global pandemic pushing the global economy into recession i think we can't discount that so i think there is more down side here. >> where are you, david, on the

equity market? >> i think you want to focus on the best leading indicator that there is which is the long bond yield. the treasury market is telling you if we're not going into an outright recession we are certainly going into a significant growth turndown and in a period of course alongside that where the uncertainty around the earnings outlook is as wide as it's been at any time during the 11-year recovery period and when you are buying equities you're buying the earnings outlook. i think we are in a bog right now. i think recession risks are on the rise that is negative i think the heightened period of uncertainty is not going to go away any time soon that's a negative for the pe multiple so i think that, you know, we'll be stuck with a lot volatility and the overall market will still be vulnerable more to the down side and your best bets are going to be in areas of the market where the dividend is

safe and you're in areas of the market that are noncyclical. >> david, how far away is recession from your base case right now? >> i think it could start as early as next quarter. i know there's a lot of excitement over adp but i don't know why you'd be focused on those, and today's ism we have the university of michigan consumer sentiment index on friday and it was just fine february numbers, considering the stock market didn't peak until the middle of the month, these are all yesterday's numbers. i think going forward we'll be seeing significant weakness in the economy starting next month i think and until we get some semblance of stability on the coronavirus situation, i think that the risk that you'll have the consumer sector follow last year's manufacturing recession and hunkering down savings rates go up. i think the general outlook for the next few quarters will be

very weak. >> so you guys are both kind of a gloomy pair here what is an investor to do if you expect another what, 5% to 7% you said down on the market? where do you hide out? where do you allocate? >> so, i mean, bonds and gold have been very effective as a crisis hedge here. i think you want to be nibbling in stocks. you're not going to call the bottom exactly so putting money to work on weakness does make sense. i think if we do experience a recession it is more likely to be a technical recession than a true recession so the economy could come roaring back here when the threat of the virus passes and given all the stimulus we've put in place. >> where are you nibbling, certain sectors? >> really broad market exposure. i would say s&p 500. >> all right well, we're bouncing today up 454 on the dow ed and david, thank you both >> thank you >> thank you >> spoke earlier this morning to

a long-time activist and value investor, founder of value act, the large hedge fund that with its many billions of dollars of course taking large positions in many companies and forced some change here. he was here to discuss a new investment that is now going to be a company that is going to be making trucks and hydrogen cell fuel stops and has a very interesting business model we'll discuss it in the next hour i did take the opportunity of course to ask him his thoughts on the new rate environment if you want to call it that and what has been a long term trend of course of lower rates and what that does for somebody who ostensibly is a value investor >> we have gone to the longest duration asset and priced it as if it is always going to be this

way. it's been going on for five or ten years. it is kind of the death of value investing to a certain extent because the world becomes kind of valuation agnostic. and once you kind of lose your connection to intrinsic value -- and what is intrinsic value if terminal value is discounted back at 1% right >> right >> once you lose that you kind of as a value investor with a bunch of baggage you kind of lose your bearings >> very interesting point of course particularly in a market, sara, in which you could point to certain securities and say they are quite cheap, bob pisani making the points earlier about the banks where multiple points have come out of the stocks in a matter of weeks or energy or any number of other areas and yet his question is if i buy something at what seems to be a very cheap multiple to ebitda is anybody going to be there to buy it from me at a higher multiple? value investing over the last ten years has been a very difficult endeavor at least in terms of trying to keep up with the overall move in the s&p 500.

>> i think of the banks as well. they're still in citigroup, right? >> they are. they're in a number of finance institutions he no longer runs the main portfolio. his focus has been on esg which is the reason for discussion this morning again back to this company but it was interesting i think as a thought from him in terms of something we might not connect necessarily to the bond yield of 0.99. >> everyone says as soon as the fixed income -- as soon as yields go back up maybe value will have its moment to shine. how many times have we heard that >> many. the same thing we hear at the beginning of every year this is the year yields will move higher only to find bond markets have skyrocketed once again >> crazy breaking news in the race for president. >> reporter: we're just getting news that mike bloomberg is suspending his campaign for the democratic nomination for president. certainly something that was

expected to happen after a disappointing super tuesday by the former new york city mayor where he only won american samoa and picked up a few delegates in texas. his whole strategy had centered on super tuesday, which we saw a shocking sweep of states from massachusetts through the midwest and across to texas go to joe biden the former vice president that brought his campaign back from the brink the current nbc news delegate count sees biden at 453 delegates leading senator bernie sanders by 80. elizabeth warren has 39 coming in third in her home state and nbc news reports that warren is speaking with her campaign today to reassess its path forward michael bloomberg picked up a single victory in american samoa and also a few delegates in texas. biden spoke in los angeles last night as the results were coming in it is safe to say he was triumphant >> just a few days ago the press and the pundits declared the campaign dead!

and then came south carolina and they had something to say about it and we're told, well, when it got to super tuesday it would be over well, it may be over for the other guy! >> maybe for bloomberg but not so fast for sanders. maine is currently too close to call and sanders leads in california, the most delegate rich state, which is still too early to call with just half the votes counted. mike bloomberg is close to the threshold that would award him a chunk of california's delegates but with his new decision to suspend the campaign it is unclear where those delegates would go the bloomberg campaign plea of yously sought to turn its attention to michigan and florida and where he had polled more favorably the campaign manager kevin sheekey said last night bloomberg would either be the nominee or the most important person to that nominee and after super tuesday it's looking like the latter guys >> it also looks like he is picking his person in a statement saying that he is endorsing biden and that he will, quote, work to make him

the next president of the united states which is interesting, that he is not waiting to see ultimately who the democratic nominee for president is at this point >> no, and it will be interesting, sara, to see how quickly the funds transfer from the bloomberg bank account straight to the biden campaign with all of the bloomberg ads up until this point seeking to paint the former vice president as someone who is not fit for office and trying to paint bloomberg himself as the one that was closer to former president barack obama clearly the messaging will have to change pretty rapidly as he seeks to re-assess his support and to change the messaging there to divert that funding all of that support, that half billion dollars he has spent so far he said he could spend up to a billion dollars or even more to defeat president trump, so we'll see exactly when that money hits the coffers for biden. >> elizabeth warren was the talk

of this desk when she was the leader in many polls obviously before the primaries began do we expect a similar move by the warren campaign? >> we do, david. i think it is safe to say a third place finish in your home state is not what you need to engender confidence among an electorate that you have electability in this race. certainly an announcement from warren would not be surprising at this point given that performance and when i talked to strategists about where warren's downfall was they really point to early november after sustaining various attacks throughout the fall about how she would pay for all of the plans she put forward, it was in early november that she put some of the pay fors out and people felt like she was being a little disingenuous about where the money was coming from and exactly how much these would cost that was really where the polls started cratering for her and where some of the support for these other candidates picked up >> that home state calculus was clearly part of klobuchar's decision to get out of the race and we'll see if sanders changes

his take on a plurality of delegates going into the convention after taking a stand on it so far thank you. watching bloomberg's exit for now from the presidential contest. in the meantime, stocks not far from session highs up 617. we're back to 3065 on the s&p. it comes as the dow is already having a rollercoaster ride in just the past two days on monday as you remember, the dow soared nearly 1300 points but then yesterday's sell-off saw it plummet 785 joining us this morning is former goldman sachs asset management chair, jim, good morning. good to have you back. >> good morning. >> how are you distilling the various dynamics in the market right now whether super tuesday politics, fed stance, the overall corporate response to the virus? >> i guess my honest answer is

i'm glad i'm not in it anymore as a professional daily thing. i have no idea what i would be trying to say in an attempt to sound vaguely coherent and of use to anybody it is even by the standards of a business which is very difficult and tricky this is particularly complex. i think it comes at a time where the world economy was challenged anymore. and markets particularly in the u.s. not exactly cheap so you're trying to make the better, seemingly never ending fed larges versus additional -- by any challenge of my professional lifetime, an extremely unpredictable one going forward. it's tough >> a lot of people knew you, jim, for your china calls and optimism over the years on the chinese economy. >> yes

>> we just got pmis, manufacturing numbers that are record lows for china and hong kong how fast do you think it'll take those economies to bounce back >> so not with standing what i just said, and partly because of the world i was involved in, peculiarly the biotic review i led for cameron i have been immersed by examining daily numbers for the province in china the last few weeks and actually it looks to me not with standing the major mistakes they probably made at the turn of the calendar year, it looks to me like the chinese have got it under control. certainly outside of hubei and according to every bit of intelligence i've got they're letting the economy restart, so i think the real value of those numbers you highlighted are that they probably symbolize the absolute bottom of this

staggering february collapse of the chinese economy. at least i hope that's the case, because if not, the world's got a lot of problems, because essentially it implies that china's dropped by half its size in one month, which we see anecdotes of all over the world. but i think the markets were at least right to vaguely explore that might be very temporary obviously it now depends on the -- go on i'm sorry. >> i was just going to say even if we reached the bottom there in terms of the numbers, which were dismal, as you noted, i think one question we're trying to figure out is how fast can activity rebound there can they just get back to 6% growth rates or is this going to look different than a "v" >> well, as i tried to remind somebody yesterday and again i emphasize, i'm not in this world in the same intensity that i used to be but if you take your mind back to 2008 to 2010, by relatively

early 2010 the chinese were actually tightening policy because they'd over stimulated so much in 2008. the economy was probably growing for a brief period by something like 13%, 14%. so the idea that once china starts turning up it can't really get back to six, i think, is probably the last thing that i would worry about right now. the bigger question is, whether by opening up people's movements again they can still show the numbers they've been showing in keeping this thing under control the past fort night and what it means more broadly for the dynamic between the governments and people but i wouldn't be worrying about the likelihood of them getting back to 6 if the chinese feel confident enough and are prepared to use fiscal policy especially enough, i think they certainly for a period could do that

we've asked lots of questions about the medium to long term, about how much growth is borrowed, questions about debts and so on, but i think the really important thing is whether they can pull off this trick of letting things start going again without causing a fresh acceleration in the incidence of this really troubling infection. >> we are seeing stimulus packages get developed in hong kong obviously china, south korea, the uk is working on emergency loans for businesses and yet here the president according to a lot of reports balking at major stimulus -- how much pressure should be on the white house and not just congress >> well, i personally have to say, what you didn't touch on was yesterday's fed rate cut i am surprised that the fed did that i think whatever the messaging and the sort of general statement of we're here to help

everybody, i think tactically it was surprisingly quick what happens if the u.s. follows the path of other countries and the rate of incidence continues to rise for another couple of weeks? whatever the long term consequence. you know, the fed has already deployed a couple of bullets i'm in that camp that agrees with many others that this is a supply shock it's not obvious to me if you have to deliberately close your economy down in some form what cutting interest rates will actually do. so i think exploring the ideas of providing some kind of loan support or loan extension and carefully thought out fiscal initiatives are likely to be much more warranted than fooling around with monetary policy in my view. >> i mean, the flip side is the easing helps cushion the effect on asset prices and liquidity

and on financial conditions and without it those all would have been tighter >> i, you know, i'm somebody that helped preside over the creation of one of the first financial conditions indices over 20 odd years ago so i'm saying what i said fully aware of the importance of financial conditions, but, you know, the u.s. can't get itself into a position where it can't avoid any tightening of financial conditions ever. because that's just sort of unrealistic. and, more importantly, when you look at the broader issues that are so relevant for the world in the 2020s about the equality of growth and the actual and perceptions of it, the idea that we constantly do surpass it markets which does mean in some places the beneficiaries of capitalism continue to be those that happen to own a lot of

financial assets, has its own set of issues, too, that aren't going to go away simply because of this. so certainly i would be hoping in the uk and in europe the more active response to this is probably going to be more fiscal than monetary. in addition to the important thing you did raise in making sure that the liquidity is there to make sure markets function. >> jim, thanks for the time and the guidance we'll talk to you soon >> thanks for having me on good luck, guys. >> let's get to washington, d.c. with the news alert. >> reporter: hi, sara. the treasury secretary stopped and spoke with reporters before heading into a hearing here on capitol hill he said that he was on the phone with the imf this morning to talk about the response to the outbreak and the impact on the economy. he does not believe there will be a long-term impact from the

coronavirus but obviously that there could be some short term damage he said he does support the fed's rate cut >> for most americans who are healthy, even if they get this virus, they will be fine and we're taking an all of government approach. i think the fed's action yesterday was very precautionary and the right thing to do. so we're taking a whole of government approach. >> reporter: now, because the treasury secretary is here testifying, he is not at the white house for that meeting with the airline ceos on the response to the outbreak, though he did say that he believes that americans should feel safe in flying and that he is not changing any of his plans. >> i'd be very comfortable getting on a commercial plane today if i were personally traveling so i haven't curtailed any travel other than for being in washington, d.c. focused on the task force >> reporter: mnuchin also

highlighted the white house's move to expand testing and expand the availability of testing kits guys, i am assuming he'll get a lot of tough questions about that during this hearing back over to you >> again, stubbornly resistant would you say, in the idea of rolling back tariffs on china imports? >> yeah, we did not ask him about that directly this morning, but yesterday when he was asked about that he said there were no plans to do that that was not on the table. >> is there a lot of criticism from members of congress on the delay in testing kits? why peope u.s. are not being tested when there is thought to be a rising number of cases? >> reporter: yeah, absolutely. the thing that we're hearing from the hill and from members is that this is very much a public health emergency and that's where their focus is. so the administration's response, the lack of testing kits, what they say is a lack of communication is why you're seeing more white house officials coming to the hill on

a regular basis. vice president pence is going to come to capitol hill this afternoon again after being here yesterday to talk to members what they're telling me is they're not really worried about the stock market slides or the volatility in the stock markets. they are focused on this right now is a a public health crisis. they are still putting the final touches on the emergency aid bill we expect to be released sometime today and trying to get that out of the door by the end of this week >> even as mcconnell works on contingencies for capitol hill itself thank you. david? ge's investor outlook day was today. they had a call not long ago that wrapped up the company saying at this moment they expect coronavirus to only impact first quarter numbers reiterating full year 2020 guidance to 50, 60 cents a share. company ceo larry culp joins us right now. nice to have you here. let's start off on the subject we can't get away from which is the virus. you have fairly decent insight

into china on both sides actually what are you hearing and seeing there? what are your expectations obviously knowing clarity is very hard to come by >> right very much the case thanks for having me on this morning. we wrapped up about an hour ago and as you would imagine this was a topic of some interest i think what we tried to share with everyone on the call is that our focus with respect to coronavirus, first and foremost, is the health and safety of our team we have 18,000 people in china many of them in our health care business obviously this has become a more global phenomena we are fully focused on everything from personal hygiene to smart travel restrictions that we are taking care of our team it is particularly important to us in china where our health care team are really very much on the front line, helping health care providers operate our ct scanners for example which are really part of the first line of defense there.

i would say with respect to operations we're trying to stay very close to customers, be it health care, aviation, and otherwise as we bring our facilities back online other than those handful of facilities we have in hubei province, our facilities are up and operating. not all of them are yet at a hundred percent of capacity. that ramp continues and literally is a day by day effort as folks come back to work in addition to what we're doing with our facilities, we're clearly working with our suppliers as they go through a similar process. so it is particularly tactical it is fluid. i think we're making progress relative to the getting back to business in china. what we said on our call, david, is we see some free cash flow pressure here in the first quarter probably in the three to $500 million range two to $3 million worth of

operating pressure but we didn't take a view with respect to the rest of the year what we don't know clearly outweighs what we do know but we'll take it. we think the footprint ge enjoys and the agility should help us weather the storm however it plays out. >> speaking of progress of course investors believe you've made a lot of it since you took over we haven't spoken on television since we talked in the fall of 2018 >> right >> at the time i asked you about power. it was very much an uncertain area similar in some ways to what we're seeing now. do you feel like fast forwarding a year almost that this is the inflection year for your power business >> well, ironically 17 months in the job this week. not that i'm counting but at times it feels like it's been much longer. that said, i thought our two

power ceos did a really good job on the call today walking through what they did in 2019, how they've entered 2020 with an eye toward being smarter about what we sign up for in terms of new business, how we're executing both in our factories and in the field, whether we're installing a new piece of equipment or servicing it, and what that really will allow us to do over time with respect to driving better margins and better cash performance in those businesses now, this will be another year where we're not putting out positive cash flow in that business but the trend very much i think is moving in the right direction. i think we have dealt with some of the legacy issues well while really laying in good operating improvements, which i think investors will see increasingly in the years to come >> a great, challenging job in 17 months, you have a gigantic aviation business that is the jewel not just of your company

but i think of the world and yet you have a max overhang that is going to make it so it is very difficult for you to forget what is going to happen are you confident we're going to see some sort of 737 in the air by the end of this year? 737 max? >> well, i'm going to tuck in behind my customer and good friend dave calhoun on this topic, right boeing i think has been chrystal clear that the regulators are going to shape the timing of the return to service. all of us are working to support boeing and the faa as best we can in that regard i don't think i have a different view than dave expressed relative to a mid year return to service. i think some of the uncertainty for us has been addressed, though we shared on the call this morning that we, through our cfm joint venture with saffron, have reached an agreement with boeing with respect to payment for the engines on the parked aircraft that were built last year as well as the engines that will be

delivered to boeing as they ramp >> you have 19 parked yourself >> well, the -- >> you own some planes >> we do within our g-cash unit. i'm really referring to the planes built in 2019 that gives us an opportunity to catch up and be paid during the course of this year for the engines we delivered that'll be a good thing at a time of some volatility to assure folks with respect to our cash position. >> let's talk about demand for a second even during the period of this turmoil, many planes are not filled are you worried about the economic consequences in terms of the customers >> well, we certainly see that happening particularly in the asia pacific region. on the call, we didn't change our outlook for the quarter or the year but acknowledged that three to $500 million of free cash flow pressure coming largely from aviation in no

small part because of what we are seeing in reduced flying hours in that part of the world. we'll see how the rest of the year plays out but that is certainly something we're keeping a careful eye on >> over all at the company you have been taking costs out trying to focus to a certain extent on margin in many of these businesses, not just power but many others. the well known analyst this week actually upgraded the stock and raised the price target. i did want you to respond to something. he says your gross margins remain sector low by about 1700 basis points versus the pure average, a metric that is hard to move the needle on regardless and that you would have to be in the top 20% of total s&p 500 companies on gross margin free cash flow conversion to hit the numbers that many people have out there for you. how do you respond to that >> well, i think there is a lot of news that came out on monday. i haven't had time to comb through that obviously we were hit early monday with the sad news of jack welch's passing. and obviously our thoughts and

condolences go out to suzy and the family in that regard. but i think with respect to our path going forward, david, i think we feel very good about the opportunit invest in technology you see a refreshed aviation portfolio. certainly both in power and renewables, new products coming online, we're investing aggressively in the digital space at health care that coupled with better cost controls in our businesses, be it in our factories, be it in our design laboratories as well as in our field service organizations. >> corporate expenses, too you've taken massive cuts, haven't you? >> we have you put that all together and we think we have an opportunity to expand margins relative to our peer set, deliver better than average cash relative to our peer set, as we look forward so we're hyperfocused on delivering better performance both for our customers and our

investors. that'll play out >> where are you on that journey 17 months in >> it's early. >> it's still early. >> david, a lot of what i see day to day when i'm with the businesses really isn't yet evident in the financials that we highlighted today and that we put out in late january. we talk about the upgrades to the team carolina, our new cfo started this week. a number of new leaders in our renewables segment are really just getting their bearings. we talk about implementation of lien, what i grew up learning from toyota has tremendous application in all aspects of ge but, again, very early at best i would argue it is probably the second inning of a multi-year transformation that is under way at the company. i can get very excited about that because not only do i see the potential but i see the team broadly, not the people who report to me or the top 20 or 30 but deep throughout the

organization around the world really seeing the opportunities for us to build and growth great company. >> okay. so, larry, let's look at power i don't like your power business i think it's out of -- you do gas turbine. that's fine for now. nuclear, well you have a couple orders your renewable also. onshore wind you're good but the world is going offshore which you don't have a prototype. i say to myself if i were larry culp i'd try to get that business together and get rid of it i know you got a lot of people that work there and don't want to hear that but, larry, that is a business whose time has come and gone >> well, as you point out, jim, lots of different moving pieces within both power and renewables i think if you look at our power business it's largely a gas business today >> eh. >> it is just in terms of size. >> i'm saying the aps and dominions. >> our utilization, jim, with respect to the use of our

installed base in gas was up 2.5% last year, right? >> service, service, service >> but that is utilization of those turbines and utilization as part of the energy transition there is no better way to transition from other sources than to gas today. right? renewables can't pick up all of that capacity. there's no more fuel better positioned than gas to run along side renewables be it solar or wind so we think that if you look at that data that we see in our installed base today, we look at the shape of the energy transition broadly these businesses have a role to play our wind business, our offshore wind business, you say it is a prototype. >> right >> that is out performing our expectations in rotterdam as we speak. that is a multi year effort. but we're well positioned in onshore and offshore we've got a couple businesses we need to fix. i thought the ceo of that business did a phenomenal job this morning laying out he is

playing a number of different hands. >> he was more, in 2016, was pretty bullish didn't hit the numbers >> well, i wasn't here in 2016 >> okay. >> but partnering with jerome in 2020 i feel good that he and the team, all of us are going to get after it >> i'm obviously playing devil's advocate because you can be number one in every business, larry. that is the toughest one to be number one in in your portfolio. >> finally, the portfolio overall. you made it clear you are in the second inning is what you said but there are those who still look at ge, health care business from which you've made significant investments. obviously the engine business. and power. and say they don't belong together eventually he is going to separate them and do even more with this portfolio. what is your response? >> well, i would say, david, that as we continue to make progress on reducing the leverage at the company overall and we made a lot of progress last year, we're on the verge

here of closing -- >> trying to get to like two and a half times >> two and a half times on the industrial side and we'll get a $20 billion check here soon when we close the biopharma transaction. that puts us in a very good position in that regard. that deleveraging coupled with the operating improvements that we've been talking about i think position us with all of our businesses to create tremendous value at ge. in what form, what shape that might take, we'll have a lot more options down the road with a strong balance sheet and better operating performance than we might enjoy today. we'll see how that plays out i will try not to use the word never very often but we're going to create value and optionality for us as we continue to tend to these issues and seize the opportunities inherent in our markets. >> all right we look forward to staying in touch with you along the way >> i'm willing to say congratulations. >> you are >> yes i am. 17 months and i say, yes congratulations. >> don't shake hands >> no. sorry. >> larry culp, thank you we certainly appreciate you

taking some time >> my pleasure thank you. >> chairman and ceo of ge. sara, back to you. >> thank you as we head to break look at the top stocks on the dow right now which is up more than 450 points united health by far biggest winner that's been one of the politically sensitive stocks on the biden win from super tuesday. up 9.5%. more on the sandertangs ki the number two spot. more "squawk on the street" when we come right back

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to save hundreds of dollars on my car insurance with geico. it's really great. well, i'm just so glad to have met your beautiful family. and we better be sitting down now. believe it! geico could save you fifteen percent or more on car insurance. . stocks are up about 1.5% right now. let's check in on the latest on coronavirus back at hq meg? >> hi, sara. new york governor cuomo holding a news conference this morning announcing an additional four cases of covid 19 connected to the 50-year-old attorney in westchester county his wife, daughter, son, and neighbor who drove him to the hospital have all tested positive as well that's as worldwide concerns are mounting about a shortage of personal protective equipment endangering health care workers. the world health organization making a call for manufacturers and governments to increase production by 40% to meet rising global demand. exacerbated they say by panic

buying, hoarding, and misuse and today more drug companies are jumping in the race for medicines developing potential treatments derived from blood plasma of those who recovered. and new drugs are being developed as well. guys >> thank you very thank you verg tirrell. let's get to rick santelli's special edition of "the santelli exchange." >> thank you very much i would like to welcome jean-claude. let me ask you one question. i don't like negative rates. japan has them, you have them, the u.s. doesn't have them my question to you is the u.s. central bank efficiently using the amount of ezs it has left if it has no intention to go below the zero bound, in your opinion?

>> with regards to the negative, rates, of course, everybody knows if we had negative rates in europe, it's because we had not on the crisis which came out of the lehman brothers bankruptcy but also our special sub rate risk crisis so we had a very, very peculiar development. and that is why we were and still are in negative rates. would i not suggest for the united states to embark on that and i would suggest to utilize other means which have their own drawbacks, even if they're fully justified in the case of europe, it seems to me >> mr. true shea, do you think it's unreasonable for any central bank to hold levels that

the rest of the yield curve seems to be sliding past just to hold the pressure point to keep from going close to the zero bounds there may be curved disportions but is that a big or small price to pay for avoiding the zero bound? >> again, it seems to me, of course, the central banks have to do what is appropriate in the circumstances. at the present level frankly speaking, i am not sure we have the equivalent of what we had with lehman brothers bankruptcy and absolute drama of immediate and grave threat of depression, not recession, but depression. so it was very special, and in those circumstances, again, the present one i mean, i am not sure that we should go in the u.s. zero-zero it would call, of course, for

having some view on what should be or could be done right now. i am not sure it would be very good to utilize right now all of the cartridges the central bank has. and from that standpoint i'm not encouraged at all by the successive call from the president, from the chief of the executive for a decrease of rates and be unhappy with the decrease of rates when they arrive it does not facilitate the task of the fed and i guess the fed could say more or less like the eathole general, you're not facilitating my life. and you're not facilitating my own authority. the fed's credibility and independence is absolutely fundamental in this present circumstances. >> excellent one final thought, we will stretch it out here, the dollar.

i see many of my sources think g7 does not like the strong dollar and part of their message of not addressing more liquidity was really a notion if the u.s. coordinated lower, the dollar would weaken, easing some of the pressures for some of the emerging markets and high demand for dollars to satisfy liabilities. do you think the stronger dow, even at weaker levels, will be an ongoing problem for emerging markets and much of the globe? >> well, first of all, i'm not sure that the dollar is that strong at the moment and speaking second, let me say that you mentioned the g7 i am struck by the fact we have a global crisis, coronavirus is a global thing it is impacting, of course, enormously emerging economies, including asian emerging economy, started there

so i'm a little bit annoyed that we don't hear the g20 at all we don't hear the coralation not even between the g7 miss but all i would say systemic economies in the world, including the emerging economies to tackle the coronavirus, you need a global strategy, not on the strategy restricted to the advanced economy and concentrating on central bank and on markets it's a global issue. >> jean-claude trichet, we have to leave it there. i thank you for your time. a lot going on in the market today. thank you. sarah, back to you i will send it to phil lebeau in washington with the ceos meeting at the white house. >> the ceos just arrive. the meeting starts in a few

minutes. this meeting is about the ability of the airlines to trace contents of passengers as they try to contain the avenatti outbreak we also had a chance to talk with the ceo end zone abos, a, to travel now and b, so many are told not to go on the road here's what they had to say. >> coming from someone like me, no one will listen but, yes, we have to get those facts out to other people. >> as people again change their travel plans and it obviously has an impact on demand. we're prepared for that. that's fine. we'll live through that. it's not true economic demand. that's again related to a short-term situation we will deal with short-term situations >> doug parker and oscar munoz a few minutes ago. they are now signed the white house. that meeting with the coronavirus task force starts in about five minutes back to you. >> phil, thank you

the head of the international monetary fund, chris lena gore gavia saying global growth from coronavirus will take a hit. listen. >> we are faced with a generalized weakening demand and that goes towards confidence and proper channels including threaten tourism, commodity prices, financial conditions they call for an additional policy response to support demand and ensure an adequate supply of credit. >> she went on to say that growth in 2020 will be less than growth in 2019 that was about 2.9%. we have a first on cnbc interview with her in the next hour on "squawk alley," so we can ask her to elaborate on what she sees happening with growth, not just the supply chain but demand side as well. they also have a pretty good feel for what's going on in china. i'm eager to get an update on the situation on the ground.

>> some of the headlines on the tape regarding china's production pretty encouraging, you can hope did they cancel the meeting? >> it's coming up in early april and it's an international gathering of financial ministers and central ministers and, yes, they're canceling it. >> starbucks, annual meeting, virtual. targets investor day, virtual. >> there are a few i'm curious about. i won't mention them publicly. a big one in may we will see as well. >> with international folks? >> a lot of international arrivals, yeah you would imagine one particularly in l.a. you guys probably know. >> yeah, yeah. >> what do you have coming up, speaking of what's coming up, on closing bell >> the ceo of campbell soup, the stock is on a tear, last i checked it was up 8% mark clouse will join us with

his strategy this is a turnaround story and it is starting to see real results. they actually upped irthis guidance today they saw sales growth for a change not much, 1% or so but it's also been an interesting coronavirus play because people stock up on canned soup. >> they did stock up 7 1/2%. interesting move for campbell. very different from kraft, which we pointed out many times, beyond karinia and benefits, they have taken substantive moves to improve the best. >> they also have snacks, snyders pretzels and kettle chips and that that's helped insulate them from some of the problems at kraft. they also had a turnaround in place that resonated with investors and new ceo that has done that as well, mark clouse, who has come out and spoken unlike what we have gotten from pet craft. let get a sector sort with don at hg. >> let's look at what's

happening now. we're in halle move to close out the week it is being led by an interesting slate of sectors health care, yes, very big focus on the heels of super tuesday's primary results. it's followed up by really not the big defense sectors but utilities, consumer staples are the second, third and fourth best sectors helping to power the leadership positions to the s&p. they are currently, by the way, the only two sectors positive in 2020 so far. so they will be a key foghous as interest rate hovers at or near record lows. just only comments of the imf directing manager, that slowing growth may be powering some of those particular moves keep an eye on those folks i will send it back downtown to you folks at the new york stock exchange. >> dom, thank you very much. good morning, it's 11:00 a.m. at the federal reserve,11