it's been a pleasure. >> what about a side car on your motorcycle i want to get the hell out of here. >> i don't know if i have enough sanitizing equipment to do that. >> anyway, it's good having you here. >> thank you, sam. >> that does it for us today make sure you join us tomorrow right now it's time for "squawk on the street. >> announcer: this is cnbc breaking news, market sell-off >> good thursday morning, welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber coming off wednesday, they are giving about half back state of emergency in california, cancellations from google, apple, netflix and more. 10-year down 95 basis points uncertainty beginning to weigh on the street. stocks going to open lower. >> plus hp rejects the hostile

takeover bid by xerox saying it meaningfully undervalues hp. the ceo of hp will join me later this morning. coronavirus fears hitting the corporate outlook and strategy southwest, apple, kroger, campbell's among the many companies that are weighing in today. we'll start with the futures, though, sharply lower amid this roller coaster week for stocks and wall street which saw the dow swing a thousand points or higher two times in the last three days, jim. maybe we're in for a couple of months of chop here? >> i think that's exactly right, carl yesterday was a very solid based on oversold relief rally the existential issue of whether a socialist would head the ticket a lot of people feel was finished because of the victory, multiple victories in states obviously by vice president biden. but now we're stuck with looking at earnings again and all that happens when you come in is you look at the 10-year and then

look at earnings it isn't like -- every company -- david, are you wearing those for the show >> i'm wearing one glove because i keep touching my face. so i want to not -- when i touch my face -- yesterday i used my lapel and got makeup all over my suit. >> look, kroger warns but more importantly my partner to the left is now warning. >> i'm adopting behaviors you advised. >> look, they're watching pictures of the state of washington where hospitals -- where people are doing exactly what we saw in wuhan and we're saying this is our country and i think there are people who say, you know what, what can i do to not be in places that i normally go to and i think the personal is overwhelming the actual. i think that we all kind of feel like we're either going to get

it or we have to avoid it in ways that make it so that we can't go to a gathering place. gathering places are probably in a service economy a huge percentage -- >> there's no doubt it's having an impact on economic activity we say this every day. i feel as though we sit here in the morning and have way more questions than answers. >> how can you not. >> how can you not but listen, in the world that -- again, every day i can give you a little update having spoken to bankers or lawyers or people advising corporations, things are slowing a bit. transactions are being pushed. they're not necessarily being cancelled. if you have a merger and acquisition deal that you are trying to negotiate based on a price with this kind of volatility or with the stocks down, it makes it more difficult. certainly if you're a buyer and planning on using your own stock. if you have business in china either as a seller or a significant supply chain there, that's an issue too. and there are some deals i'm told that have been pushed aside. overall activity just slows because people want to wait.

>> but we all are hopeful. there's a story that just broke about a roche drug that's an arthritis drug that the chinese have turned to here i'm talking about actemra and the chinese are using it which is very powerful for lung problems a site i have usually not reacted to and mentioned on air but china's national health commission is using it maybe this is the breakthrough that's happening right now so i'm looking at everything but again someone could say you're not an epidemiologist but you have to do everything you can to find out what is the roche drug doing maybe that's hopeful. >> but that's still a long way away, isn't it >> well, david, that depends on what your definition is. that's being tested right now. >> all the things that we hear

about potential closings, if you do close schools somewhere, when do you reopen them when do you know the coast is clear? how do you differentiate or is it now we just accept that this is going to be widespread. >> you readjust. >> the vast, vast majority of people are going to be just fine >> again, you come back to what is stay at home. there was a conference call yesterday, zoom video conference call it was disjointed, wasn't real run. the ceo is fantastic he was reluctant, i would say, to say the obvious, which is we are going to do very well in the era of the corona. and it's really incredible, he can't say it he can't say, listen, you know what we're going to do we're going to crush it because of covid-19, but he is. >> you mean the president himself? >> the ceo -- zoom's video he's really a terrific guy the conference call is

disjointed because who wants to say that who wants to be a profiteer? >> they are experimenting and having almost tests of people staying home so they're asking some employees as a test to see what it would be like to see if their systems can handle it, to see everything google, by the way, which i think has got to have some concerns about -- if everybody is home, what's that going to do to capacity? >> they cancelled the io conference this morning stories that they're moving all of their job interviews online according to memos going out to perspective candidates today. >> eric points out on this disjointed zoom conference call that maybe we're discovering that you wouldn't have a central office space because it's so easy to work at home. >> microsoft -- >> nature of work. >> microsoft and facebook are asking all seattle kwloi employees if they can to work from home for the month of

march. >> google has done the same. they haven't closed their offices but they have asked people not to come in if they can work from home seattle is going to feel an impact from this you have to imagine the lack of activity going on in a united states city. are we going to see that happen in cities around the country i don't know. >> i just cancelled a trip to seattle of some significance for something i was looking forward to doing for the network it was cancelled for me by the people i wanted to do the interviews with. >> what would make you feel like you could resume doing that? when do you feel as though, okay, it's all right now >> this is a health issue. i think it will be all right when people are confident that there's no one still getting sick early on, david, i think we're early on look at that princess -- another cruise ship? when i read that i thought, no, it's got to be the same cruise ship we couldn't be this stupid. >> this is the grand princess,

not the diamond princess, being held off the coast of san francisco. again, trouble for carnival. >> princess and the flu. >> in terms of how companies are planning, visa said they're trying to proactively manage expenses mastercard says we don't jump into that willy-nilly necessarily. claims today, jobless claims at 216. you're not seeing it yet. >> no, you're not seeingit depends on the city if you're seeing it in conferences, you're seeing it in restaurants there's a note today that is -- this is the kind of thing you're going to get morgan stanley note of some rigor which says covid-19, travel impact to hertz and avis underappreciated you read it and say, wow, i didn't even know how badly this is going hertz price target 15 goes to 12 avis 32 goes to 26 i read this and i said i hadn't even thought about how bad it could be for rental cars. >> of course airport is

important for that. >> what did you just kind out about an airport while we were -- >> nothing i don't want to share things that aren't completely confirmed. let's just -- we know the virus is getting out it's around. >> by the way, southwest sees a hit to q1 operating revenue. they see revenue per seat mile down 2 to up 1 they were prior 3.5 to 5.5 b of a takes american to underperform today, jim. >> i see that and think at what point do you say i want to buy american because it's much more profitable josh brown is really good. he's been extraordinary on "the closing bell." it's not false security, but the idea is, is that any one of those stocks if you took a longer term perspective, is that where you want to be no you'd rather be in roche. >> do you believe behaviors will change significantly even when this is over and done with >> no. >> not when it comes to airlines, people will resume traveling again.

>> yeah, but do you know when? >> i don't that's the problem, i don't know. >> when versus their balance sheets, david. >> i don't know. >> when versus the balance sheet of norwegian cruise. when versus the balance sheet of carnival do you see the debt? >> you're talking about a credit crunch. >> well, he's talking specifically about the balance sheets of companies that have too much leverage given the fact they're not going to be taking in enough cash. >> these are great companies i at all times have been -- these are fabulous companies, they are they offer great bargains. cruise ships offer versus hotels, fantastic bargain. do you want to take that bargain right now? >> what about the broader market, do i want to take that -- not a bargain, but do i want to take that on i've got a less than 1% yield on the 10-year. i've got the democratic candidacy of joe biden ascendant as opposed to the socialist, bernie sanders >> right >> i've still got liquidity abounding in a financial system, no concern at all on that front amongst the banks or anything

else and i've gott iequities that are cheap, extremely cheap depending on the name. >> what i came back to say is this is the peak of index. this is the peak right now you just saw the peak of indexing because there's a huge percentage of the index you cannot touch and then there's another percent of the index that is terrific so this notion of the index where 60% of the people are, not working anymore. it's back to stock picking even if by sector because there's some sectors that are untouchable and other sectors that are fabulous. and we do this indexing, which is so damn stupid right now as regarded as being the savior it's the curse. >> that's a good point it would be a major sea change in the way -- >> right now when 60% of the people are doing something, we always know that's wrong when the vast majority of people go one way. but the indexing will never

stop their fees are at stake. >> it's a morning of too many headlines to counting. let's get to meg terrell at hq for all the latest. >> cases now stopping 96,000 with more than 3300 deaths in the u.s. more states are reporting more cases, including new jersey bill de blasio tweeting new york city has two more cases and neither in connection to travel or other cases california declaring a state of emergency. in king county, washington, people are reporting people at high risk of more severe disease stay home and away from large crowds of people the u.s. department of health saying it plans to purchase 500 million n-95 respirator masks over the next year and a half after the u.s. told congress they have only 3.5% needed in a pandemic vaccine and drug development is continuing at a rapid clip

kaiser permanente saying it's beginning a clinical trial and has started enrolling healthy seattle area adults between 18 and 55 years old guys. >> all right, meg, thank you speaking of moderna, b of a cuts it to neutral today based on the year to date performance. >> notice the words that meg picked healthy individuals. now, we know in our country the fda swears the last thing you want to do is give a healthy individual something that makes them unhealthy this, again, is from tuskegee airmen where our country savagely gave airmen syphilis and let them die from it i was able to interview a tuskegee airman who got syphilis many years ago the idea that we would give a healthy person syphilis made it so we would never do that again because it's regarded as almost criminal so what are you going to do? you have to tie trade it you can't give a healthy person

a vaccine and then give them a full blast of covid. you can't do that. that's why it takes a year and a half we don't want to do that the chinese also amazingly follow that similar protocol, they do. i know i found it incredible that they were not giving the prisoners and the people that they are torturing in various areas of the country the vaccine and the virus, but they seem to be showing a level of humanity that's highly unusual. >> interesting we'll follow this story obviously all day long in the meantime there is a public service being held this morning at st. patrick's cathedral in new york for former ge chairman and ceo jack welch robert frank joins us with the late's. >> reporter: good morning, carl. this cathedral hosting so many famous memorials from babe ruth to bobby kennedy and this morning honoring another great, jack welch, the long time ceo of ge who passed away last sunday at the age of 84 now, the service started just moments ago. prior to that we saw timothy

dolan, the archbishop of new york, come in and then shortly after that we saw the coffin being carried in this morning i want to show you a little bit of the program. it's going to be a short program. it starts at 9:00, it's going to end around 10:00 there won't be a lot of speeches by a lot of people but i just want to give you the names of the pall bearers because this morning is about all of the people that jack welch touched, the people who he did business with, that he mentored an incredible list of pall bearers. mike barnicle, bill belichick, david zaslav, andy lack, the list goes on standing out here seeing all the people come in, it is a who's who of business, of finance, of media. we will hear eulogies from ken langone. mike barnicle who co-wrote that famous jack welch book "straight from the gut" that sold 10

million copies will also be giving a eulogy. again, guys, it's incredible to see the number of leaders in business and politics, media and finance just coming through these doors this morning to honor jack welch the service starting about 15 minutes ago. will probably ending shortly after 10:00. guys, back to you. >> robert, we wish we could be there too. we do know, guys, how touched jack would be by this outpouring that we're going to see this morning. >> deserving that was a great book. all a lot of these business books are just okay. "straight from the gut" was a good read. like nike. >> yes. >> some of these books really teach you. >> they do >> well, suzy is a great writer too. >> but these are all -- there's tons of them and then there are ones that are memorable. not like everything else that you read where there's a whole series of mysteries and there's only a couple worth --

>> the welch family and suzy this morning. we'll get cramer's mad dash and take a look at futures do not miss hp rejecting that hostile takeover bid from xerox. more "squawk on the street" will continue after a very short break.

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all right, let's get to a mad dash we'll start talking a few stocks here as well, of course,

including the broader market dollar tree -- >> we had mr. philbin on last night, the ceo they reported a disappointing quarter by all means and gave you a negative forecast and even told you they're up against hard compares so there's a slew of negatives. what does deutsche bank do, they upgrade it i like this call for one reason. when you've got nothing, you've got nothing to lose. no one expects anything good from dollar tree but i heard they changed -- this was the merger with family dollar, which is obviously not going well but they have now amalga mated all their management and maybe they'll get the two companies to come together and get something that is worth owning. >> so they haven't fully brought them together? >> no. they hit them with the tariffs, $47 million. they also had some issues involving supply chain because of china

>> which may still be in progress. >> and they're moving as aggressively as they can moving to some southeast asian countries. this is not an amazon, but i like the fact that -- >> no, that's a pretty precipitous fall, though used to be a great growth story. dollar general is replaced as a growth story the last thing i want to say, they have got hand sanitizer they have it they have it at a good price everyone knows that it's hard to get hand sanitizer right now and they have got it they're working overtime to make sure they have the best and obviously least expensive hand sanitizer there is. >> we have an opening bell -- >> that's what we talk about >> hand sanitizer being in

stock? >> available. >> those gloves really make your hands warm. >> you're just trying to make it so you don't touch your face remember, the thing is on your hand, on the glove it's on it. >> i know. it's just to not touch it. it didn't work for me. we've got an opening bell about eight minutes from now it looks like we're going to have a significantly down open after a significant rally yesterday up over 4% of the s&p. what will today hold stay tuned we'll see.

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on the street" live from the financial capital of the world the opening bell is coming up in just over five minutes futures suggest we're going to give back about half of the gains of yesterday obviously coronavirus is on everyone's mind. a lot of headlines, cancellations and guidance from the airlines, companies like ibm, netflix, american express and others the data not too bad jobless claims were pretty much in line at 216 and we'll get a senate vote on this congressional supplemental we think at some point today. sam zell was on "squawk today" and talked about his views regarding the virus. take a listen. >> i think that so far seems to be maybe more excitement than reality. i mean we're a country of 330 million people and we're talking about 10 deaths and we're talking about a hundred people having the virus i think the real questionis

what will it be three weeks from now? because that's really when we'll know, i think, whether we've got a really serious problem or just a spike problem. >> we're going to see. there's a story out of florida today that the state of florida doesn't want to expand the guidelines for testing because they're worried -- they only have three testing cities and they don't want to get overrun. >> geez, that's suboptimal i like scott gottlieb, head of fda, comes on a lot, very smart guy. very level-headed person everyone should follow him on twitter and he tweets a story today about seattle. i want to be careful with my words. about the explosive growth in cases much like wuhan. okay, so i happen to love sam zell and think he's a level-headed guy but so is scott gottlieb scott gottlieb has the added advantage of being the former

head of the fda. you follow him, washington state -- washington state risks seeing explosion in coronavirus cases without dramatic action. i read this and i think this is dr. gottlieb it's not some guy -- >> no, it's not somebody who would be sent toward irrational -- >> so what do you think of that? >> i think seattle is a major hub of commerce in the country, the home to starbucks, amazon, microsoft not far from there and so i think it will be very interesting to see what happens there, frankly, as a real sign of whether we're going to see significant economic impact. >> right, that's it. >> and given it is the united states, perhaps we'll actually get some reports out of there and reporting from there. >> i follow on twitter some people they're describing -- i can't tell if they're true because they're describing scenes that are very much like the wuhan hospitals where there are people

who come in for tests, they're told there aren't any tests and they're spitting on the walls and there's fisticuffs and i come back and say this is our country. >> what are you hearing? >> they don't have test kits i told you i'm just following people on twitter. everyone could be lying. but they don't have -- they're not ready. david, i'm not rumor mongering. >> i understand, i understand. >> if we had reporters there, i think we'd see a story -- >> i think we will get people there and start to see in fact what's going on in terms of daily life and whether people are staying home and things are getting significantly depressed. speaking of significantly depressed, the yield on the 10-year remains below 1% that has certainly been one of the more significant happenings of the week. >> right >> i think you can argue any long term, any thoughts

on 0.939, jim? >> that's where we get sell programs i again want to talk about how roche has perhaps a drug that could go the other way and you'll say that sam zell was right. we had something for the terrible lung disease, the complication of lungs and that would say that you should sell what you're looking for, remember, vaccine, which is a year and a half because of the way we do vaccines unless the chinese do their ethics. we're looking for some sort of treatment to get people out of the hospitals, of which there are many different tests going on but you can't get overnight because the drugs are so powerful versus the 10-year which just says that it's a situation that sounded like the stand in stephen king. it is not the stand. there is no lincoln tunnel scene happening. >> might be reflecting some of what we got out of the beige book yesterday. >> yes.

>> various regions talking about concerns over the virus itself, the impact on phase one china purchases. it's a long day ahead. let's get the opening bell here on the s&p 500 state street at the nasdaq, parity.org a nonprofit dedicated at closing the gender gap in business so i guess we'll take you are cue from the airlines to a large degree, jim. i know united cutting 10% in domestic capacity for april. international by 20% d.o.t. had an amazing stat yesterday. inbound passengers from china has gone from 15,000 a day to now less than 1,000 a day. >> look, david and i used to talk all the time about the airlines they never made all the profits that they lost the airlines are much more sounding, so what you're doing

is you're betting against a company at this point because there's no demand for the stock, not because the companies are technically, let's say, in trouble. because the balance sheets are so much better. >> they have been earning their cost of capital for a long time as you've pointed out. it was something they rarely, if ever, have been able to do as an industry this is going to be challenging, this period, there's no doubt. >> yes when you cut numbers, their big institutions should say sell no matter what. >> listen, they know what we know phil yesterday caught up with oscar munoz, i think doug parker also outside the white house. >> right. >> you know -- >> i don't have -- >> a case is cut capacity. >> warren buffett is buying. that's not bad warren buffett has a long-term view american for all intents and purposes is an inexpensive

stock, but number of cuts equal sell number of boosts, by the way, which is zoom, zm, is not giving you a buy. splunk, huge call. people are selling i think you're going to regret that you're selling zoom and splunk they have the ability to be able to thrive in this environment and make no sense to sell. zoom makes no sense to sell whatsoever it's just they did not want to say we are crushing it because of illness no ceo is going to possibly say that should i say it? >> okay. >> they're crushing it because of illness >> they have been. there are a number of names we know have been as well. >> is hp one of them >> no. hp is a separate story that you've been following, that i've been following for quite some time they did come out with their 14 d-9 rejecting as we most likely knew would be the case xerox's offer, saying it meaningful undervalues the company, fails to reflect the

full value of the assets and also poses significant risks for hp remember, it is 1840 in cash and the rest in xerox stock so you're getting awfully close to that being a fairly meaningful cash consideration given what's going on with the market right now and the uncertainties. but there are the reasons they're citing they also did let us know that they're going to talk on march 8th. on tuesday, enrique lawrence and john bisentine spoke on the phone, scheduled a meeting for the week of march 8th and they will engage in discussions regarding the possibility of exploring the combination that creates value for both shareholders that's something hp told us they would do so they're following through on that. we'll have a lot more opportunity, guys, to find out exactly what's behind this

rejection and what the thoughts are at hp. there's a lot of news on this stock so he'll join me this week and we'll keep talking to him and see what he's got to say. >> having met him multiple times during this era, i think he has a strong case when he's willing to buy back half the company that's a person who seems to be inclined to make money for you longer term. obviously this is one of those bird in the hand, two in the bush i am willing to go two in the bush here because i think a bird in the hand is reckless. xerox is acting as if there's no coronavirus. they're not changing their view as all, as if it's fair weather. when it's raining, you can't call it fair. >> right well, xerox is in it to win it they're challenging the entire board. we're only eight weeks away now from the vote. >> maybe we'll look back one day and say can you believe -- i'm jimmy chill here so i can't call them clowns. but can you believe that the

xerox people did not even take into account the worst pandemic our country has ever faced >> they launched this before we had any sense -- >> so now it's time to let up. >> well, you don't pull your bid. >> why not don't you think this is a natural -- this is an act of god. >> the synergies that potentially have been brought to bear by this combination are more valuable than they were previously because of the inability to actually grow either one of these companies. >> i can argue you take down this amount of debt at a time some companies are not able to have orders is a sign of recklessness we'll look back and say, geez, i wish we were able to stop that but weren't able to. >> one way to stop it is hp buying xerox. >> why does anybody have to buy anybody? >> hp wouldn't have to take on much debt. >> taking on debt. why not just wait until this is over >> that's a good point. >> why not be prudent instead of

reckless i'm voting for prudence. reckless has always turned me off. >> there are three s&p names that are up. >> let me be extreme there's a lot of companies that are going to do well in this environment. i saw coca-cola down a dollar. i always -- coke and a smile james quincy is going to do quite well here. if you bet against that stock you're a fool. >> kroger and is it numont >> it's a very good situation. i had -- geez, i had the privilege of having barrick on last night, dr. mark bristo. they told me i pronounced nevada wrong. nevada the gold mine they have in nevada is probably the greatest gold mine in the world and i think that you can buy it and be safe that the estimates are too low. that's a situation you want to be in. >> oil is the other big story. we think we might have a deal to

cut a million and a half barrels a day if russia can stop being so stubborn in the saudi's eyes and agree. exxon with an investor day today, jim as you know, on the heels of chevron's. >> yeah. i thought mike worth did a really good job. my issue with oil, again, is there may be more demand 30 years for oil than there are 30 days for the stocks. and i do believe that when gm has a good ev conversation and people think, wait a second, how long is the -- is oil going to last as a substance, the answer is longer than our lifetime but that doesn't necessarily mean you want to buy the stocks you want to buy zoom, then you don't have to go anywhere. >> 40 years, 40 years for oil? >> jimmy carter said, listen, saudi arabia coal and they had 40 years of coal. >> that was kind of accurate. >> that's how long the plants last. >> coal is sort of going away,

right? >> the president likes coal. >> i'm aware of that but it still seems to be going away as a result of the marketplace actually as opposed to the government. >> the largest transmission company in the country is hell freezing over? because that's when they'll build a coal plant check the temperature in hell will you >> rail traffic yesterday, coal down year on year, even after last year down 20%. >> natural gas is -- they're almost paying you to take natural gas, it's incredible they're paying you more to take a cruise than they're paying you to take natural gas. 30% is being flared. that's the principal source of methane. you know the two sources of methane, right, david? you know what they are >> yes, flaring and cows. >> damn, he's good. >> although there's been a lot of attention on composting and the lack of it and a lot of decomposing food in landfills releases a great deal of methane as well.

>> beyond meat is a terrific ethos, not just a plant-based food. >> there are some upgrades today. mkm takes snap to buy. >> i thought it was down enough. i like that call i thought that snap is something that will work at home it's hand-held >> b of a ups amgen. target doesn't move a whole lot. >> they have a great cancer franchise no one is giving any credit and they did get a windfall from the merger, the cellgene merger. i think the company is undermanaged. >> when you don't have really information to go on regarding the virus, people look to history. baycrest -- i'm sorry, lpl looks at what happens in years where january and february are down. generally not good full year down an average 4% versus when they're both up.

>> did it happen in an election year there's a lot of cycles going on remember, i think that zoom is a measure of the virus zoom is now up after being down 9 points united health is a measure of biden versus bernie with the existential crisis perhaps taken off the table. >> blankfein was talking to andrew ross sorkin this morning saying he thought the jump yesterday was mostly politics, given that there's not much good news on the coronavirus. >> i think he's right about that. >> do you think he wanders around the upper west side talking to anybody who will listen >> that's an indictment like i can't believe. david, that's an indictment. >> it is >> it makes him sound like a crazy man. >> i just wonder if he's taking nice, long walks and talking to anybody who will engage with him. >> david, that's not what i would expect the former ceo of goldman doing. >> why paulson i used to see all the time with his binoculars.

>> it's better to be a bird watcher than talk to people that would listen there's people that would listen, you may just not want to say anything to them. >> canopy growth, jim, closing some facilities. >> yeah. it's the age of aquarius there there is really -- it turns out to not be -- we don't have a way to be able to drink, get high on drinks yet we don't know how to do the proof. but canopy is now run by a businessperson, used to be a great cfo at constellation they were at a meeting yesterday saying corona sales were good. obviously there's some confusion. corona and lyme disease, everyone is having a little fun with that, throwing in lyme. >> i think the headlines revolved around surveys looking at purchase intent for corona. >> no one is buying -- that is just a cannard

>> jim, you and i sat down with larry culp. >> no one paid any attention to that interview. >> the stock is down 3.2%, more than the s&p right now yeah, didn't really get a lot of attention. by the way, an investor outlook provided yesterday during a call -- >> i thought it was quite good. >> -- and his appearance with us for the first time in 17 months. >> you had corona risk and faa risk and that's what people talked about, not the cash value better, not the idea that he's going to play offense. i thought that he -- that larry culp for those who listened would recognize this man has gotten the company after control after it being a runaway freight train. of course they got rid of trends they dominated in life sciences. >> it does sound as if this is an inflection point and they really believe they have it under control and will start to see actual signs of real progress in that business.

why it all belongs together, one day i think it won't be but it seems like it will be a while. >> and wind is hugely -- it's not probably, wind is the way of the future and offshore wind is the best larry said that they're doing a test in rotterdam. what i realized way too late is rotterdam is land. they're doing an offshore wind test in rotterdam. >> right. >> don't you want to do the offshore wind test in the water? why would you do it in rotterdam? rotterdam. >> i don't know. >> that's a place they have a lot of wind. >> i'm aware. >> listen to me, don quixote, you want the offshore test in the water. >> in the water offshore. >> because offshore is in the water. why wouldn't you ha you have th rotterdam, which is on land. >> i don't know. it is on land? are you sure it's not outside rotterdam in the water

>> maybe a lot of holland is under water. >> yes they have done an incredibly good job actually preventing flooding. >> it may be rotterdam -- he did say rotterdam, he didn't say off coast. if larry calls in, i'm ready he knows my number >> dow is down almost 700. let's get to bob pisani and see what's moving on the floor. >> off of the lows but not much here interestingly asia is up overnight, although europe is down that's very curious. a little bit of a divergence recently take a look at sectors, no surprise here. we could close at a seven-year high on gold china haishares have been outperforming. banks big losers, energy big losers, industrials all underperforming the overall market you want to look at obviously stocks impacted. we're looking at entertainment stocks for example, travel entertainment. 11% royal caribbean, marriott, delta. look at live nation too. they have had the same problems, live nation, madison square

garden, concern about sporting events, entertainment events potentially being cancelled here they're moving along with the same travel and entertainment group. we're all trying to figure out earnings basically q1 everyonin earningsd of worthless right now you want to look at europe and numbers are coming down fast these are european estimates for the stock 600. up 7% january 21st, today down 1.4. if you look at big sectors like industrials, there's been a virtual collapse in the estimates for the first quarter in the industrials put that one up there and you can see we're going down rather dramatically here. 5.4% january 21st. today 17%. look at that collapse here that's what you want to look at here because they're dealing with the real numbers and real estimates that they're getting here i think these are better numbers than we have in the united states right now let's move on. two camps here short term and long term so msci had a scenario out today. short term if you had 2% gdp

growth, stocks could call 11%. short term the markets could bounce back. that's the way other outbreaks have occurred in the past. but longer term and this is the x factor, nobody can know whether this is longer term, there's going to be a more significant earnings impact. are you in the short term or long term camp we really don't know here is something encouraging. air pollution statistics in china have been increasing in the last few days. remember they went way down at the end of february. they have been increasing indicating people are going back to work and the markets are bouncing back here look, here's the bottom for china. this was the ending of january that was the stock market in china, bottomed at the endi of january. here's our stock market, we have bottomed at the end of february. the optimists are saying maybe it plays out and our market bottoms sometime around here or the next month or so and then comes back we don't know if this is going to happen, but the optimists, i'm not calling them bulls, are saying this is a very good sign. so you want to look long term,

what's it look like? the s&p bottomed on february 28th there we are the intraday swing was 100 points on that day the bottom was 2954. there's 3057, we're 100 points above that, as you can see, but the intraday was 2855 so a very high range here. a lot of people are watching that to see if -- you don't want to use the word peak coronavirus, but the important thing is people are hopeful that somewhere there's a bottom here, assuming this is a short-term phenomena we can deal with in the next quarter or so that's what we can't answer and why the markets keep gyrating like this. carl, back to you. we're watching the 10-year at 94 basis points let's get to rick santelli in chicago. good morning, rick. >> good morning, carl. boy, you need to watch the whole yield curve. there's so many clues there. if you put yourself in a tunnel and only are looking at u.s. sovereigns, you would not think whatever dynamic is propelling this move is over. okay, look at the week -- or an

intraday of two-year note yields that is the current cycle intraday low, right now it's 55 and change we're currently trading at 57 so we keep extending that the short ending has no traction every combination of yield curves are steepening, whether it's the nob, 10s to 2s steepening 37 in the latter, 66 in the former and these are long-term moves here if you look at the week in 10s, you see on tuesday that lone spike at 90 basis points you want to watch that because we haven't gone back to that level yet, but it certainly seems as though there's pressure to do so and that's what you want to watch. year-to-date of 10s, how ironic. basically the high yield in 10s was made on the first trade at 1.92 now the low of the dollar index was basically made in the first few trades that is counterintuitive and

counter to logic of a fed that's easing and thedollar going up. the dollar is a tricky one here. if you're using that as your tell because the demand in some places that are so dramatically affected by recent volatility have an appetite for dollars finally the yen is now up on the dollar for 2020 and not only that, it's at the -- the dollar is at the worst level since september. carl, jim, david, back to you. >> thank you very much, rick santelli. transports approaching a bear market this morning coronavirus impact on airlines is climbing as southwest now warns on q1. phil lebeau is at the aviation summit in washington good morning, phil. >> reporter: good morning, carl. all of the airline stocks down 5% to 7% you mentioned southwest. take a look at shares of southwest approaching a 52-week low. as you mentioned, they are warning about their q1 revenues will be down from 200 to $300 million from originally forecast and that's because of the cost of the coronavirus meanwhile the international air

transport association, think of these guys as the global trade association. speaks for the industry worldwide. out with a new estimate in terms of how much coronavirus will cost the airlines. just two weeks ago they said they'll cost maybe $29 billion now they're saying it could cos $29 billion. now they said could be up to $113 billion here is what the ceo says he thinks is happening in terms of demand worldwide for travel. >> what we see first of all are facts. a lot of cancellation, of events conferences, meetings, purely and simply canceled for the month of march almost everything is canceled. april is not very good for may and june it's too early to say so it has an impact on business travel of course >> as you take a look at shares of the major airlines stocks all down from 5% to 7% and what we saw yesterday with united in terms of bringing down its schedule, 10% domestically, 20%

internationally. then jetblue last night saying they'll bring down their domestic schedule 5% expect that practically from every airline. they are going to start cutting capacity they have to because they are trying to rein in costs as much as possible. we're at the chamber of commerce, aviation summit all day long going to be talking with gary kelly and a number of other ceos and will give you better perspective as this plays out. back to you. >> as you are saying it boeing down 5%. 268 is going to take you back, jim, to late 2017. >> geez, mr. calhoun is doing a very good job. we've heard that from larry culp yesterday. i do think that your customers are in control of this situation. if your customers are under stress then theoretically it is not a business you want to buy shares in. boeing has tremendous demand if they can get the max going

>> right >> i don't think it has to be called the max i think it can be called 737 because of all the changes they've made i remain optimistic that that plane flies this year. >> phil, i know you're still there. when do we start looking at the balance sheets of these airlines i know many of them are not levered particularly and don't have a great deal of debt at this time. quite healthy. you look at american airlines stock price roughly 50% over the last 12 months and 38% the last three months >> david, generally speaking the balance sheets of the north american airlines are pretty healthy. they are in good shape the biggest concern out there is american airlines. that's why this stock has been hit harder than any other ones if you take a look at its debt to ebitda the general metric most are going at, five 1/2 to six times. though that might be changing obviously as earnings will be under pressure not only in the

second quarter but likely the third quarter as well. the real concern in terms of airlines and potential bankruptcies, southeast asia you've got a number of low cost carriers they need the revenue. let's take a narrow body airplane and they are leasing it from a leasing company they have to come up with $300,000 a month break it down to $10,000 a day they are just not going to get that and people are not going to be flying. so that is the concern in the industry those low cost carriers particularly in southeast asia a few over in europe as well north america, that is the good news for the industry. the balance sheets are in pretty good shape here. >> phil, in terms of the offset between the unit economics as load factors go down versus the savings they're getting on fuel, which i know southwest did talk about, how do you weigh those two things >> sure. it helps it definitely helps. when you're seeing the dramatic drop especially in corporate travel, that is the bread and

butter for the airlines. that's where they make their margins. it is not with the low cost carriers it's not you and i going down to orlando. they make a little money off that but that is not the most. they make it off you and i going to new york or l.a. for a trip there is no shortage of people who said i am being told by my company you're not going and there is nothing -- this is not a case of the traveler not having confidence. this is corporate america saying sit it down. you're not going on the road >> that was one of the most amazing metrics i thought out of amex yesterday 8% of card spending comes from airlines >> american express has held up well but that is very travel -- phil is so great. we have to think about corporate demand yesterday i had three companies that i'm involved with say that, well, one chain that they couldn't go somewhere.

it was out of the country. i was shocked at all three and was pleading the case. one is domestic and basically was told there are no exceptions to the policy. >> yeah. a lot of the big banks certainly all international travel and a lot of companies saying no way and discouraging domestic travel but not saying no. just saying only if you really have to. >> right >> by the way, i failed to mention amazon of course which we've been talking about in part because they've encouraged their seattle based employees not to go to work or to work at home as you might expect a potential beneficiary of what is going on right now. a sharp spike in amazon fresh in the wake of the coronavirus outbreak u.s. prime member purchase frequency continues to rise, one day shipping a positive impact on the business. the amazon fresh trucks never stop coming to my block. >> same. >> we know there have been some shortages as well reported >> someone stole the darned

stuff that was on our stoop. >> really. >> yeah. >> not knowing what you ordered. they just took it. >> just took our stuff i mean, incredible huh? >> our thanks to phil lebeau we'll see a lot more of phil at the aviation summit today. jim, what are you going to handle tonight >> most importantly, i want to be able to find out, is power down during this period? and are things so bad that you want a generator generac then sangame, should drug company stocks be down? they have nothing to do with the coronavirus. just trying to be a little optimistic >> we need it. thank you, jim "mad money" tonight at 6:00 p.m. eastern time we're down 3%. dow down 818 "squawk on the street" is back after this

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down 3% on the dow, down 820 as breadth is extraordinarily poor. only about 5 of the s&p 500 names are in the green in the meantime getting some economic data about to cross the tape we'll go to rick santelli and get the numbers. good morning, rick >> good morning, carl. january read on factory orders and our january final read on durables coming up on curvebalomps to mid month ged away january down 0.5, expecting a number closer to zero actually we gained 0.1 from december. if we remove transportation it improves but doesn't quite make positive territory, down 0.1 sequentially that follows the positive 0.6 on revised. we get to our final reads on durable goods. everything we are looking at is mid month. down 0.2 that is exactly what it was mid month. that stays the same. and down 0.2 well, it's the weakest since

november when we were down 3.1 let's go through the internals if you subtract transportation, just like factory orders, it jumps but minus 0.1 not quite positive territory and if you look at -- oh, i'm sorry. that is incorrect. ex-transportation it is up 0.8 and that follows up 0.9 on revised. the money ball, capital goods orders nondefense aircraft we all get excited about it. this is kind of a proxy for business, capital spending that is up 1.1 1.1 was the mid month read but just to give you an idea the mid month read of 1.1 was still the best going all the way back to january of last year don't be too disappointed. that is actually pretty good if you look at shipments they're up 1% following 1.1 so a subtle revision if i had to summarize, better than expected on durable goods a little bit softer on factory

orders and yields, still three basis points above our all time intraday low for ten year note yields which is 0.90%. sara, back to you. >> thank you, rick as far as stocks are concerned, all major averages are selling off this morning we're looking at the dow down just 765 points right now. more than 2.6% for the s&p 500 almost 3% for the dow. nasdaq holding up a little better down 2.3% after yesterday's 4% rally with as rick said the ten year continuing to move lower joining us for more is the global market strategist at invesco and the chief investment officer at morgan stanley wealth management lisa, how do you advise your clients in wealth management right now without knowing how long this is going to be with us >> you hit the nail on the head. this is a question of how long and duration and so our advice is we have to sit back and stay patient but

prepared is really what our watch word has been. clearly, this is a market that is struggling with the potential that this crisis pushes the economy into a recession and, yet, it remains to be seen whether that in fact will happen we're in the wait and see mode right now. >> when you tell clients to be prepared what does that mean >> the preparation as far as we're concerned is when is going to be the right time to actually leg in and leg into cyclicals. our view is if this is not a recession in fact we're going to get a v-shaped recovery on the other side of this and sectors that are quite exposed to an improvement in the economy, like housing, like financials, like industrials, we would see snap back quite aggressively on the other side of this >> what is your strategy >> it obviously depends on your time horizon i still believe we're in a secular bull market so you can have recessions within secular

bull markets or very deep destruction in economic activity within secular bull markets. so if you are a long term investor, viegz stocrecognize se very cheap to bonds. federal reserve policy pretty easy a pretty good demographic in this country it all aligns with a secular bull market. if you are more tactical in the near term expect more volatility in the markets economic uncertainty leads to volatility we don't know when the cases peak, and you should expect volatility if you are concerned in the near term or you have liquidity needs, you need to take this equity over weight you've had over the past number of years and right size it. if you are somebody like me with a long term perspective and needs growth in my portfolio over the long term i suspect we will move -- i know we will ultimately move past this and we will move past it in an environment where stocks are very cheap to bonds and policy is going to be very accommodating. >> what happens to your s&p

earnings number for the year >> so you've got it lower. if you think you're going into a recession on average a recession is you're down, you know, 20% or so i don't think it gets that bad i ultimately think -- >> are you the 165 school we keep hearing from? >> yeah and what type of multiple are you willing to pay on that, which means markets correct more from here i mean, what we saw in some of these other infectious disease outbreaks is somewhere along the lines of a, you know, 13 to 18% decline in markets so we're, you know, working to get there. >> really compare it with past health crises? >> this uncertainty persists longer and, you know, again, a good point. we simply just don't know what the ultimate hit to economic activity and earnings will be but we know the medical community will move out ahead of this at some point and we also know that policy makers on the fiscal and monetary side are working this so i wouldn't get too overly

bearish but i would expect more volatility in the near term. >> lisa, you said maybe prepared to pick up some cyclical names that would do better when the economy rebounds i mean, would you be buying airlines, cruise ships >> i think it's premature, you know, to be wading into where the demand destruction probably is going to be the greatest. but what we would say is that we'd be very careful about what people have thought is the safety trade, quote-unquote. and so we remain quite concerned that coming into this crisis we had a lot of secular growth stocks that were quite frothy and we don't necessarily think they're going to be immune here. and so our preference has been to kind of hollow out portfolios not really focused on some of those winners like consumer discretionary and tech and really barbell between what we

think is true safety, right, so things in housing, things in utilities, things in consumer staples, and barbell that against some of the financials, industrials, energy, more cyclically oriented housing leverage names >> so you like financials. >> we do like financials >> over an intermediate time horizon we absolutely like financials here. >> brian >> i still think we're ultimately going to get back into a growth market and even growth has done well compared to the more value oriented cyclical parts of the market here. and so, yeah as we move past this and you get a bit of recovery in economic activity then obviously your materials, industrials, financials will out perform in the near term. what this really tells me and should tell all investors is we continue to persist in a slow growth world and in the slow

growth world shocks will be potentially damaging i don't see how we get out of the slow growth environment for most of the rest of our careers. and i plan to do this for a long while if you'll continue to have me, carl so ultimately it is going to be where can you find growth in a slow growth world? i think that persists. >> mike wilson has written about risk premium looking at ten year now 92 six at what point are lower yields no longer constructive for anyone >> i think we're there >> we're there >> you know, one of the noted economists at morgan stanley has been very famous for his upside down frown where his thesis is, look, at a certain point, you know, low rates actually mean lower multiples and the reason for that is what is embedded in low rates is low, negative real yields or negative real growth if you look at what we've observed really over the last three weeks, is a degradation of

the expectations on real growth. it's that view about recession to your point, if you get a recession you're going to see those corporate earnings forecasts get hit. that is the risk you have to look at where the -- some of the operating leverage is the greatest and is not discounted and we think it is in some of those tech and consumer discretionary cyclicals which are not as stable as we think a lot of people have bet >> brian, lisa, thanks for sharing. >> thank you >> don't miss a cnbc special report "markets in turmoil" tonight 7:00 p.m. eastern. meantime the coronavirus has affected equities and government yields but do investors need to worry about underlying debt? our steve liesman is back at hq taking a look at that. hey, steve >> good morning, carl. top executives at all three major credit ratings agencies tell cnbc they are closely analyzing the potential effects of the coronavirus on corporate, municipal, and sovereign debt. moody's says it is definitely

something we're monitoring very closely. s&p says there will be more ratings actions and the pace will quicken fitch says it hasn'ty companiese virus but is monitoring it s&p has changed 27 debt ratings including seven down grades and 15 companies placed on negative credit watch moody's -- sorry -- on samsonite and ratings watched negative on monday earlier had done the same for saber corporation and wynn resorts. some airlines with weaker balance sheets other companies in travel and tourism and countries or the sovereign debt of countries that rely on those revenues to service their debt, commodity companies also being watched carefully along with countries reliant on commodity revenues. the main worry not investment grade but speculative grade debt that should raise a red flag for investors going down the credit ladder this article worries that the

liquid can i stress could be exacerbated by a lack of funds willing to cross over into junk territory put off by sudden spikes in the credit spreads and less friendly trading conditions some companies or countries might get relief from government programs or bail outs but the head of analytics research at s&p told me it's all hands on deck we need to be proactive. we can't wait until the economic effects are already obvious. carl and sara, as you know, there is a history here and i think it's one that the rating agenci agencies of not being all that out front on the financial crisis don't want to repeat. >> steve, have you looked at all the credit market and how they're pricing airlines and cruise ship operators? i read in a trading note that the cds for some of the cruise lines started widening out >> yes some started widening out. also you have an increase in the spreads on high yield debt as well look, sara, you remember the financial crisis it is not that and the reason it's not that i think at this point is there's

still a lot of liquidity around. liquidity can dry up overnight but right now you need a creditor and a lender, a borrower to really have a problem. borrowers who can't borrow, creditors who don't want to lend we don't have that just yet. people are watching it i think one of the things i've heard from people is that if dividend yields look really high, well, maybe the stock price needs to adjust. if the stock price looks really low, maybe you ought to look at the underlying debt and maybe there is a problem there so everybody seems to be aware of the capital structure of these companies and trying to gain out in a very difficultse of calculations here how well this could play to the particular company in question and their ability to service the debt >> steve, there is nothing like a financial crisis given our financial institutions then were highly lefrd and invested in assets that were nowhere near worth what they said they were this is not remotely close to that when it comes to the

financial system and our banks >> i agree, david, but the trouble is what the credit agencies are looking at is, well, what if the fundamentals underlying this debt were to change and change quickly? how do you gain each one out there's going to be credit events here, david i think that is really the key >> yep >> not that there is going to be a widespread financial crash or financial crisis here. that is not what the reporting shows. the reporting shows that the firmament underneath some companies is going to change and investors need to be aware of that >> steve liesman, thank you. for more on the impact of the coronavirus crisis on supply chains, drug shortages, and the united states' response to the virus joining us now is a former m medtronic ceo, bill george thanks for joining us. how do you gauge the response we are getting in this country to this health crisis >> well, we are a little bit late but i say now moving fast

i think kris cess agreeing yesterday and the president said he'll sign an $8 l.5 billion bill to put aid out there. we are very late on the testing kits, real shortages there i am very concerned about generic drug shortages because all the underlying materials come from china. the api. and so i am very concerned about that and as i said, on your show back in late january, the only strategy we have right now is containment. that means shutting down businesses i think frankly we're moving at the government level i think businesses are only now beginning to feel the effect and i think you're going to see severe effects in the months of march and april from people's fears and so you'll have a much bigger economic effect than has been previously forecast >> when you say people's fears do you mean corporate policy or household behavior, bill >> i think both. i think people are not going to

run out for dinner they're going to cancel cruise ships out into the fall probably they're not going to fly as much we've seen all kinds of people individually flying. i think companies have a win-win by, frankly, telling people to go on teleconference don't get on that flight to even to europe. just have a teleconference and, you know, the ceo is going to say we're saving money but at the same time they're protecting their people a lot more work from home for anyone that has a cold i think you see business moving aggressively i was supposed to be speakinga a big bank conference in mexico city yesterday that got canceled a couple weeks ago i think you'll see heavy cancellations of movement and so i think airline travel will be severely restricted. you're looking at resorts and the whole hospitality industry i think the big concern here is what is the consumer going to do and i think consumers are going to be reluctant to get into malls and shop in the months of march and april. i can't predict beyond that. but i think it'll have a

significant impact on the retail industry we haven't really talked much about. >> bill, you know, scott gotleib former fda commissioner frequently comes on cnbc on twitter this morning a long post but focuses on seattle where the outbreak seems to be most significant at least within the country right now. and says the federal government should get involved in offering assistance so that the cities would be more likely to shut things down. do you agree with that >> well, i think the city can act on their own gavin newsom just put in a state of emergency for 30 million people in california >> but do you really want to shut all commerce down going on in your city if there is no assistance available at all? >> no. >> or you're concerned, how long are you going to be shut down for, for example >> well, they've got the $8.5 billion coming. three of that is going for research but i think they can start funneling some of those moneys out. you have to move quickly the u.s. is a very big country minnesota we've had nothing. but as you come to new york, i mean, look at the people there

so i think you could see more business -- seattle already saying work from home. i think the work is not going to be as efficient. i think you'll see more companies -- we could add government assistance to tha but i think companies will move ahead of that right now and i think the other fact we haven't talked about is i think you'll see capital severely constrained certainly in the energy industry with the wti down to $46 for oil. i think you're going to see not much movement there and i think companies will say this is a good time. we don't know what's coming. let's hold off could we go into a recession we don't know. so you'll see caution. you might see caution on big consumer purchases like autos. i can't predict that but i wouldn't be surprised with the collapse of the chinese auto industry, like 80% down in february >> bill, we're watching different states wrestle with the cdc guidelines on diagnostics. on one hand you want to test people on the other hand you might not have the capacity to have a run on those test facilities

florida is one example today where they're not going to enlarge the criteria what should they do? >> well, we shouldn't be testing everybody. anyone who's got a common cold doesn't have to rush in to get tested i think we have to expand the testing capability very rapidly and get people, particularly poorer people, people that don't have all the resources, we need to get them help particularly older people. the disease seems to be heavily concentrated in people, older people that maybe have diabetes, maybe heart failure. that's where the big risk is everyone is talking about the risk is 2% actually the mortality rate is 3.4% i think it will be lower in this country but only if public health officials move aggressively and get the support and keep the politicians out of it and keep the focus on public health and open up the testing facilities, public testing

facilities for people to come to short of that, i think we'll have a lot of people wandering around with coronavirus infecting others that don't know they have it >> should it be extended to the uninsured? this was the topic at the pence briefing yesterday >> absolutely. i mean just because you don't have -- who doesn't have insurance? it is not people with financial means. it's people without financial means. and that's where some of the greater risks are and a lot of these people don't have access to good health care facilities yes i think we need to test. we want to contain the disease right now. vaccines appear according to tony fauci not available till the end of the year so right now containment and testing are only tools we have. we have very limited tools the other tool is just don't get out in large public gatherings that is why i'm concerned about the economy. >> so you used to run medtronic, bill, makes all sorts of medical devices and critical equipment used in hospitals. what would you be doing now to ensure there is adequate supply

of those things as more people get sick in this country >> well, medtronic doesn't really serve this kind of market my son used to run the second largest generic drug company they do serve the market and i would be ramping up to make sure we have adequate supplies. i think everyone had an inventory in the first quarter those inventories are going to start to be depleted and that is where you're going to see we have these global supply chains much more complex than anyone has acknowledged the supply chains are going to start constraining production because you're not going to get the components from china and apple obviously is having tremendous problems. you'll see a lot of other people, too, you haven't heard about yet that have these problems that is why i worry about generic drugs, apis. we have to figure out how to get, if we ever come up with a vaccine, i know they're working furiously to try to get a vaccine. but the problem with vaccines they have to be very specific to this and the government not only

johnny come lately now on starting to fund some of this research should have fund ted a long time ago. i am very worried about that at medtronic or any other major company i would say why don't you do it by teleconference? you don't have to have the big conference in tokyo. you don't have to have the big conference in buenos aires let's get everyone together by teleconference and have meetings that way save us a lot of money at the same time. more logically i think it'll keep people from being at risk >> and a lot of companies are doing it bill, thanks bill george. >> thank you >> meantime take a look at shares of grocery giant kroger moving slightly higher, 3.5% higher after beating on the top and bottom lines maintaining guidance for the year and, importantly, management says that guidance does not include potential impact related to covid 19 so investors are actually assuming it is going to be a plus in terms of business. jpmorgan for instance saying field research shows people are

stocking up on basics at kroger and it will help by, quote, measurable degree. we also know kroger has been rationing some items according to their website due to high manned and to support all customers we will be limiting the number of sanitation, cold and flu related products to five each per order your order may be modified at time or, of pickup or delivery yesterday we talked to the ceo of campbell aesz soup discussing how his company is adapting to the virus fears. >> we made the decision last week to begin to up production in certain areas where we're using a little bit of the analogy of weather or natural disasters, where do we see demand at a greater rate we've upped that level of production to be able to maximize our inventory >> staples companies like campbell's starting to ramp production on the anticipated and what he has seen over the last few weeks stocking up by people on grocery items like

canned soup which lasts a long time even millennials we never thought they'd go back to canned soup against every trend. >> the last three years we've talked about how canned goods in general, right, were not favored by millennials, falling out of touch with trendier brands stock went from 66 down to 30. and it's a question of how much of this is going to be reversed for the long term. >> absolutely right. they saw 1% growth in soup sales which was actually a big milestone because it didn't include any of the impact of the stock ups on coronavirus so their new ads are starting to resonate they say. we'll see how long that can last it's a good question as to the long term. or whether they can pull a clorox which gets people to buy a lot of sanitizers and wipes during time of illness, flu season, weather. but then people sort of adapt their behavior and continue in other words to come to the brand and change their lifestyle habits like jim was saying earlier about zoom video i think that is a bigger question kroger's call is going on right

now. so far no mention of coronavirus. but that's just in the opening statements i think they really want to tout their improvement outside of what they're seeing from this behavior >> absolutely. session highs here as we're wrestling trying to get back to 30/70. let's get back to david now who has the ceo of hp. >> yeah, hp's board unanimously recommending shareholders do not tender their shares into xerox' unsolicited exchange offer the company saying xerox is offering them something they already own and moving forward wouldresult in significant risks for the share holders and the overall combined company hp's president and ceo is enrique lores and joins me now nice to have you >> thank you very nice to be here >> you say of course in a press release and a long document as well the details of the current offer meaningfully under values hp is there a value you and the rest of the board conceivably would accept for your company's shares >> actually what we are saying there are three reasons why we think the offer doesn't make sense for hp shareholders.

first it under values the company. second, creates a very risky capital structure. and third, the synergies we believe are unrealistic. >> have you had a real opportunity to examine what their numbers are which are far higher of course than what you said they have publicly come out with 2 billion. carl icahn saying as much as $3.5 billion at one point. you come closer to maybe a billion dollars. >> let me explain the overlap between the two companies. hp is a $60 billion company. $40 billion are pieces that don't have any of the -- the rest of the business, a big part is consumer, things you'll be buying for home that don't have any overlap. when we look at the real overlap we are talking about 2.8 billion from our side 9 billion from their side we're talking about $12 billion for synergies. $1 billion we believe is an aggressive and unrealistic

number they have included cost savings that only hp shareholders should get benefit from >> your point being you can achieve those cost savings you are obviously as we know instituting a large share buyback over the next few years that will potentially include buying back as much as 50% of the company but why is that a better route than engaging with these guys and seeing in fact whether or not there is a deal that could be done that does make sense for both companies? >> actually what we are saying is that our number one priority is to execute the plan that we shared last week a plan where we are going to be growing profit, a plan where we are going to be reducing the cost structure of the company. we'll be expanding eps and also using our balance sheet in benefit for hp shareholders. we have also said that we are open, in addition to executing our plan, and that the combination of both will be the best answer for hp shareholders. >> a combination of both what would be the best answer >> both the execution of our stand alone plan and in addition

looking for a potential combination of the two companies. >> okay. so on that, you do indicate today that you spoke to mr. byzantine i think on tuesday you've set up a potential meeting next week. what is it you're going to be asking them that you haven't asked before that might be a different answer that might encourage you to say, okay this is something we want to engage in? >> actually what we need to do, we need to address what we explained today. we need to agree on the right valuation of the two companies we need to make sure the merged entity will have the right capital structure. and that the synergies are realistic. we really need to agree on the three terms before we discuss what will be the best way of putting the two companies together >> many of your shareholders might think the best way wouldy and would potentially benefit from the combined syy difficult potentially economic environment wh

something that you once were willing to pursue that you perhaps are no longer willing to pursue >> actually, what we have said is we are open to the combination. how the combination is done is not the key topic we should address. it is really important to agree on the three terms and then how it is done will be a discussion after all of this is clarified >> how important would it be if the discussions got somewhere that you be the person to run the combined company is that something that you have to have in order to engage in discussions? >> actually, my clear priority is to create value for shareholders but let me share the credentials i have i understand and have been with the company for a long time. i have run the most complex businesses in the company. i run the commercial pc business when it was declining and got it to grow. i drove the separation of the company, creating what today is hp, inc. i have managed the business and taken it from double digit decline to where it was this

year and i worked with the board to define a long-term plan the plan we presented last october that drives a significant restructuring and deduction of our structure outcosts >> what is it that carl icahn one of your largest shareholders doesn't understand when he says it is paramount importance and he wants the two companies together that john byzantine and his team are the surviving management of the combined company? >> what i can tell you is i am very confident in the future of the company. i'm excited about driving hp i told the team i'm absolutely committed to drive all the necessary changes to get the company into the goals we have declared >> icahn has a big voice and makes a lot of noise he keeps saying, no. not you. the other guy if in fact you even were to get there >> actually the only thing i can say is, carl has his opinion we are going to make this company successful we are going to be delivering the value we shared. >> do you really think you can drive growth initiatives, enrique? it is a growth challenge company and xerox is certainly a growth challenge company. hasn't grown in sometime

what gives you the confidence you can actually put up true organic revenue growth >> what we have said is in the next three years our goal is to grow eps by growing profit, by using our capital structure in a more effective way, and three years from now the company will be in a much stronger position than it is today we'll have a higher percentage of growing businesses. the number of businesses and their contacts and services will be bigger and a leaner company we'll be delivering very aggressive growth while at the same time positioning the company for the future >> right okay that wasn't revenue growth you just said. that was eps growth. >> what we have said is during the next few years our expectation is that we have built a very realistic plan. if we see opportunities drive revenue growth as we have the last three years we'll continue to do that >> the very conditions sometimes do bring companies together that at least have overlap in certain

industries because the ability is there to cut even more costs. you seem unconvinced however that will be the case with xerox. >> no. we have said that we are open to consolidation. we think consolidation can create value we started it three years ago when we bought the samsung printing business. it was a losing money business during that three years we transformed it into a lucrative business for hp. we are open to consolidation but it needs to be done in the right direction. o. finally, you have about eight shareholders will potentially decide here. you're speaking to me and to them right now what are you hearing from them >> actually we presented our plan last week and have been closely engaging with them to discuss the plan, to share the details of the plan, and we are getting very positive feedback about the value that we are going to be creating >> enrique lores we always appreciate you stopping by i have a feeling we may see you again before this is said and done >> my pleasure thank you. >> enrique lores the ceo of hp

back to you guys >> david, thanks i'll check the market here because it is another day of wild swings with stocks tumbling and a rush into safe haven bonds. the dow is down 650 which is actually off the lows. at one point this morning we were down 841 points still looking at more than 2% declines for both the dow and the s&p. s&p down 73 points it was down 91 a little earlier in the session the nasdaq holding up a little bit better under 2% gains, declines there as far as what is not working all sectors in the s&p are lower. all 11 of them financials are in the worst shape right now along with energy and materials and part of that story there is continued rush into the safety of u.s. government debt. that is pushing yields down. ten year below the key 1% level at fresh record lows time now to get a news update. contessa brewer has that back at hq >> thank you for that. here is your news update swiss officials are announcing the country's first confirmed death from the coronavirus

a 74-year-old woman had been in the hospital since tuesday switzerland has reported 58 confirmed infections so far. streets in rome are semi-deserted as italians come to terms with nationwide school closures, bans on attending sporting events, and government recommendations to work from home italy has more than 3,000 coronavirus cases and 107 deaths from the outbreak. a drop in travel because of coronavirus may have been the last straw for the struggling uk airline flyb the regional carriers entered the british equivalent of bankruptcy and canceled all of its flights. passengers are told to find alternative travel plans which could be difficult because flybe's network included more than half of british domestic flights outside london firefighters and volunteers are looking for survivors from landslides in southeastern brazil 25 people are known to be dead another 18 are still missing looks like a tough task there. that's our cnbc news update this hour back to you, carl.

>> contessa, thank you for that. been a rollercoaster week as you know for stocks as markets take a major dip low ward with the coronavirus continuing to drive sentiment. the market's fear gauge the volatility index is up nearly 100% over the last month markets hit particularly hard by the spikes with some big broker outages already this week. as you probably know joining us this morning interactive brokerage group chairman to talk about the markets, impact of the virus, and all of the volatility. good to have you back. welcome. >> thank you >> so what's going through your mind as you've been watching markets these last two weeks >> i think that this is mass hysteria we should calm down and just look at the facts. if we do, we'll see that people under 60 who are infected have a death rate of zero people, however, over 80 who have the infection, pass away

more than 20% of them. people in between, which means between 60 and 80, have a death rate in single digits. so if you are under 60, you basically have not much to worry about. you get the flu-like symptoms for three or four days you stay at home then you get back to work and you start consuming again and having a good time as usual. if you happen to be elderly, it is a problem because on the other end you will not get that famous very painful very expensive end of life six months is going to be much shorter. so this is sad news for people who are my age or older but

overall i don't see a negative economic impact. >> right well, when you say mass hysteria, we're at work right now. we're not wearing masks. we wiped down the counter maybe a little bit what element do you see as being hysterical do you think the market's action, the price action has been hysterical? >> absolutely. the price action and people running to the stores and buying up all the inventory it's nuts. >> what are you seeing at interactive brokers in terms of volumes and trading activity >> so trading activity has surged we have been doing year to date we have been doing on the average 1.2 million trades a day for our customers. which is about 50% higher than we used to last year account openings have doubled over the last two months so it is great for business.

but it's a sad situation but we shouldn't panic. >> what are you seeing on these -- the days have been so volatile we've had three days of 4% moves. a bunch of days of 3% moves. the most volatile period i think since the u.s. debt got downgraded back in 2011. what is behind that volatility what are you seeing behind the scenes >> well, i think the problem is that there is lack of liquidity. there is very little liquidity in the market because retailers do not get to go to the market they are sold to high frequency traders and they get internalized so the relative number of orders that are retail orders compared to the -- to all the orders -- do not see the exchanges and that is a problem. >> what are retail investors doing right now?

how spooked are they getting >> well, i suggest that people look at the facts that -- they digest the idea that, you know, death rates are really very, very low except for the elderly. >> i mean from a trading perspective are you seeing a lot of selling from retail >> well, you know, you always see the same number of sales as buys some of our customers are buyers some are sellers you know, there is no difference >> what do you make of the robin hood outages >> well, that's a problem. i think they started the company on a shoe string they haven't gotten around to creating back-ups which everybody is supposed to have. >> do you feel like there was a real retail push chase into the

market by mom and pop prior to the virus really presenting itself >> no. we did not -- we didn't see that we don't have too many mom and pop customers but we did not see that, no >> all right thomas peterffy always good to get your views we'll talk to you soon >> thank you very much >> a public service wrapping up at st. patrick's cathedral in new york for former general electric chairman and ceo jack welch. our robert frank is there and joins us now with more robert >> reporter: good morning, david. well, the service as you said just wrapping up for jack welch here at st. patrick's cathedral in midtown manhattan his coffin being carried out he will be buried on friday in nantucket. there were two eulogies. one from ken lengone and one

from mike barnicle i want to give you some moments from two of those, telling the story that as a kid jack welch got a scholarship as a golf caddy and then one day a golf member had a tough day, took it out on jack, jack took the golf member's clubs and threw them in the pond along with his entire paid scholarship and education so he ended up having to go to amherst and pay for it himself, showing that no one pushes around jack welch. then mike barnicle saying in the end jack welch had one rule in this world which is just show up every day in life and in work and perform. i think no one showed up every day in both like jack welch. guys, back over to you >> robert, well said trk'inew. nk, outside st paics n york. we're back in a moment supporting innovative companies that will shape tomorrow and building workforce development and tuition-free college programs to generate the talent companies need. with a $150 billion investment in state of the art,

modern infrastructure, and a nation-leading commitment to low-cost clean energy, new york is doing more than any other state to build for the future of your business. new york state, the state of the future. learn more at esd.ny.gov. new york state, the state of the future. we segetting to patientscines in record time. at emerson, when issues become inspiration, creating a better world isn't just a result, it's a responsibility. emerson. consider it solved.

welcome back let's get the latest on the coronavirus with meg tirrell. >> as cases mount around the globe new measures are being taken to try to limit the virus spread in india's capital new delhi's school closures affecting more than 2 million children are ordered until the end of the month. public events and schools also shut down in iran. in the u.s. testing capacity is expanding with testing giant

quest diagnostics announcing it will begin offering covid 19 tests starting monday. academic labs are developing their own tests after a delay in the roll out of those from the cdc. in new york city, mayor bill de blasio calling for fast federal action to increase testing capacity as he announced two more confirmed cases of likely community transmission new jersey and tennessee also reporting their first cases while in california the coast guard supplying test kits to the cruise ship quarantined off the coast that's been connected with the state's first death from the virus. carl >> thank you very much, meg. for more on the coronavirus impact and the market volatility we are joined at post 9 by senior chairman of evercorp roger altman who just got his microphone on. good to see you. >> good to be here >> what should people understand given what we've been through the past couple weeks? >> from a market point of view or disease >> yes, market focus >> well, yesterday we looked at and i'm sure many people have,

the economic and financial market especially equity market impacts of recent diseases sars, h1n1 and so forth. but the pattern is very consistent pretty sharp contraction both economically and markets and then full recovery but those diseases didn't occur either, one, when we had valuations that have been this high and, two, in an interest rate environment like this because there was more room from an interest rate point of view in those earlier periods than there is now whether you can say i can count on that v-shaped full recovery or whether you can't is hard to say but the historical pattern is very consistent >> before you go on we are getting news out of the election race let's go to d.c. >> reporter: nbc news has confirmed senator elizabeth warren is ending her bid to

become the democratic presidential nominee after a poor showing on super tuesday. she has so far amassed only 50 delegates according to nbc and of course that leaves senator bernie sanders as a standard bearer of the progressive movement and clarifies this race as a two-person contest between bernie sanders and former vice president joe biden. nbc says that warren will be announcing her decision on a call with her campaign staff at 11:00 a.m. and will talk to the press after that senator elizabeth warren now dropping out of the race back to you. >> thank you we want to get back obviously to the economic impact of the virus, but since we've just been talking about the election curious as to your thoughts now given the really seismic change from even a week ago in terms of a front-runner status for joe biden and where this may go in terms of the democratic nomination >> to say this is fascinating is

an under statement i've worked on nine presidential campaigns including the current one. and i think i speak for a lot of people who follow this and have been into it to say that nobody has ever seen anything like the events of the past four to five days when we all know that vice president biden was seen as down and out. he said that himself and now the greatest comeback since lazarus. it's just staggering now with this announcement there is a two-person race of course senator sanders and vice president biden. it's going to be a pretty interesting race because the delegate count right now is close and mr. biden is only about a quarter of the way toward the delegate total that is required to win an outright majority at the end of the primaries but now the prospect for one of them, and i think it'll be biden, but one doesn't know, winning an outright majority has gone up those prospects have gone up

because the field is diminished. and i think that's a positive thing. now, this advantages biden because i think he would like, and his supporters would like a head on head contest as a widespread view. i've expressed that before to you guys that senator sanders is not electable and that when president trump drops $1 billion to $2 billion of opposition research on him if he were to be the nominee and tells the american people exactly what his positions really mean, that he'd be very badly injured. so there is a perception that he is not electable and a perception that biden is that is debatable i know every other person may have a different debate on that but it is at least viable for opposition i happen to think this is encouraging. i'm a democrat but i think clarity is encouraging in a two-person race

is encouraging the points of view are really very different whether it is the difference between biden's proposal on obama care which is to add a public option and build on it and sanders' proposal which is to get rid of it and so on down the list i think it is a constructive thing. it is going to be an interesting race i think biden will win the race for the nomination but i wouldn't bet my life >> so how much extra volatility do you think that is injecting on already very jittery markets? >> well, i think part of the market reaction yesterday, sara, and now today we all know it is a very different day in so many ways, was to the biden, stunning biden super tuesday victory with a sense of some relief whether it's the health care side or whatever your example is so i think the -- to the greater the extent biden is seen as the democratic nominee, i think investors will be comforted. now, if i were a sanders

supporter i would say that's the problem and exactly why you should elect sanders nevertheless, that's my view >> roger, back to economic activity or the lack thereof as a result of this you are in addition to other to economic activity or the lack thereof as a result of this in my job i talk to deal makers. i'm hearing things are slowing there's a timing connection or it was, you know, price was an issue and the volatility really played a role. that's fallen by the wayside is that what you're seeing when it comes to deals and deal makers >> not yet and i think the follow of the announcements has still been good i think we could agree on that there's a big debate about whether if you're working on something substantial now, not a tuck-in, but substantial, whether you might want to take a deep breath and hold off and see what happens here, but if you

have the view that i do, which i expressed at the beginning of this segment, that it's going to be v-shaped from a market and economic point of view and relatively speaking full recovery, and that it's going to be within a 12-month period, and i don't mean the full recovery but coming out on the other side, then the impact on, for example, m&a volume, if you look at it on a one or two-year basis, probably not going to be b very big short term, there will probably be hesitation. only common sense. and, you know, nothing that promotes that more than strong economic activity and high valuations so to the extent the two are in reverse, it's usually, you know, difficult for volume, but i don't think this will have any long-term effect so not yet in terms of day in, day out announcements. perhaps in terms of the medium term i don't think so in terms of

longer than medium term. >> azar is making comments about testing capacity getting better by the end of the week, so we'll take it one step at a time roger, thank you >> always a pleasure >> dom chu >> what we have right now, red across the screen with financials, as you can see here, among the worst performers, the worst performing sector by a fairly wide margin, just about every stock in that sector trading lower on the day but some of the biggest laggards are the regional banks one of those etfs that tracks those names, kre, has crashed after lows from last friday. truest financial has slipped into bear market territory trading more than 20% below its highs dating back to december. carl, back down to you at the stock exchange >> and i'll send it over to chicago. rick santelli with "the santelli exchange." rick >> good morning. thank you, sara. i'd like to welcome vincent

rhineha rhinehart. thanks for joining me today. >> thanks for having me, rick. rick, thanks for practicing self-distancing. that's a good practice for today. >> thank you >> yes >> absolutely. you know, whenever we get involved in a crisis, we always become test tubes, and i know that they say never let a good crisis go to waste i'm referencing specifically the fed on friday talking about the answer is yield curve control, basically, you know, set short rates at zero and just work it through. japan tried it it failed. also it has a duration scenario that makes me want to cry. your thoughts. >> there's two things about crisis management. one, it gives you opportunities to try something new, and the second is when it's over, you never go back. you've opened another pathway. now, it wasn't just japan that's done it. the united states did it during

the 1940s. it ended in 1951 with the fed treasury accord for decades the treasury telling the fed what to do, and it ended with a big inflation. another less polite way of describing that is financial repression the government squeezes down the long ends of the yield curve just at a time when it has a lot of depth >> absolutely. and i know that your wife, carm carmen, has written rather substantial boilerplate on this topic regarding financial repression and to take it a step farther, how does this end up in feedback loops? we're putting other central banks in a position they're not prepared to take >> so, when you lower your interest rate, you're trying to get your currency to deappreciate, you're trying to borrow some of the strength of your trading partners, but the coronavirus is a global problem and nobody else wants to share with jay powell any of their

domestic strength. so they're just going to have to follow the fed down and, guess what, the federal reserve will not get as much financial accommodation from this policy ease as they might some other times. >> and finally, i think all roads lead to the dollar, no matter how you think any of this through. at the end of the day, it's going to be tough. i know there is default demand for the dollar, emerging markets during crisis and other financial struck which ares that necessitate creating cash flows, but do you agree with that the dollar is in focus of much of what the central bankers are talking about. >> so, the dollar is right now having the cost and benefits associated with being a safe haven. at a time of stress, you come into the dollar. but the fed is lowering rates, if we have large trade deficits, we have large current account deficits, a large budget defi t

deficit, the dollar has to come under pressure at some point right now, however, jay powell's colleague central bankers don't want their currencies to appreciate they don't want to tolerate dollar depreciation. >> i got you always interesting talking to you, vincent hope to talk to you again under better conditions. david faber, back to you >> okay. thank you, rick. sara, i mean, every day makes the closing bell a must watch, not just to see you and wilfred, but the market is playing a role in that as well. >> it's incredible we often have closed at the highs of the lows of the session. yesterday, the highs, one step forward, two steps back. we'll see what happens today also we'll figure out what this coronavirus impact will have on retail matthew shea will join us to talk about what he's sieg aeein how vulnerable mall stores are

if people won't go out and shop. and an update on the supply chain with 60% with china, how difficult is it to get apparel and shoes. >> speaking of staying home and going out, look at fang this morning. netflix the only component in the green and by about a percent or so. dow down 633 taxes? sales tax, real estate credits, solar incentives...

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