we don't want negative rates on the long end a movie in 1968 called "hell fighters." no matter how much liquid you put on an oil fire it never went out. put an explosion the fire goes out. the liquidity didn't help the eurozone or the japanese, yield curve strategy didn't work this week, on sale, this week special, 10-year note yields step up folks with the flat yield curve this is the best way to put a little religion back in the long end, make the most out of a flat curve, issue t-bills, why not issue 10-year notes now, the yield is not much higher and think of the bright spot if you want a yield curve that doesn't invert, doesn't turn negative on the long end, this is the answer carl, back to you. >> rick, thank you very much good morning it is 11:00 a.m. on wall street and "squawk alley" is live

♪ ♪ good monday morning. welcome to "squawk alley." i'm carl quintanilla with morgan brennan and jon fortt at the stock exchange it is a historic day of trading. we will begin with the selloff which did include a break with circuit breakers richard on the stress test for stocks, mike santoli on the crude awakening in oil prices as the saudis launch a price war. rick santelli on a bad yield trip for treasuries and steve

liesman on the fear and the fed's response bob pisani, let's begin with you and think about what's important this morning. >> what's important is how did the system respond to the immense stress that we had today. this is the first real test of the margin circuit breaker system set up back more than 30 years ago and we did have a halt on the s&p at 9:33 for 15 minutes. the -- by all appearances it looked like it went well it reopened understandably some bargain hunters there, a mild lift in the markets so the mechanics seem fine. what was distressing to see what happened to oil stocks put up halliburton, for example, not only halted on the systemwide circuit breaker but when the market reopened, halliburton almost immediately went into an individual stock circuit breaker situation, hit it once and then probably a second time as well. these stocks are really under pressure these hoil stocks, halliburton down 39% see the bottom line here is while the overact marketis

under stress i think the saudis did us no favors today and was a major part of the exacerbation in the oil stocks. >> mike, your characterization of the complications that oil added today? >> it was the one piece that people weren't really too focused on in terms of it being an intentional crashing of the oil market it's how it filters through the credit markets that's the transmission mechanism aside from the oil stocks into overall risk appetites and overall willingness to buy a down 18% s&p move from the highs which is what we have right now you know, right now it seems as if we tried to kind of hang out a little while in the s&p and the summertime lows and the 2800s. i'm surprised, the day is not over, that we didn't get another wave lower who knows what there is to see a third of the s&p is down 30% off its highs. we should keep in mind this has been going on a while so there's been punishment administered. >> to that point about crude prices, we're down less than 20%

right now, in both brent and wti, drops of 30%, we haven't seen something like that since 2001 these are massive, massive moves. they're being felt across wall street how much is potentially for selling? >> i think it's a lot of it is reflective of forced selling or people saying look, my models did not kind of encampus these scenarios so let me back off i'm more focussed on the way the markets are kind of queuing off one another. it's becoming a little more of a feed back loop of oil into high yield credit into stocks, so that can kind of ping-pong around for a while much more than it is, you know, kind of the next incremental news on virus outbreak. >> this is a direct attack by the saudis, not just on the russians but on the u.s. oil shale producing system they're saying let's shake up the whole playing field right now and be bold. we're the low-cost producers in the world, let's see who can

survive if we try to shake things up. they did us no favors, very difficult day for the markets. >> richard, what are we learning this morning from the way that stocks are behaving from the volume initially we opened down the s&p hit the circuit breaker down 7%. then seemed to come off of that and then in the past few minutes, we drifted down again, the s&p now down more than 6%. does this continue to look orderly to you and what should investors at home who are maybe sitting on their hands trying to figure out what the wise thing to do, what should they be looking for? >> the answer to your first question, it was, it did appear orderly to me. we haven't seen outages or problems we did hit a circuit breaker, but that's the first time i think in quite a while that we have and i think when you compare that to the dislocations we saw

in the flash crash where it was disjointed moves down, this was, you know, an expected, again it was an existential event that triggered the market move. i think when mike says, you know, that the assets and different asset classes are interconnected that's a product of electronic trading. he's absolutely right. when you look at all, when you look at the equity indices and futures they're all tied together you can expect them to move together and that's how fast the markets, the things that exchanges have done, i applaud them i think they've worked and worked well in a very, you know, turmoil market condition this morning. >> yeah. >> does this seem rationale to you, rich, given the uncertainty around coronavirus, how this is affecting the movement of people, the movement of goods, the productivity of the work force? i mean you talked about how

orderly stocks have been, but in terms of the value that investors are applying to equities does it make sense? >> well, the -- i'm not a market strategist but what i can say -- and i'm not a physician that's an expert on the coronavirus, but it does seem like there's still -- it doesn't have boundaries we don't have limits markets and we've had a number of experts talk about there could be -- there's other factors such as the presidential election, the top of the market, there could be other factors as well you pile those altogether, what i do follow is volatility. we've been at historic lows for a while. we were due for an uptick and we certainly have gotten it >> steve liesman, "washington post" is matching eamon javers reporting that the advisors will present the president with a

list of options this afternoon characterize what we would hope to see out of there and from the fed and the comments on friday and everything else? >> so starting from the top, i think for sure there's a feeling in markets, a feeling among people who watch monetary policy that the substantial part of the response to this xr the economic policy of the coronavirus it could be from business disruption insurance, things to help consumer demand, or otherwise fiscal spending in part because there's a sense that, a, the fed is down there when it comes to ratesalready, has few bullets left, and b, the monetary policy may not be the best suited for this i will tell you that my suspicion this morning is what the fed is doing is not so much thinking about rate cuts as watching the market adjust to the level it wants to be at and being sure that as richard was talking about so intelligently, it's an orderly decline. it's not a problem necessarily

for the federal reserve that markets go down, that bond yields fall, but if it happens in an orderly way there's sufficient liquidity with which price discovery can take place the new york fed as we report, did come in early in the morning before seemingly there was a problem, and provide additional liquidity in that regard to a specific section of the market which was the overnight lending market whether or not additional liquidity is needed is unclear at this point and whether or not a broader fed statement is needed my best guess is that the fed is not going to want to cut into a falling market like this, it might not do very much good. the fed wants to come in with maximum effect i don't think that would happen today. >> yeah. meantime rick santelli, we are seeing big moves in one direction and the other within the bond market as well. more than a 20 basis points mount in the 10-year treasury and back up to 0.524% right now after hitting a new record low

of 0.318%. put the moves into context and the fact that as some strategists have suggested today, the fact that we're on the heels of that seeing a weakening dollar could be a silver lining. >> well, you know, let's just look at the problem from a very easy macro standpoint. there's so many real cash treasuries in the world. what we've done over the years, is we've made derivatives of derivatives of derivatives, whether etfs, so the claim on this finite group of treasuries is now like an upside down pyramid. as it goes up, there's a whole host a global host, of people focusing on this actual core of cash securities. granted, it's a big one. but the focus, the laser focus, if everybody wants to get their hands and play in that arena is multiples of leverage beyond the reality of that. the derivative of the derivative

of the derivative. here's where we find ourselves a lot the same in the credit crisis we have certain areas like mortgages that became reference points on the upside down pyramid. all those priced as something that was very small. so when you shakethese arrangements up, this is what happens. i will state to the simple i hope the fed doesn't waste any more quarter point or half point eases. it's not going to make a difference the japanese have learned, yield curve control doesn't make a difference have we not learned that at every point since 2005, when all of this really started before the credit crisis, debt and leverage, that making rates lower, getting them to make more creations out of the low interest rate blocks isn't the type of building we want i think that the central bank should monitor, give us guidance, act parental i'm not disputing the fact that fiscal may make a difference, it will make people feel better but in the end and i don't say this

normally, pressured many times to say it, but with such a flat curve, supply is the way out we want to issue if they want more focus on the group give them more securities. open the window, issue 10s, issue 10s. the spread, it just seems like the right thing to do. that's my two cents. >> bob pisani, we had this big drop at the end of february and then we're kind of trading around in a range. i think some people were thinking maybe this isn't so bad. we're down below that range where we were trading but there's this oil issue partly to blame for it i think there are a lot of people who are maybe if retirement or getting close to it who are especially worried about the direction the market is taking. given that things are orderly, how concerned should people be is it stick to your plan time or do you think that conditions have changed enough that people really need to consider changing their calculus >> there's nothing out there that the standard expert advice

has not changed or gone out the window the question always has been amongst professionals that come on our air, how long are you going to live for? if you're 60, you're going to live another 30 years history shows these are generally short-term phenomenas, stick to your plan. much shorter term, if you need more money in the next five years or so, you might want to consider altering that plan a little bit by and large, stick to your plan is the most important advice i've been asked about the circuit breakers, if we drop below 7% again you keep going. there's not a second halt at 7% decline. you go to 13% the next level we've got a long ways to go to have another trading halt. system line. >> rich, do s&p earnings, estimates mean anything right now? >> i really think there's a lot of uncertainty in the market you can't -- you know, the economic impact of what we're seeing from the coronavirus, i think it's pretty difficult i think a lot of traders have gone to an -- and investors have

gone to defensive positions more, you know, off of technicals trying to get that is pretty difficult right now. >> i ask because we're a few weeks from pricing in q1, right? >> sure. >> mike santoli. >> we want to know if we're going to reset revenue rates at what level >> it's difficult to say what we're running at at the moment we started from an elevated valuation. i don't think you've reached a point where you've generated true absolute value based on a grim scenario. >> because there was so much cream at the top >> right 19 times or so >> sure. >> i mean i think right now it's all a matter of figuring out the market is getting in the direction of pricing in a technical recession or some kind of prolonged stall for the economy. doubt that we're at the point where we can actually say we priced in a significant decline in earnings at this point. the market has an interesting and a little bit curious tendency to go down almost 20%

in one of these bouts, 19 point something percent. it happened in late 2018 and in 1998 and in '89 and '90. that's going to be a little bit of a fail safe. >> the multiples are a toss up we have no idea whether the right multiple is 17 or 16 a global economic decline the overall multiple should be lower even on an average level we should be closer to 15. that's why you're getting thousand point swings. what is it we have to go through the discovery process. >> everything trying to glean what this is going to mean in terms of an economic impact as well, steve liesman. i want to get your gauge of the pros versus the krons right now, at least from a u.s. economy perspective. there's all this uncertainty, people are -- crackdowns on traveling, people stockpiling worried about spending money potentially. on the other side of the ledger,

you do have gas prices that are continuing to get lower, we have this incredibly based on the most recent data strong job market, and you do have these low rates and what we know is already shaping up to be a big surge? refinancings. >> that's going to be a help every tick down in the 10 or 30-year puts more mortgages in a place where it would be profitable for people go and refinance. if i guess in this market they can get a mortgage broker on the phone. that would be ones aspect of it. low gas prices in this environment today, cut two ways and i mean deepry in two ways. you're right on the one hand consumers will do much better, but notice over the course of time we put the economy of saudi arabia inside the united states with 12 million barrels of production a day it won't be a painless process which that readjusts to $30 oil. parts of this country will feel

a depression because of $30 oil. north dakota is one. parts of texas would be another. there are places that have been boom towns because of the oil explosion in this country. that could perhaps go away there's high yield debt in the oil market that's something to watch. on the other hand, you have the possibility that some businesses that do well when people stay at home could do better it's hard to find all of the pros on this, especially with the market coming down the way it is because that's going to be a wealth extraction from the economy. i think the best thing you can say about that, morgan, is we went into this at a reasonable rate of growth around 2% we had a low unemployment rate there's going to need to be some form form of adjustment from a decent level, better than europe had going into this problem. >> as you're talking, steve, new york state governor andrew cuomo with the press conference saying a couple of things one is interesting, some of

these policies are going to get institutionalized if a school has a student that -- who tests positive, that school will close for 24 hours also, a new policy of manufacturing their own hand sanitizer for schools and mta, government agencies, simply easier to produce than it is to purchase at this point bob pisani that's the kind of thing on a state level -- at the same time "washington post" saying the president will meet with mnuchin today to talk about the list of potential policy ideas. >> i can't figure out if that's brilliantly innovative i'm surprised they can pull that off, they're able to produce that on a mass level i would think there would be enough stockpiles of existing, you know, -- >> go on youtube and they will tell you how to make it. >> the executive director of the new york/new jersey port authority has tested positive

for the virus. that comes a day after ted cruz put himself in quarantine. >> brings up an issue for the markets, coming into the weekend i think one of the big questions was, have we stress tested the market under its current levels and valuation and sentiment for these inevitable headlines for the barrage of more and more and more and we're still on the front end and do they lose their ability to shock the markets because we've reprised this much you know, this is the process of figuring that out. we're going to get a lot of these. like the post-9/11 period where you had shock value and then it was like i guess this is the world we're in and we fight through that you can't get around the fact that we all know intellectually that this is still going to get worse in terms of the numbers. we don't know if we've priced something like that in >> look at how trading goes. we were down at the open, we're essentially down 500 points, i

follow the down stocks i don't see weird gyrations. everyone had their immediate -- had to get what they needed done it got done. we're sort of sideways now this could change quickly. it goes to your point, mike, about quickly the market reprises and everybody kind of calms down for the moment. >> yeah. >> rick santelli, we've been talking about stocks we've talked about bonds a little bit are the bond market and the stock market do you think telling us the same thing right now? we're reaching around for data points trying to understand what's going on, what kind of bets people are making, but is the message consistent >> i think on some level it's consistent i think unfortunately that the treasury market is really telling us more about the global since we've committed trying to get healthy for the last ten years. when you make lower rates, the main tool pretty much combat everything, no matter what crops up, that's the first cry you hear from anybody who has a financial position we got have to have lower

financing rates and live in a world where everything is about leverage and fully packed. what we're going through and we can argue what the catalysts are, but what we're going through is a daily de-leveraging based on margin calls because we're unwrapping the onion coronavirus caused us to start unraping every level people have huge margin calls many times the things they sell may not be the epicenter or reflect trul trulies the catalyst maybe they sell something like a netflix which would make little sense when we're maybe all staying home watching tv there isn't necessarily a logic to the process i think treasuries, unlike stocks, is a unicorn in terms of it's got one objective, one thing straight out and deal with the influx, this herd of investors that consistently put demands on it. we always seem to interpret that in a negative way.

it is negative there's a stampede there how we address negative rates is going to be very important for the longevity and the return of stock prices once the coronavirus resecedes. we don't want to make this worse after that recedes there's many ways we can do that and i think central bankers need to kind of talk less, watch more and leave more to governments. i'm not saying governments are going to have the answer, but that should slow things down any action by central banks, that's would quickly, like the 50 basis points, they are lost, they are gone and made no difference >> rich, i want to go back to you and one of the things you cover is capital market structure. given the conversation, concerns about things like credit curve, what does this do to potentialp ipos in the pipeline, what does this do to debt raises for

companies that, you know, are looking to raise money, heaven forbid if you're in the commodities market >> yeah. it is certainly put a roadblock into any ipos, new listings, debt issuance as well. one point i want to make, you have all gone through the analysis the different asset classes and i'm staying in my lane here on market structure and exchanges. the one thing that did work is that the plumbing of the market worked throughout this past two weeks and we've seen enormous volumes, basically 2.5 times normal volumes at the cme for the last really ten days tunnel the volumes down at the nyse and i guess my point would be, we didn't -- at least with the plumbing and the market structure, we didn't pile on a problem on top of the markets. >> yeah. >> with the infrastructure that we have. >> yeah. certainly a key test

as we've covered here, the fact that you did see the revamp circuit breaker structure that was really put to the test and to use your word i believe orderly today, but we are seeing some of the trading platforms being put to the test and i think about robinhood reports this morning that that platform is experiencing outages again, how -- are you watching those situations how would you expect that to play out with some of the newer starterups that have never been through something like this before >> we're watching the platforms. the retail platforms when i said the plumbing of the markets have worked, i was talking about the exchanges. there have been some out annuals on retail platforms, robinhood one. i think they have to go back and revisit how much capacity they've built up, how much resiliency they've built up in the retail platforms, and that's something that's going to be done but again, we have seen just enormous volumes and i think

that's certainly caused the problems i think regulators will have to help sort out whether this was something they should have expected i'm talking about the retail platforms, not the exchanges which have held up like i said very, very well. >> good point. if we were going to assemble a list of silver linings, mike, market plumbing. >> sure. >> lower energy for the consumer bank balance sheets stress tested. >> fire breaks here that -- i think the consumer balance sheet actually is another thing. if you look at aggregate, debt service on the consumer front is really not worse at all. it looks like there's a cushion there. that's the aggregates not people on the edge in terms of the overall economic spillover effects you can take some comfort working against that is the idea that, you know, the market had built up this big head of steam in mid-february it basically got valued for a lot of stuff to go

right and now we have to see how many of them fail to go right, how many more fail to go right at this point. i think the process for it with the volatility index in the mid 50s credit spreads blowing out because we were all braced for something worse than a 5% drop on the s&p, doesn't mean that the market is saying maybe we're through this thing. >> the lower mortgage rates over the weekend, my wife's a re realtor, trading mortgages, 2.3, 2.5. we were hearing crazy numbers. heavens, that's like a fire sell you're never going to see. >> just out of curiosity if you refied in the last year or two, would you make up for your closing costs going back again. >> diana olick uses 75 basis points as the difference there are a lot of people that refied at 3.5% that could be looking potentially at 2.75% potentially. we all know they're not

answering the phones they're overwhelmed. an epic chance to refinance and lower a lot of debt for a long, long time in the united states >> bob pisani, does it matter, as crazy as these drops have been that we've seen over the last several days, we're still not trading right at this moment at the lowest levels of the past 12 months even. >> yeah. >> context wise, does that matter >> yes >> you know what it's up to us to point that out to people. we all became, since 2008 we've become behavioral economists we understand people panic and they see their gains that historic high, february 28th, the s&p, nobody bought all their stock on february 28, 2020, and those people who watch cnbc are longer term investors that have a significant amount of profits built up over certainly since the financial crisis of 2009 ended and still sitting for the most part on substantial profits. i think that thank you, jon, for bringing that up and people need to be reminded

>> although we first got to these levels over two years ago. a lot of back and forth over that period. >> mike santelli -- rick santelli, mike, steve liesman, bob pisani, richard, thanks very much nowlet's get over to the nasdaq for an update amid this morning's massive sell-off frank holland is there >> good morning, jon the nasdaq composite down more than 5%, fell below the 200 day moving average at the open and remains there. o'reilly auto parts the biggest gainer on the nasdaq 100 right now as the coronavirus fueled sell-off continues, airlines as an overall group plunging due to travel concerns and service reductions united down more than 6% to give you an idea of how hard it's been hit, shares trading 49% below the 52-week high the stock and transports are plunging expedia down 6%, rail stocks, csx down 8% on concerns about

volume with the slowdown china. technology stocks, chipmaker western digital with the biggest decline. tesla falling around 10% and then you have to look the at the etfs the sma etf on pace for the worse finish since october 2018. it's still early the nasdaq biotech on pace for its worse finish since september of 2015. consumer stocks have high exposure to the coronavirus fears and concerns last year starbucks one of the best performers in the nasdaq hit by the concerns recently, costco saying their sales have been boosted by people stocking up still selling off today. and now turn to the f.a.a.n.g. performing better than the market but accounting for more than a third of the point declines in the technology heavy nasdaq iphones sales by half a million. microsoft falling on questions about the $10 billion jedi computing cloud contract microsoft won. a judge says that amazon's legal challenge, quote, has merit.

now back over to you >> that is definitely a development watching closely thank you from the nasdaq. time now for a news update, contessa brewer has that. >> here's what's happening the streets of milan nearly empty in the wake of anti-virus measures imposed by the italian government milan and several northern provinces are on a lockdown until april 3rd. that decree has isolated about 16 million people across northern italy germany has opened its first drive-through coronavirus test station. it's an attempt to ease the burden on hospitals and doctors. the plan is people get tested, then go home, and get the results within 12 to 24 hours. the czech republic started doing random checks for coronavirus at its borders including taking temperature of people seeking to enter the country. the government has banned guest visits to retirement homes and hospitals. afghanistan's rival leaders each were sworn in

each of them as president in separate ceremonies a week after the u.s. signed a peace agreement with the taliban these dueling inaugurations create a real dilemma for the u.s. as negotiators try to figure out how to move forward with the peace talks that's our cnbc news update at this hour back to "squawk alley" now >> thank you >> this morning's massive market drop has cost some of the wealthiest names in tech and other areas a few zeros off their net worth. robert frank explains back at headquarters it's actually a lot of zeros this is shaping up to be the biggest overnight destruction of wealth since the financial crisis the market losing about a trillion dollars in market cap overnight and the billionaire fortunes tied to stock are taking the biggest hits. jeff bezos saw his fortune drop $6 billion overnight, about what he lost last october when they had the earnings miss. he is down $18 billion just over

the past month he is still the richest man with about $111 billion elon musk down about $4 billion. his fortune down $12 billion for the month but with that big run up in tesla stock just in january, he's still up about $4 billion for the year he is the only one of the top 30 billionaires positive for 2020 wa warren buffet down $4 billion. the virus taking $12 billion off his wealth the biggest loser is barnard, the ceo of lvma dropped $6 billion last night and early this morning, down $30 billion in the past two days 60 days he's lost more than the total network of ken griffin and david tepper combined. mark zuckerberg of facebook losing $4 billion overnight, down $19 billion since late january. so the top five billionaires on

track to lose over $22 billion in just 24 hours look, these guys can afford it when you think about the average american looking at their portfolios and their investment accounts you could start to see what they call a negative wealth effect where people look at their accounts and want to stop spending because they're losing so much on their retirement and investment accounts. guys, back to you. >> yeah. eye popping numbers. paper losses for now >> for now. >> yeah. robert frank, thank you. let's get back to this morning's sell-off jonathan is the chief investment officer of the $58 billion pension plan for los angeles county employees joins us now. thanks for being here. given the market moves in recent weeks is this causing you to step back and reassess the portfolio in the composition of the fund >> it is not i think that we really define our portfolio based upon what our mission is or mandate to pay

benefits today, tomorrow and into the future and we apportion our assets based on strategies some are growth assets more risk seeking for longer term gains and a significant amount in downside protection, risk mitigating strategies that help us weather through an environment like we're going through today. the long answer is no, we're not making radical shifts. we continuously rebalance the portfolio, but we remain true to our investment beliefs and stated positions >> are you hearing directly from pensioners and county employees from whom you're managing the retirement accounts of what do you tell them in a time like this? >> i think that we're fortunate in that we have been around for a long time, paying benefits for a long time and that we have frequent meetings with our board

and hear public inputt, feedback about the portfolio. obviously people are concerned about the market environment long-term expected rate of return is 7% and we have to provide that long term on an expected basis, but people are concerned and we're a long -- have a long biased portfolio we have investments that have been going up in the current environment. a significant exposure to investment grade bonds and those have been performing well. some of our tips exposure, for example, we have a 4% exposure, that has been performing well. once again, the biggest belief we have in market timing is the importance of rebalancing and in some sense rebalancing forces you to lean into the wind and you may not get it right on an individual day or trade but long term we believe that rebalancing

helps us long term produce the benefits that we need to >> i wonder, are you feeling like this is in some ways a return to the normal rules because people who have maybe been rebalancing or had been, you know, sticking to some significant percentage of bonds in their portfolio,might have been feeling over the past several years that they have been losing out? it sounds like you're saying you have stuck to a structure and a plan that now maybe you feel a bit better about, even given the recent volatility, is that right? >> that's a great question in that one of the things we've been discussing is lacera has a complicated portfolio, significant allocations to assets such as real estate and private equity and over the last decade or so with the significant amount of central bank stimulus and intervention it really has afforded the 70/30 portfolio to be the winning

strategy and our portfolio complication in some sense is like an insurance policy against which we haven't had to file a claim. what we'll maybe now over the last week or so, we've been filing the claims and it's working in terms of providing a speed bump on the downside long term, we believe that this environment, you know, teaches the importance of umility, tha investments in many ways is a discounting mechanism for future outcomes that are unknowable and as such, rebalancing strategic asset aallocation across different categories is the strategy >> i remember a kkr report last year that called for the end of the 60/40 portfolio because as global governments switched to fiscal policy, that would be inflationary and bonds would get hurt nobody saw this coming >> and neither did we.

in some sense, with one of the things that we've done that has really benefited us is defined what each role is in a more pure sense and historically we've had a big tilt towards quote/unquote alpha or trying to outperform in investment grade fixed income. our view is the defining fixed income as downside protection and not seeking alpha or excessive returns or added risks in that strategy and as such, it's been working in the current environment. notwithstanding the fact that there's no way to avoid a 10, 15, close to 20% draw down in public equity markets. >> so in light of the entire conversation we're having, jon, how low can interest rates go and we talk about something like negative rates could mean based on case studies in other parts of the world could mean to the financial system but what could it mean to lacera or

institutional funds like yours >> the one thing i know is i can't look into the future and there's one thing, you know, a discussion about negative rates and negative rates in the states go negative, i think the larger question or topic is, we've had really low real rates for a long time whether they're very low or negative is maybe a fine point puts the way to think about it is, if you look at 10-year treasuries as a foundational building block so to speak of building a portfolio and an extended period if you can expect to earn 3 to 500 basis points above that for a diversified portfolio, there's a big, profound statement with interest rates as low as where

they are we are about to look at our strategic asset allocation this year the board reduced our expected rate of return to 7% from 7.25%. i think a lot of what we're doing is focusing on what the proper expectation is for a portfolio and making sure that we're compensated for the risks that we take the worst thing to do in an environment where interest rates are as low as where they are is to back up the truck on risk, add more leverage, add increasing illiquidity and on that point if we have business partners or money managers that have yet to go through a market correction, to me the caution flag is waving in terms of how they survive this environment. >> john grabel thank you for joining us today cruise liners getting hit hard again in today's session.

seema moody is back at hq on why. >> that's exactly right. carl, the crunch time for this industry after the state department yesterday said americans with underlying health conditions should not travel by cruise ship, raising fears about an erosion in bookings that have been hit by coronavirus fears. that's being reflected in shares of royal caribbean, carnival and norwegian cruise line. the price action has put their total debt obligations in focus. norwegian cruise line the most levered of the three announcing it's entered into a revolving credit facility with jpmorgan chase which the company tells me provides them with additional liquidity. analysts at suntrust are questioning how sustainable the dividend a yields of carnival and royal caribbean are. meantime 2400 passengers stuck on carnival's "grand princess" cruise ship set to disembark at

the port of oakland today. the cruise line operators sitting on losses for the year between 55 to 60%. pressure building on the ceos of the three companies to beef up containment measures following a meeting with the vice president mike pence over the weekend. we're still awaiting those new measures to be rolled out tonight or tomorrow morning. jon, for now, back to you. >> thank you. consumers and businesses meanwhile both restricting travel corporations continue to cancel conferences and meetings in the wake of the coronavirus spread joining us to discuss the impact, ariel, co-founder and ceo of corporate travel management company trip action good morning >> good morning. >> because of the nature of your business, you've got unusual insight into cancellations, into black listings, reduction in bookings what are you seeing particularly over the past week

has the velocity picked up or slowed down? >> yeah, definitely. so you probably remember we spoke nine months ago when we announced our funding ground and back then we talked about a.i. and our unique place in terms of data and a.i. and the ability to analyze everything this becomes handy right now so we definitely see a decline in travel. we see roughly 50% of decline. but the interesting part is that, you know, corporations, they need to continue and operate. they still need to send some of their employees to meet and interview and do other things. we have actually a unique position to give them the information to take the safest decision possible, using data and a.i. >> what was the percentage decline that you said? are you comparing that year or year to the previous year's travel level how are you counting that? >> we are actually normalizing

it because we, as a company, grew 5 x last year since we're growing so fast we need to normalize it, right. per person basis we see 50% decline last week and 18% decline in the previous month. that's kind of normalized. as a business we don't see the same decline because of the way we're growing. >> what's the breakdown you see also between domestic and international? i imagine international might have dropped off more or no? >> yes we saw more decline in asia pacific and mainly china, but it's turned around and we see more decline here. it's really changed as the situation unfolds. and that's why actually our team, what we did, there are business travel managers out there and cfos and they need to analyze the situation. so a week ago we released a dashboard, we call it the

coronavirus business community dash poor dashboard and what it does, one side we core late the cdc information, the local authority information, on the other side we core relate where your travellers are right now and where they are going to be this allows companies or customers to make the right decisions, really connect the two. it's actually pretty messy out there because if you're managing travel, people basically created excels, right, and they asked their employees, give me a reason that this trip is really, really important and they need to decide to approve the trip or not. once they're approaching it, the situation can change, right. that's why we came up with the tool and this is actually, again, why information, everybody scrambling for data right now, like information and data, is so important. a customer basically using our competitor like an american

express, you're pretty much walking with an excel right now. using us, you have the ability to make sound decisions right now. >> the question i keep coming back to, because it has such big business and economic repercussions potentially is how much of this corporate travel is lost versus how much can be recouped or made up later down the road when coronavirus actually dies down, those concerns abate >> yeah. let's take a step back here. travel is 10% of gdp right. so basically the impact on the economy is huge. if you really think about a business travel, really drives most of the economy. you know, this situation can last for a week, two, three weeks. eventually people will need to slowly get back to some normality, if not we'll see a meltdown in the economy.

i don't know, right, but i think people will need the right tools to start to go back to normal, right. you will see i think something that is similar to business community systems in the past with other events, you will see it in travel, people, companies, making sound decisions as the situation unfolds. i don't know, but i think it's obvious that people will need to get back and perform their businesses >> all right ariel cohen, co-founder and ceo of trip actions, thank you i do want to note, major indices i think we could say are at their highs of the session, although they are all down by nearly 5%. the dow now down just 1243 points the s&p off 141. >> robinhood experiencing more outages this morning

kate is here to explain. >> robinhood traders stuck on the sideline again the start-up saw two days of outages last week during another historic market day. today you see tons of red on the signs here at the stock exchange and another thousand point drop for the dow. the start-up meanwhile saying it has seen major outages in crypto trading this morning it's been partially restored its last update said degraded performance. clients on twitter complaining they can't execute trades. the founders now saying that the two days of outages last week was due to higher than normal trading volume that stressed their systems and saw down time at fidelity, td and charles schwab due to the same volume issue. customers taking to social media to vent some outrain about missing those trading days last week a lot are millennials and first-time traders most of them threatened to pull

funds. last week we saw a class-action lawsuit filed against the start-up for negligence due to the outage we see investors telling me this could cause issues for a potential ipo for robin hood we saw them widely as an acquisition target they say if anything this calls that $8 billion valuation into question >> kate, thank you very much nice to have you in the house. we're going to get comments from hhs secretary azar eamon javers has that at the white house. >> our first on camera reactions at the white house to the market moves of today from hhs secretary alex azar in the driveway a couple minutes ago and here's what he had to say. >> president trump has delivered a historically strong economy, the fundamentals in this economy are unbelievable, whether it's employment or wage growth or productivity or international trade deals. the fundamentals remain what

they are >> so azar saying that the stock market has been active today but insisting here underneath all of that, the economy is strong. the president for his part has been offering his commentary on twitter throughout the morning as you guys have the reason for the market drop no not specifying what fake news he's talking about but he says he has the sense his political enemies are hyping the coronavirus story to make it more critical than it is he's talking about the oil price drop he says good for the consumer. gasoline prices coming down. as we go into the meeting this afternoon, that gets to the white house dilemma and thinking on whether or not to intervene in oil markets i'm told there's some indecision in the sense on one hand lower oil prices are good for the s

consumer and they are very aware of the damage those low oil prices are going to inflict on the fracking industry. there's no clear cut answer at the white house on what, if anything they need to do in oil markets today. they are still hashing through that in realtime that meeting will happen after he returns from florida where he's been at a fund-raiser today. that will be at 3:45 this pampb meeting happening after that we hope to get details of what options the president selects later on today back over to you >> thank you for that. session highs here let's get to rick and get the santellie change >> thank you m morgan stanley investment management bryan, thank you for joining me today. >> good to be here >> i'm going to through my vantage point in here. i want you to discuss that and give me some of your thought ons

t on the fixed volatility. maybe the best way to turn the market lemons into lemonade especially for those that are deficit conscious would be to look at the very low tenure rate, maybe 30 but ten years especially and maybe try to put out a will the of supply maybe steepen the curb a bit >> it's clear from the rate market that the fed will ease. they will ease quickly you have taken kcare of that the last few days have been unprecedented. on the back, if this settles down, you'll get corporate issuance i think a lot of good things can come of the fact that rates are

so low >> we have talked about refi, housing purchases, but the other issue is that many times a drop in rates doesn't get proportions oud similarly among different lines. in other words, if you're a young person on an auto loan you'll probably get a big haircut and not see some of biggest drops in rates can you expand upon how there are things that will sift down to the average person who doesn't really get all these big moving parts >> right i think that's what makes an immediate response so difficult. as you say, we need to help small businesses we need to help people loans refinance. that's why sochl this chatter may come and give people more access to lower mortgage rates i think you could see things more along the lines of immediate help to individuals like tax cuts. it's much harder now to start up

programs like talf where the government or the treasury intervene. i think you'll have to see really the fiscal side >> let me stop you there a minute you've said things and you're correct that the markets already telling the fed what to do in terms of rates markets telling central banks what to do and them listening really hasn't worked out all that well. is it beyond anybody's thinking to step outside the box and have a central bank not respond to this pressure that the market exerts >> the idea they have to go right to zero like that market wants them to, they don't have to there are other steps they can take thing what -- >> here ea's my problem. i'm not picking on you

this is the response of many big institutions on wall street. in the end, it didn't solve the problems the first or second time we did these over the years. when you give these gifts to bring your portfolio back, they're not used that way. >> you point out who they are and we're going to have to do something beyond using the fed as the only mechanism here >> thank you, for being a good sport. i wasn't pushing on you. just the notion that we ought to look to history and see how these things turn out because doing the same thing does buy us time thank you very much. john, back to you. >> there's an argument to be

made that the markets been using the fed as that easy button from the old staples ommercial. you told us you wouldn't have been surprised by a 100 basis point from the fed given that and given the volatile action that we're seeing even just this morning, do you think that the fed needs to continue to cut and step in again here or does this sound like a job for congress on the fiscal policy side >> i don't know that the fed needs to do it but the fed probably will do it because as you discussing, the fed does respond to market pressure i don't know they'll get a knee jerk response and do it before

the meeting. i think at some point if things really get bad we'll have to talk about helicopter money which is former fed chair ben bernanke suggest we might have to do. i think we all need to calm down a bit. everybody gets his t hysterical hyper. my assessment is that by working this will be comparable to other coro coro coronavirus like the flu, like sars and mers. if they don't go away we'll have to live with them. >> from a technical perspective,

i could say we're at highs of the session and i say that relative to how big the drops were earlier in the morning with the s&p down 141 points but the fact you're starting to see gold come off down $5, some of these different indicators, how closely are you watching them. >> the economy up until the virus news hit the headlines was doing extremely well it has some good underlying strength if we can calm down about all of this and deal with it with standard hygiene and when you don't feel good, you call the doctor and do what you need to do, i think we'll get through this

they are trying to stay optim t optimist optimistic >> it sounds like you think the italians are over reacting putting 16 million people in lookdown you think that's out of line >> it's not my job to tell governments how to respond to this i don't know that the measures are too extreme. to the extent they are extreme, they will do something to contain the virus information. we're starting to get some really good news out of china, south korea. if that continues then i think this panic attack will

dissipate. >> time will tell. that second derivative like in the crisis people talking about second derivatives again we'll talk do you soon eventful first half of the session. let's get to the judge thanks very much a historic day on wall street. welcome to the halftime report where our coverage of the sell off continues. we have a number of special guests with us today including legendary oil trader mark fisher the committee is at the desk the dow falling to a one