on in this market. we'll continue to watch it closely on "power lunch. i'll see you there thank you very much, kelly we'll see you in just a moment it's a historic day on wall street with all of the major indexes down by record amounts the dow is within about a percentage point of bear market territory. oil having its worst day in nearly 30 years since the gulf war of 1991. dow, lowest level since january of 2019. what's going on? you've got russia and saudi arabia duking it out in an all out price war. that has sent crude down as much as 30% today it is down very strongly from a month ago. the energy sector down 19% on pace for its worst day ever the entire-year-old curve yiel

1% you see it there at .89. an amazing day >> yes, it is. thank you so much. welcome to "power lunch. we have all the angles of this historic sell off covered. bob is watching stocks for us. rick tracking the historic lows in bond yields all eyes are on the trump administration's response and stooefr steve is on the fed's next move. we'll start with bob >> we're back at the lows for the day. that 7% level becoming important because of the circuit breakers. we had the halt at 9:33 eastern time let's review the circuit breakers because they were very important this morning these are long history but only used once. level one down 7%. we saw that at 9:33. there's no other halt if we're down 7%. next level is down 13% that would be another 15 minutes until 3:25 p.m. eastern time and there would be no trading halt

at all unless we went to level 3 down 20% that would halt trading for the rest of the day. these circuit breakers had a long history this goes back to 1987 remember that 22% drop everybody said we needed to do something after that and they did. until 1997 we just used a point rule points in the dow jones industrial we revived this several times -- revised it several times it's only been used once way back in 1997 this is all new. we haven't seen it with the revised circuit breakers you want to see a rough day, here is allow haliburton halted 5 9:33 and then halted again at 10:00 and halted again at 10:22. three trading halts in one day that's a pretty rough day in one hour nobody knows how to price these

energy companies because no one has any idea what the earnings will be so they are gyrating all over the place there you see the banks. all down here. the dow jones industrial average down 2,000 points. back to you. >> robert, thank you very much 2,000 points 7.8% on the dow jones. the entire yield curve below 1% the rick has been tracking the action for us from the cme rick >> it's a wild session, no doubt. i've heard many say they've never seen mid offer spreadings this wide. i remember some wild night sessions all i can say is when you have machines, you have this thing called a plug and you can unplug many in the machines in future last night weren't going to get involved that's one of the big issues with machines. sometimes they are turned off.

if you look at five year notes, i put a ten year chart to prove we have everything five year on. we have taken out all previous loans and moved into history one week of tens this is chart isn't exactly right. i'm not being critical many charts connect the dots there's a gap. friday's lowest yields was 65 for a ten year today's highest yield is 60 even with though the lowest yield is 31 most of the time you come and fill them. that's good news if you're looking for yields that come up a bit. hyg is a proxy for kwhast going -- what's going on in the credit markets you can see there's plenty of periods that were higher and 2018, let me think, early 2016, 2008, perspective. this narrowing may be a good thing. maybe the central banks can al get together and figure something out. at 1:37 it's the o closest

kelly, back to you >> all right thanks let's look at the dow and s&p which are headed right back to their lows they hit new session lows right now. the dow is down 2,061 points the s&p is down 7.5% today it's down to 27.44 the nasdaq just shy of hitting the 7% mark itself the white house considering options for a possible response as these markets continue to plummet. >> reporter: a couple of meetings on the schedule to keep you up to date one is later this afternoon we're expected the president to meet with hiseconomic team to consider some options here to respond to this economic damage that we have seen. we're told he's going to be given a robust list of options of what to do. no indication there's going to be a decision to make but the president will be arriving here at the white house within the next hour or so. he's been down in florida

attending a fund ra-raiserfund-r on wednesday with president will be meeting with wall street executives not sure what ceos will be here. those invitations are going out as we speak. we'll have more on that in the coming hours a couple of tweets from the president to give you a sense of what he's thinking today he says saudi arabia and russia are arguing over the price of oil. that and the fake news is the reason for the market drop the president sort of blaming the oil markets and blaming media coverage of coronavirus as part of the reason why we're seeing this today. he says good for the consumer. gasoline prices coming down. that also gives you sense of the white house thinking on the oil markets is complicated they feel it's a boom for the economy in certain sectors if oil prices are low on the other hand they are aware of the damage to the fracking industry and others for those

low prices they are trying to balance that. not clear their thinking about taking any action in terms of the oil market, specifically we should have beater sense of things after this meeting at the white house once the president gets back to town. >> okay. we appreciate it >> thanks. >> traders are betting on another mass ifr rate cut from the federal reserve as early as next week take us closer to zero steve has more on that >> thanks. concern about the way fixed income is trading had some market participants saying the federal reserve may do more than just cut interest rates. there are calls to break out some of their programs from the financial crisis to resoever liquidity problems kelly and i sat down with head of global fix income we asked about unusually large bid aspects in the treasury market here is what he said >> steve, i've been doing this 40 years, i've never seen that before last night i got a message from

our london office. there was no offer on the 30-year treasury futures we have never seen that before these are unchartered times for sure >> this morning the new york fed announced it was increasing size of its overnight repo operations it upped the amount of its two-week repo from 45 billion to 20 billion that prompted former new york fed official to say quote, it is a baby step with only short term changes, limited term funding and no global reach. in our view much more will need to be forthcoming and very soon. calling for the fed to cut basis points

luckily the fed has to converted what were temporary into standing dollar swap lines with canada, ecbe england and japan and that should enable them to borrow dollars as needed that may come up. it just seems like it's taken a step toward the worst today in terms of the interbank thing that seemd like it was okay last week i'm hearing more alarm now i think it's worse than it was on friday. >> despite all the kind of extraordinary central bank stuff we're talking about that we said a big target fiscal stimulus plan came out tomorrow what would happen he said it would stop it in its tracks >> there's nobody who has not said the primary response here needs to be fiscal that includes four federal

reserve officials. they were very strong in calling out and they normally don't do this from a fiscal stand point of addressing the economic fall out this needs to be a fiscal response as it will be more effective than what the fed can do from the economic growth point of view. from a liquidity point of view, i believe that response has to come from the federal reserve. >> ten years back below half a percent now. what's wrong with this market? here is to explain fast trader guy. >> i'll try to explain it. i want to say quickly, i've been doing this, 13, 13.5 years, i can speak for myself that none of this is fake news i think i can speak for the network, none of this is fake news we're reporting what's going on. some of us have opinions

reporters report i want to put that out there because i think it's important i'm also not an economist. i think i sort of understand what's going on. history is litterered with disasterous outcomes born with good intentions. i think in the '80s, mr. greenspan said maybe we can take the recession out of the equation and they were able to do that for a period of time i happen to think recessions are a natural part of the cycle. it's like the forest old trees burn down, it's devastating but it's essential it's the same thing with our economy. what does that mean? i'll tell you what it means. they put in place these things and people get lazy. how do they get lazy in many instances corporate america got lazy give me an example, guy. i'll give you two. i think general e lek trlectric really lazy and ibm got lazy now everything is l coming home

to a roost it's making people focus on their businesses when they saw the market goes up every single day, they said why bother it's a cost i don't need they stopped then they said, wait a second. maybe we can sell options instead of buying these things, instead of not doing anything, we can sell options. the market is having to go down again. we'll create this synthetic dividend and everything will be fine whether they realized it or not, the federal reserve and other central banks dampedened volatility to a point it was unnatur unnatural. the weekend apple came out and said things will be rough, that's fine. that's absolutely fine

this passive investing looks past the news. in terms of the option volatility, you're seeing what's happened when people have what i call what market participants call negative gamma. the lower the market goes, the more they have to sell which exacerbates the down side and the same things happens to the upside we have seen it a number of times over the last couple of weeks. the bad news is that doesn't get sorted out overnight unfortunately it doesn't happen. i'm not here to call bottom. i'm not here to stoke any investment fears i'm trying the explain to you wha going on.

look and see what happened when we went through 1.4% see where we are now bond volatility is historic. it's been going on for years yet nobody talks about it and currency volatility is historic. everybody is so equity centric i understand that. it's not healthy the last point, you tell me fo back to september, the fed rebow when they said this is normal business as usual. there's absolutely nothing normal about what happened in september and we're now in march, what's going on now they can say it's normal that's fine. if you look under the hood, something is really very wrong and it's manifesting itself now. sorry to take the last five minute >> in just a quick word, you

have managed money what do investors do all this being the case, it's still the market we have it's the market we have to live with what do we do? >> if my mast th is correct, wee down 19% from ahistoric high i the market we have seen that before the problem is, we're seeing it in course of week and a half it's freaking people out that's what happens when volatility gets tapered to the extent that it is. october 2018, '19, when jerome powell was saying we're going to reduce this balance sheet, we're raising rates. i happen to think he was doing the right thing. why follow everybody else down the rabbit hole of negative rates when you don't have to if our economy is as strong as the administration said, there's no need to do that i think we'll be in a much better place now

i totally get that and i'm not trying to. it's just my opinion >> what are they protecting us from >> in my opinion, the federal reserve's job is not to make the stock market go higher it's not >> i think it's an overlay of the s&p 500. not to suggest that everybody own stocks that's not my point. when people see the stock market go up every day, year after year, they say to themselves, economy must be strong if the economy is strong, i can go on that trip. i can buy that starbucks coffee. that's 73% of that economy is exactly that go back to october '18, and november of '19, when the market

went down 19.8% in are a month and a half consumer spending stopped o epea dime we can't normalize because it will upset the market. if it upsets the market, it will upset the consumer and we have a problem. that's what you're seeing now. i'm not suggesting i'm right, it happens to be my opinion >> do you want to jump in, stooefr. do you have a thought here >> i just wonder the extent to which we can have one discussion about it being a buying opportunity or not when it's a credit event i think discussing the sins of the past might be relevant at some future point. i think that's an interesting discussion i was with guy in the idea that i would have liked to.

i was not a huge fan of the three rate cuts that came in response to the trade. that's where we are. you go to war with the fed funds rate you got, not the fed funds rate you wish you had. now the question is, getting the market through liquidity issues here so that you can have price discovery and get to that point where investors can have the discussion is this a buying opportunity. >> everybody stay put. scott wapner has joined us >> thank you i asked jeffrey if we could talk about some of these issues as steve was describing these dislocations between the bid and the ask spread on treasuries

the movement is so big that one should expect an expansion he didn't come off as -- >> it being a liquidity. >> all that surprised, i would say. not that he's not concerned but he wasn't all that surprise given what we're seeing. given that every single market is down big and the treasury market is up big given that context the credit market is more orderly than you might otherwise expect just because of what you're witnessing across the board in the markets. i say how bad could it get how concerned are you. he said i'm concerned. things have to get worse you don't have a move like this end without disorder it just never happens. that's what he said in terms of what the fed may do, he said these calls for more fed actions

seem early to me the stock market isn't even down 20% from its high. >> things with europe were like 5 or 10 and,0 now they are like 30 >> that was sort of met by that. >> you can tell jeff to rest easy >> i think the bottom line here

is while he's concerned about some things he's seeing in the credit market, it hasn't reached def-con five or whatever the highest is it's just a matter of what ultimately gets you there. whether it's the stock market which we sit here and we watch the market today in a 7 or 8% move feels like a whoosh that's not what he was talking about. >> stocks falling, not really a big deal yields falling, not really a big deal they care about people leveraged

in all of those trades and those people losing money is not really a big deal. i think their biggest concern is does it create systemic risk do we find out ex-post that it's in the banking system. banks acting to preserve themselves makes the situation worse in the sense that they keep dollar funding from the market they husband those resources because they are regulatory reasons or own concerns and their own models tell them hold onto this stuff. don't provide it that's how you get to the place where there's concern. i agree we're not there. what i have heard is market participants telling me there's some indications of some of these things that we saw back it extent there's no information and i hope it's not true that the risk will be found to be lying back in the regulated banking system.

>> let me ask a final question here to go back to a lot of the points you were making and with the context from jeff about what he kind of is or isn't worried about out there. is there anything somebody could step up and do or say that would make you feel like my concerns are being addressed. we're going back to the good old days, not the bad? >> that's great question i'm 56 years old >> that's it >> that's it i appreciate that. if i dye my hair, i'll look a lot younger. there's a commercial, it's not nice to fool with mother nature. let the system run its course. it's painful i get it you don't need -- i don't think it's about where rates are it's about liquidity you can drop rates as much as you want but i don't think that's helping the problem to me it's making it worse

to steve's point, to balance sheet of central banks that are totally inequipped to handle i don't think the fed thought this through as well >> there's no evidence of that how is it possible to say the problems from '08, to '09, got moved to central bank sheets >> where did they just vanish? >> i thaought you were going to say they got moved outside the ba banking system into the shadow banking system >> we got to go do commercial.

look at the expansion. our federal reserve balance sheet expanded at a ridiculous pace i don't think that's any way healthy. these are just opinions. i'm not trying to state fact other than the fact in terms of derivative books when you walk in one day and say some derivative book somewhere blue up. then i think you'll have a close to bottom. until then, i think this thing continues. >> we're not going to any commercial break don't worry about that steve, we appreciate it. >> you asked me i wonder what he's thinking. now we know. stocks are hitting session lows in the last couple of minutes with an unprecedented drop and major averages are down 19% from their record highs last month. the question is whether this puts the end of the 11-year bull market within reach.

david, elet me start with you. what do you think the main problem is with the markets today? >> i think it's uncertain pi about the economy which we're not really talking enough about. what really happened is as these numbers. >> referee: cases have increased, people realize more and more companies, more and more individuals are changing their behavior that's causing social distancing i think that's really where the problem is for investors, just calm down. markets are crazy in the short run. we may have a recession. we have seen a big fall in stock prices to date any way if we have a recession, the coronavirus, the effects will fade

i think the effects will be very big around the world before we're done they will fade then the economy will come back. i think people should look at valuations carefully and make sure they are appropriately diversified. don't get too focused in the short term market moves. they may be saying something but i do believer central banks can deal with financial stuff here it's the economic stuff we have to worry about there's some limit to the downside there >> russ, what is in your view, the economic risk here have we even begun to see it >> the economic risk is real we're seeing this as a unique economic shock one it's global. second it impacts the supply and as david mentioned the demand. it's very hard to kwaunquantify i think people are concerned about the economy. most people came into 2020 with the view that the global economy will not great with stabilizing. this changes that narrative very

quickly. it's not inconceivable that you can have a quarter or two of contracti contraction. i think the risk is about how much the economic environment changes. what does that do for earnings and how can policy makers respond. we have seen from central banks issues the key here other than deceleration will come from the fiscal side in targeted actions that help individuals and companies that are made vulnerable by the shock. >> david, on that note, we know that now that we're going to have wall street execs at the white house tomorrow i think this evening, trump advisers may be presenting him with fiscal options. what would you like to see announced? we need to give the effect of medical insurance against this disease to everybody i don't know how you do that through an expansion of medicaid

or find some other way of funding it i think anybody that wants to be able to get a test should be able to deal with it we need to deal with the medical issue. second of all, we need to look at the businesses being impacted we need to think about the low income workers they'll be hit by this can we do a stimulus check or something. if they lose a job or hours because of this. make sure you're dealing with the health care aspect of this >> we're coming up to the oil close, guys. thank you for your thoughts.

as we hit half past, today's market has been triggered by a huge drop. we are down about 24% over $31 a barrel that's the worst single session. this move as you can imagine is wreaking havoc on the energy sector the whole group is down 19% which would be its worst day ever let's bring in bryan sullivan. joining us is head of energy research at goldman sachs. bryan, your thoughts >> hi. i wrote a piece over the weekend. it's still up. it's an epic battle of egos. this is a pay back to trump from putin. the saudis are ticked off at the russians who were never interested in making a deal. they never got close in vienna

russians probably just showed up to say they showed up. this is what we get. i think polling people today and i'd like to hear damien's thought on this, i think it's hyperbole to suggest that all price, 40% of the oil pulled out of ground is ludsing money >> does that mean it gets shut down >> i don't know what's going to happen i wish i did there's all these things that we don't expect i will say if you're losing $10 a barrel. >> you better pump twice as much >> i think we'll have to see the industry shrink. the equities are reflecting that you don't need my opinion on that >> there's some of them now. you can see them down 40% from recent highs >> what do you think about how this will ripple across the energy sector. bryan made the point last week that a will the of the stocks were trading like oil was at 25. we're at 30 or so right here

yet you have the stocks falling 30, 40% today. what is that telling us? >> i think the key take away is the structural component of this lack of agreement. what you may be seeing is we may be unwinding economical cut. since 2016, opec production is down 4.4 million barrels per day. the rest is up 5.7 at $60 oil prices that's $200 billion wealth transfer every year from one sector to the other. i think what the market is saying is are we finally move back to the rational market structure, low cost producers and the more marginal producers that do not work at those prices not having to be around for the

next tyears. >> they have high break evens for their budgets, do they not even if that wealth transfer goes back, they come out ahead and oil is still $40 barrel. doesn't that still hurt their finances >> in the short term that's always the case. it's better to cut production and prices russia break even is $45 where saudis is between 80 and 85. the key is let's look three years from now if they do manage to increase production and prices recover from here, maybe it's not 60 but 50, 55, both economies are better off saudi's fiscal deficit is half of small by 2022 in this kind of flat production, stable price environment that's why they are long term economic benefit to doing this market share defense now is an opportune time to do it >> they want us gone they want to squeeze us.

we're the ones who have increased production even if they have -- >> four million barrels day out of u.s. production has come online in the last two years these high cost producers that have been living on debt who just got here a couple of years ago are screwing up our marmket. i'm not saying i agree but that's their view. >> this is a complete risk to the entire space thatcame at the exact wrong time for all of them i can't tell you it's big deal. exxon mobile in an environment when it should have been trading higher was not now things are going pear

shaped i get it if you don't think esg has anything to do with this, you're not paying attention that's not going away. >> what about the tobacco stocks there was a huge divestment that led to huge returns. i totally take your point. there's mass iive capital coming out. >> it takes time it didn't happen overnight things move so much faster now than they did when that happened it will sort itself out but this is happening in terms of the esg, it's happening at light speed right before our eyes every single day >> what percent of the shale producers in the united states will be here in five years >> when you look at the structure of shale there's about a third of production that comes from very small producers.

it was at the time what was needed to a rationalized industry with fewer, larger producers with much lower cost of capital that's a transition that had to take place any way it was drawn out over the last for years. >> we're watching the price of everybody in energy sector one thing everybody agrees on is consolidation. we know in a vacuum the smaller players look worse off shouldn't there be any bid under the price of these names today >> consolidation is not -- >> why >> there's no value. some cases might be a negative cost that's the issue you're going to be taking on a lot of debt. if the debt gets restructured from some of these companies, and the price of oil stabilizes,

you could see it private equity is full up. they are maxed out >> what about the exxons, chevrons >> cut costs >> buy the asset itself instead of the debt that comes with it >> what is the overall production in the united states today in barrels of oil? >> u.s. is bigger. we're nearly 19 million barrels a day. >> what will it be in a few years? >> shale, i don't think is going away even if saudi, russia increase production, they have finite capacity three, five years from now we still need growth elsewhere.

>> it's only going to get worse. for a lot of people, midland, texas lit be big job losses and projects that don't get away in a state that's powered the american economy it did power it out of the great recession. it's going be a rough time >> why do you think we would be producing the same or more in a few years? who's going to be producing that >> exxon and chevron are still growing, we think, even at low prices >> interesting >> can we give a shout out to al walker he and five other executives walked away with $300 million when they sold in may of last year al, if you're out there wactchig cnbc, you're either the luckiest

or the smartest guy in the world. >> probably take it either way >> thank you the dow tanks more than 2,000 points amid growing concerns about a global slowdown there's a dire warning telling clients the worst is yet to come for the economy and a first half recession is now a distinct possibility for both the united states and europe. david kelly, a few moments ago, said we have not been paying enough attention to the economic effect of this virus and the ripple effects through economies. you are arguing that boy we need to how bad is it going to get >> well, i think it's pretty clear there's now a very distinct possibility of a recession in the u.s the good news is that if a recession comes, it's likely to be relatively mild, relatively short because there are no major

economic imbalances in the economy. even though it may turn out to be a u shaped economic trajectory, the u initially looks like an i as the economic indi indi indicators sink and then it looks like a l i think we're going through a period of elevated uncertainty and, again, the bad news and the data still has to show up in next few weeks and months. >> i think this is one thing i say, you can correct me if i'm wrong and i'm wrong a lot, i

think people, historically confuse the health of the consumer with their want to spend. the two are mutually exclusive i'm not certain at this time they should be lower oil prices help consumer lower gasoline prices help consumers. they're not going to spend these wind falls in this environment that's why i think this could become the first services led recession. usually recessions are led by housing or by manufacturing but i think you'll see service's demand for services declining and consumers will only think become more confident and the

outbreak is behind us. most experts say this will not happen before may at the earliest >> talk to us about the services sectors that will be most vulnerable or impacted i don't think that's a verb in the recession scenario that you foresee. >> we're already seeing it in travel airlines are affected. we will see it and we're starting to see it in the entertainment industry we will see it in the hospitality industry, hotels, restaurants. these are the areas where i think you'll see the biggest fall out >> i'm curious as a data driven individual, what your reaction is as you look at what's happening in the economies around the globe what your reaction is when you hear the leader of the administration say that this is all being over stated by fake news and democrats who are out

to harm him? >> well, i think if you look around the world, if you look at the data, you can already see that we've had a very sharp supply shock it's already showing up in the chinese pmi. we will see it in the manufacturing data out of the europe which is very closely linked to the chinese economy soon we are already seeing that demand destruction in services we have seen it in china we are seeing it in japan. we are seeing it in korea and we are starting to see it in europe i think it's very clear, if you look around the world, this is a very sharp downturn. again, it can be temporary it can be relatively short because there's nothing wrong with the underlying health of balance sheets, particularly in the consumer sector. but this will only arrive in the hard data, particularly here in the u.s., in the next several weeks and months >> thank you very much for your time we appreciate your insight

>> we're closely watching the yield on the ten-year note that is backed down around under half a percent because stocks are at session lows oncen again you see the dow down it's so hard today jpmorgan is down 10% t look at bank of america down 16%. regional banks worse the prospect of even lower mortgage rates from here isn't doing much to help the home builders we'll take a closer look at this today and at the sectors future when we come back after isth quick break right here on power lunch.

here is your cnbc news update this hour the head of the world health organization is intensifying his warnings about the spread of coronavirus. he is also stressing the need

for decisive early action to slow down and prevent further infections >> know that the virus has a foothold in so many countries that the threat of a pandemic has become very real it would in history that could be controlled. >> japan has begun asking travelers from china and south korea to self-quarantine for 14 days to prevent the spread of coronavirus. passengers from both countries are being asked to stay in th l hotels and avoid public transportation heathrow airport is quiet today after flight cancellations that's your cnbc news update this hour. back to you. >> thank you stocks are right near session lows now with the dow

down more than 2,000 points. the s&p down 7.6%. the nasdaq down just under 7% this afternoon you might think with rates plunging that the home builders would be up today but no not only are they down, they are pretty much down with or more than the market. d.r. horton down 10% kb down 13%. despite low interest rates and what has been high home buyer demand the etf is on its worst pace since 2011 joining us now to talk is the home builder analyst jack, why are these stocks doing, in some cases, worse than the of all market when the one thing people say could be a help here is housing demand >> i think part of the problem today is the issue of sentiment. most people don't go out and buy a house because rates pull back.

first time buyers, aren't saying now the mortgage rates are at 320, 325, people are house ng fall off the economy overall pleading to some job loss at the corporate level. underlying fundamentals for housing remain strong. fundamen housing remain strong. >> is that fear rational would you go so far as to say the people, look, this sector can hang in there, even if the economy slows? >> we would. we upgraded from neutral to positive last week think about fundamentals of housing. you've got a supply and balance. probably underbuilt just roofs 500,000 to a million depending on which numbers you use, over the last seven, eight years. you've got the largest demographic wave since the boomers and you've got record low interest rates so fund men tas here are pretty solid. on top of that, you don't have a lot of supply chain issues

a lot of these, you don't have a will the of stuff being shipped in from china. it's a domestic play here in the u.s. we like the fundamentals still even through mid last week, we're not hearing any signs of virus related demand issues or anything of that nature. >> so you're comfortable buying a lot of these stocks right now? >> yes i think if you look at it over a three to six month period, we're going to look back and feel like this was an overdone sell off. >> three to six month, let alone three to six years right? >> wryeah you can't deny the fundamentals. i think what people are klookin at, if we're going into a recession, it's going to be like the last one fundamentals in housing couldn't be more different than they were in '07, '08, '09 i think people have to step back and look at where the drivers are. mortgage credit is responsible it's rational. you know

people are you know, there's job growth, wage inflation and again, we are undersupplied. the existing market is running about three months of supply normal market is six i think some of the builders this year helped build that void and where you're seeing most of the strength is on first time b buyers >> jack, as we see kb the worst hit today, lennar kind of secondarily so, are any of these builders with exposure to texas that may see a slowing because of the plunge in crude >> sure. and we had a note on this just this morning kb hasabout 11% of company deliveries last year from houston. so they're one of the larger names. my coverage universe i think that's partly what's driving the relative underperformance of the group. you go back to 2014, '15 we had a similar collapse in oil prices in the back half of '14 in '15, new home sales in

houston were only down 15% so i think there's more resiliency in the houston economy, but for today in the short-term, i think people are singling out builders like kb because of their outsized if you will exposure to houston other builders are in the 3 to 6% of their business >> thank you we've got a news alert on amazon out with a new plan amid the spreading coronavirus. diedra is in san francisco hi, diedra >> that's right. a few new developments regarding its work from home policy. amazon advising employees asktded by coronavirus to stay home until the end of march and encouraging more employees to work remotely, including those in new york and new jersey and this comes in in addition to employees that have been advised to work from home in the seattle bellevue area where amazon's headquarters are located, the bay area and lombardy region of italy. this follows microsoft and facebook advising employees to

work from home thank you. >> thank you stocks are up off the session lows, but the dow is down 1900 points almost 7.5%. brent is with northwestern mutual management and sundeep. brent sh how much farther does it feel like this market is going to go or do you have a sense of it? is. >> i don't know if you can have a sense for how far it might go because i don't think it bottoms until new cases pique. who knows what the virus is going to do. i've heard a lot of medical experts who don't have an idea i guess the three things i would focus on are that types like these are not the time to sell stocks history shows when you panic, your long-term returns are sub par. the vix hit 59 this morning. if you go back in history, there are only 30 times the vix closed

above that and each have given way to positive one-year returns. that may not be a call on the bottom, but i think from an intermediate to longer term perspective, stocks are becoming bet at these levels. >> i agree completely with brent. clearly you favor stocks over bonds for the long-term and the damage has been done the repricing has taken place. this is not going to be a contained event in china we have a global contagion and we have a price war on oil the range of outcomes is to uncertain that everything is up in the air we'll have a slow grinding recovery back higher at this point, you really just have to wait it out. >> what if we have a recession >> if we come across one, it's likely to be one of the technical variety. it should be shallow in nature the coronavirus was a one-time event. pathogens do lose potency and become less vie rue lent and

then don't forget all the stimulus that will be put in place the fight this we'll have a tail wind behind the market on the other side >> putting a bull's eye on my back, the market's down 19%. you can make an argument that on valuation basis, it's where we were three weeks ago or more expensive because nobody could tell me that earnings aren't going to be down anywhere from 20 to 25% and the last couple of years all we've seenis multipl expansions so you explain that one to me because it doesn't make a lot of sense. jpmorgan is is down more than the rest this is my view. book value was $60 a share traded up to 140 people say they deserve that price to book valuation because they're the best bank. now we have a lot of people saying you know what, jpmorgan is great but now it's catching up to where the rest of the banks are. i think underperformance is them catching up in terms of price to book valuation >> so rational logicals.

let me pick up on that point and ask you about earnings guys saying look, if they fall u 20 to 25% here, then all we've done is reset valuations accordingly. would you want to make a case for earnings taking less of a hit or more of one >> i don't know that anybody knows for certain so that's the real risk that's being priced in right now. there's a lot of uncertainty i guess i would take more of look at what's happening in the economy now. it's on pretty decent footing. i heard what he just mentioned and i agree that the consumer is in great shape and i can make the argument that the market is already pricing in a recession which bear markets are almost always consistent with recessions i don't know how much deeper, b but certainly, i don't feel we're in for another great financial crisis because the fundamentals are much different now. >> we began the hour talking about whether i don't mean to -- speak for yourself here, but i'll try and paraphrase it we are in the position we are in, the pickle we are in in part because we've done it to

ourselves with monetary policy do you agree with that how much, how much of where we are now is because the fed has over time and repeatedly rye et to protect us from the markets >> it's a great question i still see the fed as a different organization than they were and they're going to pull out all the stops to keep the economy afloat i think you have more monotar stimulus coming. i have heard for 25 years of my career, the fed is pushing on string they haven't actually seen it bend i think there's a high likelihood that will have some impact in the economy and more importantly, you're going to get more fiscal stimulus that is targeted that will help bridge the gap between the coronavirus before and after so if we can do that, i do think that there is some cushion to the downturn in the economy. >> i'm afraid the string just broke. >> no monetary policy feels lik

pushing on a string it's been overextended it's efficacy is diminishing, but let's talk about fiscal stimulus people worried about the size of the debt but with the long bond doing what it is, there's an insatiable demand for the ten, 30-year bond why does the government spend and fiscal stimulus has a bigger multiplier effect than monetary policy, so i'm optimistic. you asked the question about where could earnings end up. last year's earning 163. right now, projected up about 7% probably overstated, let's cut that down by 10% so plus 7 becomes minus 3. 163 becomes 160. next year r, we have an optimistic or conservative 8% rise once this blows over you apply a multiple of 16 to those forward earnings, which is where the market has consistently found a floor. you're right at these levels

>> what if earnings fall -- >> it's a different story. last year's economy suggesting 2.5, atlanta fed gdp now at 3 s 3.1% unemployment at 53-.5. u.s. economy is really strong. >> leave it on that hopeful note thank you. that does it for "power lunch" today. >> and closing bell starts right now. you don't want to miss the next hour welcome, everyone, to chosing bell a historic day on wall street. stocks were halted after a 7% plunge we are tracking for the worst point decline ever for the dow i'm here at the marathon energy post that stock is down 47% oil prices, energy stocks are getting crushed. we're going to follow all that

for you in