let's take a final check on the markets. the dow futures are down by 950 points the nasdaq down by 289 the opening bell in less than a half hour. join us tomorrow right now it's time for "squawk on the street. good wednesday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber on the new york stock exchange. dow futures down about 900 here after yesterday's 1,200 point bounce goldman today declares the end of the bull market, sets a mid year target of 2450. europe had gains, they're basically gone oil is down a buck as the saudis boost capacity worries about the virus putting stocks on track to give back most of yesterday's gains. the wild ride on tuesday saw the dow erase a 900-point jump

before rebounding to finish up almost 5%, recouping half of the losses from monday's 2,000 point selloff. jim, remember when we couldn't get a 1% move la last 12 sessions, s&p moved 3.5. >> the market feels broken to me not a lot of liquidity many things happening at night you'll see the interest rates go down at night. then suddenly the s&p is having a nightly session. we have to play by that tune i get it there's -- i want to say -- there's not panic. people want to get out if there were people, you would see endless downing endless down you could say buyers will come in i was listening to jim paulson before, he sees a lot that he would like i don't. >> you don't >> no. i like utilities i like the drug companies, i like the highest growth tech,

teledoc. the rest sell to you people are buying royal caribbean right here as if it's like a buying opportunity. a lot of people using the term buying opportunity, b.o., for things >> no. >> no, to b.o. >> as you might expect, people are focusing on the credit markets and the oil markets again today. in terms of trying to understand what's going to happen there and get a sense as to the real economy here as well if you're a mid-sized company, and you have leverage debt and you're in the hospitality industry or you're in something consumer facing, you are now looking at a potential of negative cash flow >> because you're not facing consumers. >> then the question is what does your debt structure look like do you need to extend maturities this has moved so quickly that there are companies that were buying back stock weeks ago that are now being advised to sell

stock. >> incredible. >> because that would be the smart move in terms of preparing for what may be -- we hope, a very short-lived but significant downturn >> how about the revolvers are they being triggered >> norwegian >> sure, if you're in a case like that, you will pull down your revolver conceivably. i have to the heard that generally speaking >> no. >> then the energy sector is a separate story a part of the high yield market, where you are going to have, i think, when you talk to people bankruptcies, it would seem. we're talking smaller and mid-sized players. that's going to be restructuring without a doubt of some companies there. given this price war that is only getting worse between the saudis and the russians. >> if we have two buckets here one bucket is solving the public health issue, getting a vac kci, diagnostics. the other is loan forgiveness and call them bailouts if you want that's what this meeting of bank

ceos with the president is about today. >> right and you have guys like marc benioff coming in, too i think that's good that they're doing it treasury secretary munuchin is monitoring everything. congress has to get on the case. the only positive aspect i see other than fiscal stimulus is that lynn schlifer was on, monoclodal antibodies he thinks could be an approach on "nightly news" last night, the ideas of anti-inflammatories working, getting people out of the hospital

instead of thinking about stocks going to 1820 lows, i say are we italy or south korea italy out of control, south korea under control. >> a lot of public health professional also tell you whatever we can do to change our behavior, to slow the spread of the virus will be beneficial, it will mean not overwhelming the health care system, giving us more tiles for anti-virals, not a vaccine but something that gilead is working on which could conceivably if it works and we can get it into significant supply help the growing population of people who will get the virus. >> we cannot be that optimistic because of how difficult it is to produce a vaccine >> vaccine versus -- >> one is like a tamiflu that will work like this. >> i would like the tamiflu aspect, but you have to test and

test and test. do we have time to test? in this country, i think there's an unrealistic nature that -- i was out at dinner last night it was hard to get a reservation. i was looking around i'm seeing empty tables everywhere, meaning that i'm looking two to three weeks in advance, you're hearing firms getting it david costum with an unbelievable piece saying it's the end of the bull market if i think it's going to go back to the 2018 lows -- >> but the slowdown in economic activity is going to be real when google says to 100,000 employees in north america we would prefer you say home, they're not out. they're not going to lunch >> and the conventions >> are we adding value by saying people may not go to games i'm trying to figure out -- i'm saying there's certain stocks -- i'm not denigrating what you're saying, but when i listen to you i translate that to stocks

i say what do we do with a hotel? >> that's the point of the presser yesterday afternoon. larry kudlow talking about what kinds of measures the government can take right now to help those businesses that will have this huge interruption in cash flow >> i think the outline of the thing is very important. the payroll tax holiday is probably the most important powerful piece of this on the other hand, i want to draw attention, we can use administration and executive authority, again, to help unpaid sick leave, which is very important. we can use it for the medium or smaller businesses which is very important. other distressed sectors we have some leverage on tax deferral >> word is that the hill is not ready for this yet they need to see the fire in the living room before this gets traction >> secretary mnuchin and larry, they have to go over there

no vacation. come on. this is serious. this is not the time to have vacation it's not really the time to campaign i find there's an unrealistic disconnect between people who want to go on, live as usual, as just we want to take the subways during the battle of britain bombing of london. churchill showing -- >> keep calm, carry on >> yes but we're not churchill. and then there are other people who recognize the dangers, we're all splitting up offices, going different places getting to that sense where we have friends who have it, recognizing that self-quarantine means you're not going to the movies any time soon i think, look, i don't know. this is no time for -- i'm in the -- are we kidding point. my wife wanted to go to a gathering on sunday, i said this is ill-advised we had a little dispute about it because there's a sense of, hold it, wait a second, we still have

to go about and do some things i don't want to. i canceledsomething that's ver important to me, a conference that was hugely economic impact on me. i said am i kidding? this is not going to happen. >> right, but you're still going to dinner. >> i want to end that. >> i had lunch with somebody yesterday who -- we had lunch in their office he's no longer going to lunch. >> was the sandwich delivered -- >> no, it was from a nearby restaurant >> did you wear gloves >> we didn't people do different things >> when you're wearing gloves, you don't want to go -- >> i went to the gym yesterday the whole time you think did i put this side of the towel down? >> i opened the door today and then i grabbed my bag. i said boy did i ever screw that up i said i'm sorry -- >> i left my house without my subway gloves. >> are you kidding me? >> no. >> can we go over -- >> it was fine

>> it was not that -- >> you don't have to go to john ledger's chair waiting for him. that deal will close >> these are 70% all you need is north of 62. can you believe this i'm going to be drinking alcohol when this is over. >> we'll be fine >> we'll be fine >> what are you -- >> you said for weeks, merkel said today, she predicts 60% to 70% of the german population will be infected your point has long been we'll all be exposed to this the point is not to overwhelm the health care infrastructure >> she put that out. i don't know the full statement. i think the next correlation will be a lot of you will be exposed but not really sick. if she didn't say that, that was irresponsible. anyone, the faucis will tell you a lot of people will be exposed to it but not get it the in italy, the hospitals were

overwhelmed quickly. they were fine and then overwhelming then you're teledoc'ing. >> yes we saw italy closed down, the amazing pictures earlier on "squawk box," it's not an insignificant economy. what about the european banks? moves up over there as well. the uk making some important moves. a look at a deutsche bank, a number of other banks. market caps are tiny but their balance sheets are enormous. >> enormous. the only one that i really -- i have to tell you, banco santander and they have closed, we're seeing that pretty much everywhere that bank could be the savior. certainly not the german banks shout out to tim geithner for the hated insistence that our banks raise capital. i don't know if you listen to

charlie -- >> and the stress tests. the europeans never really followed us. there were holes in their balance sheet. >> club members. >> barclays, credit suisse and barclays, 3.2 trillion >> full faith in credit of what -- >> the market cap of the three companies is something like 50 billion. >> look at monte dei paschi. it's the oldest bank in the world. david, just go set up an account there and see how you feel overnight. >> when we hear from lagarde tomorrow -- what can she do? the deposit rate is negative arguments could be made she's less aggressive than draghi ever was. >> draghi had the malcolm x position >> whatever it takes >> good book >> yes >> he had a malcolm x position she's not. it's time for malcolm x position there is no need for any other position particularly with european banks. i think our treasury -- fortunately i think secretary

mnuchin would refinance a trillion dollars worth of bonds. he understands the bond market >> we should be doing as much as possible >> it will happen. >> the largest information program in the history of the united states. why not? we can borrow at virtually nothing. >> we will. >> you have to have congress' approval >> getting workers at that point may not be an issue. >> oh, no, i'm looking for a spike in claims. we had unbelievable employment numbers. those have been fabulous we don't have inflation. we can crank it up the germans never cranked it up. they sat there with this balance sheet. she could have done anything, they did nothing >> merkel did say she open to rolling back the zero deficit rule, which would be huge for them >> it is it would be necessary. we have to do that -- remember when the biggest issue -- >> we run enormous deficits. >> no, we can do very low interest bonds >> yes >> i'm marveling, we were

worried that the chinese might sell we could use every bond they might have how about the way that china -- trillion here, trillion there. >> trillion dollar annual deficit. given rates, why not >> did the chinese beat it are the chinese ascendant because they used draconian measures >> interesting question. we don't know the answer maybe. >> i think theyguarantee >> look. the only guarantee is that we hope for herd immunity, next year everyone who has it surrounds us, those who don't have it won't get it we want to starve it we're not -- we're not epidemiologi epidemiologists, dr. fauci is. he's been very sober >> we have to beat the virus every single time. it only has to win once. >> are you like the doors -- >> that's what epidemiologists will tell you.

>> you are filled with incredible missives that you put out there. >> meg tirrell knows some good epidemiologists. she will get us up to speed on the numbers. >> well, worldwide cases are growing to more than 121,000 with more than 4,300 deaths. about 55% of recorded cases have recovered according to john's hopkins data italy's cases topping 10,000 iran is at 9,000 new case numbers growing again today in south korea after five days of declines in germany, with more than 1,600 cases, chancellor angela merkel says the virus is likely to infect up to 75% of the population the united states has at least 31 deaths. washington's governor today expected to announce restrictions on large gatherings of people as this state contends with the most cases at 279 in new york, new rochelle due to close schools and pun gathering places around the outbreak tomorrow public health experts warning

that the u.s. health system doesn't have capacity for a surge in critical patients vice president mike pence is due to meet with hospital executives this afternoon we'll hear testimony today at 9:30 from dr. anthony fauci, this as testing capacity finally ramping up in the u.s. to 15,000 patients a day with that development, there's a new problem -- potential shortages of products necessary to run the tests, namely ana extraction kits. we've been in touch with a major manufacturer who says the demand is challenging its capacity and its ramping up manufacturing and hiring new staff in response guys >> thank you very much >> that wasn't that positive anybody hear anything positive from meg anything positive? >> you mentioned regeneron last night. they said when the vaccine comes, it would be affordable.

>> they did beat ebola the company i've been looking at the whole way. i do feel confident when he says we got something, he doesn't shoot from the hip he's right now the bull work that i see they've beaten it once like dr. fauci with aids. it gives me some belief that we can stop it at that 2018 level that we got to when the jay powell bear market happened. jay has been on the team this time he's not running the triage unit at beth israel or whatever pick any hospital. all right. columb columbia >> wherever you want >> nyu landow. >> he's not running the reservement. >> they ask you some questions now. you can just wow them by saying

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we got a mad dash, counting down to an opening bell in nine minutes. another volatile week on wall street looking for a significantly down open but it is nice occasionally to talk about stocks again what have you got >> i know you probably expect me to talk about that giant deal, smile direct with walmart in canada but halliburton, jpmorgan, they downgraded it from buy to hold, right strategy means wrong cycle. halliburton a major american company historically good at fracking always been in the mix of a

company that could buy baker hughes i'm looking at this question about the balance sheet that they need debt reduction it's a little occidental like. occidental being the bench mark of stupidity -- sorry, jimmy chill -- benchmark of great moves. halliburton y halliburton, how did it get there? now i'm reading, they'll make it they'll make it. >> how much debt do they have? >> four times. >> that's the problem. if you have leverage right now and you're heading into this period, the energy sector, but as i said earlier, consumer, hospitality you have to be looking at what your needs will be reducing to the extent you can and trying to extend maturities or sell equity to make sure you can ride out whatever is coming. >> my approach -- am i

stuttering my approach is this. a lot of the companies we see are prudent companies. >> yes >> some people might think that everybody is occidental. not at auchl thell these are prudent companies that didn't expect to have a dramatic decline. the oil punch was too much that was the bridge too far. >> for those who say got a huge tax cut, got -- depreciation expensing, all those things, you bought back a ton of shares, did you waste it >> in retrospect you were doing what everybody else was saying, when you're on these conference calls, we'll deploy cash rather than raise the dividend, we will buy back stocks, so if things go bad we'll still be ready. they didn't realize go bad meant a dramatic decline in revenues so they don't have the money coming in. these are not -- marriott is by no means a bad company it's a great company people have to check in. >> those companies that may have

been particularly prudent and not been fully optimizing their capital structures, as they are urged to do by shareholders are in a better position now >> if you're like warren buffett, you're in good shape. >> berkshire is selling 5 billion worth of bonds at zero >> that's a good interest rate to borrow and he gets paid by occidental occidental he got the preferred there. >> occidental he will get the 8% on the 10 billion he lent them to get the an daadarko deal done they still have to pay mr. buffett. >> anyone read the interesting bees biogen, they're going to hotels, high-fiving -- >> yeah. >> that says let's not have that convention let's not have coachella or south by southwest maybe not have the apple developers conference. >> none of them are happening.

they're canceled >> this does not make me feel like i can't wait to go to a good restaurant. i carry this around. >> i'm still going out to eat. >> you're still going out to eat? >> yes >> you're like a risk taker. >> i'm changing my behavior in other ways >> last night ta restaurateur said his business was down by 70%. are you seeing that? >> no. and we're not a tourist place. we also are not charging a huge amount for the wine. >> the margins on alcohol are high you told me the alcohol margins at the bar >> look, there's still a percentage of people when times are bad, they want to drink. that hasn't changed. canopy growth i'm sure wished they had a gummy supply.

are you stocked up >> no. >> you're not? >> no. i can't -- you know -- it's still difficult. >> so instead of hump gummies, you have hemp rope >> no, i got the good old-fashioned kind i really don't >> the gummies from harabo you have harabo? i have that lord whoever -- what is that lord -- >> you do this to it, you -- >> flame. >> it's all you do it's like it's 1978 all over again. >> okay, mr. vaper i saw you vape on the subway >> that's a lie. >> it's a bit of an exaggerating ra exaggeration >> the good thing is his son is all statewide receiver that's the only thing good i heard since this broke out

>> meanwhile he won't have a grad wag >> kyoto said there was an olympic committee who said he would vote on delaying it one or two years, then it was said that official apologized for suggesting it. >> japan has peaked. >> these decisions are coming fast the olympics is many months away the idea of bringing together tens of thousands of people in tokyo, we'll see >> i want to ask you let's say your kid was paying 75,000 for college, and you say you're done. do you get like a prorated money back >> you don't harvard yesterday telling all its students -- >> georgetown this morning >> i would rather go to the university of phoenix online than a lot of these online schools. how did they do last year in football did they beat your kid >> a lot of people are going to that remote learning that's what's happening. >> that's just great >> think about graduations if you're planning a wedding in

april. you know, you have to feel for those young couples. >> oh, no. no this is -- >> a lot of behavioral changes hopefully will be short-lived. >> remember what fauci said, your life is not going to be the same >> right >> i think we all have to start thinking about that. too many people are going about their business as if it's not happening. >> jim, like we're going to talk to kostin. this goldman call, they see a slump mid year they see the year ending 3,200 >> i think david likes a happy ending it starts good, the arc, then it goes bad david is one of those patriot games things ryan, jack ryan. he's jack ryan, he starts here with the wife -- >> it's bad. >> then cooking a pancake. goes down here, that's where we're headed somehow it ends up here. i don't know how he gets up here the movie may be unrealistic versus reality we have to get to that 2018

number we have to get to the jerome powell number. things are worse than when jerome powell decided to throw us into recession. jay didn't set out -- >> we'll talk to kostin in a little bit >> i love kostin >> we'll watch circus breakers it's not a big issue today, but we need to fall 201 points on the s&p to trigger futures indicate we're not going to get near that at the open but it's something to watch. >> i don't want people to buy. i think we want to retest monday cash is king this is the first time in the bull market where it's not facetious. cash is king i think what you have to recognize is that until you hear congress, until you hear regeneron, something is good, you don't have any hat -- here's the hat. we don't have anything to hang on to. >> there's a longer opportunity than you typically think to buy stocks >> that's it >> yeah. >> like how i always felt about

zinga. >> too early you always said too early. >> yeah. >> you have aers are happy for your son that's awesome that's nice. >> it was a while ago. [ bell rings ] >> he said the get has obj-like hands. >> there's the opening bell on the s&p 500. at the big board it's a the u.s. army, and at the nasdaq, monopar therapeutics, focused on extending life or improving the quality of life for cancer patients >> that's what we need this all-out manhattan project. i think the president is coming around i'm not for him or hate him. this is the time to say we've got all these people coming today, right, the benioffs of the world. you're not leaving until you figure out how to beat this. like we beat polio '54/'55 >> that is under way many efforts are being made

towards a vaccine. can you speed it up beyond what is being done? >> yes >> so it's not a year to a year and a half >> that's the testing issue. you have to wait because you can't just give people a vaccine and inject them with something that can kill them >> the anti-virals could be sooner >> that's our hope >> could alleviate a lot of the symptoms >> you get in the hospital, i remember when my faether -- trying to get him out of the hospital when he broke his hip we know that pneumonia is coming he died of pneumonia notice we're no longer talking about the regular things

>> it's novel. >> so we have zero immunity from it >> pepsi spends 3.6 billion on rockstar energy. >> i think it's a good move. rockstar does do it for you. does it have a lot of caffeine in it? >> does it have a lot of caffeine the caffeine is similar to the triple venti cappuccino with skim that i have i think it's a good acquisition. i think ramon has a good plan. that area has been a hole. it's a huge boom for the convenience store. there's just case after case of these energy drinks. it fills a major hole for pepsico. remember snacking, that business has not stopped. people do not stop by the way, cbd, the hemp that you use, that's tied in with doritos. did you go to college? >> i don't even understand what that means >> well, that's typical.

>> 80 milligrams of caffeine that's a lot >> it's a great acquisition. i think pepsi is doing well. i would point out that rockstar -- that monster has been a great stock i think rockstar has been underinvested. ramon is a man of the world. he's from spain. really cool. he has this going. he could also play bond, by the way. >> he could? >> he's much cooler than daniel craig and taller >> don't take shots at people who are not that tall. secondly, daniel craig in qu "casino royal" was the best bond >> i like daniel craig i'm just saying ramon is cooler -- never mind sean connery >> what do i -- we have the market down 2.5%, that being the s&p at this point. >> right why not let it come down a little somebody will say we're

retesting. i'm saying there's no hurry to buy. >> i understand that i understand that. so anybody who is looking at the banks and going i get it, but they're all well capitalized -- yes, we may be moving into recession. energy is not that large a part of their portfolios. they have rock solid balance sheets >> they crushed it on bonds. >> all true. >> even with very little net interest margin, these guys can do well. their book values are now -- >> all right i'll buy some morgan stanley here i will do that 3.65%. theoretical. 3.65%. james gorman doing a terrific job there. they are terrific. there. i'll go there. >> you will? >> yeah. down 3%. you want to buy 1,000 shares of morgan stanley, buy 250 right now. i will sanction that >> goldman sachs at a market value of 62 billion?

below book >> book is 205 totally scrubbed >> 205 the stock is 180 >> it was 177 the other day. why get it here? let it come in >> elon musk did tweet yesterday, he's looking for locations for his cybertruck factory in the central usa >> that takes queens out of the equation i know you were hoping for queens >> in terms of what? >> the cybertruck factory? >> tesla factory >> i'm always looking -- >> aoc already said don't you dare think about it. >> god forbid we should put people to work high-paying jobs >> i think tesla is doing quite well and they're weather this versus -- let's call it. tesla versus ford. i know we have ferrari versus ford i want tesla versus ford there's some number cuts today for the automobiles of the sars, the number of cars, that's down 15 million

i don't trust ford's 9.9% yield. i would rather own tesla than ford i would. >> what about the argument that as gas prices go sub 2 around the country, why switch to an ev it will be cheaper to drive a conventional vehicle >> tesla is a technology company on wheels. i don't think people are trying to save money there. they like the environment. it does that i don't think they're pro carbon and i do think that the pennies that they save per gallon is not equal nearly to the way that people -- elon musk is just kind of reengineering a new way of driving in china, in berlin. i'm surprised -- look, if you want to deal with 70% of people who will get covid, angela merkel should be down there chopping trees with everybody else and getting the bombs out of that site and start building like crazy tesla good, ford bad >> tesla good, ford bad. >> who do i get to be? am i brad pitt >> that's christian bale and

matt damon >> yeah. >> you strike me more of a bale. >> christian bale is fabulous. >> daniel craig. who have we not mentioned? >> there's many people left. >> ben affleck >> he's got a new movie out. >> does he >> yeah. >> speaking of movies, the walt disney company is having its annual meeting today i don't know that anybody is showing up, but they are having it do you know who's no longer the ceo of the walt disney company bob iger >> michael -- >> bob iger. he hasn't been for a couple of weeks. >> did you see this hollywood reporter story yesterday asking what the rush was? in retrospect what could it mean >> his timing is impeccable. >> so many people asked that question of me i've always focused on media reporting. it's an endless question i don't know mr. iger, i spoke to him on the record as well he's made it clear that this was

his decision something he brought up to the board some time ago. >> is it a holy -- >> the way it hit and was done, it did not feel like a disney-like -- >> it didn't end like "slooeepig beauty." >> mr. iger normally scrubs everything so carefully and closely. that said, you're talking about a new ceo. iger remains executive chair what are the decisions that that ceo will make about the parks? an area he knows very well >> how about -- >> it's a hard thing the thing i would say at the moment, they do close the parks is you buy the stock the stock did trade down to 102. be careful it's too early to buy. if they close the parks, then you must buy it. >> you think that day is coming?

>> it makes too much sense >> that's what dan niles said yesterday and bernstein. >> again, it's not alarmist. it's prudent we'll get it back open we'll beat this. but for the moment they're going to say holy cow they closed the parks? then you buy there are buy moments. we're going to beat it we're going to beat it >> of course we are. no doubt about that. >> right then that's when you buy disney. >> it's the duration of how long it takes us to get through it. >> right >> and how bad it is >> if you have a good balance sheet at home, if you've been waiting, have some cash or you want to get out of stocks that are oil related, get ready to buy disney i would feel better if bob were still at the helm. >> he is executive chair >> that's good >> but not running the company day-to-day >> this is not like the philadelphia disney annual meeting. the one with sydney gold

remember, insurrection from philadelphia >> no, i was not remembering that it's not that at all >> after the declaration of independence, that is the only thing monumental that happened in that city >> it's been 16 years. >> disney -- like the casinos. i don't want to go to a casino right now. mgms just cutting buffets in vegas. >> what are we hearing out of vegas? i would assume traffic is down >> it's staying there. >> hilton pulled guidance. >> i think las vegas sands, which i really like, i would not own the stock. wynn, i would not own the stock. >> there will come a moment. don't be aggressive. there's no hurry you look at these stocks down, you say i have to move i'm saying go back to where they have been. they were a lot better then than where they are now no panic just wait. patience you'll get it.

but when you see major league baseball making an announcement, ncaa, people will say each time there will be new people saying that's for real. i always ask people what do you think while i'm carrying this instead of a cup of coffee, and do not drink this. this is 150 proof. >> thank you for the heads up. >> i don't want you to -- you can drink rockstar that's okay. i'm allowing that. >> okay. >> i think what happens is when you find more and more awareness people say i don't want to own the stock other than a gold stock. there comes a moment this morning goldman upgraded -- eli lilly, the buy to strong buy, eli lilly is a great company. you don't have to buy it when it's down a little you might get a great opportunity to buy the company there's great opportunities coming all i'm saying, if you feel like you have to buy something, buy something that can be from a grocery store, even the co-op fees in italy are open you have been to co-op fee,

they're stocked. that's a state-run -- if you don't -- if you touch a fruit without a glove there, that was pre -- pre coronavirus you can't touch fruit without a glove. that's why i always carry gloves when i'm in italy or someplace >> jim, we've been talking for a couple weeks about nike's resilience today that is ending is that because of the adidas guidance >> yeah. there's another one. come on, market in china is weak market in europe is weak market in the united states is weak you have a new ceo take your time this could be a great stock. think about where it's been. all i'm saying is you have to remember, this is now the end of the bull market, ala david kostin, who i like very much i don't like the fairytale ending he's using. but you get a stock you like stock like nike, and you look at where it's been. you say i'm going to absolutely wait to where it was when jerome powell said we need three more rate hikes

>> so 68 bucks >> there you go. >> 83 now -- >> that would be good. people might say that's a disaster no that's a great price i'm saying go for the great price. i'm not trying to be glib. i'm not panicking. i'm recommending that there's incredible bargains coming those are bargains those are not b.o. i'm not talking about b.o., david. are you -- you're too young to know what that reference is to >> i didn't hear it. >> b.o.? >> what are you doing there, texting? texting the kid? >> i was looking up my notes from earlier i wanted to mention that ongoing situation that you hate so, xerox and hp >> that's armageddon deal. we'll look back -- that was the burning bed deal >> they had a meeting yesterday. >> okay. >> involving the ceos. potentially some directors not getting a lot out of it. they told us they would meet they, in fact, did that's the leadership of hp and xerox. pretty much unclear what came out of it. expectation is that at least there's some back and forth --

well, that will require at least some sort of response from hp to xerox. hoping to get more for people beyond that. i know you look at that deal and -- >> it's the occidental deal of tech >> there's still a belief if they ever were to finally get down to it and quickly so, hp would end up still buying xerox. >> hp is too smart, unless you think their hands will be forced >> but it continues. there is some dealmaking still things that were in process. whether you're going to see new things initiated, that's a much larger question wen it comes to m&a. >> i think there's so many great tech companies that you actually can buy. i'm not kidding. look, if you want to buy some microsoft here, i'm fine with it, okay i'm fine with it that makes sense >> yeah. >> pelosi's office says she and mnuchin have spoken this morning. be alert for headlines out of d.c. >> that's positive that's what you want to see. >> let's get to bob pisani good morning >> another 2% to 3% down day

it's a take down of all the sectors in that group here let me put up the s&p futures, of course earlier the close yesterday we moved up dramatically on hopes we would get some kind of clarity on a fiscal stimulus package, that's not so clear anymore that's why we're down today. if you look at what moves the markets here, we had what was going on monday with the oil moves here, the coronavirus headlines. but again i think the most important thing is the perceptions of fiscal stimulus what's the content what's the size? what's the timing? when it gets clearer, market tends to stabilize and move up, when it's more murky the market moves to the down side look at the sectors here, you might say oil stocks are down a bit more essentially you see this global takedown i keep talking about it, 2% to 3% of the whole market is down even health care stocks are down within a percent or so of where everything else is trading this is continuing takedowns of the multiples. energy stocks, still no bottom

occidental cut their dividend yesterday. you see the dramatic declines here bank stocks, they're getting cheap here some of these stocks, regions, 7, 8 times forward earnings. pnc, 9 times these book values don't mean a lot when you're not sure what the business will be like in the next couple of months. hilton removed guidance essentially. this is joining the growing list of companies that have withdrawn guidance that's up there hilton recently. you can see this growing list we got. these typical metrics we use to figure out where is the market bottom, they don't work here like dramatically oversold internal indicators, 90% down side days. so people look at the maximum draw down in a recession for example. the s&p will typically drop 13% from its high to a low in any given year right now we're down 17% already the draw down from high to low is higher than normal recession numbers, it's typical

for the s&p to drop around 30% in recession in the great recession, ten years ago, it dropped 50%. that's a real historic outlier we're not going there yet. if you're trying to figure out what can we expect there's another 10% if you're down towards recession territory. nobody is saying we're there yet, but this is what you ought to think about in terms of a model. a lot of people are happy with the fact that technology, sort of the emotional heart of the market, with the s&p down 16% or so, technology has held up very well it's not getting cut bigger than everything else. it's really energy and banks that are being cut a lot of people could say that may be the next shoe to drop if we have continuing legs down technology right now comparatively is holding up well if you take a look at the vol yim volumes here, people are busy. new york stock exchange, huge. this is the cash equities for the whole stock market, everything nyse, nasdaq, everything 14 billion shares we're averaging per day. the average last year was 7

billion. we're doing twice the normal volume in cash equities on the overall exchanges. the futures exchanges, cme is having one of the greatest months in its entire history we look at futures contracts here, should be contracts, 41.4 million, and 19.2. twice as many -- these are contracts that we're dealing with, not shares so at least -- is there good news here? at least somebody is making money off of this sad state of affairs. everybody down here very, very busy carl, back to you. >> bob, see you in a bit let's get to the bond pits rick santelli is at the cme in chicago. good morning >> good morning, carl. what a case study in central banks, monetary fiscal policy because if you look towards mr. carney and what the bank of england did today and what many surmise the ecb will do tomorrow, their rates have gotten a little bit firmer

look at what's going on in a three-day of u.s on monday, of course, we had the low close for tens, that was 48. the low intraday lows, 31. we did cover the gap we had. that's a good thing. the so there's the week to date in tens. a slight upward bias to be sure. if you look at a three day chart of bunds for the week, minus 91 was the intraday low on monday minus 86 was the low close forever. but you can see we drifted up a bit. just a bit up about three basis points from the minus 79 close to 76 if you look at a three-day chart of gilts, the same dynamic going on i was going to show the pound. the pound had volatility but it didn't do anything within its recent range to draw any scrutiny much, of course, was built in, but the coordination of fiscal and monetary many are tipping their hat to, we'll have to see in the big picture

all gifts are good gifts, we just don't know what gifts are the gifts we need now in many opinions if you look at the three-day dollar index, 94.65 was the intraday low we have come up a bit. 94.89 is the the lowest weekly close. back to september of 2018 as you see on the last chart. i'll say it again, nobody knows when your gun is hot in new territory. it's hard to get a gps we're starting to make a base in the big picture for ten-year note yields, 150 is the area above us we have to test. if there's any chance for rates to be firming, don't expect it any time soon, though. david, jim, carl, back to you. >> all right rick, see you soon as the virus news royals the markets, executives are headed to the white house we have a look at what to expect on a big day >> good morning. as you said, top executives from

most of the nation's biggest financial companies will attend a meeting at the white house hosted by the president. 3:00 p.m. eastern time today the vice president and treasury secretary will also be present in attendance will be the ceos of bank of america, citi, wells fargo, goldman sachs for jpmorgan we'll see president and coo gordon smith in place of the recovering jamie diamond i understand james gorman decided not to attend. the focus will be lending to small and medium sized companies. on which front the most obvious action is for the government to ask regulators to reduce the amount of capital businesses have to hold in return for the banks agreeing to extend loans to clients feeling pressure from the virus. there will be a focus on liquidity and the proper functioning of markets a few possibilities. first, they could relax the terms around holding cash at the federal reserve for resolution planning, the so-called living

wills. number two, they could accelerate proposed changes to the volker rule or make default swaps more simple. the volumes are down some 80% since the peak but we are not expecting anywhere near the level of widespread action seen by the government in italy where all interest payments have been suspended. that said, it is very rare that we see this caliber of financial ceo in one place at the same time and the ability for them to calm wider market fears including about their own share prices is significant. i'm sure they'll want to make clear this is not 2008 even if today's meeting has that kind of feel about it. >> we'll talk to you all day from d.c let's get to e lawn who i understand spoke with the treasury secretary a few moments ago. not yet? okay >> back to this.

this is the number one priority for us and we expect to pass bipartisan legislation very quickly i've been in conversations with the president, with the speaker, with mitch mcconnell, and others around the clock, that's the president's number one priority. the president is also very much focussed as you know on a larger stimulus package he's looking at the payroll tax cut. we'll look at other alternatives as well. the president is very committed. this is going to be an issue, as i've said before this is not a multiyear issue. this is an issue that certain industries are going to be significantly impacted and the president is very committed to make sure we have the economic response appropriately for this economy. this is something we're going to do quickly and we're going to respond to i'll be meeting with the cruise line executives later today. we'll be getting more feedback on that. i'll be meeting with the president with the bank ceos the president is focussed on what banks can do for

businesses so the president and his economic team are full-time working on this. and americans should have every confidence in the president is going to respond accordingly >> all right we'll see what happens regarding his conversations with the speaker. >> my understanding is secretary mnuchin is pushing for all these things that will make it so small and medium sized businesses can stay in business and that people who are sick will also be able to stay home and get reckon penced. the base of the economy. >> walmart told the employees the hourly workers, they will be paid up to two weeks if they are asked to quarantine by either the government or the retailer itself >> these are hopeful things that the government is doing. i don't want to be cynical about it hate him or like him, mnuchin is trying to get the money to the people who need it most, the people you have to lay off

because you don't have the cash flow to pay them >> let's do stop trading >> there's a stock dow chemical. this is very much what's going on in corporate america right now. jim finerling, he's done great thing to dow and trying to solve the plastic problem for esg. he's got 2 .7 billion in cas flow to cover 2.1 billion in dividend that's the base case he says they're ready and the yield is 9.5%. people say you know what 9.5%, this is not occidental i don't know i think it may be too bullish. he's thought about this. and if you believe and are more optimistic than i am, then there's a 9.5, but you have to be more optimistic than i am i've not been optimistic since the super bowl and i'm still not. >> the interview with temper changed your weekend >> yes and i talked to temper this

weekend. we were crying in our proverbials, what happens to me is i say yeah, i know, let it come down. i hate doing this, carl. >> it's a tough story for everyone >> what's on met tonight >> i've been trying to highlight companies that are doing really well in the bad times. we have bill stone doing terrifically i've had teledock on they've been amazing dexcom diabetes is not stopping here. i've been trying to feature every day a company that does well regardless. and that's my goal because i want people to be taking the opportunity to other people from robin hood >> jim, we'll see you at 6:00. mad money, of course, tonight on cnbc when we come back, we'll talk to david kostin who says the bull market will soon end as we're about six points shy now of s&p 2800

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good wednesday morning welcome back to "squawk on the street." the market whip saw action continuin continues as we're at 2800 yesterday the markets rallied. the dow regains about half of that in a 1,000 point move higher today stocks are down 792 as we continue to see the vix elevated above 51 goldman's chief u.s. equity saying he believes the bull market will end soon he joins us this morning onset david, it's a good note. good to have you back. basically you're talking about a mid year slump down about 15% from the year. >> correct >> it recovers by year-end >> mostly.

think about it a couple ways the first is what prompts this that's an earnings recession the challenge here is that data and the information, the news flow has been so volatile and difficult to understand. and so we've made some assumptions in our model we've taken down our earnings forecast for 2020 to $157. >> you were already -- you cut to $165 the other day. >> a little bit like ground hog day. two weeks ago we took a number from 174 to 165. now it's down to 157 year over year, it's around 5% decline. that's sort of the story but a famous trader at goldman sachs used to say david, the path matters as much as the target and so when we think about the path of what's happening in earnings, for the second quarter, we're likely to see earnings decline by about15% year over year the analyst community is looking for up 3%.

for the third quarter down 12 %. and looking up % that tells us there's a wave in our view of negative earnings revisions that are likely over the next three to six months that's something to think about. and it's rare that the market moves higher when analysts are cutting estimates. at the last cut, typically, the market rallies that's the narrative of why we get to around 2450 around mid year >> viewers might wonder how does david get q 2 earnings down 15 when guidance is nonexistent >> correct guidance is nonexistent. we acknowledge that the new flow is coming in every day, and airlines are having their challenges and there's quarantines and different areas. businesses, people working from home all these things are happening but that doesn't mean that the market isn't trading and so we need to have some level of guidance or some level of estimates, a way of thinking

about this what we've done on an annual basis, we can look at where the profit growth is likely to be, and we know revenue is likely to come down. last week i was in california. i met with a number of private equity firms who one of the benefits of talking on the private side of the business is that you can get an understanding of their business whereas public companies can't give you information they say what do the order books look like and things are deteriorating. we've made some assumptions, if the annual growth is around 5%, how does that get distributed across the course of the year? you have negative growth in the second and third quarter particularly prominent the negative revisions fourth quarter is probably going to get better and also growth in 2021 that's the experience of some of the prior episodes that we've seen market goes down sharply and recovers at some point next year >> why do you think you're more

pessimistic than other analysts and where the market is already? >> well, the market has come down a lot it's down 15% from the high. >> but you see more pain >> and there's likely to be more downside to the market in the next month, next couple months in until basically second, third quarter where that negative earnings revisions are likely to be most concentrated why? if you take some negative assumptions, energy prices are down that's affecting energy earnings we have lower bond yields across the yield curve. that's a pressure on the net interest margin for bank negative -- the sconsumer is pulling back we have a number of technology companies which have withdrawn or guided down negative. negative companies, negative guidance from some of the semi conductor companies, some of the hardware companies with drawing guidance those are the drivers of why we have overall profits coming down the question is how is it

distributed across the course of the year, and our estimation is most concentrated in the second and third quarter. later in the year as the market is looking forward investors look forward into the 2021, likely to get a positive earnings growth in the next year now, a way to think about this is what has happened in prior event-driven bear markets? event-driven bear markets in if you look at 1998, what happens market goes down, 20, 25%. 30%. and then in the next six months it typically rallies back 20 to 25%. you get median recovery is around 22% and so the path that we are anticipating is pretty consistent with what's happened in history you still have a bear market and what's the recovery or what's the trend after that >> it's hard to predict the timing without knowing the trajectory of the virus in this country. how many people get it, and what

it looks like. >> there's no question about it. but if you are dealing with a portfolio manager. if you're running money, whether that's a hedge fund or a mutual fund, you have to make some assumptions as though we're offering a road map to how to think about that that's i think the challenge of every fund manager what do you do as a fund manager? the market is going down it's hard to navigate that the real estate companies which have more contract revenues and a dividend yield that's a way of thinking about it the higher qualities or higher quality, but many more stable growing companies, you look at the ebita over the past decade those companies trade around 20 times earnings 15 times the rest of the market. you pay a premium for that you recognize that that's one of the challenges in the market >> i mean, recessions do create their own dynamic, and there are

oftentimes perhaps we're not that much aware of in the financial system that can raise their head when there is stress. that's just an unknown >> so one of the drivers, we talked about earnings and valuation. what about positioning and sentiment in terms of the client information. at the peak, which was just a couple weeks ago on february 19th, you had the positioning of clients, institutional clients, retail, pension community, were 1.7 standard deviations above the average. so they were pretty long, very long now they're .8 standard deviation below the average. the idea of what happens in bear market is they get 2 to 2.5 down you basically going from 9 out of 10 long, maybe 5 out of 10 in terms of derisking that suggests there's more to go money flow, fundamentals and

money flow and positioning liquidity has certainly come down as well those are some of the concerns we have. >> let's take a couple hypotheticals. there's news the house dems ar going to introduce a bill on sick leave, unemployment insurance, food stamps they aim for a vote tomorrow if stimulus response is more aggressive than we think and russians and saudis put differences aside, aren't you too bearish? >> from an s&p 500 perspective, energy prices when they came down almost $30, that's worth about $3 a share $2 to 3 a share in overall s&p earnings it's a relatively small part of the overall picture. it's much more important, if you will, technology what the technology, there's almost 25% of earnings come from tech the consumer what's the consumer doing? if you have some fiscal stimulus, that's certainly a positive as opposed to negative.

and that tells you things aren't so dire. but our view of a 5% decline in earnings between 2019 and 2020 is not that dramatic >> compared to previous periods? i would assume trying to figure out the depth of the decline, you reduced your numbers twice in the last week it's very difficult. >> earnings typically fall by 13%. you go back to every recession any recessions you characterize the recession look at the recessions for 75 years, what has the experience been the median experience is earnings fall by about 13% in 2008 it was more dramatic banks in particular. right? there was 2001, technology came down there is a variety of episodes, but the long-term average around 13%. we're looking for a less dramatic decline it's a unique type of economic

disruption as we would say right? and then there's also a less robust recovery in earnings. about 11% growth for next year they come down and come back up. it's a shallower decline and sort of a shallow recovery >> we end up back where we were. >> yes >> do we end up with the same multiples? >> well, the other thing we haven't talked about is bond yields they started at 190 at the start of the year. they were 1% about a week ago, and they got dropped to 30 basis points earlier in the week and now they're on 1.75 basis points that's affected the -- >> what about the credit market, david? do you see indications of stress there that would trigger defaults, downgrades >> so you can look at the broad market which tends to skew heavily toward investment grade. the credit stress tends to be in the kind of high yield market right now. concentrated in the energy and energy credits are something in the consistent of 11% of the

high yield market. certainly a risk banks have a significant amount of exposure lending in that area would be more at risk than companies that are -- banks that would be more broad level of loan books it's a concern, but not as dramatic as it relates to some of the larger u.s. corporations publicly trading >> you mentioned the importance of information tech. where's the risk there is it on china supply chains what if apple said 5g is delayed? >> we break the semi conductors, tech sectors market demand going back and forth. you look at the container shipments to the port of long beach, the port of los angeles one of the major trade ports, the imports were down 20% in the last month year over year. they get that sense. that's semi conductors the hardware as well, and the software is a preferred area of focus for us there's more basically

subscription-based revenues. a little more visible. less sensitive to the -- that's an area of focus >> how effective do you think the fed will be here at trying to ease the pain >> well, they have been aggressive in terms of intermedian cut. and my colleague expecting further cuts >> will it work? will it help the economy and markets? >> in some respects. will it help to -- it makes equities that much more attractively valued if rates continue to fall i'd say from a valuation perspective, it's good from an equity perspective does it help the economy to a modest degree >> are you using italy as a template for mitigation? big developed economy. exchina in terms of the virus impact on banks and society? >> well, that is -- i'll leave that to the health officials epidemiologists. i would say from a fundamental

perspective, it's resulting in a slowdown in overall activity you get that from conversations with clients dp executives in business and what we see in terms of some of the data basically it's slower earnings, lower earnings and valuation and the basically the sentiment has to adjust. >> david, thank you for coming in on a tough topic. it's an important note everybody should try to get a read on it thank you, david costic. >> markets in turmoil 5:97 p.m. eastern time let's go to capitol hill we just caught up with the treasury secretary moments ago >> the secretary is here on capitol hill to testify in a hearing. he said that he does believe that there will be several phases to the fiscal response to the coronavirus outbreak now, the secretary and house speaker spoke this morning at 9:25 a.m and he signalled he appears to

be offering support for a bill that house democrats will be releasing later today that will offer targeted relief to workers. >> it's going to have multiple parts to this. the first part that we are working on asap is making sure that we get benefits very quickly to small and medium s e sized businesses that are impacted this is the number one priority for us, and we expect to pass bipartisan legislation very quickly. >> reporter: so that bill, again, is expected to include extending unemployment benefits, food stamps, paid sick leave, but mnuchin said that plans for a payroll tax cut or any type of broader economic stimulus will likely happen in a faze two. perhaps some acknowledgment of the political realities of getting something like this passed in washington >> how much urgency did you sense from him as it relates to just the need to do something

and do something aggressive with the markets falling down another 800 today? >> reporter: well, certainly i asked him about why investors do not seem to have confidence in the administration's plan to respond to the crisis. he said that this is the president's top priority both from an economic front and a public health front. i think that getting behind the bill that has momentum, the bill that is actually being written which is the bill that house democrats are offering, i think that's a sign they realize they need to be seen as doing something, definitely something before lawmakers go on recess. so if they can sort of hop on board, efforts that are already underway, i think they see that as most politically expedient and leave the bigger fight to after recess to later on as we assess the economic dodge from the outbreak >> thank you coronavirus cases in the united states passing 1,000 overnight as hospitals brace for a potential influx of patients

amid mass shortages and price gouging. joining us now is rod hoffman, president and ceo of providence st. joseph health. the hospital that handled the first diagnosed of coronavirus in the united states thank you for joining us what can you tell us about that patient? i believe he was the 35-year-old diagnosed in seattle >> well, he's an important patient to know a lot about. he was someone who actually came from china, self-diagnosed himself that something was wrong. we were able to care for him in a safe way what was important in his case which was written up in the new england journal already, he was the first case where we used a b biologic agent which turned about his case dramatically. he had gotten very, very sick, and we were able to recover him and he did incredibly well after that so he's interesting from a standpoint of a lot of different reasons. >> so are you suggesting that

remdisaveer will be effective as we see the case numbers climb? >> as you know, it's one case, but the research seems to be very positive. and it's used for those cases where a patient is severely ill. so they're able to use it in washington now for cases that are severely ill and it seems to be effective it is a bright spot that's out there. >> what about the hospital system in this country in general, i believe we have 95,000 intensive care unit beds. are we braced for something of this scale >> the good news is that hospitals have been ready for this a few times you know, we've been through this with ebola, with h1n 1. a lot of the protocols and things we need are in place across the hospitals across the

united states. each morning at 7:30 we get all our 51 hospitals on the phone and ask what's needed. i think hospitals need the most testing. we've got to make sure that we have the protective equipment for our care givers and for our patients and then what we're worried most about is are we going to have enough care givers to make sure we can take care of everyone that's why their health and their wellness is critical but we're already looking at how we use our icu beds, how can we use alternative areas of care including setting up tents outside of our hospitals so we're already going through the process of looking where we have capacity, what we need to do, and what do we have to do in front of it? we're trying to stay way in front of this as we see a wave of patients potentially coming forward. >> and what do you tell health care workers, doctor i know there are a number of people who are looking at the

risk that they face, and at least noting what is not great data at this point to draw from, but seeing there's a fairly high transmission rate among health care workers, or to health care workers. >> what we try to do is we know how to protect health care workers. we've done this with ebola and other transmissable diseases we're pretty comfortable with that those kind of procedures are there, but we have to make sure that we have the proper amount of equipment, the masks, the face shields, all of those things in place. and make sure that we also have the equipment to protect the folks that are cleaning the rooms and all of the other ancillary professionals we have. we're comfortable that we know how to do that part of it. >> so politico has a pretty disturbing piece out today where the cdc essentially confirms there is a shortage of supplies needed to extract the genetic material from the virus in order to test patients the mrna

how is this happening in a country like the u.s.? >> well, i think those are the big wakeup calls i think if i had first on my wish list would have been that we were stockpiling kits and we were ready three months ago. we can't go back in time but i think that's what everyone would have wished for, because other countries like korea, italy, and in china, have been at this for a while. so those reagents we used to extract rna from the samples have been used up in other places so those are the types of things that go into the testing it's a little bit more complicated than people think. but all of those things that we need in the supply chain have to be there in order to be able to do the tests adequately. the more people we can test, the more we'll know about how this virus spreads. >> on that point, there's reports that chuck schumer and the democrats are going to call for a national state of

emergency that would allow fema to use $40 billion in disaster relief funds is this something that money can help solve or is it more about the lack of supply and the lost time as you mentioned? >> i think it's both i think the money is going to help as we go through it we're concerned about some of our care givers. do they have the support at home one of the things we worry about is if schools are closed, a lot of those nurses and doctors have children that are in school. so how do we work to ensure that we have enough people. on the supply side, we're just going to have to ramp up i think the lesson for the country is next time around, we'd better have a supply chain that exists somewhere within our borders so that when something like this happens, we ensure that americans have an adequate supply within the borders of the united states to care for our own people >> so just give us an update you have 51 hospitals.

1,085 clinics according to your website. many of them in the west coast where we've seen a lot of cases in this country. how many tests right now can you give per day >> not enough. not even close to enough you know, we still have people that have tested this morning we were hearing about the kirkland firefighters that are in quarantine they have not been adequately tested yet so the turn around time is an issue. we're starting to do -- what we're hopeful is that with the commercial labs now coming online, that that will make a significant difference but right now i would say it's whoafully inadequate in terms of our ability to be able to test readily, quickly and get a turn around time that makes sense >> that's because of the federal government >> i don't think it's just the federal government i think it's really about getting everyone online quickly

enough this is -- it's unprecedented. i think there are a lot of factors in the whole chain of how you do testing but it's also getting the commercial labs and making sure that we've got the reagents as you talked about, extracting the rna and doing all those types of things, those are the things that we really need. we need a full court effort to ensure that we have the testing available, and it's probably in a whole bunch of areas both on the commercial side. we have a lot of universities doing a lot of the testing now as well as with the cdc and the federal government >> keep us posted. thank you for the update, doctor >> sure. thank you. let's get to our etf spotlight. we're focusing on the flight to sieft. look at the spider gold shares, gld on track for the seventh positive day in eight. it's up more than 5% from month ago levels compared to the s&p's obvious slump. we're down 870 right now it looks like we're going to

battle it out here around 2800 of course, not quite the lows of monday when we saw 2750ish and people still talk about big volume support at 2730 >> still a few hundred points where costen is talking about this summer. >> he said 15% down on the market >> yeah. >> look at shares of pepsico announcing it's buying rock star for $3.9 billion doubling down on energy drinks including game fuel and that was a big part of the strategic rationale for this decision to buy rockstar pepsi has a distribution deal. because of that it was prohibited from innovating within the energy space because of their contract. and adding more caffeine levels to some of the mountain due products it can do that now and can try to turn around mountain dew which has been a weak spot in the portfolio.

rockstar about 6% versus a monster of red bull, but this is a category that is growing growing two times the overall beverage category. all the big guys are getting in. coca-cola has its own energy product. it has a stake in monster. so pepsi joining the action. and interesting, david, to see a $4 billion deal in this environment. i talked to the ceo and vice chairman and said you're doing a deal in the market turmoil he said we have a long-term vision and we're going to continue with the long-term strategy >> important to note as well, private company. so you can sort of set a price and the market is not changing that price in any way. it's helpful as well >> right >> did want to take a look at shares of boeing this morning. they're down dramatically, a lot more than the overall market s&p down 3%. boeing down almost 9%. it would appear this is related to a story on bloomberg that says the company is planning on taking down the remainder of a

13.8, taking down roughly half of that. but again, the reports are that it plans to take down the remainder of it and perhaps that's generating some concern among shareholders beyond the obvious concerns, not just involving the 737 max but, of course, what is going on in the airline industry to which boeing is a key supplier. interesting to note, boeing's market cap at 118 billion right now is roughly the same as tesla. >> wow that is crazy. >> yeah. >> we talked to the ceo of jet blue yesterday on closing bell he expects it to get worse he says it's already worse than 9/11 in terms of bookings. they've extended their policies to offer no change fees even if you booked it in the past, not just for new booking on flights. you know, they're bracing for more pain. but he didn't say he needed a financial bailout. they're still talking about strong balance sheets. >> they're hunkering down, trying to get through what's a

difficult period >> monitoring headlines from the hill the disney annual meeting. down 880 on the markets. not losing the bounce yesterday on the dow hear what the ceo of adidas is saying about the prospects amid owe global turmoil later on the sh "squawk on the street" is back after this ♪ cobalt blue #0047 non-toxic, hypoallergenic and most importantly easily removed with soap and water a crucial innovation for telling the difference between fans and lunatics invest in innovative companies with invesco qqq

welcome back, everybody. here's your cnbc news update russia's parliament approves sweeping new substitution skoougsal reforms which allows putin to remain in power for another 12 years after his current term ends in 2024. a nationwide vote on the constitutional amendments is scheduled for april 22nd mourners gathered in japan to observe a moment of silence to commemorate the earthquake

and tsunami that occurred there nine years ago memorial events were earlier cancelled to curtail the spread of the coronavirus unofficial ceremonies happened anyway to honor the 18,000 people who died in the disaster. and americans may get a little more time to fill out and pay their taxes this year. the trump administration reportedly considering a delay due to the coronavirus the move would wave penalties on late tax payments. full details yet to be announced, but we're watching that closely and if you've been wondering what professional sports looks like without fans, here you go this is a championship league soccer game in spain between home team valencia and a team based in northern italy. all you could hear was the ball and the players talking to each other. it was so strange. but that's where we are. that's the news update this hour i'll send it back downtown to you, david >> going to have to get ready

for potentially more sporting events looking like that thank you. we're about an hour into the trading session. let's look at the major averages we are down sharply as you can see on the nasdaq. the dow and the s&p. with the s&p down almost 3.5%, we are well, well away from anything that would trigger a circuit breaker, but we're keeping an eye on it our next guest is telling his clients to use the recent volatility as an opportunity to rebalance portfolios we are joined by bill nygren what are you doing in terms of volatility and how you approach your own portfolio >> we follow our own advice. most of the managers have added to their positions in the oakmark funds in the past two weeks. personally almost any time the market goes down 5%, i take some

of the cash and buy more of the funds i manage i think we come on here all the time after volatile periods and say that investors should rebalance, and i think sometimes they don't really know what that means. if you think about somebody who had a portfolio that a few weeks ago february 20th when the market had peaked was about 50% equities and 50% bonds, today that portfolio because equities have gone down 20% and long bonds have gone up 20%, is now only 40% equities and 60% in bonds. so it's gotten out of the balance that they had originally targeted for their assets. so the typical investor today should be thinking about selling 20% of their bond holdings and reinvesting in equities to get back to where they were in terms of their account balance just last month >> yeah. that's a tough thing to ask people to do when they're watching markets like this, isn't it i mean, psychologically it would

seem there are barriers to overcome >> absolutely it's a tough thing to do, and what you see in the real world is people hurt themselves by going the opposite direction. they see what's been working in the portfolio and add to that. it takes them further out of balance from their original targets. >> and why are you confident in adding at this point given the volatility and the possibility of a recession, significant earnings decline why not kick back and wait a bit? >> i think especially in times of voil tillty, it's important to remember where your expertise is we're not infectious disease experts at oakmark we read a lot about the krfr, but -- krfcoronavirus, but thers a huge range of where this disease may take us. but one of the things you don't see is experts talking about this effecting our lives two or three years down the road.

and what we are experts at is business valuations and changing assumptions affects the values when you're talking about stocks that a month ago were selling at 20 times earnings, the first year of free cash flow in a discounted cash flow analysis is less than 5% of the value of a company. so even if we got a disaster scenario where earning were pretty much wiped out for the s&p 500, that's not our prediction i don't think that's possible. but that would still be just 5% of the long-term value so we think the market being down 20% on this scare is an extreme overreaction >> how do you separate value creation as prices come down with between that and existential risk regarding an industry let's say cruises right? i mean, what gives you the confidence cruises come back even if it does take three years? >> well, we don't own any of the cruiselines, but that doesn't mean we don't have exposure to

travel we have mgm and booking.com. if you look at a company like booking, the stock price has fallen from something like 2100 to about $1500 a share they have close to $200 of cash and investments per share. at the end of the year the consensus earnings forecast for next year was about $130 so net of cash at today's price it's selling at about 10 times that estimate. this is a business that we think has tremendous tail winds and is competitively advantaged as more travel bookings go online. now, is the rest of this year going to be good for booking obviously not with travel plans falling. but do you really think people are going to travel less in 2021 and 2022 and is there any fundamental change that would suggest that the online travel agent should get less business less market share than we thought they would get a couple

months ago we don't think so. in that environment, booking.com is really, really cheap. >> you know, value managers like you, bill, were saying that banks were looking cheap even before we got this coronavirus scare and that massive fall in treasury yields. now the banks are down another 27% over the last month. you have a lot of exposure to them how do the valuationslook at this point >> you're right. we love the banks. most of last year we still love the banks. a company like allied financial that's a large holding of ours i think last time i was on cnbc, i was talking about how cheap it looked at seven times earnings the earnings forecasts have barely budged in the last month but the stock is less than five times now. they're aggressive repurchasers of their own shares. they sell at about two-thirds of book value we think this is an extremely attractive stock for a long-term

holder and less travel this year really does very little to expectations of what they should earn we think that's cheap. we think citi group is cheap at about six times next year's earnings bank america at seven or eight times. the competitive motes for the businesses keep growing and growing. the services they provide to customers are highly valued and if interest rates go negative and they can't earn their money on spreads, they'll have to earn their money on fees. when i was younger, checking accounts generally had fees attached you paid per check you wrote and paid a fee to have an account. recently instead of doing that, the charge if you will, for a checking account is to earn less of an interest rate than what treasury bills offer the service is valuable if they have to change the pricing model, they will these companies have a valued service, a good competitive mote, and they'll find a way to

earn a good return on equity on those assets >> shares of citi down 4 .5% this year. what about your own investors? are you seeing people withdraw and go to the sidelines and say love it, but not right now >> fortunately, david, one of the things we put a lot of effort into at oakmark is educating shareholders through our quarterly reports, our commentary, and as warren buffett says, you end up with the shareholders you deserve our shareholders tend to be long-term oriented we've seen small withdrawals but we've not been impacted by large withdrawals that a lot of our peer group has, and we are actively encouraging our investors today to rebalance and consider adding to their positions in the oakmark fund like we're doing as managers with our own accounts. >> understood. bill, always appreciate you taking time. thank you. >> thanks, david

starting to see the company impact adidas out with earnings quantifying the impact from coronavirus. they say they estimate it will take a billion hit to sales in the first quarter and also missed on guidance sending the stock down 11% i spoke with the ceo a few minutes ago, asked him how the economic slowdown is impacting the company. >> we closed 19 at an all time 6% up line growth 15% in china and 34% growth in online very strong quarter. what we did say by the end of january, we saw like any other company, a complete closedown. that meant that about 80% to 90% of our business stopped overnight and we lost about 100 million in revenue on a weekly basis. that's starting to slightly pick up in the sporting goods industry, you're at the end of the food chain. people when they start shopping again will buy normal stuff

food, drinks, detergents before they buy the sporting goods. and that is what we're seeing so far in the first quarter the up side is it hasn't changed in the sporting goods industry fundamentally, nothing has changed but it's a painful setback. >> what about the supply chain is there been any disruption to factory closures in china? >> very minimal, because it happened around the chinese new year a lot of the factories were closed anyway. we do about 23% of our business in china and 19% of our manufacturing capacity is in china. there's been some noise, but really nothing that is changing the bigger picture from a supply chain standpoint for our industry >> what is your sense as to whether factories are back online for apparel and accessories in china >> for the visibility we have, the factories are online and so are the distribution setups. all the factories and distribution is running.

we need to get the consumer to start buying again as i said, two weeks in an apartment, your first thought is not to buy new running shoes it's probably basic shopping that's why as attractive as supportive as good industry is, we'll have a lag compared to other consumer goods products. but it doesn't change the bigger picture. it's positive. >> what about sales in europe? what have you seen in recent days and weeks as the coronavirus has spread there >> oh, very little impact. we're seeing a slight slowdown in fiscal traffic. an uptick on the online traffic. the country that's impacted is italy. but the overall shopping picture is not fundamentally changed in europe a slight slowdown. >> one of the questions wall street is grappling with is europe in recession? how do you answer that >> there's no doubt that the european economy will be impacted by what's going on right now. whether it will go into a

recession, the lowest growth economy for the last couple years and i think the european banks right now issuing credits and lowering the price of money, however, the big difference to 2008 when the financial crisis was around, it was a constraint the market was a high price point. right now people can get access to money the price is low it's going to be hard tore put a stimulus into the european economy to get extra growth. >> what about the u.s. are you seeing an impact in the states yet >> at this stage, no i think the biggest impact is right now the concern that people have, and that's also the same in our company. our biggest concern is for our people, how do we make them feel safer, feel they understand what's going on? because the uncertainty is right now bigger than the substance. that might change over time, but right now it's getting the right information out. >> how are you doing that? i assume you have to do that both with your consumers and employees. how do you make them feel safe

>> so far our employees we communicate with them every day. everything we communicate we don't speculate. we are fact-driven we've been clear on what happens if we have a case within our company what we've had we isolate we have the people test. we bring them out of the company. we take care of them this is going to happen to every company at this stage. being transparent and open and make people aware we care and we try to work out solutions should something come and for a lot of the people that feel unsafe, we let them work from home. that's what technology allows you to do. so that's also what we're making happen for our people. >> how many employees would you say do you have globally working from home right now? >> right now we're still small part we have about 60,000 employees and i would guess less than 10% is working from home, but if you have an instance that number dramatically goes up but right now most of our people are working from 95% are working

from the office because they feel safe. they feel well taken care of, and should the situation change, and should we have an instance here, we'll move to a different plan but what we have to do is make sure that we maintain the focus at our business while taking care of our employees. we still have a business to run, and for the vast part of the world, the vast part of the world is still not impacted by the coronavirus. that is also an effect >> in places that are impacted, have you seen an up stick in online spending and do you need to make adjustments to meet that >> we have seen a delayed up tick in the beginning there was a down shift no logistics works we're asking now a higher traffic. if you look in china while our overall business is substantially down, actually the traffic on our website is up double digit compared to last year that's where you see the change in the consumer. they don't want to go to the store so they're moving online this is going to force a quicker

transformation to a more digital business we invested in that the last four years thank you to the ceo of adidas clearly they're coming from a strong position. they don't see any long-term effects in terms of spending on what they're selling they have all these new innovations. he was talking about the beyonce line as well but the problem is for the market, the outlook is too murky and risky. when you're talking about a billion dollar hit to china's sale, which is a huge driver of profitabili profitability, it's hard to see when the spending is coming back he's not willing to say it's coming back in a v-shape right now. he said when the spending comes back, it's going to go on consumer products and household items, not sneakers and sporting apparel. big question marks we also talked a little bit about what it would mean if they have to cancel the soccer championship for a company like

this i'll play that for you in closing bell >> an important interview especially on a day like today as we've been watching that, the treasury secretary is testifying before the house appropriation committee. he was asked about the ten-year. >> the situation is obviously moving very quickly and rapidly. so we are literally meeting every single day, seven days a week on this on the task force steve beegen from the state department, the deputy secretary is on the task force i was meeting with secretary pompeo this morning. and we updated each other on the issues directly as well. so state and treasury are very much coordinated >> he did talk about the economy and the sectors getting hit the hardest as well. >> there may be specific industries that are highly impacted by travel that have issues with lending and just like after september 11th, the

government authorized certain loan guarantees. we may consider that and i would just say you know, the loan guarantees are an effective way of making sure the government is paid back without putting the government at risk >> i would assume that would include the airlines >> mnuchin says they are looking to provide tax extensions. they say the tax deferrals could add about $200 billion in liquidity. they're in touch with world bank, imf. he's going to host a g-7 call. it's happenings a grassley is saying there's no bipartisan support for a payroll tax, and with that he hit session lows. >> the thinking is this would require bipartisan teamwork right away to try to do anything to try to help the economy and build confidence, to help the markets. this was the president's pitch it was going to be a tough sell. we sort of heard that from the beginning. >> yeah. getting on the ground and supporting the small and

medium-sized businesses, there's where a lot of people seem to be in agreement, but yes, there's more about debate whether there needs to be a broader and very expensive payroll tax. >> also doesn't answer the issue of the elderly who aren't working at all not to mention people who will not be getting paid because they're not at work. this is a tax on the money you've already made at work. >> there's that, and it's also not the most speedy way to put money into people's pockets. it can take longer, up to a year >> paycheck to paycheck. >> paycheck to paycheck to spend the money the household gets, and the other thing is are people in the mood to spend if they're hunkered down in their homes and not going to work and not going about their daily routines that's the question. >> yeah. and the question and also how quickly they'll be able to support some of the businesses that are facing hardships right now and trouble meeting their own payroll. >> i want to hear more about the shale bailout. there was some discussion about that >> i'm not sure that's a real thing or not i don't know

>> it was mentioned yesterday in the all the talk of stimulus out of the white house and the president. obviously these companies are in a lot of pain, but they're also in a lot of debt >> they're in a lot of debt, and this is the markets. i don't know how you intervene necessarily to prop them up, so to speak it will restructure and come out stronger at some point let's check in with megaback to the coronavirus. david, leaders of the u.s. response to the coronavirus crisis testifying to the u.s. house oversight committee. the nih's anthony fauci referred to as america's doctor was asked if the worse here is yet to come he answered yes, it is, but he said how bad things get depends on the ability to contain an influx of infected people coming into the country he also said there are at least ten vaccines in development but the most advanced still won't be ready to deploy for a year to a year and a half. any faster he said would mean developers are cutting corners

he said treatments may be ready sooner the cdc director coming under fire for the u.s.'s testing capacity this as new concerns arise about a potential backlog on the materials needed to run the tests. carl >> thank you very much cruise thank you cruise stocks have continued to get hammered after the vice president held the meeting last week with leaders from the industry to discuss the impact of the coronavirus hi, sima >> hi. carl, thank you for joining us today. the face of the cruise industry as president of cila i'm hearing your industry is looking at updating the health and safety guidelines. including banning citizens above the age of 70 years old or have a chronic health condition can you confirm that >> yes, we met with the vice

president of the united states and a number of top officials on saturday although the cdc director acknowledged the strong record on public health we had over the decades, they challenged us to mitigate the approach. we had 72 hours in which to respond, which we were able to do yesterday in time it was an amazing effort across industry leadership. we feel like we have been responsive on prevention, on detection, and on care for guests on cruise ships and we believe that we've now elevated our ability to manage any situation that would arise and that people should feel comfortable to cruise with us. we are not, at the moment, going to give specifics. we think it's only fair to give the government a chance to respond to the details of our proposal but no doubt the vice president put a lot of emphasis on exactly what you said. either elderly travellers or

travelers with serious chronic underlying health conditions are the most vulnerable segment of the population and we need to take that into account. >> banning citizens above the age of 70 certainly necessary but that's going to take aim at a cruise industry that does appeal to a wide ranging populati population we have to say a lot of elderly citizens love to cruise. are you prepared for the financial damage to come yesterday the vice president saying we will throw a lifeline to the cruise industry is there a bailout in the cards? >> everybody loves to cruise and the most important thing we can accomplish in these days following the meeting with the vice president and the submission of our plan is to make sure all travelers are confident in our plan. all we're looking for right now is to make sure we are maximizing the well being of our guests and crew. obviously the whole economic

ecosystem of travel, of airlines, cruise lines, hotels, travel agencies is hurting right now. we get that, we're a part of that, and we need to work ourselves out of that situation over time as this covid-19 environment improves so we're not asking for anything today. we want to make sure the government knows we've been responsive to the request for a strong plan and that's what we'll be discussing here in washington >> in new york, you know, when we talk to investors about these stocks, nobody wants to touch them not just because of what's happening right now and the loss in business, there's a feeling that people are never going to want to cruise again >> we're a resilient travel sector, we're a resilient bunch of people, there are leaders who have been in this segment for decades. we'll get through this challenge. every challenge presents new

circumstances we've never dealt with before, but there's lots we can draw on. in the end people love to cruise we create a lot of the greatest memories of our customers' lives and we look forward to getting back to that but we got a lot of work to do between now and then to make sure that we're addressing all relevant public health needs and then to rebuild our economic performance. >> adam, you mentioned the episodes you've been through before we know those stories. how does the cruise. the modern cruise need to change in the future in ways that it hasn't changed already >> so without going into the details of our plan, from a public health perspective, we have already put into effect a lot of screening protocols in terms of people's ability to get on board if they've been in certain countries in the last 14 days they can't come on board a cruise ship. we're going to elevate our screening protocols.

once the guests are on board we'll elevate the way we care for them, vis-a-vis the realities of kcovid-19 as soon as we can test in volume, we will incorporate it into our daily and weekly care for our guests and should there be any event involving a suspected or confirmed case, we are going to be prepared as an industry, and in a self-sufficient way to handle the transportation, logistics and care for all the guests and crew on that particular ship. >> you're seeing the stocks move to the downside, not just today, but over 60% this year for the three major cruise lines, carnival, royal, norwegian are all offering deals to incentivize the travellers to get on the ship. is that the right time to be

doing this after you've seen the ships quarantined over the past month? >> there are about 1,400 ships that make up the cruise industry so virtually all of them are completely in good shape as i mentioned at the beginning, we have a notably strong public health record over decades, which we are now elevating with our new plan so yes, we believe people can cruise with us with confidence and if they are in the vulnerable segment of the population, i think you'll see that our plan addresses that >> thanks very much. >> thank you the closing bell, the last few minutes of -- >> are the most critical moments. >> -- have certainly been the most important lately, up or down, but they've been magnified moves. >> we're seeing a magnified

move, final 30 minutes is everything we're talking to ceos, box ceo aaron levie said the coronavirus outbreak may be the devifining moment for the cloud see what he's doing. >> difficult to watch but important to pay attention to. we're down quadruple digits, 4% decline as we've given back almost everything from yesterday. "squawk alley" starts in a few minutes. ♪

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