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good wednesday morning, welcome to "squawk alley" i'm carl quintanilla another busy day as our eyes, jon are peeled on the tape. >> yes the market give and taketh away. this morning it takes. dow down right now about 900 points and change. it has been down more than 1,000 rbc's mark and jeff join us now. good morning, guys >> good morning. >> good morning. >> so i'd like to start, mark, with what you do with the many calls that you've made already given this new environment that we're in affected by the coronavirus and covid-19 we can talk netflix, expedia, two different stocks in terms of

how they're being affected but perhaps illustrative of how investors need to look at their portfolios and how things could be affected. let's look at netflix, you say it's not recession proof but you believe it's resistant why? >> so in the internet space, consumer internet space, ke extremes, the companies with the greatest exposures, troubles with their business models and the virus and recession, would be the travel companies, booking, expedia, and at the other end of the spectrum, i would say are the high value kind of safe options entertainment options. and netflix would be at the top of that list you've seen that in the way the stock has traded it's outperformed almost every other s&p 500 stocks in the last six weeks as a safe virus play but if we go into recession, the history shows it was consistent

throughout the '08, '09 entertainment. it's cheap, safe and that's probably why it'll continue to outperform if we tip into a recession. >> do we have to worry at all about the debt levels? i know it's a different type of debt than we see in the oil patch but investors are probably going to wonder. >> they will wonder. you're right to raise that as an issue. the advantage that netflix has is this is occurring this year rather than last year when the free cash flow burn was still rising netflix's free cash flow burn should come down this year there are scare scenarios under which netflix has to go back at onerous terms in the market. but demand for the product -- this is a subscription business, that's what investors take comfort in, less likely to be consult especially if it's low

price. netflix seems safe in that environment. >> steve, i want to get your thoughts on. i say if because we have had a number of guests on in recent days who have predicted we could go into recession with everything going on with coronavirus, in your universe, what would be seen as recession proof? what would you be buying or would you stay on the sidelines? >> tech has performed well on the way down pretty much in line with the market group mark's group is best year-to-date we are starting to hear about large software deals that may be getting pushed out a bit although i'm overweight software, getting concerned about some of those names. on the other hand, the wolf fin tech conference is going on now. service stocks have been hit so i want to step into global payments, visa, master card, fis, probably too premature to

get too aggressive. >> when you say it's too premature to get too aggressive, are there levels you're looking at >> people think we may be if in a bear market. we're looking at tech stocks above their 50 day average so that's going to give us bounces but percentage above the 200 day has not yet bottomed out, also large cap tech has outperformed smaller cap you can argue it's not over until the generals fall. seeing weakness in apple today, microsoft has been holding up well we may needs to see weakness in some of the big cap names before it's all over. >> mark we spent so much time the last few days talking about demand shocks we've taken our eye off the ball on supply shocks in china. i wonder, where is the risk there? at least from a hardware standpoint, are you looking at delays to 5g

are we still worried about iphone production? semiconductors and the line. >> i'll spin that question to steve, he may be better at that than i the supply chain i worry about in the internet space is companies like amazon with the retail supply chain. i think there's two internet stocks that probably are the most recession resistant if we're going into a recession, i think one is netflix the other is amazon. if you look at what happened to amazon in 2007, 2008, and 2009, the rate held constant it had the smallest deceleration we saw in the group. and think about amazon with the aws cost cutting initiative, cloud efficiency when it was a huge part of the business that wasn't in existence ten years ago. and the business has gone from consumer discretion spending to consumer staples spending. so amazon and netflix are the

two safest >> amazon is different in they don't need the capital markets the way netflix does, right? >> true. absolutely, carl true >> steve to follow-up on that, we're talking about microsoft, apple. i want to throw in hp and dell on the early part of the coronavirus issue we were talking about supply and manufacturing out of china now i'm wondering about demand on the one hand businesses might be hesitant to spend on the other hand, maybe with people working from home, there are equipment needs that people might have in order to enable things like remote work that they might not have seen before. what do you expect, or is it too soon to tell, what do you expect the impact to be on pc sales on office upgrades to enable remote team work >> probably, you know, slightly positive in the near term. so dell and hp are in the consumer pc market i expect it might get a bit of a

boost. the consumer pc market is actually healthy of course those companies sell larger equipment, servers and storage, that's probably going to be deferred the hardware group in general has been underperforming they saw the weakness begin late last year, before we had the virus impact once we get past this and get to a value environment, because growth is still outperforming value, when value comes back you could get a nice trade in names like hp and dell, but that's the second half. >> just to wrap up, i want to swing around to the online travel sights and the stocks you cover as well. is there a historical comparable to look at and say this is how it played out in this event and it might be similar for this industry we had a couple airline ceos come out and say at least from an air travel perspective a

little like 9/11 in the sense it's being driven by fear right now. >> i was talking with management of booking holdings earlier today, that's almost 100 million in global bookings they're not willing to make statements like united airlines made about the length of this, duration looking back at comps to 9/11. the internet business was so much younger then. i don't think there are comparisons. look, they've seen travel demand seize up in china, greater asia, western europe and north america. my assumption would be things are going to get worse or better we've cut numbers for both expedia and booking. i hope we did the last cut but i wouldn't be surprised if we have to come back at it later this year that's the biggest, riskiest area, of areas i look at travel, it's almost dangerous

because of the virus issues. i think that's going to take a while to come back. >> lots of turbulence. mark, steve, thanks. i would mention the markets way down, but the dow still about 200 points above yesterday's lows and the s&p about 40 points above yesterday's lows. >> every dow component is in the red. one of the biggest losers, boeing they just released orders and deliveries, 28 for the month with a total of 46 max cancellations. biggest cancellation air canadada there were 19 conversions of max to 787 deliveries last month, just 17 this comes as we are learning of plans for boeing to make a draw down of its $13.8 billion loan we heard from ceos yesterday and several did mention needing to defer deliveries of aircraft as

a result of coronavirus. this would put pressure on boeing and air bus in the months to come. friday marks one year since the faa grounded the airplane. since then, boeing has had loss in $100 billion and shares today are trading down 9%. >> allen blinder joins us on a day that the bank of england had their own emergency cut. the best stimulus now is simply coronavirus testing kits alan, always good to check in with you, we thank you for your time today. >> sure. thank you. >> your piece is tough you say you're 90% recession odds you call the u.s. response a shame and a disgrace let's talk about your view on where the economy is headed in the short term >> well, i wouldn't be one bit surprised if when we look back at the data it is decided -- the

national bureau of economic research is the arbiter of such things that the recession started in march we don't know that it takes months to get the data that would be relevant to a call like that. but it wouldn't be a bit surprising to me and what's driving it, your guests were talking about it a moment ago, is fear. fear of shopping, i called it in the piece. and you can understand why people don't want to go to movies, restaurants, shopping malls. not to mention the travel that you were focussing on a moment ago. all of those things -- spending on all of those categories has probably plummeted in -- and much faster than our data system catches it >> all right and so given that, what do you mean when you say the best stimulus is a kit? >> well, one source of the fear, not the only, but on

significant source of the fear is you don't know if -- people don't know if they're carrying it the people that are very, very sick, which is a very small number, sadly do know. but lots of other people don't know and the consequence of that is -- well, people don't know -- you don't know if you're carrying it yourself but beyond that you don't know if the store clerk or the airline stewardess or the barber might be carrying it and not be sick we've learned that people are carrying it, may not get sick ever or the symptoms may be delayed. so the consequence of that is rampant fear and i don't want to say the cure, but a pal yaive -- the most important pal yaive i can think of is much greater testing of the u.s. population

as i mentioned in the piece, it's disgraceful how far we are lagging behind other countries in testing >> it's certainly been a big issue and one we've been talking about quite a bit. in light of that fear, the comments you're making right there, i want to get your reaction to treasury secretary steve mnuchin who a few moments ago commented on the current situation and made the comparison to 9/11 and the fear we saw on the heels of that incident >> the travel industry, in particular, is going to be the hardest hit. that what we're seeing is that similar to after 9/11, there was a big impact on airline travel unlike a recession where airlines lower the price of tickets and more people fly, this obviously we just have a complete decrease in volume. so as i said earlier, there maybe needs to come back to congress like we did at september 11th >> so whether it's airlines,

whether it's cruises, which we've been talking about, other forms of leisure, hospitality, travel if you see that broader industry hit particularly hard, what could the broader ripple effects be to the economy? >> you have the normal ripple effects that you have when a recession begins anywhere. that people in the affected industry, let's say travel, but -- by the way, i wouldn't limit it to travel but anyway, people in the travel industry, their paychecks go down, their profits go down if they're small businesses some of them may go out of business and that has ripple effects on other businesses from which those people buy they'll be smaller buyers if they remain -- in the case of bankruptcy, not buyers at all. so this is going to go through the economy the way normal recessionary forces go through

economy. but i completely agree with what secretary mnuchin just said. but i would go broader this is not only about travel. this is about anything that puts people in face-to-face contact your previous guests were talking about netflix optimistically, completely because it doesn't put people in face-to-face contact but netflix and businesses like that are a pretty small share of the economy compared to businesses that do put people in face-to-face contact >> understood. i want to understand part of your point in what you've written also because this environment is, of course, very political. we are in an election year it sounds like you're talking about confidence, as being a very important ingredient in this and feeding confidence consistent communication and good data. >> yes.

>> this administration has been shaky on the consistent communication piece and it sounds like you're saying without these test kits we don't have good data >> i think that's exactly right. it's two separate related issues that you raised there. first is the test kits which i was emphasizing so people just know whether they have it or they don't have it but the other is the communications you know, nobody read "the boy who cried wolf" to president trump three years ago. sadly we're now in a position where after so much lying, who in the country believes what he says and that's exacerbated as everybody has noticed by the inconsistencies coming out of the white house, say, compared to what's coming out of, say, the cdc and health professionals

in general and who would you believe? i mean, i think the answer to that is obvious. >> i think that's why the market has put so much credibility on fauci and steve mnuchin to a lesser xtent i want to ask you about short-term medicine and the things the secretary is talking about today, payroll tax holiday, tariff relief, that's one thing they can do unilaterally what's the best short-term medicine >> i'd like to -- there are lots of things wrong with payroll tax relief, but it has the advantage of getting into the system quickly. very quickly it's small this is not a lot of money but i would emphasize the things that can be done quickly because i said before, i think when we look back at this episode, we'll conclude that march 2020 was already recession month. i think the paid sick leave is really, really, really

important. and i want to emphasize, that means publically paid. you know, many of -- we compare the united states to many other countries which mandate that businesses provide paid sick leave. this is a horrible time to tell a lot of small businesses that are reeling that, by the way, you have to pay for sick leave for your employees the government needs to do that as quickly as possible the thing i worry about is, this is -- that's a new program and it takes time to ramp these things up. i mean, we should start it yesterday. >> we're going to have to see how all of this continues to manifest finally, though, i want to get your thoughts on the market and all of the intense volatility we've been seeing, these major moves not just in equities, in crude but also in treasuries as well we've been getting reports there's concerns about liquidity

in the treasury market how closely are you watching that right now when we talk about things like the fed's ability to intervene, is this an area you think the central bank is watching closely? >> i'm sure they are i don't have the ability to watch it as closely as the fed does i'm sure they're watching it closely. the last thing on earth they'd want to see is illliquidity in that market. the system has been flush with liquidity for a very long time and the fed can easily -- should that start changing, the fed can easily provide more liquidity. i don't have the slightest doubt that they will so i don't think a liquidity crunch is going to be part of this problem the uncertainty there is mainly whether the fed will actually have to do anything to make sure we don't have a liquidity crunch >> we'll find out a lot more

next week with that fed presser. alan, your op-ed is in the journal and we hope everybody reads it, thank you very much. >> thank you oil taking a dive again this morning as the russia saudi standoff continues we have some inventory numbers that are adding pressure today energy names getting crushed the sector the worst performer this month joe petrowski and david dackelbaum join us now good morning. >> good morning. >> i realize we're talking about a commodity that has seen major moves for decades now, it's like shooting fish in a barrel, but how low can oil go here? >> i think we've established lows and i think we'll be $45 by july 4th and there are eight reasons for

that and on a fiscal basis we have many things in the -- many jelly beans in the jar to address the crisis but oil has bottomed >> i want to dig into that a little bit more, but first david i want to get your take on that and whether you agree. >> i wouldn't say that we completely agree there i think there's a lot of situations in the market right now that would lead us to believe that this $35 and change oil price can persist plus or minus $5 for the next couple years. i think the market has been oversupplied now it requires an opec cut, including russia's contribution. with that potentially off the table now, we will be oversupplied in the back half of this year. and there are threats that saudi arabia would be producing at maximum capacity and i think we have to factor in

the contagion effect of a coronavirus driven demand slow down which i think the market is trying to only discount for one quarter in this first quarter here but could lead to lower demand the rest of the year. i think we could go lower. i think down sub 30 near term. i think we're at cash cost for many areas but i think if you do see saudi arabia escalate this price war with russia and exceed that 12 to 13 million barrel a day number in april, the market is going to continue drifting lower. >> joe, why do you think you're going to see $45 crude come the summer, especially since there are so many uncertainties around coronavirus and we are seeing the inventories build and saudi arabia ramp up production? >> the amount of marine oil and airline oil we use is minuscule compared to ground transport, which is going to grow 10% this

year we're below cost in many regions. the saudis and russians have a huge hatred for the shale producers and the electric car industry but any countries who have a combined deficit of 250 trillion would be crazy to go to war with the shale producers in the u.s. who can outperform them. gold normally on the historical -- i mean, oil on a historical basis is usually it takes 200 ounces of gold to buy oil. today you can buy 500 barrels -- sorry, 200 barrels versus 500 barrels. so oil is cheaper historical standards. back in 2016 when we went to $16, we were then $40 on oil within 30 days this is not the end of the world. this is a volatile commodity

that has historically been volatile and demand for certain products like petro kchemicals which use million barrels a day is increasing because of the shift from oil companies from making transport fuels to, in fact, petro chemicals which is a strong market for them and their growth market. frankly, what was wrong with the petroleum market, it was like a lot of victims of coronavirus, had underlying issues before this began i agree with david that, you know, supply was out because of opec, shale, and the nonoutput supply demand was down because of european recession and china recession. but the u.s. is strong, and we're not in a recession and i don't really think we will be going into a recession. i'm not an equity trader but

with low interest rates, low energy rates, regulatory relief, and a president who's business friendly, i think we'll reach into that jelly bar of solutions. we'll be fine. >> david, if you're right and we do end up with sub $40 a barrel oil for as long as a couple years, how much are you looking at the economic consequences for those geographic areas where oil is important how much of an impact on the credit markets do you expect to see? >> first, it's a great question. first, russia has already stated that given their reserves that they can withstand prices at these levels for decades i'm not going to determine whether that's a correct claim or not you're dealing with international affairs. saudi arabia has been running a

deficit. they do have cash reserves that could outlast the impact of lower priced oil here for at least three to four years at this point, if not longer. but i do think on the other side of that, you're seeing a real impact you brought up the credit markets to u.s. producers, particularly the independents, even names as occidental petrol yam. you're seeing several cut cap x immediately by 30% if not higher we think this results in a 300 barrel a day drop in u.s. oil production by the end of the year, another 500 plus by the end of 2021. i think the by the time we get to the end of '22, you'll see 2 million barrels a day off of a 12 million barrel a day market in the u.s. that's declined. you bring up the credit markets and we cover about 30 stocks right now and our universe alone, about a third of that

credit is coming due in the next year or two here this is going to be a critical time there's been policies proposed on the hill, i think today, where companies are asking for some easement around some of those reserve base lending facilities and some of their credit issues. this is a situation worth monitoring, but you can see upwards of almost $100 billion of credit coming due in the next four years that could start stressing the markets here >> i can comment on that. >> i think we're going to -- oh, okay >> all right i would like to comment on that. >> yes >> most of the oil producers, including major oil, do not have heavily lev rajjed balance sheets, they're less than eight turns and low interest rates and accommodating banks and an increase in m&a activity, which i think you will see from this

crisis where reserves are bought one thing to point out is the oil is such that we have almost a 30% return if you buy reserves and hedge $40 oil forward. and in a world that's searching for yields, there's nothing better than buying reserves right now. >> that's a key point. definitely the die m ynamic whi something we saw play out the last time we saw $30 barrel oil as well. joe and david thank you for giving us your takes on this. >> thank you we are near record lows, the dow is down near 1,100 points, 4.5% the s&p 4% and the nasdaq just shy of that. in the meantime there is a multi-million dollar problem at the port of los angeles thanks to the coronavirus jane wells is in wilmington, california with that story

jane >> reporter: jon, yeah i'm outside the hall for the long shoreman's union where work is down by half. if you are a casual, a daily from lancer you're not getting any work at all. the long term get paid to be home but the casuals do not. we're looking at the port, 40 ships have been cancelled. that's 25% normal volume this year you look at video at the port of long beach, what's the problem empty containers are choking the ports. containers that should go back to china plus u.s. agricultural products that they're starting to rot the head of l.a.'s port was called before the city council >> it is our estimation that the effects of the coronavirus and the downturn in trade will cost us tens of billions of dollars in the industry when all is said

and done >> reporter: now they say mersk is coming to the rescue at the end of the month with the biggest ships in the hemisphere to clear out some of the containers hand sanitizer imports to the u.s. are way up, according to ocean audit. walmart has ordered 14 standard containers, more than twice what it ordered this time last year a lot of purell, made in france, don't leave home without it. >> that's a chart. you have to think with some of the more time sensitive goods, air freight is going to be a bigger part of the puzzle and potentially rate spikes there. in the meantime at the ports what are some of the locations doing to protect their long shoremen >> well, they're not testing dock workers yet as far as we know that could be an issue they're really concerned about it in seattle. if the dock workers get sick, can you shut down the port on this end

the crews coming in they're tested by customs before they leave asia and tested again on board 96 hours out from here if there is any signs or symptoms they're sick. the ship will not come in, the crew will stay on the ship if you violate the rules, it's $94,000 per incident guys >> jane, just remarkable the safety measures and container numbers in l.a let's get a news update here with sue herera. >> here's what's happening at this hour. harvey weinstein has been sentenced to 23 years in prison for rape and sexual assault. the surprisingly stiff sentence is not far below the maximum sentence of 29 years he faced. his lawyers argued for leniency saying a long prison term would in effect be a life sentence britain's treasury chief

announced a $39 billion stimulus plan it includes $5.5 billion for the national health service. earlier this morning, the bank of england cut its key interest rate the trump administration is reportedly looking at stimulus plans which might include a delay for filing and paying your taxes, that is now due on april 15th and bars and restaurants across italy closed early as part of the country's coronavirus restrictions the governor of the lombardy region is requesting tougher measurers, including closures of restaurants and malls. that is italy at this hour stocks back in the red this morning, 2770 here just about 40 points above last week's low of course, after that session

that saw the s&p and nasdaq post their best day since 2018. thanks for the time, guys. appreciate it very much. stephen, seeing a lot of calls that the market deserves to go down 10 to 15 from here. is that the base case at citi? >> look, we have ballparked this event as a 20% decline in u.s. shares with those impacted industries and international markets higher beta taking a larger drop. we can't be exactly precise if it will be a 25% down move i think that's what happened recently with credit markets having weakened and still to pass that impact, particularly outside of the energy sector onto markets is a negative outcome. it begs for a stronger policy response ultimately here we're facing what is akin to a natural disaster

it's something as was said today, not a financial crisis, it's not a business cycle that it boomed and had to go bust we can take a sharp hit here across the world economy in the first half of the year and, in fact, rebound from it. so i think that again argues for something that i would ballpark at 20% with much more in some areas rather than pick some massive number >> so really not that far from where we are right now omar, i'd like your view on that question, and if you can distill the impact on russia, saudi. >> i think that part of the weakness in oil was probably what push a lot of the markets down even further and elevated the volatility more than what was necessary given the economic conditions i think, you know, specific to the question about whether there's more downside here, i do believe that a big part of this is that the market still pricing

a lot of uncertainty i think a lot of what we have seen so far is market doesn't understand how long this is going to take and what are the answers that nobody really knows. i think a big chunk has to be with the fact that people are thinking about an earnings recession that may be there already. and then understanding what may be the possibility of an economic recession i think the market will have more downside, if an actual economic recession is more likely probabilities are increasing as we speak, as the more -- of these takes time, the probability of recession gets higher and higher. and therefore the chances for a bear market are actually more, you know, pronounced >> steven, we were talking just now about your base case and a 20% drop due to covid-19 impacts. i wonder how much of that factors in the sort of adverse

credit market impacts that are possible from these low oil prices are you factoring that in at all or does the 20% kind of assume there is some sort of stimulus response or some kind of support that keeps the credit markets healthy? >> we need to see disaster assistance we need to make sure we are not damaging economicpotential and the ability to rebound travel and tourism -- forget oil for a moment but just the ability of global airlines to operate in a period after they had an incred demand short fall that is critical we can have what has gone on here, the surprise not from the demand side but russia and saudi fighting over who will make the next cut in oil production, that's one issue what i care a lot about is that we have credit markets and healthy parts of the economy

around the world not hit a downward spiral. in other words, when we hit unnaturally low levels of economic activity, well below satisfying demand we are not starting a new downturn from there, and we're not assuming, in fact, that credit markets have to have the downward spiral in healthier parts that's what would make it a lasting full year economic recession as opposed to a short, sharp shock. the signs have not been good the last couple of days, but this is why you do need a policy response to protect the healthier parts of the economy. >> it's certainly what everybody is looking for, waiting for, those details. omar going back to your point about earnings recession we have seen hundreds of companies come out and either revise, couch or in some cases cull their guidance all together from a fundamental perspective, how are investors, maybe longer

term investors to get their arms around the situation and what this is going to mean for these companies? does it essentially mean that you're going to continue to see these big moves in the market until we get more clarity around earnings in the next season? >> there's no question in my mind that the volatility will continue to stay like this, even as we get news on a stimulus, whether it's monetary or fiscal. volatility in this part has to do with the fact that a lot of the estimates of earnings and estimates, even on economic data are going to be incorrect or they're going to be not in the ballpark or what is reality. we know the impact of the coronavirus in earnings and economic data is still by far very unknown we don't know to what extent this is going to hit bottom line of companies we just know it's going to be there. with that in mind, it's really just trying to estimate how much further down or potentially, you

know, how much potential positive surprises that may be in the market. i think, you know, volatility and especially when it comes closer to reporting earnings is going to be very critical and therefore the appearance of volatility will continue to stay in the market. >> it's a key point, steven. the data headed our way other the next few weeks is going to be soft at first, soft data before we get harder numbers -- >> i think you might see some strong data. you may see retail sales strengthen. >> what specifically >> things like china's manufacturing downturn was remarkably deep and hard partly bauecause of lunar new yr migrations, people out of place and stopped from returning to the factories. the disruptions in the u.s. economy is small, but the negative impact is still coming. estimate uncertainty, particularly the second quarter,

i think the largest impact will be in the united states in the second quarter so just having estimates, having any notion you can guide and say what the year will be like, you have to discount that quite a bit. and that's why markets are falling. >> so if michigan comes in and confidence is not severely dented, are you saying don't necessarily trust it >> generally speaking yes, we saw small business increase for the month of february -- >> but that was the month of february. >> right but there will be new data points and i'm sure there will be some impact but it's not going to capture the actuality of what's happening here when angela merkel can tell the german public that 80% will get the coronavirus if they don't do anything about it, again we have to come to grips with what will happen, the hording behaviors, a

massive drop in travel, tourism and transport. all of these are natural things, none of it has to outlast a virus but if figuring out how it plays out in a gdp report is probably not that important right now. >> we have a shot at data or at least color from a couple decent size tech companies, adobe and broad com, which are reporting tomorrow what would you hope to hear them say about guidance, about demand, what should investors expect and listen for from these companies as the executives try to give some idea how they're navigating this uncertainty? >> i would probably say i would be surprised if any company that come out and try to revise their outlook will not acknowledge the fact there is a lot of uncertainty regarding what the impact may be on the coronavirus. i think most companies will come

very conservative in trying to set expectations low to make sure that whatever the earnings reports may come down the road end up being more closer to reality. i don't think anybody really has a good gauge of what these, you know, constrained consumer demand and the shock to demand we've seen in the system will have an impact in their earnings down the road. what they know is their impact is going to be negative and affect their business. it's already affecting their business and the lagging effect of how that is in earnings is probably going to take a quarter or two before we can see the real earnings so i would expect for them to be realistic and provide the low set of expectations to make sure that people realize that everybody is trying to wait until we can have a good gauge of what the final output is, and i don't think we're there yet. >> to wrap all of this up and make it actionable before i let you both go, steven how are you

advising your clients right now in light of the stuff we're talking about? and omar, quickly i want your response too. >> we've taken defensive actions we're 5 points overweight, treasury, overweight gold. but the reality is, don't throw out your long term pore folio. this is an unnatural disaster and it will pass >> omar? >> big part of what we have been discussing with clients is to stay calm. this is the reason why you have a long-term financial plan periods of high volatility happens and then there will be more of this coming. this is the time to stay disciplined, continued to follow your long-term objectives, make sure your risk tolerance is in the right place and don't try to speculate market time when bottom is going to happen. stay clear to what your plan is and focus on the long term a year from now we'll be talking

about something else that's a part of what we try to gauge with our clients. >> staying calm is important on a public health front and also on an investing front. try to remind our viewers of that all the time. omar and steven thank you. talk to you soon let's get to capitol hill where elon caught up with treasury secretary steve mnuchin. elan >> reporter: the secretary tried to reassure markets and show the white house is working on a detailed economic response to the coronavirus outbreak,an even though it has become increasingly clear that their signature idea, the payroll tax cut is not winning over lawmakers here on capitol hill he tried to frame what happens through the end of the week as just a first step. >> i assure the american public we will have a full economic plan to deal with this, and i believe there will be bipartisan support. some of this stuff, okay, is

complicated. this is moving forwards very quickly. so this will require multiple times coming back to congress. whatever we do kind of in the next 48 hours, that's just the first step we'll be back. >> so he did lay out a couple measures that treasury will be recommending to the white house, including extending the tax deadlines for individuals and businesses he said that could amount to a $200 billion short term stimulus he talked about loan guarantees for the airline, hotel and cruise industries, and pushing for an increase in sba loans but said he does not see any need to intervene in the markets right now. over to you. >> hard to keep track of the steve mnuchin headlines just in the first couple hours of trading. all kinds of crazy things going on, yields up a touch. >> there's three things moving the markets. one is oil and what everyone wants to hear

is some kind of signs of detante between the russians and saudis, no positive news on that one the second is on coronavirus headlines. no new scientific break throughs or news. we hear about shortage of lab materials for testing. not a lot of positive headlines. and third, perceptions of the stimulus program the size of it, the timing of it we saw the market moving up as the president made comments about potential help to the airline and hotel industry but it started coming down as everyone realized, this payroll tax cut is going to be tougher to get through the market is saying we have three things that move the market and all three of them there's not positive headlines right now, particularly on the fiscal stimulus idea if we get better news, more agreement towards the end of the week the markets are going to lift on that

right now show me the headlines moving the market forward. the three things moving, no positive headlines on any of them right now. >> the moves for the dow and s&p today, they're big but they're just about average for the past 12 sessions of 3.5%. obviously the direction today is down. >> notice how we coalesce about 1,000 points down all the time isn't that odd isn't that like a human markets behavioral, 1,000 points is what we're comfortable with, all of a sudden. >> is this the new normal? the moves. at least for the time being? >> markets trade on a multiple of future earnings expectations and know one knows what the e is in the p.e. ratio anymore i put up some of the regional banks, they're seven or eight times forward earnings, nine times. these are cheap on any historical multiple. but cheap on what?

you have no idea what the earnings are you're using current estimates, saying they're cheap and you have no idea what that means that's right >> the vicks is still above 50 tell me about volume i presume that's still high. >> it's titanic. >> right >> on a normal day the entire stock market u.s. will trade about 7 billion shares that includes nyc, nasdaq. everybody. we're about 14 billion in the month of march this is magnitudes higher. the cme is having one of the greatest months in history they trade on contracts not on shares but they're doing twice the normal amount of contract trading as well. the only good news is the floor is busy, somebody is making money out of this tragedy, and that's what it is, and that's nice to see. i'd be happy if we went back to normal volume and got better

headlines on coronavirus i'd trade that tomorrow. >> remember when we talked about 5g and who got the biggest show on streaming feels like a lifetime ago, doesn't it >> gosh, yeah. >> bob, thanks. >> it's will this change what we're doing? we're about to engaging a great national experiment where we decide we'll spend a month or two distancing ourselves frech other and it's a social experiment it's a tough game. >> yeah. bob pisani, thank you. it's time now for special rick santelli exchange >> reporter: hi, morgan. before i get to my guest, professor ken former imf chief economist and current harvard university professor i would like to point out the dollar index has been on a tear in the last 30 minutes. 30 year bond are two basis

points in positive territory they settle at 128 now at high yield price of 130.y as rates drop so did stocks and confidence in the economies domestic and global. we're seeing a bit of a reversal to that. you want to weigh in on this subtle change to get ready for 24 billion to be auctioned off >> it's heightened on certainty driving down both the interest rates and stock market and, you know, other times when tint rates go down sometimes the stock market goes up so, this is an extraordinary circumstance that the market is feeling incredible and certainly, yeah, even if we hadn't changed the meme

expectation of where the economy was going w-this kind of volatility we would see a sharp drop in stocks just with that. >> now we saw, of course, mr. carney and bank of england and uk government come up with package that was all wrapped up, communicated, expressed very well, and it seems as though the uk market at least for a while liked that since the eu 27 meeting yesterday, same arrangement with the ecb and lagarde tomorrow >> in the first instance we need a multi-faceted response to the health crisis and what's happening to the companies immediately hit by that. and there's disagreement about what that would be italy and israel, china taking these extreme measures, maybe united states will go into more social distancing. beyond that you want to prevent

this from lasting a longtime i would certainly be in favor of an outsize fiscal response now and perhaps more later to protect the healthy part of the economy. yes, this is a natural disaster. yes, this will eventually go away but this is not feeling like an every three year event, its feeling like a much more rare thing happening and you want to watch the collateral damage, you want a v-shaped recovery yes countries need to get-together but they certainly disagree right now even on what to do germany is preparing its people to say you're all going to get it and we're going to let that happen italy is trying to sort of not have that happen and israel even more so. what do you do >> you know, you and of course ry reinhart wrote a famous book

i keep leaning back thinking central banks still have a langua hangover from policies they endorsed during the financial crisis can banks rise to the occasion is there ammunition, true ammunition -- i know that with regard to the u.s. treasury secretary mnuchkin said he would like to insulate taxpayeand hav loan guarantees to bail outs weigh in on how governments and central banks can or should move at this point. >> look, there's a lot of stuff that can be done on the fiscal side and when we're talking about loan guarantees for the airlines that ought to come out of the treasury. that's fiscal policy the technocrats can implement it but shouldn't decide it. we talked about this before.

if things got really bad we would wish that we could use negative interest rate policy effectively. it's not there although if you look at markets they think there's some chance we'll see a bit of it even in the united states. but the first line of defense here is fiscal policy because you have to address the problem. there's a health crisis. airlines are, you know, going to need loans small businesses i the think this has to come out of fiscal policy, the treasury, and i think we need a significant stimulus beyond that because the healthy part of the economy that suffers and that would really be a shame because i think this will pass and we ought to get a good recovery when it does but if policies paralyze that's at risk. >> excellent professor, always interesting to hear your thoughts morgan, back to you. >> thank you rick santelli, thank you this discussion dove tails nicely into the next segment small businesses struggling to contain the fallout from

coronavirus as sales stall and customers stay home. here's what treasury secretary mnuchkin had to say about how the government is trying to help >> i think there's big bipartisan support people under we have to help small and medium size businesses in certain industries. this is a one time event and, again, i couldn't be more pleased the u.s. economy is the most resilient in the world and we'll get through this very successfully >> our next guest was forced to cut 10% of his workforce due to the slow down thanks to coronavirus. jay foreman joins us now thanks for being with us >> you're welcome. glad to be here. >> so the impact so far of coronavirus on your company it seems to be a one-two punch. first from the supply chain standpoint in china and now from the demand standpoint. i guess explain to us break down for us what the impact as been so far and where that has resulted in some of the these

layoffs. >> sure. well, i mean the biggest issue is, you know, we're financed by banking institutions, and when they see a trade war or coronavirus situation they want to know how that will affect your forward looking earnings. we have to try to project. if we have to project our earnings will decline because we either have a challenge with supply chain or demand that will affect our borrowing like the secretary said, we're going to need support for small and medium size businesses by the government, they have to backstop the banks so banks can backstop small business. from our standpoint we were looking at a supply chain crunch with china shutting down now china is opening back up and the factories are coming back online so we don't anticipate a further slow down there. now it becomes a demand issue. so we're worrying about, you know, this concept of the economy shutting down at certain levels we're here in florida and there are hotels all up and down the

coast here that are waiting for spring break stories come in those folks aren't coming. if those folks don't come those hotel rooms will be empty and hotel owners will have a real problem. are the banks going to come in and foreclose on not hotels? we know everybody will go back on vacation in six to nine months this is a real short term problem and really is going take the central government getting together with the banks to help backstop businesses. >> sign terms of those governments getting together with the banks, the proposals that we've seen so far and i realize we're still awaiting many details, but from a fiscal policy standpoint what are the very best or most effective things that the government could do for a businesslike yours right now? >> so, it was a longtime ago but i remember in the '70s when there was an economic problem they did a freeze. when inflation was going crazy they da wage and a price freeze and that kind of just stalled things out for a while to let

things cool down i think the government need to come in and tell banks hey you need to freeze, you need to chill with your clients and help your clients get through this period for six -- three to six months or so and really just cool down because if the banks start to panic and they come in and start to call in their loans we'll have some real carnage >> jay, i only have a couple of second left. reuters on the tape now citing source, boeing freezes new hiring except in certain critical areas how did you make the call between hiring freeze and bringing head count down >> well, really we had to look at our balance sheet going forward and realized we had to prepare, if earnings were going to decline we had to cover that by overhead reductions, and simplest way to do that i can't get out of my lease, i can't get my landlord to give me a reduction in rate. we had to go with layoffs. we hope to bring those people back

in the near term that's the way people lower their overhead. labor is the way it's unfortunate we need some help. people who are getting laid off are going to need help i don't think people need a payroll tax cut. people are working it's the people that aren't. >> i under jay, thank you jay foreman, basic fund. let's get to the judge i'm scott wapner your money is front and center today it's all about stocks. whether you should buy them or not and the names some are suggesting you do grab today we'll debate what the our investment committee the question of the day is this, is it time to buy and if so what let's begin with the former, whether it is safe to buy right now to put som