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♪ ♪ to not make haste >> good friday morning welcome to "squawk alley." i'm carl quintanilla with jon fortt. morgan brennan heads our coverage at headquarters bulls trying to hold the bounce after the worst day for stocks since 1987 the five big tech companies apple, facebook, alphabet, amazon and microsoft lost more than $400 billion in value on thursday the treasury secretary steven mnuchin joined us this morning on "squawk on the street." take a listen. >> the president is looking at a major stimulus package

whether it's through the payroll tax cut or through another means of delivering liquidity to hard-work americans, we've announced what will be about $200 billion of liquidity through delaying irs payments, so hard working americans who have tax payments due or small or medium sized businesses can delay them i can assure you we will use whatever tools we need to make sure that the industries impacted by this get through this this is a short-term issue it may be a couple of months but we're going to get through this and the economy will be stronger than ever. i look back at people who bought stocks after the crash in 1987, people who bought stocks after the financial crisis for long-term investors this will be a great investment opportunity >> kirk of wells fargo asset management joins us and john ruth ledge good to see you, thank you for your time. >> good morning, carl. >> kirk, you got the treasury

secretary talking about liquidity, the president reportedly meeting with testing executives later on today. fda approving the roche test how many constructive things are happening and what more do you need to hear >> there are a lot of constructive things happening. i think this is all great news for the market, but as we have spoken about before this is a medical crisis primarily with financial implications. so what i'm looking at is how much money goes to the medical sector and specifically to our hospitals because while i think the financial markets are going to recover and there's great long-term value, i think the critical thing is our emergency wards, our icus and, you know, those type of things in addition to financial stimulus we need help for our medical sectors. >> and john, weigh in, if you will, on where we are just from a market perspective as well the human toll and tragedy and concerns continue, but there's a question now about if you've got

cash on the sidelines, when do you get in and how much do you get in i know you're thinking about this how are you approaching it >> you know, it's a very difficult time, carl, because one doesn't want to go around saying if you had raised cash a year ago you would be in a good spot right now because they can't. people who did are looking at tremendous opportunity to buy things at big discounts but you only want to buy the things that are going to vive and prosper which means the best names with no leverage, with no tight debt kov nance, no immediate refinancings, so i haven't sold a share of anything in a while and i'm tickling with buying things our biggest enemy is our emotions our emotions right now are eith either screaming sell or buy neither good advice. we want to preserve capital at

this point it's a very difficult time to be an investor. the same thing not only in the stock market but in the bond market and private equity and real estate where the same forces are at play it's a time for older, cooler heads to calm people down, i think. >> it would seem nothing is immune looking at the volatility across so many asset classes in the past week alone. kirk, the fact that we seem to be poised for a more coordinated response from the federal government, whether it is the fed stepping in with the $1.5 trillion injection into the financial system yesterday, the fact that you do have this fiscal bill, this potential first phase fiscal bill moving through congress right now or the comments from the treasury secretary on our air this morning, is this enough? is this the type of response now, are these the type of policies going to do enough to quell investor concerns and potentially stop what could be a recession? >> i think they will

look, i can't predict that volatility is going to end i think the volatility will continue one thing i've been pleased about is the treasury market i think it's very interesting that treasury yields are holding in and actually have come up which i see as a good sign i think the support for the treasury market has been terrific i think a lot of the measures that are being taken in terms of the fiscal side, you know, and i hope we see more, i think it's great for the markets, i think the markets are functioning pretty well here certainly we've got a way to go, but so far so good in terms of, you know, if i knew what was going to happen, i think we would all be pleased and the market have actually behaved fairly logically as hard as that may seem >> jon, i want to get your take, given the fact that you have deep insights on china as we start to see more supply chains come back on-line, i think just today, you had the report that lowest tally of new cases confirmed in 24 hours in china since january 8th.

as that country comes back on-line what does it do to global industrial activity >> china is definitely now stabilizing. the supply chain issue from that end is actually getting somewhat better now we have an issue from our end because you can't push components and parts through shut down factories. as my colleague said, this is a medical issue, not an economic issue. but i think china at this point, i think the most destructive thing you're seeing is the blame game between chinese officials and american officials it's very stupid, very destructive. this is a disease. we need to do everything we can to contain it. we need to do everything we can to try to lubricate the economy too. you know, send people a thousand dollars. the fed should open the gates, et cetera. that's not going to solve the problem. in terms of will it stop a recession, i think no. recession means people are not working. i think people are going to be not working for some time here

and in many other places but that's not the real issue. the issue is to me, when it crosses the threshold from being a macro problem, spending, supply chain, et cetera, to being a nonpriced rationing credit crisis. the biggest issue there to keep your eye on is the corporate bond market. there's a huge corporate bond in china with a banking system that's not really suited to providing working capital to private companies. in the u.s., we're having heavy outallows from the corporate funds as the corporate bonds have the lowest possible investment grade rating. if they lose one rating mutual funds will be forced to sell and buy perspectives that's the issues, avoiding a 2008 lehman brothers, keeping credit flowing, keeping the banks open, that's really the issue. right now, that's not going very

well >> good to talk to you both. a lot to handle. we expect to hear from the president at 3:00. good to see you both >> we're getting news on grub hub. kate rogers has that for us. >> hey there grub hub announced it is temporarily suspending collection up to $100 million in commission payments from impacted independent restaurants nationwide the fees will be suspended for qualified independent restaurants. the company hasn't broken down quite yet how it will be qualifying those in addition it said it's created a fund that will enable proceeds from the donate the change programs where they round up the bills and donate the remaining to charities. grub hub said it and seamless have been raising more than a million dollars every month for the program. they will work with city officials to identify the

organizations to use the funds moving forward. >> this is one to watch. kate rogers thank you for bringing us that news. major live events and conferences canceled what would happen if the new york stock exchange floor shut down bob pisani has the answer for us >> morguep, the nyse is now allowing most personnel to work from home. for the most part, they're not nyse employees i asked stacy cunningham what would happen to the floor if someone tested positive for coronavirus here let's listen in. >> if there is an outbreak wecht clean the floor and reopen pretty quickly as well that's something we're not planning to close the floor at this time, but as you mentioned, we could and we could trade fully electronically >> now the nyse has had a business continuity plan bcp in place for decades in the event the floor needs to close for a flood, snowstorm or any disaster this plan would allow the nyse to trade electronically without the floor open if it needs to. the market makers and the floor

brokers who are here can continue to participate in that electronic trading, though there may be limitations around the closing auctions, for example. the nyse has closed many times over the year, notably four months of the outbreak of world war i in 1914 for the death of john f. kennedy in 1963, four days after 9/11 and for two days after hurricane sandy in october 2012 with these cases the markets were closed in the situation now under consideration, there's the possibility of closing the floor, but keeping markets open electronically that's a little different. now in the event that some or all of the people working here need to self-quarantine for whatever reason, traders tell me many teams have started splitting up some working from separate offices in order to avoid having an entire firm self-quarantine, a model being adopted by many companies that need to keep up and running in some capacity in the meantime both the cbo options exchange floor and cme trading floor have been temporarily closed and jon, i

can tell you, secretary steven mnuchin was on making it clear he wants the markets to stay open you're hearing from people at the top a lot of pressure to keep the markets open and the nyse will be doing a deep cleaning of the entire floor after the close tonight. back to you. >> all right bob, thank you coming up, adobe ceo's as ghafr isrerngss after eain rit teth bak we see harnessing natural gas unleashing the promise of clean energy. at emerson, when issues become inspiration,

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welcome back adobe shares soaring up 9.5% after posting record revenue though the company did see an impact on profit moving forward due to the outbreak of the covid-19 disease from the coronavirus. adobe ceo shantanu narayen joins us in a cnbc exclusive from the company's headquarters in san jose great to see you >> thanks for having me, jon >> i want to get to earnings specifically in a moment, but i can't help but think, you became ceo years ago, just in time to face the financial crisis. as we're getting into this period dealing with this novel coronavirus, how is this similar, how is it different for you from the ceo's seat? >> well, jon, having been here 20 years, i used to think that i had seen it all, but this is clearly unprecedented times. and i think like all responsible

business corporations, what's front and center for all of us right now is foremost the well being of our employees and our customers and so focusing on what we are doing as it relates to working from home, ensure we have the travel restrictions that are appropriate at this time moving forward and ensure business continuity as it relates to making sure that our customers who want to engage with digital, that has been all consuming which is different from anything that we've experienced before >> now, on the call last night you said that, among the impacts that you expect to see, they are enterprises deferring basketball game decisions, delaying consulting services, implementations, reducing marketing spend, consumers reducing spending in countries more adversely impacted by this covid-19 situation how well do you think you're able to gauge, to estimate, the

impacts of those things given the lack of tests here in the u.s. and some of the spotty data we're getting? is it still kind of day by day, week by week evaluation? >> big picture, jon, we had an outstanding quarter and we had our first $3 billion quarter what we said on the call if you take both our businesses on the digital media side, we had record new arr for what is a q1 in $400 million and i think we saw little to no impact as it related to how people were transacting with us on adobe.com. on the digital expedient side, the enterprise business you're alluding to again, greater than 20% bookings growth, revenue subscription revenue grew north of that. but with the travel restrictions, what we are seeing and in all my conversations with ceos around the world, what they're focusing on is first employees and making sure their

employees are safe but all of them are also asking us, as adobe, how we can help them once they focus on the employees, how do they engage with their customers digitally but yet, we said that as it related to our q2 numbers, we would expect with the travel restrictions with some of the requirements that happened in enterprise, we would expect to see some weakness as it related to people delaying maybe their digital purchases and the services implementation. on that side, you know, we factored all that in to our targets. but overall, i would say that, you know, adobe had an outstanding quarter as it related to q1 and long term, nothing changes. the imperative to engage digitally is only going to get more important, but i think all corporations are trying to figure out how they operate digitally and focus on their customers. >> and i do want to give some time to emphasize that as well your stock is up 9% and that is

for a reason i want to ask your cloud positioning, does that help ameliorate the potential downside in a situation like this, meaning, when people to have to work from home, if they're using adobe software, how easy is it for them to be productive on that software from home i know a lot of your customers have set up limits on exactly which machines people can use the software on. are you able to make adjustments to that in a secure way so that some of those employees perhaps can use the software on different machines as appropriate and are those conversations taking place >> that's a great question, jon, and for somebody who has followed us as you know, our business is relatively predictable. the move to the cloud enables us with 90% revenue and you saw that both in q1 and you're going to see that in 20q2 as it relats

to the core profitability of the company. we have learned forward with education specifically on how we're engaging with customers given every single institution around the globe is moving t on-line what we've decided to do is to allow people who had access to the cloud or document cloud in the lab, to have access to it at home. we're going to be leaning forward, engaging with every one of our enterprise customers, also in terms of an outreach in asking them how we can help them during this time, but i think all responsible corporations like adobe are going to look at it and say, let's take the long run, but let's make sure that our customers are not impacted during this trying time. >> shantanu, tell us about productivity during this work at home period. i know, many people know that you have been building out headquarters in san jose, several towers you have downtown there. partly for the purpose of productivity, getting workers together to build and troubleshoot this software when people have to work

remotely, how much do you have to slow down your timelines on how you roll out improvements, new features, in your cloud software and how much does that potential slowdown or hit impact you if this goes on for several months >> well, jon, we've had this debate incessantly in terms of is it more productive to be in a closed office, an open office, more productive to be at work or work from home i think we're going to all as a globe understand and get more data associated with it. my sense is that on the engineering side and the product side, more of the product people, especially the engineers, are accustomed to working from home and i think that will continue unabated. there is some element of when you're walking down the hallway and having a really interesting debate and that causes new innovation, i think we're all going to try to find out how to

keep that productivity and creativity alive as we transition to a completely digital environment. i think most companies are going to see a little bit of a hiccup, but it's going to be nice the next time i meet with my engineers and i can actually give them some real data on what we are seeing in the situation >> shantanu, that raises a great point and you're so good at seeing around large corners, to the degree that we do come back to work and congregate again as americans and europeans and asians, you name it, in a year or whenever it is, do you see that coming back fully or will there -- has there been a structural change in the way that we are going to relate to each other as coworkers? >> i think there will be some fundamental structural changes that are going to be long reaching i think as it relates to business continuity planning and making sure people can work remote you are going to see some fundamental structural changes i think most companies are going to look at this and say, what

did we learn as we had everybody work at home and how do you make that a part of the normal workforce and how do you balance, you know, the beauty of having everybody in a room when you can be creative and really brainstorm with how you can use more technology? at adobe we've doubled down on making sure people have access to this technology, wherever they are we are going to be as soon as i finish this, do my first call-in employee meeting and my first all-vp leader meeting completely virtually electronically we're doing our digital summit we normally have in vegas, also electronically we're going to learn from this process which is a good thing. we all know that technology has significant benefits and as long as we can use this effectively, but i think there will be long-term structural changes in how we work. >> it's going to be really interesting to see how all of that plays out, shantanu you touched on this a little bit but i want to dig into it further here and that's the fact

that your cfo said our recurring revenue model and real-time visibility we have into our business uniquely positions adobe to manage through an uncertain environment. that real-time visibility right now is so important, especially given the fact that at least from a macro perspective, so much the data now seems kind of old, the fact that there's so much uncertainty around the earnings picture from a market standpoint, if you had to break it down across the sizes of customers and businesses using your products and services and regions around the world, what are you seeing in terms of that real-time visibility right now >> morgan, that's a great question we have this thing we call the data driven operating model that enables us to understand every single day what the customer is. what we said on adobe.com, both in the entire q1 as well as the first few days of march, we've actually seen little to no impact in china where we have a small business as it relates to our

creative cloud and we sell through resellers, that saw a little bit of impact in italy, where we have relatively healthy business, while the reseller, in other words people engaging directly in physical locations, was impacted a little bit, we saw additional strength on adobe.com. i just continue to think as long as consumer sentiment is positive, that people will engage more digitally because people are at home, they're going to be creative, they'll want to be entertained, but it's changing we get visibility country by country in terms of what's happening because we not only process trillions of transactions on behalf of our enterprise customers, but we see that directly. it's fascinating to see how this has actually moved in conjunction with the outbreak. >> shantanu, you and adobe are in the top tier of fast-growing, large technology companies so i wonder from your perspective

also as ceo, what are you still spending on in this environment? >> well, we just, you know, we always focused on how do we continue to build the company for the long run while navigating the current environment. i think as i think about that fundamental innovations and product, we will continue to invest in that we will certainly look at geographies and say do we disproportionately double down on some of these places and i think the other thing that's top of mind for us right now, when we have the solutions like electronic nurs electronic signatures or productivity when people aren't in a physical location, how do we get the awareness out i think much like a number of our customers are asking us, we're probably going to spend a little bit more on awareness because we feel like stronger companies can actually grow stronger during this period. >> okay. finally to be clear, you're still hiringand across the board or in specific areas

>> you know, we're still hiring across the board, but all of these interviews are virtual and so part of the challenge that we have is how do we know whether it's a robot on the other side or an avera.i. or an individual it will get delayed a little bit. big picture we'll focus on it and monitor the situation in real time. >> all right and monitoring your stock in real time you are up more than 9% after earnings. adobe's ceo shantanu narayen with us exclusively, thank you meantime china's tappinging its leaders in tech to con tain the spread of the coronavirus. eunice un explains from beijing. hi. >> hi, carl. titans like alibaba and tencent are test itting out new technologies aimed at getting people to feel more comfortable leaving their homes again. china is encouraging tech firms

to experiment with all sorts of technology to help people cope with the epidemic. in big cities like beijing, some of the most useful are apps that track confirmed cases. this one by tencent and state paper, the people's daily, detects where the clusters are so i can figure out whether it's safe for me to go out and where. contact listtechnology is bein pushed hard. anything that helps people get things done without having others around. at this supermarket the main way to pay is with self-checkout all i have to do is open the app, get my payment code from ali pay and scan it and i'm done more buildings are asking for health codes these codes were created by the government with technology from all alibaba and tencent. i'm categorysed a green safe, yellow a risk or red a serious risk the codes are meant to help office buildings and residential areas keep track of who might be sick, but they're also raising

privacy concerns about what data is being collected and how much more control it gives to the government for now, more people are eager to get back to their day-to-day lives and willing to embrace these somewhat and potentially intrusive as well as overbearing technologies guys >> eunice yoon, thank you for bringing us the latest from beijing. professional sports leagues suspending their seasons in the wake of the coronavirus. eric chemi has the latest. >> that's right. the big story out that came out this morning, golf's most prestigious tournament the masters announced it is postponing the event it had been scheduled for mid april a month from now that news coming after last night's news that the pga tour canceled its current event after one day and shut down all events for the next three weeks just a short while ago, we also learned that the boston marathon, which had been scheduled for april 20th, that would be postponed into september. overnight the xfl, vince mcmahon

just launched this year, cansingling the rest of its entire season. the brand new league saying it would still pay its players for the missed games the season would have ended in april. leagues, teams, business partners are trying to figure out a lot of unknown questions, that they don't have the answers to mark cuban is looking into ways to pay hourly workers who might not get paid during the stoppage because there are no games kevin love from the cleveland cavaliers announced he's donating $100,000 to arena workers and hopes others will follow despite complex written agreements and legales, they have an understanding they have to work together and figure out lost media exposure and canceled things, even if it takes many years because on a long-term contract they have a lot of time to make up the difference of what gets lost right now for now, nascar, indy car and the ufc plan to hold their

events the olympics still on schedule for now. but as we know, things are changing rapidly >> that is for sure, eric. thank you, eric chemi. dow up 376 basically 1,000 points off the opening highs. let's get a news update with sue herera at hq. >> good morning, carl, everybody. here's what's happening at this hour iraqi soldiers surveying the damage at the site of a u.s. air strike that targeted iranian backed militia weapon stockpiles a top u.s. general says the threat from the iran backed militants remains high. here at home disneyland is open for one last day before it temporarily shuts down because of the coronavirus disney plans to reopen the original happiest place on earth next month disney's cruise line is suspending operations starting tomorrow disney world in florida is set to close on sunday walgreens and kroger expanded their purchase limits on some health products. walgreens limiting sales of

items including wipes, hand sanitizers, masks and gloves kroger has placed limits on the number of cold, flu and sanitary products per order and a preliminary study from china is taking a look at how the coronavirus affects children ten infected children were assessed only seven ran a fever and none showed other symptoms seen in adult patients such as muscle aches, headache and pneumonia. experts say the milder symptoms may make it early detection and isolation of children much more challenging. you are up to date that's the news update at this hour back downtown to "squawk alley." i'll send it back to you. >> thank you very much a look at the best performers on the dow, session lows, dow up 262, being held aloft by jpmorgan chase, boeing, intel with percentage gains that would have shocked people about a month ago, but today sm etty moderate. back in two minutes. is a baby company. but we're also a company that controls hiv,

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welcome back to "squawk alley. stocks are at session lows right now. the major averages are up for the first time in three days but the dow is off by more than 1100 points right now it's currently trading up 270. the s&p is up 1.4%, 2515 is your level there in what has been an absolutely historic week for trading. jefferies brent hill and meghan shoe of wilmington trust join us now to break down the market action we have been seeing thanks for being with us

meghan, i'll start with you. the fact that we are fading the gains right now what is that indicating about the market at these levels >> we would expect continued volatility and i wouldn't be surprised to see a couple of really big up days like we've seen over the past week because volatility we tend to think of as very negative, but it is two way. we are still cautious on this market we think this has a ways to go before it will be fully played out. you know, we're looking for -- we've seen some significant monetary policy response so far. we're waiting for fiscal but unfortunately what we really need is time and that's not something that a policy maker can give us to see how this virus plays out. we're still on the upward trajectory here in the u.s we think there's more volatility to come. >> meghan, where is an investor to hide right now? how are you consulting your clients in this time of great volatility >> we're telling our clients to

be underweight equities but not sell out or do any knee-jerk panic based selling. when you do that, it is that much harder to get in at the righttime and there's so much focus on where is the bottom, when will markets go back up again. we've seen about a 25% peak to trough draw down which is right in the median of historical recessions we're pretty much there in terms of the market pricing in a recession. there's really nowhere to hide in the equity market in this type of market because even the defensives are getting sold off. what we've seen hold up a little bit better has actually been what worked over the past year or so. some of those growth names, higher quality earnings stability, those types of areas of the market, we still like some pockets of health care. we still like consumer staples and some consumer goods because when we do get through this, and we will get through this, we are going to be sitting at low interest rates and low mortgage

rates and consumers came in this in a good position consumer based products and goods will be poised to rebound on the back end. >> low gas prices too. some of the growthier names are names that you cover i see here in the notes you're lowering estimates across the software industry, 40 companies you cover by 1 to 3%, but no one is immune here that being said, where do you see more safety with your coverage universe and where do you see the coronavirus and the broader macro economic effects having a bigger impact >> yeah, short term i don't think we see any safety. we still think there's probably one or two more rounds of number cuts to come the 1 to 3% cut that we made could be a 5 to 10%, no one really knows, depending on the impact just driving into san francisco today, it feels like a thanksgiving day no one is on the roads it's eerie i think when you think about many of these companies that

close business the end of march that have a direct sales force, it's going to be really tough to get deals done i think the first quarter is going to be really difficult it's going to bleed into the second quarter we have companies like expedia and booking pulling guidance for the year i think right now, the answer is no one really wants to to do anything we do like intuit given the safety in the tax business it's a well-run company. we like adobe. your ceo was on earlier this morning and thing they're in a great position as a monopoly in the creative business. we think microsoft will come back, but again, they're still at risk with their enterprise business they preannounced one month left into the quart so no one is immune there are great stories that are off 20 to 30 plus percent that we think investors will come back to. if you have a two-year lens, we think you can take advantage of some of these. short term i think it's -- we

still haven't probably seen the bottom yet >> and meghan, i would think a lot of investors, particularly those who might be rebalancing their retirement portfolios, but a lot of investors have a longer window than two years. why not buy now? we're down about 25% from the highs on the s&p that means 33% upside to get back there i doubt many people think that we're likely in any way to drop another 25% from here. that means it's a decent time to buy, right >> for a long-term investor you're getting some very attractive opportunities we do not know how long this is going to play out, but if you have a long enough investment horizon you're getting attractive entry points for clients who have portfolios that have moved and significantly drifted from their targets we are recommending to rebalance. for clients who have cash on the sidelines you're getting the opportunity to buy in market

levels we haven't seen since 2018 we would say be patient, don't throw it all in at once because we could have another 5 or 10% down to go in the market, but we absolutely don't think you should try to be too cute in timing the bottom and if you have a long horizon we think we're going to get through this where we will have a contraction in the second or possibly third quarter but expecting a rebound in the fourth quarter such that u.s. gdp is probably going to be about 1% for the whole year. >> brent, just to go back to your point, the fact that we saw slack report earnings, stocks trading lower, slower growth, the coronavirus could hurt demand for products as companies cut back on tech spending took investors by surprise since it's been seen as one of the stay-at-home stock names within playbooks right now. you can make a similar argument for a name like grub hub, suspending collections of restaurant commissions as well some of these names that have been at least in recent weeks

tossed around within the tech and internet space as names that could actually be advantaged by the situation we're seeing in people staying at home, are there actually some hidden costs, unexpected headwinds that could materialize that haven't been taken into account? >> yeah. i mean i think look no one is immune everyone has created this list at stay-at-home names, activist, electronic arts, play more video games, amazon, more deliveries to your homes using zoom video trens conferencing and slack as we've said no one is immune slack this morning, the magnitude of the move, even after the stock had retraced from the high 20s to the low 20s back to the steens, you know, again it goes back to our thesis that right now, there is really no great shelter in tech and we think tactically there's more short-term downside but there's great franchises and ultimately

we'll hopefully find the bottom in the next quarter. it depends on your horizon i think many have said if you look out two years on a 25 to 30% correction it's really hard not to make money in past recessions or past pullbacks we've seen if you have that duration. i think you have to bet long term right now and there are great bargains that are coming in to sight. we may have, again, one more number cut going into this quarter. again, look at adobe, great franchise, they brought their direct selling business digital experience down into the low teens. it's the lowest growth rate we've seen in that business since i think it was 2016. we're -- this is unprecedented so no one really knows again where the numbers are going to bottom we think there's one cut we've had. probably one to two more to come we're getting closer but we're not probably quite there >> yeah. we know there will be a bottom at some point. it's a matter of when. brent and meghan, thank you.

>> thank you. and let's get a quick check on the markets want to mention the dow at one point was up around 1,000 points now it's just under 150 points, less than 1% same for the s&p and nasdaq, both up less than 1% the rally has faded. we'll have to see where it goes from here. for now, let's get to rick santelli at the cme for the santelli exchange. rick >> thanks, jon i would like to welcome the bond man himself, jim grand of jim grand's interest rate observer jim, i can't think of a more appropriate person to have on on a day where after quarters and quarters of accumulating high leveraged debt, triple b debt, having the fed and central banks have rates low enough that any form of debt in yield look good, covenant light and now all of a sudden we open the exit doors, what do you see going on describe how the liquidity is, what the fed has done, your

thoughts >> well, liquidity is this thing that is there when you don't actually need it and not there when you do need it. the fed seems to be at 6s and 7s, not knowing quite what to do except to do more of it. i see something circular in all of this, rick, to meet a crisis, our central banks, the governments, foster credit formation suppressing interest rates during quantitative easing, but that increment of debt, we're all epidemiologists now, it impairs the corporate immune system. the next time there is an actual disney cyc distant cycle problem, thanks to the medicine that was so liberally dispensed to them to meet the crisis. we come to the present day there is more debt than ever before in corporate debt as it concerns gdp and the quality of

that debt is weaker than it has been in at least since 2007, and to meet this difficulty, governments the world over are borrowing more and central banks the world over are intervening more, creating more and suppressing more one does wonder where it ends. >> with regard to where it ends, next week we're going to have a fed meeting. we've seen christine lagarde for the most part hold pat i was impressed. carney and the bank of england be more aggressive, we expected that post-brexit your thoughts, there's calls out there that they should go to 0 to 25 again. what do you think especially under the terms of a trillion and a half liquidity thrown thrown into gears? >> i think the fed will act and try to do something aggressive, grab zero again. i want to commend christine lagarde on her first statement

she said we are not here to manipulate or to do something with credit spreads. and she had to walk that back because the central bank of new york, the european central bank is, indeed, there to manipulate credit spreads so i -- i think it's important that central banks, whatever they do, at least don't forget that interest rates are prices and these prices mean something. i think not a little of our difficulty now is that the prices have been skewed and manipulated and distorted such that debt is much more abundant and much less -- lower quality than would otherwise have been except for the central banks' exertions. >> in the final minute we have, here's my big problem, jim is that we need to make sure the average person, small businesses, don't get tsunamied by the economic repercussions of what may yet come, but on the

other hand, many of these entities that are going to be getting help love leverage and probably instead of trying to deleverage, they're going to take any type of help or liquidity given them and releverage how can we keep that from happening again, but still address the issues we need to today? >> well, rick, i think we need a different race of human being for that one i think people respond -- people respond to incentives and the incentives have been and remain for some part to borrow more and to level more. although at the margin there is a wave of de-leveraging. it's rather mixed. but we'll know more in ten years i say, rick. >> i got you thank you. nobody knows the future, but nobody knows about bonds in the present better than you do thanks for joining me. morgan, back to you. >> great conversation, rick santelli take a look at biggest leaders on the s&p this morning as we fade the gains and the

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get secure, reliable internet and voice for an amazing price. call today. comcast business. beyond fast. welcome back there is a look at the dow is dax is up 9%. flicked red before the close and the vix now up a touch above

77 next guest part of the fixed income team at j.p. morgan that's been ranked number one over a decade. head of strategies jay berry, thanks for your time happy friday >> happy friday to you thanks for having me. >> what has within the jpm playbook so far? and is it playing out in these early days the way you saw >> yeah, our view is that the aggressive action the fed took last week by cutting 50 basis points has set the stage for another aggressive set of cuts the other times where the fed cut rates intermeeting it's followed up with another aggressive cut at the next meeting. so we're looking for the fed to lower rate bis a 100 basis points by next week. in a world interest rates are so low the fed is supposed to use its bullets rather aggressively.

we think it makes the case next week and if you look at how markets have reacted the fed funds market now is expecting the fed to cult rates to zero very shortly. and the way the yield curve is steepening seems to be reflective of of that as well. >> when you look at the fed's playbook it's told you it will go forward quick and use guidance and it are remain on hold as long as it need and i think the thing they are looking at now are probably inflation expectations market based expectations have fallen pretty sharply. they are sitting near lower levels of the decade and the fed is trying to sort of maintain credibility for its inflation targets, saying it will not raise rates until the inflation and rates are back above target. and then finally, the question

is whether the fed uses asset purchases again. you saw what the new york fed announced yesterday. it took the purchases and pushed them out to alleviate market functioning stress but the question is whether it makes larger use of asset purchases in order to help reduce dislocations, which are historically high in the treasury market right now. >> jay, there are people who say that the half point cut from the fed was too soon that it deputy seem to have that much of a market impact. and question how many remaining resources should more shocks occur. why are those people wrong to be concerned about that the. >> one i think if fed's told us in a world which it does have much room to ease it has to ease aggressively so they are justified in acting aggressively and yes they have got limited

tools with respect to traditional monetary easing. but they have got other non traditional tools that we just talked about but i think this also makes the case that you need to see a policy response from others. and we've -- >> jay, i apologize. we're just getting a tad of breaking news. for that eamon javers. >> that's right. we're told by nbc news which is conforming reporting out there that the president does intend to call a national emergency later today. he's calls a press conference for 3:00 p.m what we believe is happening is the president is likely to invoke the stafford act here that is a procedure that was initially started back in the 1970s to deal with national disasters. and it unlocks funding from the federal government for fema to respond in the localities that have been hardest hit. in this case the possibility is that you are looking at a

national declaration of disaster which would affect every state wait and see yesterday the president said that he may do some of the more minor things under his emergency powers we don't know exactly what he had in mind there. so there might be something short of a full national emergency declaration coming from the president of the united states we're working to get more, carl. and as soon as we have those details. we will get them to you. >> if we do actually get an emergency declaration from the president here we had a healthcare ceo on our show yesterday talk about what that could mean from a healthcare perspective and from a test perspective do you have any sense of what that could do from a regulatory standpoint and more specifically? terms of speeding up the pros in terms of being able to get test in the hands of doctors at healthcare facilitates >> i don't and one of the things here is talking about the idea of unemployment insurance under fema they run a program that could be

refashioned to apply to some of the people who have been or will be displaced by the virus that may be one of the more important elements but we don't know the full scope of what the president has from behind here and we'll push for more details. >> as we await news regarding the white house and the speaker on a response bill is president is going to talk at 3:00 and there will be a g7 video conference monday to discuss coordination around the globe and see whether we get any surprises on sunday. >> yeah. i think market, it's certainly wounded. it is fragile. it is very sensitive to any sense of whether there is going to be policy response commensurate with the market i do think there is patience on congressional side without making too much of each tick by tick move, it is not

terribly unusual to have a super big bounce at the open after a very oversold market and then find your way after that, and maybe give some back i don't think this is a verdict. just with the news eamon reported it would be an emergency declaration, the market has picked up again perhaps there was we don't really know what we're going to hear at 3:00 and this is more palatable than perhaps other options. >> the vix was above 77 a while and now its gone negative. the vix has only closed, what, above 70 four times >> yes exactly. >> one of which was yesterday. >> very distressed market. it didn't exist in '87 they back tested but beyond that it is '08. that is base your example of levels and very hard to sustain it if you closed above 70 or so on the vix you have always gotten a very powerful bounce that maybe didn't even mean that much so right now seems as if the

rallies are guilty until proven innocent when you have been in this condition but really the makings are there because it is such an utterly washed out market. >> -- well off the highs of the morning. the exception is rest of 2000 which as just turned negative and we've seen selloff down 34% off the past month a loan. what are the small caps delling us right now >> they are tell us a few things, morgan one being a lot of financial stocks in there. treasury hat l -- there is a lot of indebted stocks in there that is not really core profitable when you get down to it sort of the lower quality version of a lot of the things the market is i afraid of. so it is staying away. obviously they would mostly benefit from quick acceleration. the market less able to weather a recessionary period so all of those things are in the mix i think. >> and finally, maybe not nearly as important

bulsinaro of brazil. his facebook page says he's tested >> i don't know if we'll be parsing these things for days and weeks to come. >> i don't see how we can avoid it. >> yeah. >> as we get closer to the fed statement and presser. try to rest this weekend because we need you all back here on monday let's get to the judge carl, i appreciate it so much the final day of a tumultuous week sees stocks trying to bounce i'm scott wapner good to have you with us in a little while we're going to be joined by the billionaire investor carl icoahn. joining us here today. keith banks. bank of america. vice chairman. head of the investment solutions group. let's start where we always do our eyes anymorely on your money again to