every weekday tune in from six to 9:00 a.m. eastern for mornings with maria, on foxbusiness network. i hope you'll join me every day as we set the town for the day. that will differ a gent for us for now. that's it stay safe. ♪ ♪. gerry: hello, and welcome to the wall street journal at large. what a week it was on wall street and indeed everywhere else. this is the week the coronavirus basically took hold of all of our lives. every day the news headlines are virtually nothing more than a play-by-play of the latest on covid-19. the disease caused by the pathogen. efforts by health officials, government leaders, and average citizens to contain it. massive changes to our daily lives have been made. large groupings of people's been banned to further spread

the disease. major sporting events were postponed or canceled. schools and colleges close their doors, concerts were scratched, even traditional st. patrick's day parade were called off. thousands were told to work from home. president trump was seen daily on tv holding high level meetings and giving updates on the federal response. his critics blasted him for not doing enough. that on friday, he declared in a national emergency bringing out more federal money for states and municipalities. meanwhile wall street was reeling. the financial markets have gone into freefall on fears the impact of the disease could cripple economic growth. history was made on wednesday when the longest running bull market came to an end almost exactly 11 years to the day began with the dow falling more than 20% from its high-end month ago. the next day, stocks drop the most in one day since the 1987 financial crash. however on friday, there is some hope that the federal stimulus program might help the crisis. with all these rapidly

changing events related to the coronavirus, what if anything do we know about the outlook for the financial markets and economy? it would be refacing threat of recession? what can and should the economic do to ease concerns customer joining us to join us as alisha. so tell us first about what happened this week? a week ago the markets were down, but they were down a little bit and people were not necessarily predicting a bear market recession. telstra wrong this week. >> what happened this week is the market went from pricing and a v-shaped recovery in the real economy so therefore you hit in the first part of the year in recovering the second half. pricing is maybe a worst-case scenario so you shaper recovery where you take a big hit in the beginning and then you have a period of anemic growth, may be some credit distortion to start growing against it last longer. or even an l shape recovery

where you have a permanent loss of demand as a result of a hit to the service sector. and never quite gets going again. so once you start running earnings off of that, you get a quite dire scenario. that's what the markets are pricing in on thursday. gerry: this is all an unnecessary panic in the market is overreacting to the overreaction. what he think? >> i think what you are dealing with are markets that started, let's go back to the high on february 19. the market was trading at 19 times earnings, that is historically very, very high. and, there is justification for it because yield and rates were so low. gerry: they were very low you're getting get a better yield on the rate of expensive price. >> almost by definition we have rate and yield so low you can justify higher multiple. zero coming into markets that were frothy, and especially had gone straight up since october 1. there is hardly a down day over the past four months.

you came into vulnerable markets and what you had was this exaggeration. it was a nobody's model. when we predict risks for 2020, the pathogen that's going to make the world ill was not one of those shocks. so that's really what happened. the china example is very interesting because china shows you can actually stop the contagion, but the price is at deep hit to the economy. china has art experience that. so as long is the story with the china censored story and is china censored stock market looks through it as a one quarter supply shock that then the u.s. would move beyond that. it would essentially focus on china. gerry: 's are trying already seems to be on top of it and they say but we can always trust the numbers there. but they kept the new cases to

allow deaths are dropping significantly. some people looks like it's a bad flu season in china. they took some drastic measures. why should we expect any words here? >> things are good happen the u.s. that's different is the government is trying not to make it look like italy. italy let the contagion spread before it shut down the country. what we have seen is the healthcare system actually cannot handle all the cases coming into the hospitals. so the idea is, if you can contain, you can flatten the curve. we talk about the curve in the treasury market but we also have a curve in terms of number of infections. you put some probability that some will need to use the hospital system you need to flatten that out and extended out as long as possible. what happened this week was the understanding that the contagion was coming here because there is a lack of tests and information, you can't put a number on it. so what we lack a lot of numbers on this, a lot. gerry: for the real economy, does this mean recession a? >> we have a 60% chance of a

recession sometime this year. jack: you mean to contact a course of negative. >> we took call that a technical recession we are probably headed towards one of the monch of marth, certain by the second quarter. some people think we are here already. that ultimately the question is you have an entire year which is a recession parade we think that's less of a chance because we see a bounce back starting in the third or fourth quarter this year. but there will be a recession sometime within this year. gerry: is the right way to think about that, you talk about your v shape in u-shaped talk at the beginning, that we are just going to take a short-term hit and there might be a technical recession as you call it. but the economy has been in pretty good shape for a long time. the interest rates are low, they can't go much lower their most as low as they can go. but does that mean this is just going to be a very short term hit to the economy and we will be back onto the path of growth very quickly? >> that is the big question weighing on markets right

now. as of wednesday's close when we have bear territory, essentially telling you lack growth year. what happened on thursday was really pricing and that u-shaped scenario. you're going to get credit involvement, but you can't easily replace this demand so quickly. it's not just about manufacturing, rebooting the second half. but how are you going to replace all this flights not taken, although cindy gains not seen you can replace that so easily. you're going to bump along at a much lower rate for a while. that's what thursday was about. i don't think it is actually done yet. the conversations not done. gerry: this is gonna pass at some point, one month, two month, through vince's focus on china, evil traveling again. they're probably in her travel more than they did in the past because the need to catch up on some of those things they miss, vacations, business travel, people are going to meet again, be out in the stores in the gonna come back with a vengeance are they? >> they should, except it's

very hard to replace lot services. you're not going to go to starbucks 20 times in july because you did not go in february. you just can't replace that demand so easily on the services side. but there will be some that takes a while to recover. but most likely there will be some recovery. i think the greatest analogy is what happened in 911. it was a sudden shock when all the sudden and suppresses growth, suppresses demand, and recovers at some point. and the issues here, set a bounce back but something or take longest? gerry: so what's your view? will be a bounce back? >> our view will be longer and deeper but ultimately by the third or fourth quarter you will see growth returning again. the big risk of course is the credit markets. gerry: got to quick break they're coming up next i want to get your thoughts on how

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gerry: i am with alicia levine, bny mellon chief strategist. when you look at what happen this week's it creates its own problems in the financial system. companies have trouble getting credit, banks get a little more reluctant to lend to each other and others. are we seeing any signs of stress the financial market? >> yes and the action started seeing that on wednesday. what you saw was express the treasury market. the treasury market is the most liquid market globally. and when accounts need to sell, they tend to sell treasury first because it is an easy exit. always on wednesday as he saw the stockmarket crash in, but we also saw yields moving out.

gerry: when yields move up and prices go down. >> so bonds and equities work to help buffer each other. they help each other and upper the downside for this is the opposite on wednesday which really made it and suggested there was a running cash, and an issue in the treasury market. so what were hearing is corporate's are having credit lines, so they can have cash to get through the air pocket that is going to happen for the next three or four months, particularly in leisure, hospitality airlines, and doing so chose banks may not be so willing to lend. i'm so what you see, is the fed has to come in and supported the banks and the liquidity of the market so there's enough cash in the system. gerry: is that working? is that calming some of the concerns? >> is $1.5 trillion into the

market that should help that funding issue. but when you see yields move in the same direction, opposite direction of equity, you get suspicious there's something that happening. the other thing happening is the yield on triple b is widening. why does that matter quote? because that's the index prayed the total capitalization of that is $2.8 trillion. the young higher high-yield index is only $1.8 trillion. so some of those are going to be fallen angels into the high-yield index on you have forced sellers. they cannot hold anything less than investment-grade. going to have a ripple effect in the credit market perhaps. gerry: that's gonna push up any higher those yields in the low-grade investments do we have to worry -- one of the features of last ten years with this expansion we've had a set of massive in corporate debt. leveraging is got up a lot.

>> really don't have to worry about it by the way they are still low from where they were a few weeks ago. but should we be worried now if we do have a recession and we do have the stresses in the market, about the amount of debt out there? especially corporate debt. >> the crisis is when the gorging on corporate on the balance sheets come home to roost. what's happened is the funding markets are really close meaning you can't sell bond out see or force a drunk cash in your credit line if you can't do that, really is going to be an issue coming to you have enough cash to pay off your debt to get through the air pocket in your business? that's a big if. there are certain companies that have severe cash flow issues very quickly. others not so. that's really the job of the analysts to see which companies are mcrib spike cash flow and. gerry: surly when the tide goes out you can see assuming

naked, are we going to see metaphorically speaking that some companies have been swimming naked last couple of years customer. >> think will definitely see that here they are definitely going to see fundamental issues in the energy sector, and the hospitality sector, and the leisure industry, hotels you just know that is going to be hit. spieth eight that's for the broader economy to your point about making it harder for the company to bounce back you get real problems disseminates corporate and that's going to have a larger effect on things like wages and anything else that affects all of us. >> the easiest things to do is cut fixed cost is to cut headcount. in the really interesting thing here, i was thinking about this in writing about this week, we actually don't have a number on any macro data yet. that shows the impact of coronavirus on the u.s. economy. it happened so quickly, and the sudden stop is happening

so quickly we don't have a number on it. you're going to start seeing jobless claims next week and you're going to start seeing manufacturing and service sector numbers. that's how fast this is been. gerry: rent check will mark quick break but up next is what can be done, what's the government doing? what more can be

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gerry: i am back with bny mellon chief strategist alicia levine. most people seem to think that to help the market get through these short-term challenges that's not really going to be enough to lift the economist and give it the boost it needs to grapple with this most evil

think a physical response is needed. >> you need both. you need to support the liquidity and you need to support the credit and the functioning of marketing. we expect the fed to cut another 50 or 60 basis points the next two months, but that is not really for now. that's really for later when you get the bounce back to the economy and you're going 20 grow again. you'll have so much liquidity and support to do that. the real issue is the funding market and the credit market. they are very aware of it and i think his background in financial market is very useful here. gerry: so what's been on the fiscal side cut taxes, increase spending cosmic so looks like all that is on the table. part of the message from thursday's 10% selloff, was telling washington that is time to get its act together and do something. it reminded me very much of the sell off after tarp failed the first time in 2008. so we expect to see something between the house and the administration from a tax-cut

deferred april 15 tax. gerry: what about the payroll tax of the president once customer. >> that support for individual small businesses, support on the healthcare xi, no copayments, getting the test for free. it really has to be a multi functional approach to dealing with this issue. i think the administration very clearly knows that. gerry: one of the things people worry about is everybody takes the opportunity to load up these bills with their own favorite programs which not necessarily beneficial the situation at all. you get lack of fiscal restraint was seen in the past? is that a risk? >> i think it will happen. you're going to get one large log roll here you're going get the social spending side are also going to get the business support side, but there's no way out of it. in fact, you need it right now to get the u.s. through the air pocket is to confront it altogether. truth is, the messages in order to stop this virus from spreading, you have to shut down the economy. gerry: a payroll tax cut do you that would be significantly beneficial?

twelve and half% employer employee, the of the holiday parade the year would that be abuse in people's pocket customer. >> you put money in people's pocket but it may not help your quarantine, it may not help when the countries undergoing this sort of social distancing and trying to manage it. but it will help on the other side once demand comes back. gerry: what about those who don't have a job, students, retired people they need help too. >> i am hearing discussions on the student debt side as well. to give a holiday and having to pay some of that back. think all of this is on the table now and as these numbers keep coming and showing the severity of this, i think all of it is open for discussion. gerry: just in conclusion, again as a start out the beginning, is there a danger here that we are overreacting, we're going to end up doing things here both in the private and public sector and pass a big fiscal stimulus ring to cut interest rates aggressively. arbor get into all this in

response to something is going to pass me to it get there? >> i think not, the message from the public health official that you have to contain this thing early before it takes over the entire population. and containment means a hit to the economy. we actually don't have a proper number of people affected in the u.s. so in the absence of information is best to prevent the spread. as we get more information, we can start thinking about other strategies. right now, china's being looked at is how to stop this thing. take the hit and move on. >> we are not china we can't just shut down but it does look like were trying this week. >> we are going to have rolling containment. seeing different areas of the country and specific northwest of the new york suburbs, it's going to be rolling containment as the number of cases grow. that's what we think it's actually going to last a little longer what you see in other countries. alicia levine thank you indeed

for joining us. just ahead in stead of assigning blame we should thank those who are doing the job of protecting us. i will explain next. tv sports announcer: oh! let's go to a commercial. not another commercial! when you bundle your home, auto and life insurance with allstate you could save 25%. the more you bundle the more you can save. what? bundle and save. click or call for a quote today. doprevagen is the number oneild mempharmacist-recommendeding? memory support brand. you can find it in the vitamin aisle in stores everywhere. prevagen. healthier brain. better life.

gerry: its unfortunate reality of modern life that when anything goes wrong, our first instinct is not to fix the

problem is to find someone to blame. as we continue to try to digest the implications of the coronavirus we are at it again. democrats and the media are blaming the president for acting too slowly, miss communication and complacency. the president is blaming foreigners for the virus, media for hyping it and the obama menstruation for not helping us prepare for pandemics. let me say this, i am not a doctor any kind of medical expert. i can barely apply a band-aid without hurting myself some not going to join those experts to know exactly what's happening and who to blame paid all i do want to say though is a huge thank you to the doctors, nurses, and other medical professionals who are right now helping, healing and comforting. however bad this may get, these men and women are on the front line risking their own life and health to save us and our loved ones. if you are looking for something this weekend after pretty glum week, if you're looking for something to be positive about, some help and

inspiration, there's nothing better than right there pray that's it for us this week, for the luggage show updates be sure to follow me on twitter, facebook an instagram part i will be back here next week with more in-depth news with wall large. thank you for joining us. ♪ ♪. jack: i am jack otter. coming up the panel tells you what our sources have been buying during the wall street selloff. that we begin with what we think are the most important things investors should be thinking about right now. as corona virus rolls the market put stress on the financial system. what to expect next. airlines and energy companies are really feeling the pain, which companies can weather the storm and how to determine what stocks can stand up to the coronavirus crisis on the barron's roundtable tonight my colleagues have been