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tv   Worldwide Exchange  CNBC  February 24, 2020 5:00am-6:00am EST

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it is 5:00 a.m. at cnbc global headquarters. fears spread over the coronavirus once again take center stage gold and treasuries in rally mode as investors flee to safe haven assets oil prices also sliding today. it is monday, february 24, 2020. the dow will open by about 700 points and "worldwide exchange" begins right now
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good morning and welcome to the show i'm dominic chu in for brian sullivan we begin with breaking news. u.s. stock futures pointing to a sharply lower open as losses accelerate this morning. a flight to safety under way in bonds as well. stocks moving to the downside. the ten-year yield dropping to its lowest level since july of 2016 in the wake of the brexit vote a rally in gold prices playing out. the metal surging to a near seven-year high. you can see gold prices up 2%. 1685.40 the last trade there a sharp move in crude prices as well for world benchmark tti or brent prices and tti as well wit this morning's selloff comes as investors continue to watch developments around the coronavirus outbreak and spread in places outside of china, like in south korea our own frank holland is here with the latest on those numbers. good morning. >> good morning to you
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that's right new numbers overnight on just how serious this crisis is becoming in south korea. there are now more than 230 new confirmed cases there, bringing that country's total to more than 830 a sharp rise in cases in other countries around the world, especially in italy where the number of confirmed cases rose to more than 150 over the weekend from just 3 on thursday. iran also confirming 43 cases from just 2 last week. the outbreak continuing to send economic ripple effects outside of china flight cancellations due to the virus have topped 200,000 as the bulk of airline service to the mainland and hong kong remain stopped completely in february alone, the number of flights that were scheduled to fly to, from and within china are down 80% from a year ago, sending benchmark fuel prices to more than two-year lows. dom, back over to you. >> thank you for much more on the developments throughout the morning. meantime, the spread of the virus prompting a market selloff
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around the world as well we have global team coverage, matt taylor live in singapore and julianna tatelbaum live in london matt, we begin with you and the massive move lower in the asian markets. >> thanks very much for that risk-off picture across the asia-pacific markets japan out for a public holiday as well. this moat mostably played out in the south korean market. we'll show you that in more detail in a moment we were down by 3.8% broadbased gains across the larger markets, australia and new zealand down by 2% a number of companies coming out warning about the impact of the virus. new zealand shares down by 5% at the close of trade the china market, things were a little more contained. shanghai composite down 0.2% take a look at korea this is where all of the damage
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was. the tech-heavy kosdaq, down by 4.3% the kospi also down. the country raised its alert level to the highest, code red and reported the additional cases frank was telling us about. we could see the bank of korea cut rates to a record low to offset the short-term impact the bok will be moving on thursday president moon calling for more fiscal spending to fight the coronavirus impact as well south korea really seeing the significant selling pressure today. kosdaq down by 4.3%. in european trade, italian stocks are sinking 4% as that country deals with the continent's worst outbreak julianna tatelbaum is live in london with the latest there what can you tell us about the situation in italy
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>> the losses are severe and widespread the dax is down more than 3.4% that's the main benchmark in germany. the ftse leading the way lower, down 4.3%. this comes as over the weekend italy became home to the largest outbreak of coronavirus outside of asia. the region, northern italy accounts for 30% italy's gdp it's a crucial part of the italian economy. we've seen a series of quarantines come into effect and measures to control the outbreak and investors now bracing for what this could mean not only for italy but for broader europe let's take a look at the sector as we've seen the brunt of the selloff borne by those most exposed to the outbreak. travel and leisure down more than 5.43% airline stocks bearing the brunt of the pressure in europe. basic resources, auto, technology, oil and gas round out the worst performing sectors
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this morning investors fleeing to safety so the more defensive parts of the market holding up better the best performing sector in europe, telecoms is down more than 2%. widespread selloff taking place in europe as investors brace for what may come next in terms of the coronavirus outbreak. >> julianna tatelbaum live in london with the latest on the european trade thank you very much. sticking with the european situation, and tapping italy, the number of confirmed cases there rising to more than 150 over the weekend from 3 on thursday more than 100 cases from just one region around milan in northern italy at least three there are dead. joining on the cnbc news line -- cnbc's claudy pensotti we kind of got the lay of the land how severely are the government treating the coronavirus situation in that country? >> dom, they're taking it very
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seriously. right now there is this lockdown of this area you were mentioning it's a ten-kilometer-area southeast of milan the rest of the milan, lombardi region, right now there is no lockdown but strict measures have been put in place i want to start with the numbers because an update has just come out. the contagion is at 212 cases, so up from the 152 you mentioned. that was the number that was still going around this morning. there also has been one more death, so now the deaths are up to four, but it is important to note that these are all people that were elderly people or with pre-existing conditions. so, what is concerning is not so much right now the number of infections, but it is sort of these measures that have been put into place that are, of course, causing the concern and the reaction that we see on the markets. the measures are, first of all, that schools have been closed,
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universities are closed, churches have been closed, the biggest cathedral in milan is closed, the biggest theater in milan, la scala suspended all events what the government is asking is to not meet in large groups. so, while schools are functioning both private and public, the recommendation is to stay home if you fear you may have been contaminated or if you have pre-existing conditions or other issues that could somehow make it more difficult for you if you were to contract a virus. right now what you see is more traffic because people aren't taking public transportation but otherwise people are going about their business trying not to panic. we expect a meeting to go on
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between the prime minister and the civil prctionz >> we also have sporadic reports there are runs on local grocery stores despite the fact there is not panic in italy, it seems the citizenry are reacting in a way that says, hey, i need to prepare. >> absolutely. there are no more masks in pharmacies, no more hand sanitizers you are seeing groceries, running out of goods e-commerce sites are having difficulty guaranteeing any delivery because of the -- because the worry if they do go into lockdown, there will be a problem getting supply less the virus, more what if the government puts into play measures that could really confine and put people in their homes for what they realize as what's going on in china, maybe not seven days but up to a month if not longer. the concern is what the impact could be on the longer run. >> claudy with the latest on the developments in italy, thank you
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very much for that update. stock futures continue to trade near this morning's low so far. let's bring in art hogan, chief market strategist at national securities art, you've seen all the headlines this morning we've heard from claudia we've heard from matt and julianna about everything that's happening. is this now finally a situation where the markets could see a more severe pullback given the concerns on coronavirus? >> it's interesting. when we look at the market on the close on friday, it was at or about where the s&p 500 was when this was announced. almost exactly to the point. and i think the reason for that is we had this combination of there's significant fiscal policy being put into place by china and the response has been very rapid but in that entire time, our assumption was, okay, china is taking care of china's problem and now this has become everybody's problem. we heard about one or two cases in italy that's 200 now the same thing is true in the ramp up in the number of cases in korea the market has taken notice, and
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i think that's what we're seeing even with the percentage drop we're seeing this morning in the s&p 500, it's stopping right at its moving average, which is incredible but just a logical market the other thing that's been logical about this market, it's adversely affected those spaces, travel leisure, restaurants, gaming stocks much more than it has some of the companies that will have temporary economic losses. >> you said there could be some support as these markets hover around some moving averages, especially the s&p is now the time you start buying dips let's be honest, it's worked for the past six, seven years. >> it's worked for a long time i would say, know where your levels are 3258 is the exact number on the s&p 500, that's oddly where we are. if that holds, i think this is a day where they're telling you, this is the magnitude of how much they're going - >> is this a situation where you want to go deeper into the safe haven assets gold prices are extremely
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elevated right now yields are extremely low near record lows, by the way so, do you want to go into those at these levels? >> they are so stretched gold started breaking out in december the rsi on gold is higher than the utility etf. the safeties have gotten expensive, so i'd be careful if you want to raise cash than plow into gold through treasuries, utility utilities, the consumer staples, they're very crowded, much more than we've seen in years, as a matter of fact. >> art hogan, national securities thank you very much. it's going to be one of those gray days to see what happens in the market when we come back on the show, much more on this morning's selloff with dow futures indicating a 736-point implied drop at the opening bell plus, treasury secretary steven mnuchin on the coronavirus china's response and its impact on the u.s./china trade deal later on in the show, getting ready for three hours live with
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the oracle of omaha. it will be great to get his thousands on what's happening right now. a very busy hour ahead when "worldwide exchange" returns do you have concerns about mild memory loss related to aging? prevagen is the number one pharmacist-recommended memory support brand. you can find it in the vitamin aisle in stores everywhere. prevagen. healthier brain. better life.
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welcome back to the show stock futures right now pointing to some real sharp losses. you can see the three worst performing premarket stocks in the dow jones. american express down 5% visa down 4.5% apple down 4% as well as fears of the spread of the coronavirus
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remain front and center. we'll keep an eye on those ti particular stocks and others. hadley sat down with u.s. secretary treasurer steven mu chin hadley, is it concerning for the treasury secretary >> reporter: no doubt about it, dom. this was concerning not only for the u.s. treasury skts in our interview, it was concerning for all central bank governors at the g-20 over the weekend. it was a major point of concern for all of them. major focus. when i asked the treasury secretary about that, he said it's too soon to say we need two or three weeks to understand what the economic impact is going to be, just on the united states. to give you a bit of perspective, a week ago when i sat down with the managing director of the imf it was too soon to make any moves over the last hour the imt said
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we're taking off ten basis points, half a point for chinese growth this gives you a sense of how quickly the story is moving. listen in to what the treasury secretary had to say about what this could mean for phase two of the trade deal. >> there's no question china's major focus is now controlling the virus and the approach of phase two will definitely slow down a little bit. >> reporter: slowing down a little bit is all we could get from him on steps in terms of the trade deal, what the u.s. government is. anding from the chinese. a lot of mixed messages from various members of the u.s. government pompeo, esper speaking to me last weekend in munich saying the biggest change on the horizon is china and secretamnu taking a step back saying we're pre pleased with what we've been able to do in china, echoing president trump. >> this is a gathering of
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finance ministers. what exactly is the sense, is there a feeling like the global economy can withstand this, can it be something we bounce back >> reporter: i think they were all trying to be as cautious as possible that's not surprising. yet dwe heard comments from the finance minister of france basically saying 30% to 40% knock-on in tourism is expected from coronavirus asking the finance minister about oil prices, this was prior to tanking 2%, i said, how concerned are you about your bottom line, how concerned about what we'll see next here he said, when we talk about taking more barrels off the market, that's about market -- i asked is the oil minister going to get vindication remember at that technical meeting he was encouraging not just opec members but russia to come to the table with with more cuts he was cautious there. i think there's a lot of cautious sentiment coming out of
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this g-20 meeting but a heck of a lot of concern. >> thank you very much. still on deck for the show, a $7 billion deal reportedly in the works over at credit karma plus, more red flags at boeing over its grounded 737 max fleet. liking the now platform? every time it takes care of something for us, we celebrate. how often does that...
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you can see some of the biggest premarket losses for the nasdaq including western digital, currently down 7.5% micron down about 6.5% the same thingfor advanced micro as well. you can see these companies, especially semiconductors to be down at the opening bell. intuit is reportedly in a deal to buy credit karma for $7 billion. this would be their biggest acquisition in their 37-year-history. the deal would come less than a week after morgan stanley agreed to buy e-trade financial. barclays is starting a search for a new ceo to replace jeff staley. the financial times reports the shakeup comes as the financial regulators are probing alleged links between staley and disgraced financier jeffrey epstein. staley, who has been ceo of
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barclays since 2015 told colleagues he plans to leave by the end of 2021 and could step down at the bank's annual meeting next may. boeing confirms debris has been found in fuel tanks of 35 of the 50 grounded 737 max jets they inspected they are among 400 planes boeing built in the past year they could not deliver to customers boeing temporarily halted productions of the 737 max last month. and warren buffett is defending berkshire hathaway's decision to invest heavily in stocks such as apple as the company's more than four-year acquisition drought continues in his annual letter to shareholders, buffette says the opportunity to make major acquisition are rare buffett reassuring investors they shouldn't worry about the future of berkshire when he and
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as you can see, the dow jones is slated to open down 741 points the s&p down about 83 points the nasdaq down by 281 keep it right here we'll have all the news you need to get you up to speed for this massive move over in markets.
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breaking news. a global selloff is under way as investors track a surge in the number of coronavirus cases outside of china the latest on this worldwide
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outbreak and the moves you need to make with your money amid this turmoil as the second half of "worldwide exchange" begins right now. welcome back to the show i'm dominic chu in for brian sullivan breaking news. futures extending their losses halfway through the 5:00 a.m. eastern hour as you can see, the dow jones opened down by 750 points. the s&p off by 84. and the nasdaq down by a whopping 284 points as well. these losses right now currently right near the lows of the session. now, a flight to safety is under way in bonds as well the ten-year u.s. treasury note dropping to its low level since 2017 benchmark yields 1.4%.
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1. 1.29%. a rally in gold prices the metal surging to near seven-year high at this stage. prices currently around 1684.50, that's 2% to the upside. you can see a sharp move higher in the course of the last couple of days for gold prices. that sharp move is translating in crude as well in the other direction. those prices for u.s. benchmark crude prices, $51.52 that's 3.50% to the down side. global markets are sharply lower on fears over the spread of the coronavirus. we have global team coverage matt taylor is in singapore, julianna tatelbaum is in london tracking those markets in europe, and eunice yoon is live in beijing eunice, would elstart with you the world health organization is expressing new concerns about the spread of the virus as more cases begin to pop up outside of china. >> reporter: that's absolutely
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correct,.c dom the w.h.o. is in the hotel behind me. they're about to hold a press briefing with chinese experts in about half an hour to talk about their trip here to china a senior w.h.o. team has been on the ground visiting several places, including the epicenter of wuhan, so they should brief us all in this situation, not only in the epicenter but china more broadly this visit by the wmpbl.h.o. co at the same time president xi jinping held a conference call with 170,000 officials he told them that the trend looks as though it's positive, but the prevention work is still at a critical stage. six provinces ended up lowering their emergency response today also the top economic planning agency, the ndrc, said more business is resuming across several provinces and
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industries so that, obviously, is positive, but a sign things are still precarious, the national people's congress, the legislative body here has decided to postpone its major annual parliamentary session which normally takes place in march. there's no new date set for that conference dom? >> eunice, while we have you here, what's the latest here on authorities in the wuhan area reversing their decision to relax the lockdown on the city we thought that was a positive development, that things were going to free up just a bit but the government has backtracked and is continuing to lockdown. what can we read into that >> reporter: yeah, that was a very strange situation when earlier today wuhan city had said they were easing the lockdown and allowing more people to leave under a certain circumstances. however, just hours later that lockdown -- that decision about the lockdown was retracted
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and the authorities said that a work team had posted the notice without authorization and that instead they -- the latest notice now says that wuhan city will adhere to the orders strictly of president xi jinping in order to prevent the epidemic spreading outside the city i think it shows the challenge these local authorities really face in trying to balance what we see as dual orders from the central government, and that is to clamp down and snuff out this virus, and at the same time, support economic growth. >> eunice yoon live with the latest on the coronavirus. let's turn to matt taylor with more on the action in the asian markets. it was very much in the red, matt >> absolutely. we're going to start off with the action in south korea. really the underperformer as that country raised its alert level to the highest code red
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amid a spike in cases. big move, not only in equities but also in currency korean one weakening in the order of 1%. the kosdaq down by 4.3%. on the kospi we saw a decline, 2,079. airline stocks fall as they stop flights to daegu in south korea. the bok will be meeting on thursday and president moon out of south korea already calling for more fiscal spending to fight the virus impact let's give you a look at the rest of asia because it was a decidedly weaker picture you won't see japan because it was out for a public holiday australia and new zealand, we talk about the impact on the travel-related companies a variety of companies in these markets including in new zealand, warning they're going to take a profit hit as a result of weaker demand as a result of
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the virus in new zealand shares in new zealand down by 5% on the back of that. the china market, things were a little more contained here the shanghai composite down by a quarter of 1%. we saw green on the screen for the shenzhen market. hong kong down by 1.8% dom, back to you. >> thank you for the latest on the asian trade. let's go to julianna tatelbaum for a look at how the early trading in europe is shaping up. that same red and negative theme is carrying out there as well. >> it certainly is, dom. european markets are firmly in risk-off mode this morning every major region, every sector trading below the flat line. the dax, the german benchmark down 3.6%. the underperformer this morning, italy, the ftse mib down more than half a percent. this spike in cases in northern italy has prompted a series of quarantine measures from the
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italian authorities. school closures, university closures, business closures and airlines taking a substantial hit this morning as flight cancellations come through for the italian region investors in europe very firmly reassessing their strategy when it comes to the coronavirus implications and taking risk off the table. i want to give you a look at the sector because it's interesting to see the substantial selling really coming through. the travel and leisure sector down 3.8%. exposed cyclical sector down autos, technology, industrials also selling off quite sharply the best performing sector, the most defensive parts of the market, but still firmly in the red. even the most defensive sector trading off about 2% massive selling here in europe back to you. >> broad based selling across the continent in europe. thank you for that update. taking another look at the u.s. futures picture, we are right near the lows of the session so far
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if these futures losses hold into regular equity trading, the dow would open down 786 points, and the nasdaq would drop by 296 points as well let's get more insight with portfolio manager at washington crossing advisers. when he woke up this morning and you saw the numbers on the screen, what was your immediate reaction >> it wasn't a surprise. the market has been ignoring this risk overall over the last month. there is a real push and pull between optimism that global growth is going to continue to mosey on above 3%. we are a little bit more pessimistic about that we believe, overall, that this is going to be a demand shock to the global economy the longer this proceeds, then you'll see global growth get marked down substantially. >> so, i'm curious there has been a scenario over the past several months where we've known the trajectory of this virus yet it's done nothing
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to shake the markets until today. what exactly then was the proximate cause in your mind for selling off at the open? the masses thought this was going to tb contained in china now you're starting to see it spread into other investors' backyard, which is a real shock to demand. not only that, but for capital investment as well so, yes, you can have monetary policy that is extremely dovish across the globe, but when demand falls precipitously, that's the real issue. >> viewers and listeners have listened and i've said in the past, there's been no real losing trade gold has gone up treasury bonds have gone up. stocks have gone up. now there's a divergence what exactly do you do given the current environment? do you go into bonds and gold or stocks, defensives what exactly is the playbook now? >> well, if you're overweight aggressively on equities as well as momentum stocks, you want to
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modestly start to shift your portfolio. keep in mind, we're up over 30% over the last 18 months within the global u.s. equity markets so, we're recommending that investors go into more quality investments, look at investment-grade bonds instead of high-yield bonds. we would eliminate the emerging market trade and overweight u.s. dollar dominated assets and move up the quality spectrum. go into some consumer staple names. >> like what >> pepsi, procter & gamble you can get a good return over the next 18 months and move away from the high momentum companies, those story stocks that have set -- >> you're not worried those defensive consumer staples are overvalued at this point >> no. because a lot of them are not holding a lot of debt on their balance sheet. so, yes, you're looking at pe multiple, but if you were actually looking at their enterprise value to cash flow, you would conclude these steady
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eddy companies have a great consist cash flow stream, rising dividend and reinvesting back into their business. that's the critical thing investors are forgetting about. >> thank you very much for this big market day so far. coming up on the show, we continue to follow the fast moving developments in these markets with steep losses on tap here in the united states. the dow would open down by 750 points at this stage plus, the oracle of omaha talks investing, takeovers and more in his annual letter to shareholders our own becky quick previews her special sitdown with warren buffett when "worldwide chgerernexan" tus. legendary terrain in telluride, the unparalleled landscape of park city, or the famed peaks of whistler, you've faced the hassle of lugging your gear through the airport. with ship skis, you're just a few clicks away from having your skis, snowboard and luggage shipped from your doorstep to your destination. with unrivaled pricing, real time tracking ship skis delivers, hassle free.
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welcome back to "worldwide exchange." this morning's global markets continue to sell off as investors continue to watch developments around the coronavirus outbreak and spread in places outside of china, like in south korea and italy our own frank holland is here with the latest developments there. good morning
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>> good morning. that's right new numbers overnight on just how series the crisis is becoming in south korea, there are now more than 230 confirmed cases there, bringing the country's total to 830 a sharp rise in cases in other countries, including italy where the number of confirmed cases rows to 150 from 3 on thursday iran confirms 43 cases from 2 last week. the imf is warning this outbreak could put the global economic recovery at risk the managing director of the imf giving that outlook following a meeting of g-20 finance ministers in saudi arabia. she added, while the group hoped for a rapid recovery, it would be wise for countries to prepare for more adverse scenarios the virus cases in the u.s. remains at 35, much less than other parts of the world back over to you >> frank holland, thank you for that back to south korea where that country remains the number one hot spot for the virus outside
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of mainland china with the number of cases spiking to more than 760 at this point joining us now on the cnbc news line, timothy martin, korea bureau chief for t"the wall street journal". lots talk about how severe the situation is what exactly is the government saying about just how much its citizens should care >> for the first time in a decade they rose the virus alert level to the highest threshold it can, which means it can ban chinese travelers, lock down cities, inject emergency funds to address the problem the number of cases in south korea has risen 27-fold from just a week ago. >> let's talk a little about some of the moves that are being -- you mentioned what could happen with the government what exactly is happening right now? there have been any real steps taken by them to stem the flow of this and, perhaps, even restrict travel? >> so, for now they've -- a lot
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of the moves are going forward, so they pushed back the start of the school year from early march back a week. they have had a cabinet-level meeting today where they are putting together the emergency team to address the issue with three chiefs the government has been given the ability to send workers home who have fevers. we're seeing, you know, a lot of plans be put in place. we haven't seen quite a lot of on the ground execution yet. >> so, let's then talk about what exactly it looks like for certain areas when it comes to the coronavirus. is there a real feeling like there's a slowdown in activity are people staying home more are grocery shelves being cleaned out? is there anything like that happening right now in south korea? >> certainly in an epicenter for coronavirus cases here, it's turned into a virtual ghost
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town the mayor has recommended people stay indoors for the next two weeks. shops are closed, restaurants are closed if you find a coffee place that's open, they will only do takeout or delivery. even here in the capital in seoul where the number of cases has been somewhat limited, you do see everyone walking around with face masks. you can't find face masks in a lot of retailers and things do seem to be operating at half speed. >> timothy martin, "wall street journal," korea bureau chief thank you for that update on what's happening with south korea. we appreciate it. warren buffett is using his annual letter to shareholders to reassure them about the road ahead for berkshire hathaway in that letter he touches on everything from the company's investment strategy to a lack of major acquisition in the last few years and possible insight into who will succeed him. becky quick joins us ahead of the big live three-hour sitdown with warren buffett himself. this is a big deal, especially
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given all of the macro concerns surrounding not just the markets but the global health situation as well. >> you're right. warren buffett has been a calming voice for the markets over decades, particularly when we were going through the financial crisis there were days he came on and really calmed things down when things were far downon the markets. we're going to get his thoughts this morning about what he sees happening around the globe with the economy and what his concerns about the coronavirus might be we're also going to talk a lot about what was in that letter. he did spend some time focusing on succession, focusing on stock buybacks, talking about a lot of different issues we'll get his thoughts on the markets because he laid out some interesting thoughts in the letter about how we kind of got to this position based on what was written from a 1924 book, edgar lawrence smith had written that book. it was a book very few people knew about until it was high loited and it changed people's perspective of buying stocks basically he came to the conclusion that it's always better to buy stocks than bonds. we'll talk to warren buffett
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about that this morning, too mr. buffett is always prompt, always on time he's here already. he's been sitting here, made up, ready to go since about 35 minutes after the hour i don't know if you can take the shot and see here's warren, ready to go, on time meantime, let's check out what's happening back at the nasdaq right now, dom i think joe's standing by ready to go, since our show starts in about 12 minutes' time no, joe's not there either andrew's not there joe's not there. warren buffett is here and he's ready to talk about all these things coming up warren, very quickly, let's talk a little about the fact that the market is down almost 800 points this morning concern for you? >> no, that's good for us, actually we're a net buyer of stocks over time just like being a net buyer of food, i expect to buy food the rest of my life and i hope food goes down in price tomorrow. when stocks are down, we're going to be buying on balance. and who wouldn't rather buy, you
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know, lower price than higher price. people are really strange on that most people, most of your listeners are savers that means they'll beat out buyers they should want the stock market to go down. they should want to buy at a lower price but they have that feeling that they just feel better when stocks are going up. >> we'll talk more with mr. buffett about what he sees happening, about what potential concerns he has with the coronavirus. obviously, that's something that the markets are concerned about, the world is kerntd about as it looks like this is spreading and developing we have a lot of that coming up on "squawk box." >> we appreciate that. a a long-time follower of warren buffett. i love the fact that my 401(k) buys every two weeks so i, too, hope that stocks do go down every once in a while. becky, thank you very much we'll see you shortly. a sign up for cnbc buffett watch newsletter get a weekly round up of all things buffett, on berkshire's
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top stockholders, exclusive clips from our warren buffett archive for free from to your inbox. on deck for the show, we'll break down the moves you need to make in the trading day coming up ahead as stocks face renewed turbulence the dow right now, you can see they're down by 8800 points you can watch us live on the go on thenbc capp. "worldwide exchange" is back
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it's a big market day coming up the market selloff has accelerated over the course of the last hour. dow jones down by 100 points than before. down by almost 800 points. just in the past few moments, the oracle of omaha, warren
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buffett speaking with our own becky quick talking about how he feels about the selloff environment for stocks take a listen to what he said. >> well, no, that's good for us, actually we're a net buyer of stocks over time and just like being a net buyer of food. i expect to buy food the rest of my life and i hope food goes down in price tomorrow when stocks are down, we're going to be buying on balance. and who wouldn't rather buy, you know, at a lower price than higher price people are really strange on that i mean, because most people, most of your listeners are savers and that means they'll beat out buyers and they should want the stock market to go down. they should want to buy at a lower price. but they got that feeling that they just feel better when stocks are going up. >> that is exactly how warren buffett has sounded all these years. joining me is david katz david, you heard the words from the oracle of omaha. is he right? >> he's right.
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he's one of the best investors of all time. he'd he's made an enormous amount of money. his thesis, if you like stocks, buy on the dip oush consensus is it will be good overall and you want to buy on the dip in the coronavirus uncertainty. we wouldn't chase rallies like the last two weeks but you want to put money to work in days like today. >> let's say days like today are happening and let's say these losses hold till the closing bell what would you be putting money to work in >> you have to have a six to 12-month time horizon because the coronavirus is going to be around, it's going to get worse. typically as things go down, they recover once they're clarity, light at the end of the tunnel you want to buy a broad basket of stocks. if you've been looking to get into hot technology companies, apple, microsoft and qualcomm are being skid marked down significantly. we would buy on that if you're looking at companies on a long-term basis, there's a lot of good questions at 12 times earning.
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kellogg, one of the largest fake meat franchises. viacom got beaten up brutally last week. selling at 5 1/2 times earnings. forget the market, forget coronavirus. you're buying a good company with good yield at 5 1/2 times earnings economic centric pressure. u.p.s. will be under 100 today if you can buy that, you're getting a very good yield. the world economy is going to recover, whether it's in 6 or 12 months and that company will be a lot higher. >> the biggest premarket losses for dow components are in companies like visa and american express. that implies something, right? there's possibly a slowdown happening globally payments may slow down, everything else. is this a v-shaped recovery or u-shaped recovery or one that will last longer than that >> we think it will be a v-shaped recovery. a lot. companies said they affirmed their outlook but it didn't
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account for the coronavirus, which would hurt their results we think the first quarter is going to be weaker than expected the key is if there's a light at the end of the tunnel, if the market can see the economy picking up after that, which we think it will, companies will get a pass on earnings misses because there's going to be a lot of earnings misses we think as quickly as things come down, it will recover you're not going to recover the full loss in gdp in the first and second quarter but you should recover about half of it. >> what is the place you would stay away from we've heard some experts say these defensive-oriented sectors like utilities and consumer staples are overvalued at this point. no one wants to go into treasuries with them yielding 10% or less. gold prices are above $1,600 what would you stay away from? >> we would shy away from those investments because if the crisis ends, they would be back. we would not be putting money in gold or buying utilities you want to try to focus on
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consumer product company with earnings ten or more if you have a 12-month time horizon and you can buy a business at 13 or 14 times earnings, you're generally going to do well. >> from a portfolio manager's standpoint what would be the news flow you do not want to see, that would make you feel worse about what would happen given the coronavirus outbreak and global developments with the economy? >> the two wild cards, coronavirus is going to spread you'll see more headlines. you saw it go to europe this weekend. it might come to the united states in a more significant way. the flip side is hopefully there's going to be some sort of a treatment that's better for it once you get that, that's the light at the end of the tunnel a spread of coronavirus globally is going to affect the economy typically when the market goes down sharply on something like this, it recovers as well. we think that's going to pass. u.s. politically, you saw bernie sanders win in las vegas this weekend. we don't think that he ultimately would win the presidency, but if there was a great likelihood of that
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happening, that would be negative for the market. we wouldn't invest against that, but you do want to watch it. >> david katz, mate tricks asset advisers, thank you for joining us we appreciate your thoughts this morning be on a big market day. that does it for "worldwide exchange" this morning a very special "squawk box" ahead with warren buffett answering all of your questions. it begins right now. welcome to a special edition of "squawk box." becky quick is live inomaha with berkshire hathaway chairman and ceo, warren buffett. he's with us for the next three hours to dig through his annual shareholder letter and answer your questions it's not too late to send them use #ask warren. this special edition of "squawk box" begins right now.
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good morning and welcome to "squawk box" on msnbc. live from the nasdaq markets, and becky quick is in omaha with warren buffett we'll get to him in a minute first, breaking market news. we're right around down 800. i was glad to say we're down 799 when i started this read but we're back below 800 again u.s. equity futures plummeting as the coronavirus outbreak widens about global health and the all-important supply chain china supplies for the rest of the world, that's really what's dampening expectations this morning. on the percentage basis it's not the end of the world but it will get your attention if it's down 800 in the premarket session, you might see a -- you might see four numbers up there eventually at some point. maybe it recovers. i heard some comments from


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