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tv   Power Lunch  CNBC  February 28, 2020 2:00pm-3:00pm EST

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want so the fact that the defensives are selling off maybe is a sign we're kind of building that final crescendo,but having sai that, after a 15% down week, the market's going to have to do a lot of base building to set up for the next up leg and that could take a few months here >> okay, so people need b to be patient which means they have plenty of time to think about dipping their toes back in we thank you both very, very much that does it for the exchange. i'll see you on "power lunch" with tyler >> welcome, everybody, to "power lunch. for a very busy friday it has been by any measure a punishing week for your money and it is showing no signs of letting up as we are just two hours away from the closing bell this is where the action has started heavily this week. the dow off the lows of the session, but still down as you see this, 875 points on track now for its worst
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weekly point loss ever this is a week of never befores and not since. industrials falling nearly 4,000 points on the week this will also be the worst week, worst month, worst start to the year since the crisis in '08 and '09. not since more than a decade ago have we had such a rough beginning. then there's this. rough lewly 95% is in correctio territory. down 10% and nearly half of o the s&p 500 is in a bear market situation off 20%. kelly. >> very good thank you. welcome to "power lunch", everyone our team coverage of this market sell off rolls on as the coronavirus fear and impact spread bob pisani is tracking the volatility today rick santelli is watching rates and bonds move lower, he's at
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the cme. meg has the latest on the outbreak for us. eamon javers is in d.c. with the administration's response and steve liesman is focusing on the fed's next move. we begin with bob pisani >> we're lookinging for signs of some kind of bottom, but it's hard to come by. i want to show you the dow jonesville last two days. same thing happened today happened yesterday 1:30, 2:00, market starts drooping gold's acting strange, too that's likely what's going on. but we want to find a bottom here microsoft, good indicator. not really telling us much again, the sell off in the middle of the day. it's hard to determine we're near a level where the market is comfort bababl comfortable. we've got these checklists of things and most scream buys here, so extreme oversold c
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conditions in the market that's for darn sure new lows expanding at the n krrcnc. the vix is in backwardations this tells traditional traders buy, buy, buy the markets. junk bond, massive outflows. yes, retail sentiment is down, but not extreme panic. most says buy the market people say we don't know this may be a unique situation where you get these crazy levels for weeks on end, way beyond what normally would occur. take a look at the haircut the market's taken the high on february 19. today, it's 29 we droppeded 13% in a couple of weeks. that's an extraordinary number he did trading hold up we had panicked selling. no circuit breakers were hit remember there's a circuit breaker. s&p drops 7%, the market stops for a while. that didn't happen we also had no tape delays or
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breakdowns that i was aware of here in the united states and no big etf issues, no big blow ups in the etf space i think this is a good indication the market's held up under extreme levels of stress back to you. >> thank you very much let's go from the stocks to the bonds and it has been, been a busy week for stocks, equally busy in bonds. the ten year hitting fresh all time lows today. and rick santelli is covering it all for us from the me >> yes, tyler and not only tens, but 30s hitting all time lows and the entire curve under pressure just to give you an idea, two year note yields are down 44 bases points for the month 30-year bond yields are down 25. now look at a month to date of the ten-year notes we started the month at 150. ending at 115. so for the month, it's down 35
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these are huge numbers when you put them into percentages, it makes one perspire look at our tenure versus the european it's at 176 just in a week it's gotten 14 basis points closer the closest it's been since september of 2017. because our rates are going down mucher kind of catching those negative yields in europe and finally, let's look at what's going on with 30s to 10s. tens to two is steepened 30s to ten has steepened it means the distortionings are buying on the long end and short on the short end >> thank you the latest now on the coronavirus. global cases now exceed 80,000 deaths reaching nearly 3,000 and the world health organization raising the alert to very high meg is here with the latest. >> hey, again, kelly that increased risk assessment
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comes as the virus has spread to 56 countries the world health organization though emphasize iing there is still time to contain the virus if countries move quickly to detect cases, isolate an care for parkts among those hardest hit, south korea with more than 2300 cases. italy with 650 iran with 300 and ir -- mexico became the second country to report cases. two men who visited italy. in the u.s., the cdc addressing the first case of community transmission, a person in california with no known travel history. the doctor saying health officials are working back trace how they were exposed. she said it's possible the patient may show she was in contact with an infected traveler they are still investigating zpl. >> how do we put into tgood new
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news sfar joe, the idea that ne cases are growing outside of china, but slowing in china? is the fact they're slowing in china, i've got to say in absolute term, sounds like good news >> i think public health officials are encouraged by the fact you're seeing cases decline there and the w.h.o. saying those kinds of extreme measures work, however there are lots of questions about whether those can be extreme in other countries for a number of reasons so the number of cases we are seeing outside of china is very alarming >> all right thank you very much. >> now to the white house where the mradministration is trying calm the markets and nation. eamon? >> yeah, that's right. the message from here at the white house is don't panic at this point larry kudlow was u out in the briefing room talking to reporters today suggesting the risk to americans is low he also said the administration is not going to take dramatic or what he called precipitous actions to support the stock market at this point
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they don't want to do anything here that makes it look like they're really concern ed about this they feel this is the natural course of event, stock market reacting to headlines. there is some defensiveness here inside the white house they feel they've not gotten enough credit for the actions the president has taken so far mick mulvaney speaking to that today as a conservative conference here in washington. here's what he said. >> we took extraordinary steps four, five weeks ago. why department you hear about it impeachment. that's all the press wanted to talk about the reason you're paying so much attention to it today is because they think this is what brings down the president >> so the acting white house chief of staff saying that media coverage of this epidemic is because the media wants to bring down the president so it's a sense they're sort of undersieged from the media and el where, but they say
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ultimately, no dramatic action happening today at least in term of the stock market and the message from here again, don't panic, this is going to be over soon >> thank you very much now to the pressure mounting on the federal reserve to cut rates in response to the sell off and slowing global economy and steve leaiesman has the latest. >> i want to give you the latest just got a report from bank of america. they are calling for a 50 basis point rate that's now their call far march meeting. >> 50. >> and not only that, they're saying a surprise rate cut or intermediate cut is possible markets are reacting to commentary from st. louis fed president where he joined other fed officials. it appeared to lean against any near term rate cut bullard saying they could cut rates if a global pandemic develops, but that's not the baseline case. that followed comments from charles evans who said fed action would be quote premature
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until we have more data proceeded by fed vice chair claire da on monday who announced it's too soon to speculate whether coronavirus will lead to a change in the outlook. while that's going on, you heard what i said about b of a futures markets continue aggressively price in rate cuts. take a look at these numbers here now 100% probabliy probability of t in march up from yesterday. >> it wasn't there the day before >> but not only that, there's a 49% probability of a 50 basis point cut at the march meeting i want to come back tho that in a second because i want to show you the rest of the tenor out there which shows if you don't get two cuts in march, you would get a 69% probability in april third cut for june 55% chance of a november 4th cut or a full percentage point being
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baked in former fed governor on squawk this morning reiterating his support for coordinating global rate cuts, a move he argued would give u.s. businesses some breathing room >> my instinct would be that chairman powell needs to reach out to his counterparts around the world and buy some time. >> i asked you the remember that 50 basis point cut for march let's do some simple math. if the market is close to baking in 50 or close to, what would it take for the fed to surprise the market >> true. but they haven't been doing that so much late ly >> well, it's what they wanted to do more or less in the crisis was if the market expected this, in order to have maximum effect, they did that. so o i don't want to say it sh k but a 75 basis point -- >> but still -- >> would not necessarily be off the table if you think the fed
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would want to surprise the market for maximum impact >> that financial crisis though was something intrinsic to the financial system you know, it came about because of distortions there it needed to be addressed there and mitigated that way can we say the same for coronavirus? >> i would agree with the premise of the question. no evidence now that what's going on is inside the plumbing of the financial system. there's no sense at all that the market is not clear and we had a bit of a debate on halftime. it is a crash of the market but if you look at the way it is gotten to those prices, as far as i can tell, they haven't gapped down. here's a security and people can't sell it. that would be a drying up of liquidity. we e don't have that evidence yet. so you're right. that perhaps the kind of emergency stuff that i'm talk ing about would not be warranted. >> who or what would a rate cut help >> there's a big debate about
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that you could argue that if banks are reluctant to lend, then at a certain lower interest rate, they might be more, borrowers, reluctant to borrow, that a certain lower interest rate , they would be more willing to borrow there were parts of this crisis that would appear houf to defy any impact or stimulation from fed rate cuts like for example, the absence of supply from china. the unwillingness of people to go and do certain spending >> is it going to increase my propensity to spend. >> let's go to dinner because interest rates are lower no or to a concert where you risk getting oronavirus >> let's go buy a pair of pradas >> if we develop concern, spreads blowing out or some situation where it would have a financial issue, it would have more effect. you could imagine other things
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the fed could do my best guess is jay powell is hunkering down with his advisers and trying to get creative the message i'm getting from the wall we put up is that they don't want to cut rates and they may want to try some other means to try to stimulate. >> i know you said they've never done this regulatory fore beerns on small business loans but now would be a great time. why mott give that a try he's a lawyer. seems like more like it could be up his alley >> it's a good idea, but imagine the optics of it these would be the optics of a rate cut if i come on and say the fed has an emergency announcement,, i might get a collective yawn or they might throw something at the television and say there's the rate cut i demand. >> steve, stick around as we chew more on this with our team of market watchers. here with us, quincy crosby, that firm manages 1.5 trillion probably a little less this
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week and mike ryan, ubs global wealth management, his firm manages 2.6 trillion so there welcome to both of you quincy, what do you think of what we just talked about what would a rate cut really help and do you expect to see one >> i do expect to see one because this reminds me of an elongated version of christmas eve in 2018 when the market was ferocious. and by the time we got to january 4th, the fed had changed its mind about rate cuts about the way they were going to unwind the balance sheet so they do change quickly despite what they say just a few weeks before that if this continues and we start to see more pressure on top line revenue growth, and if we start to hear about layoffs because what are companies going to do if they think b about layoffs, the fed is going to come in. >> mike, are we watching the
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death of the bull market >> first of all, what was just mentioned about the fed's response there's two things first of all, it's conditional and second, ininterpretertive. they need to assess economic conditions and you have to interpret what they think the impact is going to be in terms of how u the fallout is, what i means for the financial system, so at this point what the fed is doing, they're in the assessment phase. they're still processing how much fallout will it be. right now, we see the domestic economy has held it well the biggest issue that's confronting fed officials is really the tightening of financial conditions and what could that mean to growth going forward. i think what we're facing now is a period of extreme and sudden sell off of the marks in response to an unknown external threat we know what coronavirus is, but we don't know how it manifests itself no one can quite quantify what the impact will be so until we get more on the depth of this crisis and whether or not it's sort of broken containment, i
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think it's premature to talk about broken markets or recessions >> can the fed not respond here? >> what i'm saying the i think the fed is still in processing mode i think they're committed to action before they've seen anything show up in the data i don't think that's in the fed's thinking i think they'll do is continue to look at what's happening in terms of not only here globally, and take that into consideration and then the most important thing in the short-term is these tightening financial conditions is this causing stress in the market and is this going to wind up translating into a deeper economic outcome >> quincy, i'm going come back, i point out two more days like today and you're at a 20% decline, which is the tipping point for a so-called bear market as more and more companies in the united states start to come
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out and say here are the numbers that we're looking at, could this accelerate the decline as those companies start to put hard numbers or hard estimates on what they're seeing in their businesses >> no. >> now it's all speculation. i think the worry, looking at a bear market or going into a recession is we know they're going to hold back spending. it's whether or not they decide to let people go once that happens, that feeds on to itself, especially since 68% of f our economy is consumer spending and that's the biggest worry that you have because in terms of the market, one of the things we're seeing on the retail level is that investors are i don't want to say calm, they're watching this, but they're calling for guidance and they're being told look, we've gone through this, t not 20% yet. this is going to another phase but things can change rapidly.
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in other words, if you leave the market and go into cash, something could come from the fed or the government or by the way, this virus stops. this is man and the market against a virus and that's why it's, it's that the companies don't care about laying off. they will do it if they believe that it's going to help their bottom line and that sets the stage for something else and that's where the fed i think is watching to see what companies are doing. i think they're talking to ceos. their beige book is made up of an eck doe tall evidence it would be hard for me to believe they are not speaking to small business owners and to ceos to see what their plans are. >> hearing panic from client, those kind of calls that say hey, take me out of this market or why did you have me in it >> look, we certainly hear anxiety on the parts of clients because when you see this kind of a sudden, sharp fall, it gets everyone's attention we're not seeing any panic moves. one of the things we have been
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counseling clients for a long time, you want to not be caught in these quick traps you want to focus on what we're seeing over the horizon that's been six and 12 months back to what was said a few minutes ago a. i think we have to put these things in perspective. there's a certain amount of humility that has to come with this process what the markets are starting to price in, it's important to stream outcomes. it's discounted this as reaching a breakout phase in terms of disease. they're already discounting that this has going to be a significant and sustained impact on economic growth and those tw are not certain. what we could see if this proves to be contain ed and if we see this is more of a transient impact on the economy that lasts for a quarter or two, then markets will steady. you'll also see corporate earnings although they're likely to be impact d, you'ed we'll se the second half of the year.
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>> maybe the market underestimated the impact for the first few weeks of this and now maybe overreacting to it fair observation >> yeah. i think that's a perfectly fair way to put it. lock, when we think about these thing, we have to approach them not only with humility, but sob rye ty. when we have an event like this, as a species, we tend to understood appreciate them then overreact. >> all right thank you very much. quincy and mike, thank you very much 2020 was supposed to be a year of growth for retail and consumer spending, but what happens if the coronavirus begins to hit american's wall lets what happens, lauren >> well i think a lot of it is still nup the air in wait and see mode is how a lot of analysts describe it to me it was a really interesting what a firm put out this something. polled about 2,000 americans earlier in the week to see what places they would consider avoiding if this situation were
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to worsen here in the u.s. number one, almost 75% of people say shopping malls that more so than restaurants right now as it stands, a lot of people are avoiding public transportation airlines, the subway, that's kind f top of mind to avoid right now, but if this situation were to worsen, this study is showing shopping malls is the number one destination that people would look to avoid and obviously malls are already strugglie ining with falling fo traffic. could deal another blow to that space, but consumer spending makes up 70% of the u.s. economy, so it's really important i think to just monitor the consume rer's psyche right now. are they looking to stockpile on necessities like toy letries and medical supplies, hand sanitizer sales are booming. l brand called out hand sanitizer sales as a growth spot, which is really interesting in itself, but you know if that consumer does start
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to pull away from maybe apparel, footwear, luxury could take a hit because of tourismtourism just because consumer spending is to vital to our economy and the growth we've seen, the it's key to watch here. >> lauren, stay there for more on the impact that we could see here from coronavirus on the retailers, let's wribring in sun anderson a retail analyst it's great to have you with us today and could a company like l brands kind of get through this better we just heard about hand sanitizer. i know they have a myriad of other issues now the stock is down humongous, but how would you separate out those who could see some positive near term impact from those who can the be hit >> l brands, bath and body works format could benefit from the sanitizers they sell
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it's just cherry on top of the icing. when you look at l brands k them getting back to bathing suits, we're heading into march now and the start of the spring selling season consumers originally may have been looking to go on spring back vacations, potentially those could get canceled if this gets worse and starts to spread and maybe they don't buy that bathing suit they were looking to buy you know i think at this point, though it's still too early to tell we'll probably most likely see traffic down at the malls this weekend. i think consumers are starting to look to avoid public places, but one weekend or two weekends of down traffic probably won't hurt things, but if they spread and get worse, i think march is more of a pique selling season for spring and that could make a bigger issue for the retailers >> a different way of state thing it is the price action, what's priced in now with these stocks in some cases down 15%. i would imagine it's at least a couple of quarters of dried up mall traffic and i like a couple of names you highlight here like
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a carters. maybe on the baby gear side. sketchers, american eagle, steve madden why do you think they might be better positioned? >> yeah so carters is very well positioned it's more of a defensive play. if you have a 6-month-old you're still going to need to buy apparel for them as they grow oaf the next three months. you don't necessarily have to go to the store to buy that you can purchase online and it's not something that you would postpone unlike some other discretionary purchases. steve madden, while purmss get good postponed, if you're going to buy a new pair of shoes, most likely that gets purchased while it could get delayed, it ends up getting made up in the end. >> sure and lauren, you menged the company's were already this week in the case of bath and body works starting to talk b about seeing an impact from krohn, but what are we going to
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hear from in the next couple of weeks or or i wonder if anyone would come out and preannounce probably way too soon to talk about. >> i pulled some data this morning and so far, 66 retailers have mentioned coronavirus on their earnings calls this quarter and we're not even through the thick of it. we still have reports from kohl's and nordstrom we've got to hear from gap which has huge exposure to china so we could see a lot more to come one thing i wanted to build on though that she said with e commerce, carters, potentially they could have a strong baby business online, i think that will be something to watch if consumers in the u.s. now have to resort to shopping online, could that just you know, speed maybe the rate at which e commerce sales you know take over total retail sales here in the u.s. >> yeah and have a lasting effect in that way thank you both lauren and susan, appreciate it. all 11 s&p sectors are in
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another steep market sell off. the market is down more than 1,000 points better picture u for the nasdaq, which is down less than 2% here. still at 8400 on the nose. we're talking about 4,000 point drop or so for the dow so far this week so the selling pressure does just keep going. steve liesman has breaking news for us >> federal reserve jay powell out with a statement now saying the fed will use all our tools and act as appropriate to support the economy. i could read you the full statement which says the economy remains strong, however coronavirus opposes evolving risk to the outlook. the federal reserve is closely monitoring developments and the implications for the economic outlook. we'll use our tools and act as appropriate the support the economy. an unusual statement issued i would suspect quite specifically
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while the market remains open suggest thag the federal reserve could act and use all their tools and agent as appropriate >> and look at the bounce in the market right there from 800 something down 30 seconds ago now down 639 so obviously there was a message received by the market in what you just said >> i'm not surprised that powel spoke. suspected he might have spoken some time all week with market downdraft. i think it tells you the fed is paying attention aware of potential risks of where the market is trade iing i think hearing the market, the discussion that we just had about what the market's pricing in we were at a 50 percentage point probablity of a 50 basis point cut in march we had b of a call for a 50 point rate cut this leaves open what the fed will do but it raises the
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possibility or brings the fed closer to where the market is in pricing in some action >> real quickly, are we to just say it's a convince dense that first we have bank of america come out and call for this half point cut. all of a sudden, the market is pushing on the fed and now we have the statement from fed where they would i don't want to oversell it, but they opened the door toward action, don't you think? >> most certainly. this statement does open the door to action look, this is a process that happens often. the asset markets move quickly, violently and price things in and then it takes sometimes the economists and guys who watch the fed to be b brought along with that. that's what i consider the importance of the b of a and i know the fed because of the interview i just did, i look at the markets but also the surveys of economists and earlier or later last week where the fed vice chairman said hey, the economists aren't calling one. that was the important of the b
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of a announcement. they're on board with the possibility of a 50 basis point rate cut i suspect others will be as well certainly the market was pricing that in. now it seems like those who spent more time considering fed action and this statement by jay powell does open the door for some type of action. i don't think it suggests an action before the meeting, but as bank of america said, it can't rule out an emergency cut. >> yeah, very, very well put stick around we're going to bring ron insana into this conversation and kathy. ron, i'm trying to think about the last time we've had statements like this from the fed. you know, the it's very rare for them to weigh in at all in this manner when it comes to financial markets or to follow up with a rate cut >> so i think in one sense, it was the european central bank that said it was going to do whatever it took during the
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european sovereign debt crisis in 2011 where you've got that type of statement. you go back farther during the financial crisis of 2008 and then again back even farther to 1997 and 1998 when the fed stood in for the asian currency crisis, the russian debt crisis and not only made statements, but ultimately moved it's interesting to see the market thus far has not responded terriblically dramatically to that news. the dow was back down 700 points, so it does speak to something steve was talking about today which is this a have just for the markets and will it address any issues that a widening coronavirus spread might bring to the u.s. and global economy >> and or is it a little bit of do disappointment it's just talk and not action at this point >> i think it's that while the fed is very intentional in their comments an while there's a purpose to making a mistake at the market open they needed to do this
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they needed to say something against such a significant drop in the equity markets with 4,000 points lo points lost in a week, more could follow there was speculation that could be be some type of action taken this weekend and by releasing the statement, perhaps they're preempting that and buying themselves some time during the march meeting. for the most part, everything we've heard is they think it's premature and they want to see r more evidence of the u.s. economy feeling that pain befor takinging that action. what investors want is fiscal support. something from president trump something from congress that actually would put money into their hands. what some of the other countries around the world is doing. something with more immediate effect on their bottom line. they don't necessarily feel that an interest rate cut which the markets have priced in up to four now will be enough. >> and if i may, i'm not sure
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fiscal policy response would help either. i think what would help is a coherent public health policy response which we have not gotten from this administration. there are some who have criticized putting mike pence in char charge >> even if they came out and say so you have on the one hand this statement from the fed, what if the news had been hey, we're going to have daily briefing to by the cdc to kind of tell everybody here's what's happening with the case count in this country. would some pressure like that do more to instill confidence than this statement from the fed? >> yes and in contrast the to what we're getting which is mick mull vvaney blaming the media f situation that's actually real the media didn't infect people it didn't put hong kong in a state of emergency and close their school it didn't disrupt supply chains. it dbt quarantine a thousand in germany. these are facts we have brought out. nor have we told people to sell stocks as a consequence. when they say this is a plot on
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the president, this is a real event that's going to have consequences for some period of time a duration of which we don't know but it's not like we're making this up as political ploy to harm a president this is happening around the world and having an economic impact >> and i have to speak for cnbc here, we certainly did cover the travel restrictions that the administration promulgated a month or so ago and very i think thoroughly and responsibly at that point when they happened and maybe it, we are not in as bad shape as we could have been because of those travel restr restrictio restrictions are we at a point of such crisis that we really need to take fiscal action here and as you say, put dollars in people's pockets? >> well, it would be the perfect excuse for the administration to do so. we're not necessarily at a point where that's necessary because the number of cases whether you believe it's a true number of
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cases and the u.s. is limited. so far, u.s. data hasn't been terrible yes, earnings are going to be ugly this upcoming season, but i think all the central banks want to wait for the evidence now with that said though, president trump as part of his re-election kavm has been pushing for putting some sort of stimulus that would put money into the hands of americans and i think that the coronavirus situation on the bottom line for businesses, i think bare minimum, this gives them the excuse to tame additional action we've seen it abroad hong kong has offered a payout to all of their permanent residents and south, they're offering rental sub sidies along with temporary tax breaks on autos so all around the world, we're starting to see fiscal stimulus, so while it may not be the permanent solve and of course a vaccine would be much more mariningful, it could stem
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the slide. >> the irony here is that in order for the fed to do as much the market wants or more like steve said earlier at this point, they'd have to do a lot you have u to wonder if there's anything they could do to calm things down. an p announcement could hit the wires an calm people down. assuming we're not going to see negative growth in china, a draw down in u.s. gdp and as goldman sachs suggested, zero profit growth among u.s. corporations if ylower interest rit, you make the stock market more attractive in those term, but again, it
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doesn't go to the root of the problem, which is how much economic activity has been disrupted and for how long h it last yes, the fed can help out in a manner of speaking, but again, it's not the solution to that particular problem >> thank you very much american companies of all shapes an sizes are prepping to deal with the coronavirus outbreak and let's check in with someone who gave us a good idea of what to expect. an international attorney who specializes in mergers and acquisitions and he has been speaking with businesses in china and across the world welcome back what are you hearing from china? you pointed to the real danger zone business wise in china was not the large state owned enterprises, but it was the smaller and medium sized businesses that don't have the cash flow or the capital.
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>> the chinese government tuesday announced a 500 billion i guess about 72 billion u.s. dollars. that they're offering small and medium sized businesses to refinance their debt you were talk iing about whethe or not fiscal policy would help. the chinese are extremely worried about that why would they say we're going to extend your loan, refinance you. the biggest problem in china is unemployment if these small companies go out of business aside from the nuclenot doing business, the chinese government is faced with a populous that's unemployed that's something an economy like theirs can't accept. >> as you look around the globe, i would think that there would be similar movements afoot in other countries, particularly t
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italy. where the economy must be slowing. >> i had a talk just a few minutes ago with a client of mine in italy near milan and what he said to me is the coronavirus at this point seems to be incontained to the few cities but he said the real challenge for him and italy is their recreation al their tourism. italy is the eight largest economy in world and at $2 trillion 13% of their economy is now related to tourism i spoke to someone wrer today who told me in venice, which is really not in the part of italy which is being affect ed by the coronavirus, that the hotels there have experienced a 40% cancellation rate. and if you take that and you put it across italy and most of europe goes south rath err than north during the summer season,
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italy could be badly hurt. their economy is not particularly strong so this could be a very serious thing. >> as you look at china, how quickly do you think it could bounce back? you've had an economy that's basically gone to zero in this first quarter. it largely stopped how quickly could it bounce back >> i don't think it can bounce back as quickly as we would like let me give you an example when ever they have their new year's celebration, workers love and they go back to their home about 80% return then they have the hire new workers this year, instead of the 15 to 20% not coming back, now it's more like 40%. i know of one company in southern china that i can't disclose, they have about 1400 employees. normally, they would lose 200, 250, this year, they're down to 850. but the interesting thing is only 650 of the people who have come back worked for them before
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so they had to hire another 250 people the problem in supply chain is two things first of all, productivity, which is down. you have to retrain the people and secondly, quality. so i think it's going to be a longer road for the chinese to come back. i'm not optimistic >> dennis, thank you on that note, we leave it. appreciate it. >> thank you very much and look at the market the dow is making a comeback of some size. the dow's down about 530 points. before you got that statement from the fed, just about 15 minutes ago, we were down closer to almost 900 points so again, markets continuing to try to figure out what this language from the central bank means and what further action might be coming. as contagion fears hit the market, some investors are starting to bet on plague stocks, kate has more on that. kate >> those millennial traders we saw rushing into virgin galactic are moving on to stocks that could benefit from coronavirus
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now seeing net selling on sofi's investing platform ma it's a will tlot of small cao names. vir, 50 times the average. lakeland is also on the list as well as codiagnosics i also spoke to e*trade, charles schwab and robin hood. e*trade saw a significant increase in volume and a quote by the dip mentality, names like ford robin hood traders are still all about virgin galactic. sofi seeing new interest in those smaller brk io brk io tech names. >> thank you very much
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let's give brk bio tech a check up down only around 9%. michael, welcome, good to have you with us. there is i think one stock to be positive for the week. because i take it they have a promising antiviral. >> they're up. they've had not only positive data around some of their core business, around an eye drug that some of the competition, but in general there's been a huge interest in a lot of the names. >> where do you think they go from here? region ron up 2, almost 3% for the week maybe that was just a day i didn't see but where do you think these bio tech go from here and will they
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be a bull work in the market >> i think there's two parts one is how this sector in general has been a tough sector. particularly gill jalalabeadgil. we believe that's mostly been not only on drug price iing and political fears, but a lot of other factors going on so the two factors, one is let's see what happens with coronavirus. and two, let eat see what happens next week with the super tuesday elections and all of the other things going on. our view is the goroup is going to probably move higher. both on resolution many time on the coronavirus and these stocks are cheap, but also because i know what about the supply chain and the shocking numbers about the amount of drugs imed into
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this country from china and the. >> i've reached out to a lot of my companies a lot of the drugs coming in as generics or otherwise are are impacting the generic companies. most of those companies really not impact ed by the smi chain. most of these cancer drugs are made here in the u.s. or otherwise have not seen impact there. so for the most part, i'm not too concerned about that and most companies said at this point, there's not an issue there. so i'm comfortable there sofa r. >> does that mean for the most part, we don't have to worry about any disruptions to the medical supply chain we were talking to a gentlemen the other day who works with supply chain and container issues and he's based out of new jersey but was saying even
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things like insulin or different things that people might need could get held up because there's not the right containers for a variety of reasons >> i think no different than a lot of supply chains is related to the fact we don't know how long this is going to go on. in the short to median term, most of these folks have some sort of built up inventory or supply of all these products particularly because they're prepared for these type of situations no different than when there was hurricanes in puerto rico, most have these sort of contingency plans put into place if we go out farther in time, they have to look at secondary
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suppliers but it come down to how long is this going to go on. faster the resolution, the less concern. >> michael, thank you very much. always clear meanwhile, tech stocks getting crushed this week. the fangs down double digits and the trillion dollar megastocks like microsoft, apple, amazon, apple, alphabet losing nearly a trillion dollars in market value this week alone. we've t ch mgomuore on the markets on this turbulent day coming up on "power lunch. ♪ ♪ ♪ don't just plan to retire. plan to live. an annuity helps cover your essential monthly expenses, so you're free to live
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welcome back stocks are having the worst week since the financial crisis with the dow on pace to lose about 4,000 points in the biggest week points drop ever. right now down 2.3%, 582 points. the s&p a little bit less than that, 1.7% and the nasdaq only down 1%. meanwhile the yield on the 10-year hitting record lows. you can see it there, about 1.144% so it does just continue to keep sliding. and fed chair jay powell putting out a statement just about 20 minutes ago saying the fundamentals of the u.s. economy remain strong. but -- and this is where investors pay attention. he says the fed is closely monitoring the coronavirus situation and will act appropriately.
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let's bring in lee munsin and rejoining us is ron insana ron, you were with us when this fed statement crossed. the initial market reaction looked either disappointed or unbothered completely by it. now it might look a little bit better, but perhaps we're parsing this too finely here >> and it's hard to tell i think in a strange sense going back to my earlier days of covering stuff like this if the fed had come out after the close, they would have set up monday as the day the market could rally. this is really kind of tactical stuff from a policy perspective. whereas now, if the market sells off into the close after the fed said something like that -- >> they've already wasted that bulletin >> maybe rightly so. but the rate cut is not going to cure this problem. >> if they had done it after the close, would that have given people all weekend to make the same arguments >> it is a double edged sword and the fed will get either praise or blame for just about anything they do at this
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juncture but the fundamental issue is, again, still not monetary policy it's how deep is the economic impact in china globally and here in the united states. how much does it reduce corporate profits in the first two quarters of the year and would lower rates cushion any kind of blow you might see from the economic and business impact >> lee, you want to weigh in on that >> yeah, i do. i've been doing this for 22 years. and last night i really felt a change of heart that i hadn't felt since september 2008 when lehman failed. i'm generally a person who likes to come in early on corrections. we've been buyers of the s&p of the emerging markets all week. but once i started looking at the information from the cdc we're out here in new mexico and i have clients that work in the labs in risk assessment, and what i'm hearing on that side is that we're going to get some more information from the cdc but the bottom line is in order for this administration to get elected again if that's their intention, they're going to have
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to control behavior. when i hear that, i'm not concerned about death tolls. i'm not concerned about this going past summer. what i'm concerned about is that we're going to have school closures here. and if that starts to mute consumer spending, let's be honest the u.s. consumer is what's keeping this global thing going. and even if hours get cut, it's going to be a problem. so i am not usually buying -- i'm usually buy. i'm not today. >> even if we play out that worst case scenario, take it to the logical conclusion there's school closures and event cancellations. this lasts for a period of some time how -- are we talking about an actual recession if so how deep and how long? because all of those pieces of speculation factor into what the market will do you know, there's a big difference between, hey, this is going to be slower growth for a little while and this is going to be a sharper downturn and the nature of a rebound we might get it, whatever the rebound might look like. >> all this week i've been spouting out a v-shape recovery. so i'm not -- by the way, i am
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still a bull let's just make sure that audible got told what i do think is the psychological toll is going to be much greater than the economical i don't think we're going to b in a recession i don't think we're going to see more than maybe 15%, 20% maybe 25% profits coming in. if you have several months where there's less activity, people not going out to eat and doing that i think the psychological toll means that as we get closer to a 20% correction which is only about another 150 points from here, i think we go lower. more specifically, for all those technicians out there, we never got a retest of that december christmas eve 2018 low at 2350 but the bottom line is i don't see a severe recession but see a much more severe reaction over the coming months. that's why this bull wants to reduce some exposure in europe, in japan but i'm not selling my s&p, but i am selling some small cap values sam other places. i'm doing silly things like
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buying some gold i haven't done that since lehman and i think that's significant to have that type of change of heart just in 24 hours >> ron, what -- i guess it's debatable what a rate cut would do for the economy what would it do for the stock market and for oil? >> one would assume, and you know for all intents and purposes jay powell just hinted that if necessary, the fed will cut rates. and we've had virtually no meaningful response. at the moment we're not looking at, you know, a rally that's going to take us higher at the close. where i would part ways, i think, with lee is, look 2008 was a unique event in so far as it was a global systemic financial crisis that's not what we have. this is not a money problem of sorts. it is an economic disruption yeah, i agree. we might have a two, three, six-month constraint on profits and growth but we're in a year in which we're likely to only grow 2.5% anyway so it's not like you're going to get a 5% updraft on the other
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side japan in fact even before coronavirus had a 6% contraction in this economy for putting on the national sales tax when the economy was not that strong. so i think you get, you know, a longer period of slower growth even if you don't get a recession. >> real quickly, what do you make -- we are seeing the dollar slide a little bit treasury yields are falling and that's helping to shore up a teen si bit the action in gold and some of the -- is that more significant to you in the days ahead, do you think? or no as many. >> i think gold has been hurt by forced selling because again, if there are margin calls and others who are trying to raise cash, gold's been up a lot. so they may be taking profits there. what strikes me more is the 1.14% print on the 10-year note. so clearly now they're pricing in a rate cut. now they're pricing in slower growth even more dramatically than earlier in the day. you know, that's not my favorite message out of the markets right
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now with bond yields continuing to fall. that tells me and with oil dropping still that there's demand disruption expected ahead. >> all right, ron, lee, thank you, both. the last hour is upon us, kelly. >> i know. i'm looking at you you are the face of this whole story tide going to be again tonight? >> a special at 7:00 i hope you all will watch. and have a good weekend, everybody. "closing bell" right now welcome to "the closing bell." coming to you live from the new york stock exchange, i'm wilfred frost. poise z to turn in their worst week i've come to the delta post today. airlines tanking this week delta down 4.5%. down over 20% just this week the s&p 500 down 2% right now. down 12.5% this week 59 minutes left of this session. >> i'm sara eisen. we are all over the market selloff with a big lineup of guests to help you navigate th


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