Transcripts For CNBC Squawk Box 20240713

Indicated up about 40 points yesterday, we did see compressed yields higher prices for treasuries 10year at 1. 36 the twoyear at 1. 7 in japan, the nikkei falling over 300 points. The bond market won, so we are going to have our friend on today. He always says it is going to be because of slowing growth. He seems to get a little bit serandipitus about it. Ill give him credit. The slowing growth caused whatever caused the slowing growth gold is up. Stock market ignores things until it doesnt hope depot might help. Stock called sharply higher after reporting better than expected results i got a 242 bid, 242. 50 bid now. Right . 228 is 18 cents above estimates. Whatyou are seeing there does not reflect what we are seeing samestore sales up 5. 2 , which is strong. Consensus is at 4. 8 home depot announced a 10 increase to 1. 50 a share you can figure out the yield will double every seven years. Joining us with immediate reaction, the bottom line beat is big the samestore number is better. Thats a pretty big beat i read quickly across the board, a very good report. This came and there has been a lot of talk about unfavorable weather. With Home Improvement, there is a bit of an offset there this warmer weather has done a 52 comp with that Housing Market getting stronger. We are putting up this kind of quarter in q 4 which is important for spring into the warmer months. Warmer weather, people buy snow shovels every year and salt, so it does impact results when it is a warmer winter why doesnt it allow for remodelling in the winter . It does presumably people are doing projects in the winter they dont in the summer. Your projects involve bed, bath and beyond. You are in the city. What projects do you do in the city im talking about my multiple homes it takes a team of people. No, seriously appliance companies, other things for home depot. How does that affect those companies . If home depot is doing a 5. 2 comp, the product they are selling is coming from these suppliers. So they are benefitting as well. Definitely there is a lot of concern right now about coronavirus. Here, the big positive is these lower rates. We got a trade and took it down bring it back up, please we finally got a trade up 1. 1 . That should have boosted the dow. The dow is having trouble this morning. I guess well see you tomorrow talk about lows do you think this reads positive i think it does it seems is that home depot is doing well in this environment there is nothing to suggest that they did something smeshl on its own. Just looking at shares and it is a wait and see. Well see you tomorrow. It will be tough to beat that jacket tomorrow. It is tough to beat that jacket. I got vertigo. Did you shoot a couch . You are jealous because he has a jacket i brought a jacket today. People to go, places to see. The fall out from the coronavirus outbreak well bring you the live report from china where the government is urging citizens to return to work even as the virus spreads in south korea and italy and stock futures right now looking like the dow would open up by 21 points higher, s p off slightly we are back in just a moment announcer todays big number, 26 . Thats how much the s p oil and gas xop has tumbled. Yesterday was the worst day since august of last year. We see heating breakthroughs clearing the air for billions. At emerson, when issues become inspiration, creating a better world isnt just a result, its a responsibility. Emerson. Consider it solved. Wthats why xfinity hasu made taking your internetself. And tv with you a breeze. Really . Yup. You can transfer your Service Online in about a minute. You can do that . Yeah. And with twohour Service Appointment windows, its all on your schedule. Awesome. So while moving may still come with its share of headaches. No kidding. Were doing all we can to make moving simple, easy, awesome. Go to xfinity. Com moving to get started. Welcome back master card shares falling after hours warning the coronavirus could hurt First Quarter revenue by two to three Percentage Points selling lower cross board travel and he commerce growth expected there as well. Shares of moderna rising sharply after reporting it shipped the first batch of the Coronavirus Vaccine to researchers expected to start a Clinical Trial of 20 to 25 Healthy Volunteers in april. Well see how that goes. Phase one testing it is but the stock is up 19 based on the testing i saw another company you have no idea you need to hurry. Moderna. Mode rna thats why it is called that anyway the latest, the cdc is raising the threat level in south korea and warning americans not to travel there as it remains the biggest hot spot outside of china a cabin crew for korean air has tested positive for the virus. The detailed routes flown have not been made public yet they plan to test more than 200,000 members of a church at the center of the outbreak there. In italy, imposing restrictions on hundreds of thousands of people Paramount Pictures has halted production of Mission Impossible 7 starring tom cruise that had begun a shoot in venice. Going to eunice now. Good to see you. Good to see you too the country has a long way to go to get back to work as business as usual authorities have said the resumption of work isnt ideal the ministry of Information Technology and industry said the resumption of work at small to Medium Size Companies is only at 30 . Transport Ministry Said projects have stalled for railways, airports have yet to recover a lot of those are done by Migrant Workers who have either not been able to travel or reluctant to travel. The authorities will continue to ban flights in or out of Hubei Province schools have extended their close yo closures campuses will stay shut while students can continue to study on line. With cases jumping in south korea, the Chinese Government is interested in sharing its experience with handling this crisis with the south koreans and japanese, it also at the same time, some local authorities have started to adopt stricter measures at korean communities here in the popular communities that they want to avoid imported virus cases. The people there will face a quarantine as well as other measures one other update is about the wall street journal reporters, the three who had been kicked out. Two of them have left the country. Josh chen, he tweeted out, now out of china, cant express the depths of my gratitude to support. He posted a video of his and philip wens last view of beijing. Now wondering what the u. S. s response could be. There has been some response that the u. S. Could concern booting out chinese journalists. As people get back to business, what does that feel like on the ground you feel that there is more activity on the streets, more people in shops but it is definitely not at the same level as youd expect. One of the concerns here is once you start to have a flood of people coming in, do you start to have more outbreaks of cases . That is the main concern have they relaxed how difficult it is to go in and out of your housing complex . No, no. It has gotten worse here again i just noticed today, we are only allowed to have four people inside the elevator. That was posted today. The restrictions keep getting higher even though authorities here want the Economic Activity to rise as well back to the selloff the numbers are startling. Yesterday was the dows worse day in two years dow and s p are in negative territory. The market loss was at 927 billion in one day going to our guests now. Here is the question becky tried to ask it yesterday of warren. Hes such a longterm thinker, he doesnt always talk about the day to day issues. If you are an investor and you have cash on the sideline, are you supposed to wait or go in now, the lows are in how do you begin to think about this i would say off the peek, we are down a quarter percent 14 months ago, we were down 20 if i was a longterm investor . Yes you dont even i would take a pe cash aside and put it to work. Start putting money to work as the opportunity comes. Youll get preannouncements. It will happen travel industry and industrials will come out and say, we dont know how this will work. Buy highquality put your cash to work. 5 could easily go to 10 all of these warnings they dont know what the warning is half the time look back at the cycle 10 to 15 years s p going to ebola to sars if you are looking out 10 years, you could weigh down 15 not, i need this money we are looking at particularly gdp slowing this year that was going to happen whether the coronavirus occurred you had it up again 3. 5 in february up until a few days ago. You are looking at 5 to 8 return for the full year you should expect a breather that was your expectation to begin with we are seeing a slowing economy this year. 5 to 8 would be a lower return last year at length, the reason the market went up is from expansion i think a lot of that is off the table. You are looking now at 2021 for some Earnings Growth the opportunity to buy is now. You hope when things flat line and start growing. Is there anything interesting in look at health care stocks, that could be something that some of the stocks like zimmer for the hips j and j, the slight dislocation there, you want to be new value there. Do you think anybody is getting a new hip if we have medicare for all when you look at countries like that, im not talking insurance companies. That made no sense unless unless what unless you can tie that to bernies 60 minutes appearance uhoh, im talking politics. A sanderswarren ticket is up above trumppence. Would you touch something in the middle of this an airline we own delta. It is at 53, off almost 20 . Maybe thats the opportunity. Go buy expedia now i like delta a lot. Investment grade id start nibbling on it not saying go buy your positions. Secure dividends look for Companies Like that that you can get the opportunity. I think the thing you should do is to have a shopping list. Dont try to go around shopping whatever was down yesterday. Do your homework ahead of him that have growth and when they hit your targets, buy them when we look at home depot and lowes, strong numbers and housing. Begin to nibble. Same thing with visa even though some are up this morning . If you are seeing stocks at reasonable valuations, start with the quality you are looking for rather than try to pounce on whatever shiny object is catching your glance at the moment thank you appreciate it. Coming up, if you hate waiting in line at the Grocery Store check out, amazon has some good news for you. Looking at the big losers in the european markets all down 5 since yesterday morning. Well be right back. now you can, with shipsticks. Com no more lugging your clubs through the airport or risk having your clubs lost or damaged by the airlines. Sending your own clubs ahead with shipsticks. Com makes it fast easy to get to your golf destination. 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Set to open amazon go grocery. About four times of space as the Convenience Store targeting customers in residential areas no cashiers or checkout lines at all. You need the app i have it. Ive been to the other one pretty extraordinary it is spooky you literally walk in and take what you want and leave. Did you look back and see if it charged the right amount . It did. There are thousands of cameras on the ceiling how many workers are around watching you do this very few. Hardly any that was the miraculous part you walk in, it knows who you are. Even when i go to the store and i scan every item myself, it messes up. I dont know. I think they are catching it as you are taking it off the shelf. Then that is good you are there by yourself and not with a couple of kids trying to stuff stuff in and out of the cart they have not perfected that. This is a thousand times more sophisticated and probably cost them a thousand times more to do it juul planning to unveil a new version of the e cigarette a locking device that would link to a smartphone via blutooth and would only unlock when using a photo and government i. D i dont know how that would work my kids can hack into any one of my systems you can show an i. D. Is it okay to write all of your pass words down no. And it is not okay to make password with two fives for ss i use a combination of my char children and dogs. Dont say that out loud i make them so complex that i get the highest security, that little bar goes off the charts for how secure yesterday, we were joined by Warren Buffett one thing we talked about is cryptocurrency he has been a critic the founder of cryptocurrency tron and ceo of file sharing company. He tried hard to convince buffett to change his mind on bitcoin. He gave you some bitcoin, how does it feel to be a bitcoin owner . I dont have any bitcoin. You dont okay. You dont own bitcoin no. I dont own any cryptocurrency i never will i may start a war on currency. Maybe ill create one and say there will only be 21 million and you can have it after i die but you cant do anything with it except sell to yourself that created a lot of controversy. Justin said he gave cryptocurrency at that meeting called buffett last night, he did get some cryptocurrency in a wallet given to him but he turned that wallet over to glide, which is the foundation he had been raising money for for that lunchon that he paid over 4. 5 million. All of the money went to glide that bitcoin gave it over to them neither of them was slying justin gave it to him. He was very thankful he gave it to the charity. Warren is not the quickest to embrace new technology no. Hes never bought amazon. No. Hes admired amazon and jeff bezos for a long time. I wouldnt expect warren to look into it closely there are some people that are not complete idiots that might push back on comments made blockchain whether you love or hate bitcoin, there are uses and value to a lot of that stuff why would you talk to fiat man . The point is neither of them were lying about this. The kons versy was somebody is lying here. Nobody was lying yes he said he was grateful. He gave it to glide. He didnt throw it away he knew it had value when we come back, well talk about the selloff on the last big down day. Well ask him if now is the time to strike. As we head to break, lets look at the biggest decliners in the s p and dow. Through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From finding out whats selling best. To managing your fleet. To collaborating remotely with your teams. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. We are up triple digits now. Back on squawk box. Wall street waking up with a black eye this morning after suffering its biggest oneday loss the dow dropping 3. 6 . Now lower for the year what do you calculate last years gain at around 31 . If you looked at the points, it was a shocking number i dont think it made it in the top 50 declines. Up next, well talk to chief Economic Advisor from allianz. On the last down day, he told us dont buy the dip. Well dive deeper into home depots earnings that is a dow component helping things this morning. A reminder, you can watch or listen to us live or on the go on the cnbc app. Well be right back. I got that vibe, got that vibe got that vibe, yeah, i aint petty, looking fly, looking fly, looking fly, yeah, they aint ready. I can shine, i can shine, i can shine. Imma do what im made to do. Imma do what im made to do. Built for excellence. You start from the foundation up. The excellence is reaching dreams and chasing them at the same time. About a month after the initial coronavirus outbreak, advising he would resist the temptation to buy coronavirus dip. The coronavirus is different. It is big. It is going to paralyze china and cannot be counted as we noted by Central Bank Policies i think we should pay more attention and try and resist our inclination to buy the dip joining us now, allianz chief Economic Advisor looking back on those comments, there is still a lot we dont know about this virus, what would you tell people in terms of this stock market caller i would say continue to resist to buy the dip because it worked in the past. As you say, there are uncertainties. One is the short term uncertainties. How quickly can we contain this virus. Second, the longer term uncertainty is what well do to china. What does it do to the process finally, a whole host of uncertainties related to the conditions the Global Economy and markets have been doubled from fundamentals there is a lot of uncertainties out there. I understand the inclination to buy on the dip i understand with expecting the market to bounce up. I stress this is different everything comes down to price throw, correct when you would say it is okay to buy the dip . Is that a 10 pull back, 15 pull back . When you say there has been some value here of course remember, consensus recommendation was not only buy on the dip but buy the markets that have lagged buy emerging markets since the highs, in the u. S. , we are 5 and u. S. Markets are up 10 . Just not at these valuations yet. These are such difficult things to try. You are a digital economist. We are trying to figure out what countries are doing behind the scenes how do you sum this up or do you stay out of it because it is too complicated right now . No. I do a lot of research and talk to a lot of people the many he had call profession will tell you we dont understand this virus yet. There is a lot of uncertainties. Looking at the economics of cascading stock. Ask, would he go to holiday in italy now . No hell wait it will take time. Yes, there are so many uncertainties. Youve got to collect data and put the picture together that picture is very merky right now. Who in the World Health Organization is saying this is not a pandemic when you have outbreaks in italy, iran and south korea and now the threat level has been raised to red, what does that mean do you think well be shutting down travel between countries . That is the question. The u. S. Issued a travel alert on korea today people are thinking about this it is a i deglobalization shock. Economic sudden stops are hard to restart ive seen it because ive worked on developing countries where these happen they dont tend to happen on second largest economies in the world. We learn a lot i would just caution there is so much uncertainty right now if you you are going to buy this dip, you focus on companies with very strong Balance Sheet, a Business Model with robust enough business. Companies that arent going to hit like others but dont deserve to be hit. It is very selective not buying indices in the more vulnerable economies when you look forward, what are some of the things you look for as indication that things will be stabilizing or Getting Better first, understanding of what exactly is this virus and how to contain it the confidence of people to reengage look at china, we are getting 20 to 30 of people showing up. This is unknown. Telling us when you shock us with something that takes us out of a comfort zone, it takes time the third thing im going to look at is how much damage have we created to companies that are vulnerable look at the triple b credit. That can change dynamics look at, a, the fundamentals of the disease. Look at the confidence and finally the technicals we want to thank you for your time we appreciate talking to you well see you again soon thank you, becky. Coming up, italy reporting the first coronavirus case in the south just an hour ago a doctor staying at a canary islandresort tested positive and online sales . Thats a whole other system. And different regulations. Therererealal eate e crits,s,. And we have no way to integrate all that . No. But bdo does. Peopopleho k kno knonow o. Restrictions on 100,000 people in two regions of northern italy claudia with cnbc italy joins us now. What can you tell us claudia this morning theres cases that have been confirmed tha have not been as serious were talking about southern italy. Were talking about tuscany so theres concerns that this may go further but its important to note that right now what has been done so far by the authorities here in italy has been very, very aggressive they have been very precautionary. The cases registered are a little over 200. Somewhere around the 230 level theres been 7 fatalities and the number is growing at a slower rate than the last 24 hours. Its too early to say, but public places, you know, theater, movie theaters close at 6 00 in the evening and open up at 6 00 the following morning but people are still going to work theyre trying to keep the economy going. People are cooperating very much in the area where theres not the zone because you mention that 100,000 people people are in the red zone where theres actually a lock down theres locks and military forces that have been deployed there to keep that area isolated which is where the cluster is. The question is that we dont know who the patient zero is so that makes it harder to pursue the threat and spread could actually have its about the 150level. And to try to understand what kind of measurements the government can put into place and in the second day this sort of new situation that we find ourselves in very unexpectedly as a day by day as far as how the people here in italy are reacting there seems to be, though, the feeling that authorities have stepped in swiftly and checking very carefully thats why youre seeing a growing number of cases. Claudia, thank you. We appreciate it we also want to thank him for joining us for the hour. Thank you. Coming up, were going to have the former fda commissioner to join us to assess the United States and the readiness here to respond to an outbreak plus a little later, David Gerstenhaber will be with us on set assessing the damage from yesterdays session and the market volatility. What you perhaps want to consider doing with your money adg to todays trade youre watching squawk box on cnbc you can earn more when you invest your cash. You can get a satisfaction guarantee. 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Comparable sales this is the business that came in down 0. 5 but that was better than what was expected which was 0. 9 of the drop macys also reiterating its annual sales and Earnings Guidance for physical to 20. Youll probably remember they held an investor day the launch of a new format called market by macys and its concept backstage currently in a number of stores also by 2021 the top 250 stores will represent nearly 80 of sales. A week ago we should note s p did cut the debt rating to junk status on doubts about the new polaris strategy i spoke briefly to the ceo and he says the First Quarter of this year will expectedly be our worst performing quarter of the four because the polaris strategy savings dont get traction until the Second Quarter goes through the year and regarding coronavirus its not into guidance. Theres some slow down into stores that have an asian shopper base whether thats a new york store or tourist based store but also no disruption to the merchandise availability as of yet but still also quite early for this story. Courtney. Thank you. Again take a look at the stock now up by 6. 8 also breaking news in from mastercard the chief product officer is going to become the new ceo next january first. The current ceo is going to be transitioning to the role of executive chairman at that time. Of course we should point out during his tenure that stock has increased more than 14 prior to assuming a role he is going to become the president of mastercard and thats going to be happening on march first. All of this comes a day after mastercard warned his revenue could take a 2 to 3 hit this quarter because of the coronavirus. Some of things that concerned the markets is not only a slow down in terms of cross border and travel taking place but also cross border ecommerce. People being afraid to buy things and have it shipped here as well. You know the story well. His own personal story is an amazing story but whats happened at mastercard over the years is an amazing story. Having said that its a bit of a visa story but on a relative basis. Theres something going on here and they did a remarkable, remarkable job. This is a long transition time and that will probably give that will make shareholders look at this positively the idea that this is not happening instantly and he is going to be sticking around afterwards. Now interesting that stock off a little over 2 . It was down before. I was looking at this this morning. Its been down all morning long and thats about the concerns yesterday with that warning in the post market trade. Markets look set to rebound today. Were talking about the dow up 99 points after it fell over 1,000 points yesterday futures look higher with the s p up about 9 points and the nasdaq up about 50 points he has more on yesterdays drop and what looks to be a turnaround tuesday what do you think . An attempt at that seems to be an unsettled market becky it challenged this story of american exceptionalism at work in the market look at the acceleration and this is the rest of the world. And the s p 500 really had a pretty gentle angle and the question is, has this been the start of some kind of a period, a real shake out a major correction Something Like that . We dont really know well get a one year chart we had a pretty good flush yesterday and you did get the volatility index up into the mid 20s. That is very similar to the path of august fifth. That was another time when the market had been pretty much near a high and had a big one day drop okay we will be watching. Whats the latest . And the ten year treasury yield. Well have it later at the lowest level since july of 2016 could be headed even lower as gold hits higher according to our next guest joining us now the president strategist Global Strategies and andrew is the senior Portfolio Manager of Morgan Stanley investment joins us on set. All right. Heres what i was saying earlier. I dont know if you were watching your premis about lower yields that you have been calling for for years and years going against the grain has to do with the idea that growth was globally not going to be Strong Enough to support higher yields and we see the rest of the world some in negative so that has always been it but fundamentals seem to catch up with your overall viewpoint even though youre not a technician the china trade war and now we have coronavirus fears giving you another leg down in yield. You always based it on a sugar high from the tax cut i think in this country in the United States but it just seems to come into your peview even though you didnt forecast why it was going to happen. Do you understand what i mean . It happens but not because of why you said it was going to happen. Yes it was not luck my view was that the first two components, the Global Growth simply would not pick up i was going against the grain even in terms of those forecasts because as you know, the consensus was that the Global Growth would pick up and the u. S. Tax cuts would be effective. Its true. But thats not the end of it its also saying that the feds policies will not cause inflation. American population is getting old and therefore is not consuming enough and structural change is not going to go away those are macroeconomic factors and i built into it a global influence. It could be and in this case it turned out to be the coronavirus. You have to build into your expectation that uncertainty contribute to putting it down. Would the world become very calm again and i didnt get an answer saying any one of those was likely to happen thats why i was very secure with my forecast for the last three years. Let me ask you if we go below one, we might as well go negative i think the markets will rally. Its going to be a goodyear for equity and if the market is down on the year then this is a better time to buy than a couple of weeks ago but lets just keep it calm here market is back to where it was at the beginning of the month. You talked about Companies Reporting bad numbers. But at the end of the day, youre talking about Interest Rates but the reality is the dividend yield on the market is better than the ten year so to me for equity this is a better time to buy than a couple of days ago and its going to be a goodyear. You saw home depot talking about a 10 dividend increase. If that keeps happening they eventually force the stock higher and the market said these are going to be sustainable cash flows to be able to do dividends and buy backs for many years to come even stocks like alphabet that dont have a dividend. That being said, you do not necessarily want to see the treasury yields continue to make new lows yes, the backdrop of low yields help support equity valuations the relative yields look good for equities and i do think thats going to be a problem for the market it was in 2016 and last year when we got to this position but if they continue to make new lows everyone is going to say were in that late cycle vigil and we dont have a backdrop of strong nominal growth around the world. Rates dropped and the market corrected. Be wary of too much crowding. Id like to go back to something mike said a minute ago. The economy is not in good shape. The comparison between the dividend and the ten year yield simply doesnt hold. That shortterm in which you have this concern about slowing growth and the inability of inflation to pick up im not going to say the bond yield remains low but this has been repeated again and again which is why the factor that the s p 500 and the comparison with the 10 year yield simply does not mean that the he requesteque superior to bonds at this stage. If you look at what happened in the last two recessions in 2001, 2007, 2009 the equity market reached a record high in december of 2007 at the time at which the recession began. So much Predictive Power where as both in the 2001 and 2007 recessions that ten year yield as well as the yield curve, clearly it was predicting a recession which was exactly what its doing again today and thats what is reflective in the bond market okay. Thank you. Thank you very much. Meantime, jp Morgan Holding it in yesterday in new york. Lots of news expected out of that one wilfred frost joins us with a look at some of the headlines. Expected headlines wilf. Yeah. So the slides for the day ahead have just dropped and the big headline is that theres no change to 20 for targets despite a huge collapse in yields since we lost got targets from them which came when q4 earnings were reported in january they put this in front of the presentation on page 2 it includes 200 billion target in Green Financing this year up from 175 billion last year no financing of oil and gas in the arctic and limited financing currently about 1 of their financing and they wont do any fresh financing in that area but back to the fundamentals for the bank stocks. Yesterday they all sold off sharply in line with the rest of the markets. The biggest decliners with this years biggest winner so far, Morgan Stanley the bank with the most exposure to asia, citigroup, and the one that seems the most Interest Rate Sensitive Bank of america, jp morgan was down as well but only about 2. 2 and despite no change in the financial targets the focus today will be on the comments that we hear from the business heads and of course chief among them jamie dimon in terms of the changing macro environment with the yield curve and the coronavirus. Were due to hear from him at 11 45 a. M. Things will kick off at 8 00 a. M. Before you go in terms of some of the projects that jp morgan is no longer going to finance, is there any estimate on what that will cost today it will certainly cost them something. The critics will argue why not why didnt you do this earlier the science hasnt changed for a decade more detail on that in the day ahead. Much more on the broader markets and reaction to yesterdays sell off but up next, Mortgage Rates driving the Housing Market higher and home depot is looking to capitalize. Well discuss the latest report after the break. And then later the white house unveiling the 2. 5 billion emergency coronavirus plan and the update on the spread of the virus and what it means for ua b rur mey sqwkoxetns right after this welcome back a couple of downgrades to tell you about this morning they will beat yesterday for sure downgrading to underperform and concerns about the Second Quarter could be coming. They see limited impact from the coronavirus but they are concerned about the ability maintain that based on limited earning. Revenue above what the street had been expected and 10 increase in its Quarterly Dividend to 1. 50 a share. That up 2. 4 this morning. Thats a dow component helping the dow as well. Joining us to talk about the results and the broader Retail Sector is the ceo and courtney, what did you think of home depots numbers . Pretty strong across the board yeah. They said their longer term strategy was just taking a little bit longer than they planned to pay some of the dividends and those results. So some investors are wondering is this going to be an issue Going Forward but they got themselves back on track here and things look strong 5. 2 is quite good we know that the Holiday Quarter for home depot is not like a Holiday Quarter for acys. Home depot did a great job with the business and we saw it come out and were going to see it continue because Interest Rates have continued to come down and nothing is really going on right now as far as the coronavirus slowing down the consumer. Lets talk about the potential threat to retail from the coronavirus and youre right. Its not something slowing down things in the United States but we did hear from mastercard last night. They warned not only that cross border travel is being effected but cross border eretail. Ecommerce or any of those things i dont know if people have concerns about buying things from china right now i had people asking me things on my twitter feed saying should i be concerned that its going to live onsurfaces . I have people asking me that at home too is that something that have a potential impact and where could you see the supply chain issues that might show up in the u. S. Retail situation we dont know enough about the coronavirus to give anybody an answer on those questions. The last time i was on i said the market doesnt seem to be taking the coronavirus seriously. As of yesterday they were taking it seriously as a heart attack we know its 40 of luxury goods and theyre not going any place. Theyre not just not buying them in china, theyre not buying them nywhere. Way fair is all the way up to 50 . Factories are coming back by the way. You mentioned this morning earlier that theyre coming back slowly and we see 30, 35, 38 performance. Thats pretty low but if theyre up by the end of march, i dont think thats going to be a big problem on the supply side im much more concerned on the demand side. If we see this spread like we just saw these numbers out in milan, we could see the Global Market shutdown for goods or the u. S. Consumers start to shutdownment thshutdow shutdown that would be a really, really big deal i think that could cause a global slow down but if it gets broader than that and nobody is going to work and nobody is going out to shop thats a big deal but right now its a big deal mostly. It hasnt happened yet but its obviously a concern what do you hear from the retailers that you talked about. Its interesting when you talk about ecommerce. Theyre honest with what theyre seeing and they mentioned the asian ecommerce business that they do with alibaba, thats been hit pretty hard so i thought that was fairly telling because you could easily order a goose, a canada goose jacket online and get it delivered and potentially not fear going out in public the Discretionary Spending has been curtailed regardless of the platform. Very quickly. Obviously it all depends on how long this lasts, how far it spreads but the prices that youre looking at most of these retailers on right now, has it factored in what we know at this point . I think it is factored in i think, when i look at these i say if youre a longterm investor youre buying the dips on all of the stocks if youre a trader maybe it isnt all factored in yet. And were doing a good job of controlling that its already starting to slow down in china. So i think as far as consumers go and as far as the brands go their buys when theyre if you trade off the lvma that always trades in a multiple that nobody can afford to buy it, its a good time to step in because theyre still going to have great business once this is over. I want to thank you both. Good to see you. Thank you. Coming up, americas preparedness for the spread of the coronavirus in the United States if that were to happen and what a quarentine of a major city would look like futures remain up triple digits. Up 128 points now. S p indicated up about 13 or so. Nasdaq up 65 home depot continuing to help after a pretty Solid Earnings report well be right back. We see engineers simulating the future to improve today. At emerson, when issues become inspiration, creating a better world isnt just a result, its a responsibility. Emerson. Consider it solved. A new kind of investor is changing things up. [ indistinct talking ] with an app thats changing the way we do money. Download robinhood now. And with case numbers now approaching almost 1,000 a new travel warning from the cdc. A level 3 warning meaning avoid nonessential travel due to Widespread Community transmission of the coronavirus. Thats the same level as for Mainland China meanwhile the white house sending a request to congress to make 2. 5 billion available for the response Raymond James analyst says that amount is only about a 6th of what is necessary to prevent or respond to a widespread outbreak in the u. S. Thank you so much for more on the coronavirus and the latest on where we are, i want to bring in the former commissioner and cnbc commissioner and he also serves on the boards. Good morning. Thank you. So here we are. Its now moving into other countries in ways that we had not imagined theres still questions about what its really going to happen here are we overestimating or underestimating. Were probably just attaching a small fraction of what is going on italy, iran, south korea, japan seems to have more spread than what is apparent right now. And were looking at diagnostic tests for a platform and you order that when someone has a serious respiratory issues and they dont know what it is and they dont get back a positive result for anything if you have dozens or hundreds of cases you might not detect a signal that way. We tested cumulatively and our capability probably isnt more than 50 or 100 a day to the best they all need to be shipped to the cdc right now. We need the five state labs that are doing this but theyre small. Youre saying that its much worse. Well i dont think theres thousands of cases youll see unusual respiratory illnesses being admitted and that will give you the report and go in and test the cases you could have a small low level spread and it becomes harder to put out small outbreaks if you dont detect them early. And comes back with an immune response and sepis response. That might be it. Probably its going to be much lower than the 2 . My guess is. 2 to 5 you look at the people and that doesnt mean people are getting sick enough and identified there does seem to be a response here when some people get sick its easy to see a spectrum of illness. Here you either dont get sick or you get very sick. Yesterday we had warren buffet on that told us he has been speaking to bill gates about this and one of the concerns is that idea that they dont think this is necessarily killed off by warmer weather what do you know . We dont know when you have something novel it can continue to circulate it could pick back up again. Thats what happened with h1, n1. It came in the spring and continued to spread in the summer and dropped off and then came back in the fall. Theyll have a huge Business Impact an impact on this network and this company an impact on all japan what are you thinking i dont know if japan is doing as good of a job they cant trace back to a source and thats a signal that they probably have more spread in their country that youre just not identifying. We have seen this expedited expedited drug approval for a vaccine. Couldnt there be an expedited Testing Process if we decided. Its a challenge. This is a coronavirus. It might be more difficult to make a vaccine we dont have a lot of experience. Its tough enough. With h1 n1 we were able to make a flu vaccine. Its a small genome. People can get reinfected with this. Good to see you, appreciate it thank you so much. All right when we come back, Airline Stocks slammed in yesterdays session as cases of the coronavirus rose out departments side of china. U. S. Carriers already suspended service to china and Hong Kong Well get you up to speed on the sector after this break and later seeking market refuge from the virus has been tough well talk about why he thinks biotech stocks could be a safe haven teafr yesterdays market plunge squawk box will be right back. And ask your doctor about biktarvy. Biktarvy is a complete, onepill, onceaday treatment used for hiv in certain adults. Its not a cure, but with one small pill, biktarvy fights hiv to help you get to and stay undetectable. Thats when the amount of virus is so low it cant be measured by a lab test. Research shows people who take hiv treatment every day and get to and stay undetectabe can no longer transmit hiv through sex. Serious side effects can occur, including kidney problems and kidney failure. Rare, lifethreatening side effects include a buildup of lactic acid and liver problems. Do not take biktarvy if you take dofetilide or rifampin. 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Our technology and Financial Solutions are changing whats possible in all sorts of ways. So, how can we change whats possible for you . Those flights into the u. S. And europe and vice versa. When you take a look at the u. S. Carriers and their exposure to europe this is an area that generates anywhere between 11 and 17 of the annual revenue for the big three u. S. Carriers, american, delta and united they also got hit and didnt matter that most of their flights are here in the u. S. Southwest, jet blue, spirit they were all under pressure yesterday anywhere between 6 and 10 . Lets see what the stocks do yesterday. Already indicating that there will be a bounce back. Guys, back to you. Thank you for that. I want to bring in right now the principle at kaplin research and host of Airlines Confidential podcast. Good morning to you. And its going to be a break again on any plane. You would have to believe thats going to happen. That assumes nothing is happening in the United States and we just heard and he seemed to suggest that this movie is coming to america. Thats to misappropriate the old saying about the known and unknowns this is some of the unknown unknowns here. Which look a lot of things have happened so far that none of us saw coming so a lot of the economic models, the Airline Association put out forecast last week of what 30 billion in Industry Impact but almost all of it in asia that was assuming a sars style impact of the virus now they took into account that china is a lot more important to the Global Economy but in this whole epidemic becomes a pandemic then obviously all bets are off and some of those fears are priced in. Okay. So you like the point to Point Airlines in the United States. Particularly the ones i mean, the ones that are least exposed are those that dont have Global Partners in youre jet blue or alaska youre doing business with chinese and european carriers. You dont even have any of that. So its limited to people from china that arent traveling domestically in the u. S. Right now. So yeah, if you believe that, you know, the impact is demand from china and demand around the world then those are the airlines on the table. Lets think about the other permutations though. What other airline or travel adjacent kmacompanies would you start to think about. Yes, hopefully. So thats a good question you see whats happening with the cruise lines theyre the opposite of that. And now, it is also interconnected and what is safe right now. Whats safe right now other than the mostly domestic u. S. Airlines as summer is coming and the virus itself is helping getting hands around that because this could be a huge opportunity obviously if thats the case i think its virus news that is going to tell us that its an opportunity. Fair enough thank you so much. Appreciate it. Got it. You bet. Coming up at the top of the hour volatility spiking on coronavirus fears. Were going to talk about investing in Uncertain Times thats coming up at the top of the hour in the meantime, take a look at the futures this morning a bounce back but we should keep it in perspective. It was a decline of over 1,000 points yesterday were sitting here the highs of the session at least dow futures up by 165 points the nasdaq up by 84. Squawk box will be right back. Is changing things up. With an app thats changing the way we do money. Download robinhood now. How you watch it does too. Tv just keeps Getting Better. This is xfinity x1. Featuring the Emmy Awardwinning voice remote. Streaming Services Without changing passwords and input. Live sports with realtime stats and scores. Access to the most 4k content. And your movies and shows to go. The best tv experience is the best tv value. Xfinity x1. Simple. Easy. Awesome. Xfinity. The future of awesome. 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The dow coming off its worst day. Investors and Hedge Fund Manager. Plus a race for a virus vaccine and which companies are best positioned for success and pain at the ports, we will take you live to one of americas most important shipping terminals for an on the ground look at how the virus is starting to ripple through the u. S. Economy the final hour of squawk box begins right now good morning, everyone were live from the Nasdaq Market site in times square. Im becky quick with joe and andrew lets check out the u. S. Equity futures for this hour. More than 1,000 points for the dow. This morning there say bounce back but its relative dow back by 165 points s p futures by 16. The nasdaq up by 86. If you take a look at whats been happening in the treasury markets, yesterday the ten year fell below 1. 4 . Yield is still there at 1. 38 right now. The two year yielding 1. 264 well start this hour with the most valuable company in america. Apple. Shares of the tech giant getting hit hard on coronavirus fears. We asked him if he knows about the impact of the virus on the company. No. I dont think i dont think i placed a phone call to tim cook in two or three years. No ichblths and t guys, its good to see both of you yesterday when buffet was talking about that he said that he considers apple the Third Largest company because the stake they built up has grown so rapidly overtime when you start thinking about what will happen with the bounce back where are you its all the iphones that they didnt buy during this period. Because theyre lost sales potentially . They potentially are. We dont know yet about the psychology of the Chinese Consumer not only does apple have to deal with when do the workers get back in full force but then when do the buyers come back in stores are they going to feel like i meant to buy an iphone a month ago so now im going to buy it or is the psychology going to be i need to save a little bit more because i dont know how long this period of uncertainty is going to last. Youre not talking about apple losing market share necessarily, so. I dont know if people say im going to buy a huawei phone or Samsung Phone instead if they were in the market for a high end phone but even that is possible if they suddenly decide im not going to devote as much of my resources to technology. We just dont know yet. Do you agree with that . I agree with that on the other side of the supply chain issue aside from being consumer and supplier, the Technology Manufacturing industry so, you know, Lunar New Year a lot of people think china takes a break for about a week or so. It coincided with coronavirus and were starting to see the effects of that. Not just for apple but the back half of the year is going to be pretty bad just how disruptive factories have been. Factories are coming back to some extent. Maybe 35 . If thats the case and that sticks out and we ramp up from here, is that going to be a huge problem or is this something where you could see a recovery at least for the supply chain. I think for recovery its more likely recovery i think as he was talking about theyre buying apple shares every day. Hes buying on all the dips. Its actually a good thing and the fact that he finally got some. Yeah he did talk about that yesterday. A long time user of the flip phone only he has finally transported although some people raised the question yesterday does that mean that its jumped the shark. Thats what i would think, yeah but, you know, i think theres another question here industry wide about what is happening with 5g china was on this big push to build up 5g networks in all the major cities. I think it has to you have to be outside to install this equipment if they were going to push all year to do that they probably dont have people up on poles doing that what does that do for demand for 5g equipment and devices at the networks that could mean an advantage in a way for apple because theres a number of other players that have 5g phones out already that might not see that demand come through sooner it might show up later infrastructure and devices the platform, we dont know what it is. All we know is its just faster right now for a lot of people. Its fine, people watching netflix on their phones. Is there something that 5g is going to give me that i otherwise would not have been able to get through my phone thats the thing i havent seen yet. The speed youll want i i see people snapchating heres my download speed and upload speed but what did you get for that i think this issue on huawei and china 5g is important the u. S. Talked so much, the National Security conversation about huawei the other piece of it is that we were behind ight if we are behind a couple of months and on the chinese side, once all of this gets cleared up and i hope that happens quickly, the government does have enormous incentive to push even harder than they might have from an economic stimulus perspective. So its too soon to say. Thank you good to see you both. An update on the worldwide spread of the coronavirus. The World Health Organization is now warning countries around the world to be ready for the disease as if its knocking at the door south korea is aiming to test more than 200,000 members of a church 200 members. Not 200,000. Worldwide fears from china, italy and other countries hitting u. S. Stock markets hard yesterday as you very well know with the dow and s p 500 suffering the worst days in more than two years italy is the hardest hit country in europe with more than 200 cases reported yesterday and infections now topped 80,000 they say the epidemic peeked there between late january and early february eunice joins us with the latest from beijing. Thank you so much you guys were just talking about chinese stimulus just now state tv said that china is going to roll out an additional 71 billion to support small and medium sized businesses with loans. Theyre going to wave the vat for businesses all together that are in the epicenter of the province the announcement also comes right after the authorities here had said that the rate of the resumption of work for smes is only 30 also a transport Ministry Said that projects and railways and airports as well as highways have stalled these projects rely very heavily on Migrant Workers that have either been restricted from or reluctant to travel back to their work places. It has been doing okay and had some positive news is now 7th province to downgrade its Emergency Response level as the country attempts to get back to work the province said that its going to extend its closures for schools. A lot of people have been watching that. Campuses will stay shut until further notice while students resume studies online from march 2nd. Hong kong is also going to keep its school shut until april 20th now with the cases jumping in south korea and the foreign Ministry Said that china would like to share its experience to help south korea as well as japan to fight the virus at the same time, china has also places within china with big south korean communities have now started to impose restrictions for anybody who is going back and thats the way to try to prevent a further spread from china that could be coming in from south korea one other update on a completely different story but the wall street journal reporters that have been kickedout. We are seeing further evidence close Quarter Sales growth will be 2 to 3 lower in previous guidance but we also heard negative comments from apple, united airlines, cocacola, procter gamble. Joining us to talk more about the potential market fall out from the coronavirus is the howard chief investment officer. Macro economist but also a Hedge Fund Manager are you a quick study in epidemiology. Not as quick as you joe. Probably not. But you had to be. At least to some extent. Consensus is that assumes positive things happen in terms of the spread of the virus absolutely correct. But the comment that i would make is its too soon to know if its going to play out. They shutdown tourism and supply chains and this is different in certain respects than in the past and first of all china is a much bigger piece of the Global Economy than it was the last time we had Something Like this. We had been seeing what i think were signs of improving Global Factor the u. S. Is far less impacted by this things were starting to turn in china. So Just Supply Chain worries on the ten year Just Supply Chains for example in europe, god forbid here thats a much i dont know where the stock market goes in materials of that that would be a worst case scenario. I think thats right and again the point is that we dont know how to play out the general assumption is that you get a big hit to First Quarter output in china and asia and they work hard to get things back online which is what seems to be happening already. They told people to start going back to work on the one hand, on the other hand kids arent going to go to school until the latter part of april. Thats what we heard earlier. The market is pricing in a cut in the middle of the year in recent weeks and over the last few days we have seen another full cut price by the middle of the yearment this is against a background where the fed said prior to this well, i hope inflation isnt doing anything one way or the other its lower than we would like. Rates are arguably negative. Real rates are negative in the United States so now you have a market that is pricing two full cuts in terms of valuation with the stock market you point out obviously rates are low but you make the point and its kind of an interesting nuisance that i hadnt seen previously that since the market discounts into the future, Profit Margins probably peaked and wages are probably going up especially in companies that arent as well managed as the s p 500 so the market could discount even with low Interest Rates and maybe no reason for an expanding multiple is that your view . Does that sum it up . Are you worried about valuation even with low rates . Its an interesting trade off. The lower rates go the more people want to adjust the discount factor but stocks theoretically are pricing future growth how much do you really want to pay for that . So we had a market that was over 19 of forward earnings and still in excess of 18 times forward earnings the yield on the s p is higher than on bonds right now. So for a competition from capital standpoint do you want to own overvalued bonds or overvalued stocks . The real point is that unless theres a radical shift upwards on potential gdp growth. Financial assets are expensive right now. Are you saying dont buy the dips were not an equity fund and we had a single digit return last year so less than the s p last year. Have you gotten less enamored yes some what less this is the issue of where do you put your money what assets are you going to own . And how much can you expect to make so a degree of caution is appropriate rather than the expectation from overvalued levels youll become even more overvalued. We should check back in wel talk about who is in the hunt and how long it could be before we see viable candidates lets take a look at shares of macys that company out this morning with revenue beating on the top and bottom lines you can see right now the stock is turned around though. Its giving back the gains we saw earlier when the news was first announced. Its down by 13 cents. Also a reminder for you, you can always watch us or listen to us live on the go and on the cnbc app. Youre watching squawk box here on cnbc. Its probably not even in the top 100 on a percentage asis an earthquake happened in l. A. A week earlier we had a horrible earthquake and then this happened anyway, when the dow dropped more than 22 , that is it right . Do you think thats going to help your case it hasnt stopped people from being in the market. Were a little bit more than an hour away from the opening bell on wall street. Were going to start with shares of home depot. 60,000 shares of premarket volume after americas biggest Home Improvement retailer reported bigger than expected profits and sales at existing store locations. Next up you have shares, this is big. This is the u. S. Listed chinese electric car maker its surging by around 31 13. 5 million shares of premarket volume after it said it was in talks for a new round of nufundn and new facilities that could raise the equivalent of 1. 4 billion worth of chinese yuan and thats why those shares are up big right now and well end on shares that are also surging by about 15 that is meant for phase one trials in humans in the United States later on. So again those headlines moving those stocks i will send things back over to you. You look at the Big Companies that have an opportunity to help us here. Lets talk about the economics of doing that. Good morning. Thank you for having me. Yeah so clearly the market has been very focused on what players, what companies are going to be involved in. And it comes down to a race. Whats happening now is were going daytoday, headline to headline to determine or assess which of these companies is going to come out with an appropriate treatment. So there are Many Companies on this list that are looking for a vaccine. It just doesnt seem like, you know, we as an Investor Base really know what is going on until these vaccines are put in humans theres no way to handicap which company you think is farther along in the race or more behind for example . It seems like theyre probably the Largest Company and they happen to be in the lead by most accounts. The companies confirm that they have a phase one trial in china that could read out as early as april. Youre talking about five or six weeks to understand whether they have a treatment that could be a viable option for patients in china. Now youre talking therapudics. I thought they were still talking about vaccines and its the vaccine used and there are sort of resurrecting for coronavirus its five or six weeks roughly before they have the results in china and then moving into Clinical Trials in the u. S other companies that are experimenting with vaccines in their portfolios as well as regeneron and many other small and microcap stocks that have been super volatile over the past couple of weeks. When you say vaccine it could be preventive and a reatment do any of them seem effective if you already have coronavirus. They were trying to assess theyre going to be used in a traditional sense or if theyre going to be used once a patient is infected in a Doctors Office and hospital setting et cetera it will be more of a treatment option and most of the companies are going to be used therapudically. Maybe thats a question that since were a business channel, what are the economics of a successful vaccine like this its immaterial at least for the Largest Companies youre looking at many countries in the developing world which are susceptible to virus and coronavirus for companies that do more than 20 billion revenue a year it seems to have a very, very small impact on their business as well as most of the other companies were talking about as well. Giving these drugs away for free working with Health Organizations around the world and this is one of the things that investors seem to be grappling with is the real impact that some of these drugs are going to have on financials. Thank you for helping us this morning. Appreciate it. At the port of charleston in South Carolina what do you have on tap for us well, joe already we have seen a couple of ships docked at port here. Theyre getting loaded and unloaded at the same time with the help of the big blue cranes that go up to 155 feet china is South Carolinas biggest trading partner and Officials Say theyre racing for the coronavirus to start impacting traffic here well tell you what to expect coming up next quadrupled their money by 2012, and even now, many experts predict the next gold rush is just beginning . So dont wait another day. Physical coins are easy to buy and sell, and one of the best ways to protect your life savings from the next financial meltdown. [announcer] today, the u. S. Money reserve is releasing official Gold American eagle coins at cost, for the incredible price of only 159 each. These Gold American eagles are official gold coins of the United States and are being sold for only 159 each. Pick up the phone and call americas gold authority, u. S. Money reserve. 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Dont wait another minute. Call now to purchase 1 10th ounce Gold American eagles for the amazing prices of only 159 each. Up 140 points. One of the big winners this morning. S p up 14 and the nasdaq up about 70 points or so. Closure of factories is having a real effect well be talking to the executive director and came to us from charleston good morning to you. Already theres trucks over here that are loading and unloading refrigerating containers and the dry containers and colorful ones that you see, theres about 2,010,000 containers that arrive at this port from china every single week. They take about a month to get here from overseas and they expect the impact of the coronavirus to make a difference here thats when all the cargo would have been here and already hearing reports and ships are coming with little to no cargo and all of that is to dampen what has so far been a South Carolina economic succe successful. Were sboe grated into the Global Economy its probably going to reduce the momentum that we have achieved going into 2020 and thats autos, planes and tires those are all industries that rely heavily not only to ship their products but also vital Component Parts in their manufacturing process. So officials hearsay that they are hoping for a snap back once production gets back up to speed in china but guys, now, with the coronavirus spreading throughout europe as well germany is South Carolinas second largest trading partner so everyone here is taking a wait and see approach back to you. Thank you very much lets talk now about the port impact on the west coast for that were joined by the executive director of the port of los angeles this is the busiest container port in north america. Its estimating that its cargo value will drop by 25 over the year over year numbers when the final tally comes in thank you for joining us. Thank you. Thats a huge impact to try to think about 25 decline what are you seeing so far whats the day by day on the ground there. Its been about a 15 decline. What were seeing is 40 cancelled from february 11th through april 1stment that amounts to 25 of our normal shift calls. 15 impact for the quarter im assuming thats not because you anticipate things Getting Better in march. We were down about 5 in january. And you might remember that the tariffs for january first saw a little bit of an up tick. Thats down 5 approximate kt in january down 25 in january. No, not necessarily well see what they look like. But again 40 vessel sailings cancelled from february 1 through february 11 and april 1. What are you hearing in terms of things happening on the ground in china and other places where the ships are originating. Are things improving to this point . Factory workers are not coming back to the levels that were anticipated originally. It was extended by about a week and were seeing them collapse from the normal number down into a viable figure that can collect cargo from other Southeast Asia locations. It sounds like theres problems along the entire path for that with the factory workers not coming back. Theyre only coming back in small portions at this point even if you had goods at the ports would they be able to be shipped if you have a Skeleton Crew by and large, yes. You have lived through this before you were in shanghai during the sars outbreak. What did you see at that point i was in charge of sales for a company overcovering a large swath of china and we werent moving around domestically or internationally. This appears to be much worse. Why. Because of the number of folks infected and the lack of productive taking place throughout the supply chains. Do you think china is doing the right thing by trying to shutdown some of the affected areas or do you think its more damaging we need to curve the illness first and get people well. I think well look at the inventory levels that we had here in the United States and those being down right now well have to play pick up soon but we have to get people healthy and back on the drop. What do you think as you start to hear about outbreaks in other places italy, iran. The next most concerning information was yesterday with south korea. Hes a big hub for us as well. They move about 11 million container yuunits a year. Have they shutdown shipments coming out of south korea . Not at this point. Do you anticipate that will be the case . Its over 970 cases diagnosed according to this mornings news well see where the path takes us. Thank you for joining us. We hope youll come back and give us updates. Coming up, much more on the worldwide economic fall out from the coronavirus. From factory shutdowns what are the warning signs and which levels do they have their eyes on . Its all just ahead. You dont want to ssmi it. Stay tuned youre watching squawk here on cnbc. I have an idea for a trade. Oh yeah, you going to place it . Not until im sure. Why dont you call Td Ameritrade for a strategy gut check . Whats that . You run it by an expert, you talk about the risk and potential profit and loss. Couldve used that before i hired my interior decorator. Voila maybe a couple throw pillows would help. Get a strategy gut check from our trade desk. Try to win by attacking, now, we know the trump strategy distorting, dividing. Mr. President it. Wont. Work. Newspapers report bloomberg is the democrat trump fears most. As president , universal healthcare that lets people keep their coverage if they like it. A record on job creation. A doable plan to combat climate change. I led a complex, diverse city through 911 and i have common sense plans to move america away from chaos to progress im Mike Bloomberg and i approve this message. Meanwhile they continue to take a wait and see approach. Its really difficult to assess its going to be the path of the virus. The number of cases and the spread as you say and then theres secondary things like Financial Markets that were seeing today a bit as people reassess the risk outlook. All right despite the comments lets look where the market is pricing the federal reserve. Okay the first cut, 74 probability and now theres a second cut built in that is a probability for september and theyre toying with even a third cut. Call it about half baked in. A 42 probability for december and writing in the commentary. Supply chain disruptions may way on u. S. Activity however under our baseline assumption of a sharp reduction by the end we see the impact as limited. So thats the base case for many economists the fed so far seems to think that the effects will be limited either continued market sell offs that is threatening the economy in spending. Or a sharp decline in the outlook for the Second Quarter thats what will lead you to rate cuts and now the effects of the First Quarter in which continue to come down. Uncertainty about the Second Quarter continues to come up. Okay. Steve, thank you lets expand this conversation about the economic fallout of the coronavirus. And with an equity perspective, chris harvey the head of equity vat gist at Wells Fargo Securities im going to go to you first since youre here at the table all right we have all been trying to figure out, are you supposed to buy on the dip is this really a dip mohammed says dont buy the dip. So what we say is so what youre doing before bless you. Thank you. I feel fine i feel fine, i swear okay. Now youre not paying up we want to pay or we want a little bit of a discount to have that access to the coronavirus we think its temporary but were starting to see numbers being cut whether its apple or some of the Credit Card Companies and it will have an effect but were just not ready to buy the dip right now were looking for a bigger shift in risk aversion. Okay. Were looking for what does that entail were looking for somewhere between a 0 and 5 pull back back in december we said we expect to see a 5 to 10 pull back in the first half of this year were beginning to see that. But that was a fundamental call that you were making that had nothing to do with coronavirus, right no, for us its the catalyst. The underlying fundamentals you have fed issues and you have issues with passive and buy backs. You have issues with Political Risk you have issue with retail and retail speculation and now what youre having is the coronavirus is starting to expose all of this and people are realizing that not everything is great in the world and we are pricing back in Political Risk to some degree so you have to account for that. Psychological call as much as anything else. Kevin, help us with what you think excuse me. Oh. I apologize. Help us with what you think are the genuine Economic Impacts of this going back to what he was just talking ability in terms of how hes looking at the stock market yeah, well, as far as with regard to the coronavirus its too early to say and to have very much conviction in how much it will exactly drag on the u. S. Economy. I think coming into 2020 the economy already started to show some signs of slowing. Much of last years growth was lead by the consumer and i think that the real worry here is that if the consumer is already being showing signs of slowing, that this is only going to kpser baexaserbate the down e its too early to call that but i think that the u. S. Economy is certainly at best 2 top line gdp growth and theres worries that if this were to spill over to the u. S. And so far we havent gotten any evidence that its starting to effect the u. S. Economic data but the fed is right in that theyre carefully monitoring the situation markets are more cautious coming into this year and we started to see some moderation in the consumer. I want to ask either of you guys, theres a big discussion around whether or not fed rate cuts will solve this problem you might put a floor under the market and the market might need that and it doesnt look like that. And supply and demand roblems. If china drops by 20 and is impacted by that, the magnitude of the u. S. Economy is very small. And this is how recessions happen the magnitude of the tightening and financial conditions could eventually tip you into a recession. The fed is probably going to eventually have to go with two rate cuts june and july markets have to trade every time we have a fear of economic slow down the fed doesnt need to step in. The fed cut three times last year and they increased the Balance Sheet by 10 theres enough accommodations on the table. So let the markets trade and let the markets take care of it. Yeah. You have to consider its not what you think the fed should do but what they will do. We saw this in 2018 the fed still had rate hikesand in january they didnt have a tightening bias or and later in june they teed up. We have a lot of things before the next meeting and we could see a teeing up that Economic Uncertainty has increased here and monitoring the situation closely. And what makes this different is that Consumer Spending is such a large u. S. Economy that consumer starts to get spooked. Thank you so much. Coming up, key Technical Levels to watch. All markets all the time and the day after we saw the dows Third Largest point decline in history and we continue to monitor the shares in macys. Rose sharply after the earnings and revenue beat and then turned around and the Conference Call is going on and the cfo confirmed that the guidance issued earlier this month and confirmed it and said macys expects a small impact on the First Quarter sales from the coronavirus. Well be right back. Welcome back to squawk box, everybody. Been watching the if you thurs morning and they have been higher. The dow is up by 153 points. Comes after a decline of over a thousand points yesterday. S p up by 15. Nasdaq up by 75. Joe. Our next guest says that all the factors for market setback have been in place for quite some time. Joining us now to talk about whether thats what were seeing right now is john wolf, wed be remiss if we didnt start with the s p 500 and tell us what technically youre seeing. So we had a little break yesterday or a big break on a percentage basis, but its down 5 from its high. You know, the trend, as you can see, is still up, still supported by upward sloping moving averages. 5,100 in 200 day. This area in mere, roughly lets call it 3,200 or theres about is where we think the support level is. So you actually said percentage. On a percentage basis its not a big gray notday on a percentagef all of of all the markets globally, we think theres tremendous complacency here. We have a 30week moving after rage. In order to smooth the picture for the hang seng. And when its sloping downward, down 67 here, 36 here. You can see the average is sloping. So we think that this is where the complacency is because investors believe china sa going to flood the market with liquidity. Unless it turns up, its hard to be long in this market. All right. But should we glean anything from the hang seng about our averages domestically here i dont think that were going to is this if youre long in the hang seng . I think if youre long in the hang seng you have to be cautious and i think its because people believe china sa going flood the market with liquidity. We talked about gold being way ahead of stocks and bonds were way ahead of stocks as well, if you believe yesterday as a big down move. But lets look at gold. Gold, as you can see here, broke out of this giant base. We like to call it this is long term. Thats right. This is monthly. This is a giant move here. And we think ultimately gold will make a new high above its 2011 high. And right now gold, while it will clear those. This is what the long term looks like. Heres a real giant base here. Big breakout here. Another base here. Breakout. We think it gets above here, make the new alltime high and gold will make a new alltime high in all currencies. Thats like a 50zbleer its another base breakout, we think it makes another alltime high. You didnt bring us anything on the Interest Rate complex that the point assets keeps rates low and this is the way its going to continue. Risk here is that the dollar breaks out to a new high which upsets the feds apple cart with respect to looking for higher inflation. Is there a reason that its not down thats a portuguese name. So its roke . No. Trying to help you out here. Thanks a lot. Thanks. Lets get down to the new york stock exchange. Jim kramer is getting ready to go with his show. He had this advice for investors earlier. Listen in. I would say adoin this as hard as that is, to simply because it has worked in the past. I think theres a lot of uncertainty out there. I understand the inclination to buy. I understand for this market is to bounce up because thats what its been conditioned to do. But i stress this is different. Jim, that sounds a lot like the advice that youve been giving people too. Yeah. Look, i think he is just spot on. Look, what happens today if someone from italy comes via milan to jfk and brings the illness . Are we ready for that . I would tell you were not. No. I mean, id like though think we are, thats okay. Dr. Faust is the best. Hes saying, listen, were trying to slow it down and contain it. No ones saying were going to eradicate it. We have to go through the process where we can have Something Like that. And we have the slowdown thats actually i think palpable at this point. You dont want tosee people stopping to go out in a service economy. Why dont we let it play out a little why do we have to buy 300 from the top . I think you let it it you have some stuff today thats bouncing, why not lighten up a little were just too close to the top. The top i didnt like because it was led by the most stocks some of which are coming back today. I dont like to see that. David was with us a little earlier and he kind of pointed out some of the same things. If you look at earnings and where we were for forward earnings even before coronavirus, look, you were looking at some potentially rich valuations. Yeah. Look, he was hate to be totally like minded with what i heard this morning, but they were all fabulous guests. I think all of them said why not be careful whats the hurry and i think that thats not i bad view. Its not that the markets toxic, its just whats the hurry . We just dont know yet. Right. Jim, thank you. Been watching everything youve been talking about. Of course, thank you, becky. Well siee you in a few minutes. Dont miss a first on cnbc later today on the exchange at 1 30 p. M. Eastern time. Stay tuned, squawk box will be right back. Financial securit. Being able to retire. On our terms. No matter what your goals are, our trusted advisors can help you reach them. Ameriprise financial. We were paying an arm and a leg for postage. I remember setting up shipstation. One or two clicks and everything was up and running. I was printing out labels and saving money. Shipstation saves us so much time. It makes it really easy and seamless. Pick an order, print everything you need, slap the label onto the box, and its ready to go. Our costs for shipping were cut in half. Just like that. Shipstation. The 1 choice of online sellers. Go to shipstation. Com tv and get 2 months free. Quick check on the market given whats happened. Lets show you where we stand right now. Dow looks like its rebounding a bit. Dow looks like it would open up about 145 points higher. Nasdaq 76 points higher and the s p 500 up 55 points. Whether were staging a comeback or not, staging a comeback i dont know just yet. Youre looking at red still across the screen there in europe. My wish is that in china that it actually is contained that way it wouldnt matter if we see these outbreaks in other areas. If china can handle it and control it, then that could give you, you know, take solace that maybe he would could handle it wherever it breaks out. And china 1 point however many billion people, ten of billions is still a small amount and were nowhere near that. Were less than 100,000. Lets stay positive. Fingers crossed today. Make sure you join us tomorrow. Squawk on the street begins right now. Good tuesday morning, welcome to squawk on the street. Im here with jim and david at the new york stock exchange. Looking for the bounce after the worst day for the s p in more than two years. Lot of coronavirus warnings this time from master card, united, phillips, home depot is a bright spot. Europe started green, currently