Gone the worst week for the markets since the financial l crisis back in 08 and the quickest move from record high to correction a 10 drop in the history of the s p 500. Thank you and welcome to power lunch. Team coverage of this coronavirus induced sell off continues. Meg is breaking down the latest news on the outbreak bob is tracking the volatility Rick Santelli is in chicago watching the yield curve and Steve Liesman is here on the pressure facing jay powell and the fed. Meg . The virus has now reached more than 40 countries with total case numbers worldwide topping 82,500 and more than 2800 dead. The World Health Organization telling every country to be prepared, citing the virus quote pandemic potential that includes being able to detect cases early, isolate t m them, trace their cats and provide quality clinical care. Saying people need to have the right information, including what the disease looks like. In 90 of cases, its a fever and in 70 , a dry cough. Typically not a runny nose those efforts are now being done in california around the first patient who may have caught the virus through Community Transmission in the United States the patients being treat ed at Uc Davis Medical Center in sacramento after being transferred from another oopt hospital b they say out of an abundance of cautious, a small number of employees have been asked to stay home. The governor saying the states Public Health officials have been in touch with the cdc about expanding testing protocols after the patient had to wait several days for testing due to narrow federal testing criteria. He said the cdc assured them theyd advance with urgency. He said california has just a few hundred testing kiting now, which he called quote simply inaud quaut. We also saw a number that california is is monitoring 8400 people those are people who came back through commercial flights who would be monitored under the regular system of monitoring those will be b monitored, but not testeded per se. Well california only has a few hundred testing kits so it couldnt test them any way right now around 71 71 of the s p 500 is in correction territory or worse. 28 are in bear market territory. Meaning a 20 decline from a recent high. Bob pisani is at the nyse tracking the action and its all red, bob not clear were at a bottom, but theres been some attempts to buy in the extreme situation. I want to show you the Dow Jones Futures here last night, we closed arounddrot 900 points and rallied back about 700 of that. We didnt quite make it back up here, but thats a sign of extreme indecision from the markets in terms of where we need to go and what were doing. Why did we have that why did we have that turn around around 10 30 because the market has been pricing in enormous amounts of bad news extreme oversold readings and big, big stocks. The highest weve had in two years. Goldman sachs talking about row percent earnings growth. Some people are saying were getting extreme. Talk about oversold conditions some of the big names here this is just this at the bottom. A ex down 13 m united to eed technologies, down 10 this is in a few days. Some of the fang names down 11 . For the week, 9, 9, 9. So where are we at now the good news is there is less selling pressure today there have been attempts to buy on the dip today thats a good sign the bad news is we dont have uncertainty about what the new us is b about coronavirus. And because of u that, this is much less certain than we needed to be. This could reverse easily. Unfortunately, we just dont know and attempt, next week, everyone say iing the feds goi to meet. This is great new, but we dont know what theyre going to do and number one and number two, we have no indication thats going to be in any way effective. The cuts rates is going to be effective or that stimulus is going to be effective necessarily helping things out not going to help with the Health Issues. Back to you. Thank you so much bob pisani in the bond market now, the ten year yield hit new record lows. Lets get to rick for more rick yes and not only that, we finished up 113 billion in supply a little while ago with 32 billion seven year notes the auction didnt go particular ly well. I gave it a c minus. The yield and the pricing coming in a bit sloppy and most of the metrics a bit below average outside of the bid to cover. 2. 49 it was the best since march of 2019 look at the intraday of seven year and you can see we have a bounce look iing at a two day of tens for a while, they had a spike low. That was around 124. We had a so 3 spiked low that was in two year note yields. That would have push ed the ten and twos over 20 basis points. Indeed, its narrowed from the level a bit. Theres still three basis points of separation between twos and tens if you look at a year to date of 30 year bopds. They traded down u 174 my point is 124 in tens. 174 in 30s these are big psychological levels we want to Pay Attention which side we close. Thank you very much the coronavirus crush punishing stocks of course driving oil down sharply as well pushing yields as rick mentioned to record lows also putting pressure on president trumps punching bag Steve Liesman here to tell us if he his a wave of cuts is on the way. The president last night as he often wants toos, was critical of the fed and chair if you dont mind before i get to that, i want to give you some fresh headlines, the chicago fed president speaking in mexico city hes out with new comments on the coronavirus saying it would be premature for the fed to give any guidance on Monetary Policy before the fed has more data he add ifs the fed sees something that requires adjustment, quote, im confident well give it all the consideration it 23450es that echoes what other officials have been saying and pressure is mounting on the to react to this virus from former fed officials from the president and especially from markets, take a look its been moving around all day. This is a moment in time but the Key Development here, i dont know if you remember, march was not in play yesterday. It is not a 58 probably. Thats less than three weeks a 75 probablity. Moving to your right and for folks on the radio, another bar in the middle. 63 probablity of a second cut as early as June September 52 probability of a third cut. This morning in tthe wall stret journal, former questioned governor kevin mor ris wyatt writing quote, the Federal Reserve should lead the world in taking action. The window to contain the virus in cop taning china has long since closeded the window to mitigate on the Global Economy remains open but not for long immediate quarter point rate cut coordinated with china, europe and japan and announcing theyre ready to do more with only a few rate cuts in its arsenal, jay powell faces a series of actions. Should he act and whether the cuts would do any good in the face of a problem that is essentially right now a supply problem in china and its hard to think, people have been writing about this, how a rate cut solves a demand problem created by the unwillingness of people to say go out of their homes, take risks, go to work, to a restaurant u. Is there a rate that would cause you to go to a concert that you wouldnt otherwise go to because rates are lower . No. Not just that, when we talk about the odd of a fed rate cut, were using a treasury market to infer those probablyties so fed funds futures very sympathetically traded with the fed exactly so part f what i wonder about especially as we know so much of this is international demand, people needing that flight to safety is it always the market demanding these cuts or is it a mechanical reflection of the buying pressure. For the fed to feel this, is it really there. The tenyear rate is the sum of ten years of overnight rates or the average over that time, so yes, it reflects what the market reflects from the Federal Reserve. You are also correct in saying it is a sympathetic response to a flight to safety that as i suggested earlier, it moves all around its 75 one day, 38 and that is a key to the way the fed is thinking about this. I think they want to wait to see how things settle down exactly where the market is priced outside of what appears to be a certain panicy trade and make a Monetary Policy decision that has longevity after that. Just seeps so circuitous. We have kevin mor ris on sidewa squawk box hell join the anchors tomorrow. What would a rate cut do . Well, txd put a floor on the market it would confirm, affirm the markets expectation if the fed is involved and watching and concerned on a more economic, it would bring the actual rate of the funds closers to what would be a lowered neutral rate because investment demand has declined because consumption has declined it would bring the rate down to what would be a more closely aligned with what a decline rate would be that rate is starting to get close to zero at this rate i think right another philosophical thing to ponder. But weave living. Thank you so much lets pursue this further. Can if fed come to the markets rescue let bring in michael, who has about 3 trillion under management and lorraine gilbert, president of wealth wise financial. Michael, what do you think would a rate cut really be a tonic to the Global Economy if it were a coordinated one as the former governor suggests it wouldnt be to the economy, tyler but it might be for the markets. So i do think its kind of an interesting distinction there in that if you think about even japan has flirted with negative rates sibs since the 90s. Europes had a negative rate since 2014 so i dont think it will help the economic situation, but it might help market confidence by putting a floor in those under the assets from that standpoint lorraine, what is your position on that yes, when we look at Central Banks all over the globe theyve been p continuing to whoer rates in some areas, we have negative rates. When you look at what happened this week in hong kong, the Hong Kong Government giving the e give lent of st 00 to 7 million residents there. Youre seeing that Central Banks have done as much we can and at some point, there needs to be fiscal stimulus as well. To be another driver into the economy. Michael, what are you hearing from customers and clients about their level of anxiety, their anxiousness to do something, do anything i think of jack bowman, said dont just do something, sit there in moments like this i think thats a good point a anxiety levels are rising, but chints have stuck with a disciplined longterm plan and havent overreacted. Remember when we started this year, s p futures 500 positioning was Strong Equity i market was strong call ratio was signalling a very bullish market there was a lot of very bullish sentiment. Mostly from hedge funds and other alternative buyers and i think whats happening there is some of those players that were overly bullish are getting moved from those positions and thats exacerbating this volatility, this Market Action its not mom and pop and its not your traditional long temple Institutional Investor who rain with the dow down about 700 points now and we were just deboughting the merits of a rate cut, a lot o of f people are saying what good would a rate cut really do to solve a problem that is you know a supply chain problem and you know ultimately one of people trying to take care of their health right when we look at it, theres a supply chain impablgt and the demand impact. So if you look at china for example we were expecting the Chinese Consumer to buy about 28 million automobiles this year. I doubt seriously thats going to happen. To that extent and if you look at the chinese now representing 60 of the gdp, thats cig b cant. If we look around the globe, theres a slowdown in some areas leaning to recession thankfully, the United States we are still the bright star amongst the Global Economy so were is still hanging in there with a consumer that as the medicine mentioned is moderately strong as far as the growth in spending michael, two questions. First, what are chinese stocks telling you and second, is this the death of the bull market i think whats interesting is that china, ironically, may be providing us the road map in terms of the way out of here so they even acted and like lorraine was suggesting, enacted a tremendous amount of fiscal policy, Monetary Policy. We could debate whether they did a great job, but social distancing has helped and the mortality rate has stayed fairly level. No not surprisingly, chinese stocks have rebounded. Skeptics will suggest osks the government is buying securities there propping up the market, but theyve taken a number of actions to help support the economy. Fiscal, Monetary Policy, as well as to address the virus and chinese stocks have actually started to outperform the rest of the market in recent days now for me, to your second question, if you have courage, conviction and capital, its tough to call a bottom but it may be time to start putting some money to work snipping iing around in bargains in places Like Technology and health care. We did see when markets hit their 200 day moving average, we did see some temporary buying come in, so i think that this is not the exogenous factor to end the bull market and the expansion, but it could be ugly for the next few weeks zblu thank you very much lets get a news alert on the Trump Administration and coronavirus. This one coming in reuters says the Trump Administration is is now discussing using the defense production act to ramp up plex protection masks and clothing its a war era statute that allows the United States government in order to compel companies to produce particular materials. Its often thought of most often in terms of mining steel, aluminum but in this case, reuters is reporting the administration is discussing the idea of using that act to force companies to produce more masks and clothing we dont have that one con if i wered directly from the administration thank you very much retail is taking a beatling along with the rest of the market now the s p retail etf down 10 this week thats on pace for its worst week since november 2008 take a look at some of the biggest losers signet, guess, macys, abercrombie by and the gap shutting more than 15 matthew shay is president and ceo of the National RetailFederation Just out with its latest retail Sales Forecast despite coronavirus fears, you guys are still calling for 3. 5 to 4 growth in retail sales this year, is that right that is right we put our forecast out yesterday. And thats a forecast that weve been working on for a few weeks so before we started to experience a really kind of severe reaction were seeing over the last few days its really based on the really strong fundamentals of the consumer economy i think in the conversations weve had with retail leaders to talk about the government this year and more recently, there are a will tlot of positive sig about consumers. You talk about the low employment rates low Household Debt so overall, were in a good place. Now weve got the uncertainty in the market related to the Health Issues theres multiple factors in the stocks hardest hit kind of reflect that theres companies with high debt levels or poor prospects where losing marginal demand is going to hurt. There are companies that have more exposure to china and just the names that people feel like look, theres just not a reason for exposure to companies that rely heavily on Discretionary Spending period. What do you see in terms of the weekly numbers or any daily insight you can give us about how Shopping Behavior is changing so far if it is weve been doing our best to have those conversations with our members as weve tried to convene those retail leaders and ask those questions and were grateful to health care expoerts and the administration for make ing represents available to talk to our members in Conference Calls and other settings i think its interesting, i just heard the segment with steve and i heard he was on this morning as well and this morning as you said a minute ago, kelly, talking about this as a supply problem. Now saying is it a demand problem. I spoke to ceos, the sense is that much of the inventory they need is already pulled into its own water or distribution centers. So weve got the supply and the chinese supply company is coming back online so the question is what happens after thatin the country. I think we have to rely on the guidance of Health Care Professionals to direct us as to make all the preparations we should so lets expect were going to be ready if we have to deal with some of this did i just hear you say that the disruption in the chinese supply line is abating tyler, in talking and this is, theres a lot of variability obviously between companies and even inside segments based on your mer base, who youre serving, what your product is and what your supply chain looks like of the Larger Companies have started to indicate the signs theyre getting from the Chinese Market is some of the production is coming back online. I think theres a question of how long is that tail that works to the system to get those Companies Back