Closely. The treasury yields are probably the more important story were watching this morning. Lets take a look at that. Youll see the tenyear is yielding 1. 067 . Mike santoli point the twoyear at 0. 73 right now. Its been cut in half since valentines day. I think a lot of the push and pull of futures from when they opened last evening, are we going to get a surprise rate cut . Weve had Central Banks around the world comment on that. Its been stunning considering bond yields were already very, very compressed coming into this weekend and now weve just stretched the new lows. At one point 0. 69 , that still stuns me for the tenyear. Weve been continuing to watch these numbers drop rapidly this is the story people will watch closely. We should point out, stocks in shanghai surged overnight on speculation that authorities will stimulate the economy soon. As mike mentioned, theres talk of potential coordinated central bank move. Thats something our guest host talked about on friday, an oped he put in the wall street journal thursday. You can see the nikkei closed up by 1 . The hang seng was up by 0. 6 the shanghai composite up by 3. 15 . Well get right knot next news but in the old days, money supply, news would come out. The headline was, stocks sell off as asteroid heads towards the worth, destruction likely at 10 00 a. M. But market rallied in the afternoon. I mean, the fed, really, is that going to be what i think the context matters. I understand. He made the case i didnt mean that context. I meant the dow was down 3,500 points last week if were bouncing in a very overstretched market to the downside, at least because we already priced in something pretty dramaticin terms of new cases and Economic Impact and the rest of it i think in the short term the idea that the fed is going to use what ammo it has, perhaps, is enough to at least kind of lubricate the markets. Well, were disconnecting again between the fixed income and the equity markets we had that maybe we didnt know how it was going to resolve itself well, it did but with stocks coming down. 106, we thought the tenyear had to stabilize before we needed stabilization. The tenyear before the markets recovered, maybe it doesnt recover. But 106. I figured at 115 that it was headed back to 1. 25, 1. 50. Even if we get news from the fed this week theyre going to be more supportive,ist a bandaid its a sentiment bandaid. Well continue to get bad news from the economies here and abroad, well continue to get revisions in earnings. The fed can only keep us afloat and well probably chop around we talked about this last week well probably chop around in a range until that bad news is over back to the actual news about the virus. The first case in manhattan has been confirmed the patient, a woman who recent recently traveled to iran and isolated in her home a man in his 70s died in Washington State hes the second patient to die from the virus the first death was reported on saturday both patients who died had other health conditions. There are more than 80 confirmed cases so far in the United States lets talk about the impact of the outbreak on the markets after last weeks selloff. A trillion dollars lost by six companies. Apple, microsoft, alphabet, amazon, facebook and visa. Legendary investor leon cooperman weighed in last night during a cnbc special. Weve had plenty of 12 corrections but none that i recall in three days we have gone from complacency to fear in a short time frame to have a strong conviction and to answer your question about the stock Market Outlook and what people should do, i think each individual has to have an opinion on two items one is the coronavirus and second is the election outcome mike, i think the correction, the rapidness of it, the decline coming from an alltime high is what caught peoples attention. And relatively rare in both those respects the damage done in a short period of time in terms of the number of stocks down on heavy volume, way below the trend. All these indicators of how far the rubber band is stretched is are very extreme right now. The issue is it means the markets are up settled you would only get that way if people were caught way offsides and they have an outlook completely in a fog. I think thats why you have the volatility index above 40. The bond market in a buying panic right now. All those things suggest you should probably be pretty reserved about making bold predictions about where you go from here and what its going to take in the time weve been talking, were talking about the markets essentially flat at this point. Dow a second ago was indicated up by five points. The s p turned slightly negative one relevant marker here is the low in the s p from friday morning was around 2850. We closed 100 points above that. You had this very big rally late friday thats an interesting point because thats essentially where we were trading much of last summer during that pullback and we were afraid of the flat yield curve, afraid of recession explaining the friday narrative, short covering. That wasnt obvious that that was going to be the response late in the day. The response could have easily been, we have two days to find more cases and more deaths and we could have theres 80 but going into the weekend, i think the consensus or, you know, the if you just looked at the kneejerk reaction was, i dont want to be long for these next two days. Which is why it was mechanical. It was. Its like im learning from betting on basketball. It doesnt matter whos playing, either team can win. And on friday theres no way it was a 5050 flip was the market going to melt up or down. It was gratifying. I watched. At 25 till we were down about 25 to 4 00 we were down 950 points i was like, we could be down 1,950 by 4 00. Watching it shave 600 points off it was like, well, at least i dont have to be in agony all weekend long worried about monday. Usually closing on a low friday after a stress week is not a good thing thats what the textbook says. In these markets, ill go to baseball, if you get blown out one day, momentum is the next days starting pitcher thats true, too. Its basketball time march madness, if we have it this year. Theyll probably have it. Just may not have a lot of crowds. It will be on tv. Lets finish this up because its been a great year anyway. Goldman sachs out with a new note over the weekend predicting the fed will cut rates by 50 basis points at or before its next meeting later this month. And an additional 50basis point cut some time in the Second Quarter. Goldman says to expect policy makers from those in canada, uk, india and more i think i knew that after talking to kevin on friday. Joining us david albright, five star bond management, like 10 billion in assets. In the last three weeks youve been really your moniker is midas. You have been the greatest manager of money across the board of anyone. Everything youve touched in the last three weeks thank you very much, joe. Isnt it true do you feel smart . Unfortunately, the equity markets havent done that well. But lets talk fixed income is there any area i guess bank loans. Bank loans and high yield, the most equity and they vent done as well. High yield is off a a point and a half. What about muni they are seeing massive inflow 30 billion this year buckeye brought a tobacco deal in ohio. We bought bbb tranche. It was up five points. 25 times oversubscribed. Its sort of an irrational market right now we think if any market is full of value, high yield munis, theyre up 4. 5 year to date which is crazy, counterintuitive seems like theres an irrational exuberance, especially in the muni market. Theres been an irrational exuberance in the bond market for three, five years. Theres so many times it would be like, god, i wouldnt dare put my money and no matter the duration, you would have done okay. This is it. Its got to be it now. If youre late to the defense game here, where do you buy in the bond market . I think people are worried, its too late to get down on equities its too late to get into bonds. Where are the opportunities . Do you buy corporates . Do you buy munis weve been doing a quality trade the last 18 months we bet on the consumer weve done jumbo mortgages weve done a lot of assetbacked securities which are extremely liquid, high quality now we have plenty of fuel for the fire ive been taking an opportunity to fill out positions ten days ago were expensive qvq, stations casino, charters communication. Taking bits and pieces, its not all or nothing if youre not in the market as of now, you should have some diversification, you should always be in bonds one thing thats looking very good, joe, cash at 1. 5 versus the tenyear at 1. 06 does that last . Im not sure. But it does seem like an attractive alternative. You say what youve been buying thats on the corporate side that means you dont expect some nasty erosion of Credit Conditions im trying to read how the credit markets respond it seems like this has been an equity pack muni pack. It does you have to be careful theres been a lot of fallen angels weve avoided highyield energy which is down. Weve avoided some blowups in emerging markets a big bet coming into the year we made is to stick with the u. S. Dollar. The highest yielding g3 the u. S. Dollar, if you look at currencies with the exception of the yen, theyre off 3 to 10 you have to pick your places, pick your spots. Credit watch very closely. Its a case by case basis. You want to be able to pick credit can i ask both of you, does this feel like the type of situation where, okay, weve gotten scared but its a buying opportunity . Does this feel, weve gotten scared and more panic to come . Were down 12. 8 from the high on february 19th. On average the equity market is down 14 every year. 12. 8 is still less than that. I think if we if we arent nearing a recession. If you believe were not going to go into recession because of this, a bear market or a correction without a recession is usually about 15 to 25 . We still have room to go on the down side. I dont know this is a time when jittery investors should try to throw new capital into the market i think for the moment its worth riding out. Although a year ago maybist not a full year when whomever were saying recession ot odds have gone from 45 that 25 we were all worried about it there was nothing there. You turn the light on looking into the abyss, theres nothing there. Im afraid the turn the light on now. The coronavirus could do it. It could but we dont have any data yet in the beginning it was this is a supply side shock now its more of a concern the phantom recession that made no session is no longer i could certainly, eisley explain i think the issue is you are already at a relatively low level of nomal growth so anything globally, you mean. Globally. Here as well if the Unemployment Rate were as it were here, Consumer Confidence is great. What im saying is people are now talking about, well, maybe we get a technical, statistical recession here two quarters of near zero growth that doesnt necessarily change the picture. I dont know if you think its picture. For us i have a buy list. Where have things traded off in the bear market. Las vegas sands, macao their action was cut by 87 for the month of february. In china we own some internet Online Gaming names, which have done extremely well. If you take a look at the cruise lines, the airlines, if you take a look at restaurants, retail. Anything thats traded off we have a buy list were not jumping in with both feed we dont think theres a recession, at least not in the near term and taking a hard look at credit. Totally different i dont know if id look at the stocks of those the bonds maybe. Do we go under a point i mean, were only 0. 16. Do we get under . We dont get under zero but the fed came out and told you the neutral rate we have is zero their neutral rate is negative negative rates havent worked around the world you have 15 trillion of negative rates. We havent stimulated growth, havent stimulated inflakes, allowed access to capital from Weaker Companies we dont necessarily try to get there to do something. Sometimes we end there. I think the bias is to the downside at least for the short term on rates. David, thank you. Stay with us youre here for three hours. I am. Three hours when we come back, preparing for an outbreak in the United States well talk to Health Policy expert dr. Zeke emanuel. All dow stocks are in correction territory barring this mornings rally, depending on where we go, the dow is indicated by about 62 points 11 in bear market territory. Down more than 20 from the recent 52week highs names like boeing, exxon, 3m and disney well talk more about this later this morning squawk box will be right back. At fidelity, online u. S. Stocks and etfs are commissionfree. And when you open a new brokerage account, your cash is automatically invested at a great rate. Thats why fidelity leads the industry in value while our competition continues to talk. Talk, talk stay two nights and get a free night for your next stay. One night, two nights, free night. Book now at bestwestern. Com. New overnight, china confirms 200 new cases new survey data showed chinas Manufacturing Activity slumped in february. The purchasing Managers Index came in at 40. 3. Thats the lowest reading since the survey was launched. Japan reporting five new cases overnight and Controversial School closures began there, creating child care problems for millions of workers. Auto sales in japan tumbled 10 in february as the Virus Outbreak led to production disruption south korea reportedly nearly 500 new cases overnight, bringing the total to more than 4,300. Thats Pretty Amazing just all this. In china, you see the or japan, the article that in japan, people the flu season is being minimized because people are washing their hands so much and staying home from work that the normal flu season, people are doing better. Things like hand washing, lets do that all the time. I started, i started. Thank you. Youre welcome. China, thats a bizarre cases. 200 cases. The size of china, 200 cases and a pmi of 40 . Thats a disconnect and shows you the fear is whats doing it. Its not fear china intentionally shut down and tried to quarantine because of the fear of the coronavirus. Maybe you dont i understand. I understand. Maybe you only tested two. The number of new cases is not proportionate to the economic damage thats being done the same thing can happen here. The economic shutdown is the type of thing that china, by the way, moss of us have been applauding them for taking these extreme measures because it meant it didnt spread rapidly to the United States. The amount of cases in a country like china to see the economic damage versus the actual number of cases they dont have to be infected in order to come out of the workforce, right they quarantine enough people, they dont all necessarily need to be affected theyre not at work, theyre not producing anything thats the issue and then it builds on itself you pass through a certain area and those people cant go to work for a certain amount of time at some point, almost a third of the workforce out of work. If we have this type of damping of Economic Activity with 80,000 or 90,000 total cases globally, what happens if we have a million cases . Then it wont be as proportional because weve already discounted you discounted a lot of Economic Activity. Yes, exactly. You just wonder, god, if we could get a quick therapeutic that could deal with the symptoms with people that get it worse than other people. It would be great. Then we may go back eunice tweeted today about how Stem Cell Therapy supposedly worked in a patient who was very sick from this. We might go back was it fdr, the only thing to fear we might go back and in hindsight say that at some point. Im hoping im hoping then the Zombie Apocalypse scenario. Lets bring in a medical voice to talk about this right now. Zeke emanuel, university of pennsylvania vice provost for Global Initiative and former Obama Health Care policy adviser. Dr. Emanuel, thank you for being with us. Good to be here lets talk about what you think right now, where we stand with this, whats likely to be the situation here in the United States. First off, i would note if you look at the nasa satellite nitrogen oxide observation over china, which tests, you know, industrial production, car, driving, its virtually clear now. Nothing happening in china i think that leads you to the problems that was noticed. There is a lot of fear and there are a lot of people who are worried. I think for any individual, as pointed out, the risk is low but collectively from a Public Health standpoint, there could be big risks i think what were going to see in the United States is we now have 80 cases. As we test and test more people, youll see that number rise. Double every day when we really get testing out there. We know that in Washington State, for example, its been circulating in the community for at least six weeks, back to january 20th or Something Like that it certainly has been passed from person to person. We know that longterm care facility, there are going to be a lot of people who are probably infected and i think, you know, that does stimulate fear this is a lot of psychology, as pointed out, but psychology does play a big role, as you know it plays a big role on wall street and plays a big role in how people are acting. Ive noticed the university of pennsylvania, you know, the phrase an abundance of caution, youre going to see that people will say, maybe i wont travel to this meeting do i really need to go somewhere . And i think youve seen the airlines, they recognize it. Youre going to see this for all sorts of cruises, i think, are down for a very long time. I think people are cautious. A rate hike isnt going to change that kind of behavior. Zeke, you point out the longterm care facility. Were focusing on that because particularly for people who areundarhave underlying conditions, the virus could be worse there are several things we know put people at increased risk older