Transcripts For CNBC Squawk On The Street 20200206

all-time highs for the dow and s&p within striking distance. >> but we have a tale of two tech movers. twitter shares are soaring on strong user numbers. peloton plummeting. no sleep as casper is set to make its debut here, pricing at the low endi, far from unicorn status. the february rally rolls on. the dow is on track to open at an all-time intraday high. china says it will cut tariffs on $75 billion on u.s. products in half, follows a similar move by the u.s. following the recent phase one signing. however, also being seen as a move to boost confidence amid the outbreak of the coronavirus and resulting economic impact. mnuchin is on tape saying the u.s. is probably not going to see 3% this year largely because of boeing, so a couple headwinds. >> yeah. look, these remarkable days i think have largely been china-related in a positive way. china seems to come in every day and do something china cutting v.a.t. the other day, injecting $75 billion, before that china injecting 200. i think they're doing far more things but the cut of tariffs is very important because a lot of the critics of the president and his deal said, look, it doesn't matter they have to cut the tariffs first. so now they're going to do it. but at the same time, they have a crisis where the last thing they're trying to do is figure out howmany soybeans to buy. they're going to have to eventually i think they're spending every minute propping up their markets or trying to build hospitals mixed picture. >> aren't you more taken with the market action? just tesla alone of course we focused on it endlessly but perhaps for good reason. >> very good reason. >> it's funny, in talking to investors, it doesn't seem to be about fundamentals right now, it's about flows everybody is talking about flows. so tesla gets crushed yesterday after that incredible move up. again, none of this really on any fundamental news, up or down and then you see software -- sort of the high growth software stocks get hit yesterday. >> after being up big before. >> and value comes into play short growth, long value and nobody seems to think about p.e.s anymore. >> not at all. >> it's just flows, which is led by the citadels of the world. >> someone is just whipping around now, let's just call -- we haven't covered tesla the way we should have. tesla is us, tesla is cnbc people under that ron baron, the biggest tesla bull, he's not going to sell stocks, was going to come on on tuesday. but there were other people who didn't know that he was going to come on. if you listen to him, he's talking about a trillion he's giving the trillion figure. >> and that trickled out. >> so the smart people bought monday and moved it up big the not as smart people bought it tuesday and then the smart people from monday blew it out into the uninformed tuesday buyers. it was us, okay. it was us. it was ron baron we keep trying to say, well, it was somebody saying. musk hasn't said a thing >> well -- >> but i'm saying when you listen to ron baron, you wanted to take it to a thousand. >> but it did have a broader impact than just tesla in terms of the way it was being viewed and the way it was being traded. >> yes. >> and the flows it was initiating as a result of this and then the island pattern. suddenly people wanted the island pattern. >> or the eiffel tower pattern. >> yeah. the stock went up too much the sellers can try to press it down there's a lot of people that said, jim, it was not a short squeeze. some of it was a short squeeze. >> yeah. >> but i like what david's analysis is. it's amazing, when this stock got hit, it was almost like people said, all right, it could be an opec cut libya is offline let's buy value, because tesla failed tesla went up again, let's sell value. >> yesterday was one of those days if you look value versus growth, it was stark. >> it was the day. now, we used to have these rotations over periods of weeks, then it was over days. now it's over hours. >> right. >> and i think it's just ridiculous if you're going to be at home and you're going to play it like this, citadel is going -- well, no, the equivalent of citadel, we don't know what they're up to. >> i know that it's -- i mean everybody wants to say it's -- yes, they do a million -- citadel is an enormous asset management company it does a lot of different things, including algorithmic trading along with many of the others and there are enormous amounts of assets in these companies now. >> you're right, but the volume is so little on these value plays. >> yeah. >> but you're right. if tesla is up today, it's almost like there's some sort of algorithm that says if tesla is up, then sell value and buy adobe. >> right >> it's so fatuous. >> because you have former rocket scientists who don't know anything about the stock market who are writing these algorithms >> exactly they don't know anything about what stocks are doing. they just know that they correlate, correlation so twitter does a good job if tesla turns around, twitter who is up two and change, it goes up five it does because the -- >> where does that leave us? >> irrelevant. >> okay, good. just wanted to make sure. >> the question is not about us, the question is what do our viewers do >> our viewers have to decide what they like, okay let's take bristol myers this morning dr. fario reports their cancer drug was down a couple and you just own it through. if it goes down, you buy more and if it goes up, so what they have to have core beliefs there could not be for people at home i like it today, hate it tomorrow because you'll ending up buying high and selling low do your homework and decide when bristol is one of the winners and just own it. >> right >> when i say irrelevant, what i meant is if someone comes on air and says i would sell bristol myers, don't listen. just say, look, i like what giovanni is doing. i like their drugs, i like eliquis which is killing it and i'm going to tune it out there's no way you can play that game. >> so sell recommendations are also irrelevant? >> if a company -- if you like the question, yes. yes. so if someone were so slap a sell on bristol myers today and that's like a sell on clorox that i had to deal with. i was going over it with ben, the sheer number of sells. what these analysts have to do, they have to have some buys, some holds and some sells. he's in the unfortunate camp of being a company that right now has the lowest growth so people wanting to sell it. >> at a high multiple. >> citi today goes to 176, jeffries goes to 155 on clorox. >> it's crazy. clorox has a drug that kills the coronavirus, except it's known as bleach. people have -- i took bleach wipes on i was telling this to ben. he doesn't understanding what he doesn't understand is that he's not a hype artist. i don't want to be a hype artist but he had to boost production for clorox i tried to get him to say isn't that because of the coronavirus and he says we'll do whatever is necessary to please our customers. how anyone can say sell when they have the one thing that people are carrying when you go on an airplane. >> how is it that names like that are doing great ostensibly on the notion that they're going to get business on corona, yet the market is also acting as if we've reached peak corona. >> cowan on tuesday said we saw a nice deceleration of growth. estee lauder was up today. because they had a great previous quarter >> qualcomm also talking about the coronavirus. >> oh, my god. >> and i'm hearing more about supply chains. it's very important next week in terms of these workers, are they all going to come back and report for work back at these factories. are you going to have a resumption of manufacturing. why are you laughing >> state tv in china this morning said they're going to establish liaisons to go to factory floors and prod managers to reach full capacity. >> our guys say, listen, safety is paramount clearly profits are paramount. did you feel better that -- i felt better that all restaurant staff and drivers are required to wear face masks and measure their body temp at all times that made be feel better are you crazy? i don't need kfc that bad. >> more importantly it's about supply chains that are going to be broken conceivably -- >> do you think so >> i think auto parts already. >> you see toyota wants to source outside >> and it may have an impact that is only a certain amount of time it may be less than the ongoing trade war of the last two years. but it will have an impact on this quarter. >> the cdc says that we have 11 people who are -- 11 people, that's all, it's not up. of course "the new york times" says it's 12 so you're talking about 11 or 12 they have a graph about where everybody is and it hasn't gone up. >> 99% of the worldwide cases are in china. >> exactly the quarantine might be working? >> so you think this can be a global localized phenomenon? >> well, the second largest -- well, no, there's a couple countries is a cruise ship off the coast of yokohama which turned out to have 20 people. >> and those people will be quarantined for a couple of weeks. >> yeah. >> are you ever going to go on a cruise again >> i cancelled one. >> all right. >> i just thought there are other things to do. >> does your 18-month window, up chipotle window extend -- can we use that analog on cruise lines? >> i think so. right now there's a piece this morning, royal, an analyst likes that royal says there's almost nothing, which is really -- is that right i find that really amazing that people aren't really cancelling, saying that the book is filled david, the book is still filled. what do you think? on a cruise. would you go on a cruise >> i've never been on one. >> that's not responsive to what i asked. >> one day i'd like to i guess before i die. >> how about u.p.s. reaching a deal with their pilots union to make travel to china voluntary that's got to be interesting >> voluntary >> you wonder which pilots are saying i'll take it. >> remember that we had the secretary azar, he wasn't that interested in going to wuhan i don't know if you caught that, david. >> no, i did catch that. nobody should go to wuhan is basically what he's saying. >> there are a lot of people who are very calm about it and there's other people like me who are saying i'm sorry, i've got to take my clorox wipes everywhere i have masks i have 12 masks. they're black masks. they make me look like jesse james. >> i saw those >> i put one on and thought, no, and took it off. the people who are not ill are not the ones that we want wearing masks. we want the people who are ill we don't want to get it. >> we want people who are ill to stay home. >> yes yes, david >> self-quarantine. >> you got it. >> but thankfully there have not been a lot of cases here in the united states. >> no, it looks like it's working. at what point -- how many days do we have to wait until it looks like the quarantine -- that it's become a public health issue not a medical issue is what i'm thinking. our guys are doing a good job. i think our country is doing a good job. >> i think that's generally the consensus. cdc, nih -- >> aren't they doing good? you've got to give them a little credit. when we come back, casper is going public today after pricing its ipo at the low endi of the range. we'll get cramer's mad dash, tons of names to get to like qualcomm, twitter, peloton, yum and so forth w 'll hit some new highs on the dowhen we start the opening bell in about 16 minutes at leaf blowers. you should be mad your neighbor always wants to hang out. and you should be mad your smart fridge is unnecessarily complicated. make ice. making ice. but you're not mad because you have e*trade which isn't complicated. their tools make trading quicker and simpler so you can take on the markets with confidence. don't get mad get e*trade and start trading commission free today. don't get mad get e*trade and start trading that sofa on tv is iexactly what they need. and now, they know it too. that's the power of targeted tv advertising. it's smart. it grabs people's attention. then they come to my store. buy that sofa. and leave happy it's easy, and it's effective. and it's why comcast spotlight is changing its name to effectv. because being effective means getting results. all right. we're going to get started with trading here in about 14 minutes or so. let's get to a mad dash and start talking stocks twitter one of the names you may have seen the company's cfo on "squawk box" right pr we came in. what do you think of the quarter, jim >> star of the day we should patent that. get, this monthly average users up 21% billion revenues here's the most important thing. super bowl ads, 38 there are 35 of those advertisers who advertised on twitter simultaneously with their ads. so that is a sign that these advertisers believe that people are watching the game while watching twitter for reinforcement. and two out of those three that didn't, one of those is bloomberg and one is trump and they don't take advertising like that so such a success for them. congratulations. they really have gotten it together that last quarter -- >> is it sustainable are we going to see another increase in costs? >> you made an island reversal >> okay. >> it's been episodic. it has been episodic let's just say this episode was a good one. >> okay. >> i don't want to say more than that other than the fact that i think they have gotten it together i know it's disappointed but i think ned -- you know, it's weird we think the cfo is running the company just the way sara fryer was running square. >> or jack's in africa. >> they can telecon or do zoom video. i don't know, the customers like it i think the super bowl is one of those defining just like the olympics are coming up a lot of people watch the olympics and are on twitter. so this may be twitter's year, so to speak, except for the fact that people say wait a second, why don't they take bloomberg? >> and they're still spending a lot on optimizing the platform for advertisers. >> absolutely. so it's not perfect. but i like the quarter there was a big twitter booth at the super bowl there were no people from twitter there. it was somebody else that was contracted so i immediately called ned on saturday and said, ned, where are the people from twitter? they're still spotty they need to be in more places >> well, the stock is going to be a feature today with potentially as much as a 9% gain. >> wow that's better than kellogg, that's better than dickinson. >> we'll keep an eye on both of those and also check in on qualcomm, estee lauder. >> we have so much to do that's why we took over the 10:00 block. >> we haven't told them that. >> yeah. >> by the way, you can always watch us live when you're on the go you know, leave the house but you still want to see your cnbc. >> can you stay in your casper bed and watch? >> what we're going to say about qualcomm lo t app and you can watch us on the go we've got the opening bell after this time to pay attention to the ipo market once again. we are on ipo watch as casper nits ready to ring the openg we'll bring you the company's first trade and an interview with the ceo these folks, they don't have time to go to the post office they have businesses to grow customers to care for lives to get home to they use stamps.com print discounted postage for any letter any package any time right from your computer all the amazing services of the post office only cheaper get our special tv offer a 4-week trial plus postage and a digital scale go to stamps.com/try and never go to the post office again! ♪ yes i'm stuck in the middle with you, ♪ no one likes to feel stuck, boxed in, or held back. especially by something like your cloud. it's a problem. but the ibm cloud is different. it's open and flexible enough to manage all your apps and data securely, anywhere, across all your clouds. so it can help take on anything from rebooking flights on the fly, to restocking shelves on demand, without getting in your way. ♪ ♪ you're watching cnbc's "squawk on the street. a very busy thursday morning we'll keep our eye on the coronavirus. european stocks doing very well. deutsche with their first new capital raise in about a year or so. >> i'll tell you, be interested and beware of how i'll pronounce this, banko san tandare. the person who runs it sensational, saying that's going to become cash that is the most i would say arguably solvent largest bank. spain is doing quite well versus germany. those who want to spec, i am blessing it for $4. >> european banks are in the green once again for the year as the results have been pretty good today we mentioned casper before the break and it's going to be interesting to watch as they go public if you don't know already, e-commerce based business in bedding and furniture, 69 sleep shops in north america jim, you tweeted a picture of yourself on a bed this morning. >> right this is kind of a post wework apocalypse picture there look, this is a deal, they're losing a lot of money. they felt like they had to get this deal done they may have priced it to move, so to speak. you cut and cut and cut and you can get a deal to work, any deal to work. but the losses here are staggering i just want to point out. this is one of those deals that if they had brought it higher, it would have been crushed they have really been very good about where to do it it's a very small deal but the valuation is half of what it was when i had them on "mad money." it's a bed that's mailed i don't know, it's not exactly clorox wipes if you're on a subway car. >> there's dpd, a drug research firm, price is at $27 at the top of the range that would be the biggest of the year. >> there you go. now that's something i'm very interested in because these drug companies -- i had charles river labs on. a lot of these companies, the drug companies just outsource what they do i like -- health care is so good right now because buttigieg is not in favor of extracting everything united health makes i do think that's one of the big changes since iowa people like the drug stocks. cardinal health boosted. cardinal has been so bad. >> right. >> and now it's good >> also some of the value plays that we were talking about earlier are included in that. >> but the elizabeth warrens, the bernie sanders, they don't want those companies. >> no. >> they think that those companies extract too much worth. >> yes. >> so it looks like the high water mark of the extract work people has occurred. what do you think? >> i think that's an argument to be made. it's an argument made by big pharma as well given the new therapies that we're constantly seeing that we're paying off we're not just giving you the next medicine to treat your cholesterol, we're now actually curing cancer. and therefore, it's worth it. >> and we have not done a documentary on that. that is -- when you do person personalized vaccines to stop your cancer, when you are able to solve cancers that are just the mortality is 100%, it's a fantastic story. we should tell it more. >> it changes the debate a bit in terms of drug prices. it may not but there is something to be said that pharma can start to make an argument okay, we're charging a lot because we spent a long time developing this and we're actually saving lives. it's not something that we've come up with that's 5% better than the last thing we came up with. >> yeah, it's not me too now look, there have been many drugs for small cell lung cancer, but now we're starting -- we're seeing people who have cancers that were just death sentences and now they beat it. and we don't talk about it. >> yesterday about merck and that split of some of their older drugs. but keytruda is what they're betting on. >> bris tal tol myers, their nus have been down 2%. their blood thinner -- >> we're talking bristol myers. >> there's casper, the friendly ipo. >> let's get to the opening bell this morning at the big board, celebrating an ipo online mattress seller casper. we'll talk to the ceo philip krim [ bell ringing ] >> watch tesla as it falls below 700 this morning interesting story on the wires, some house democrats -- two house democrats today are going to unveil legislation that would create a nationwide ev charging network. they're calling it the ev freedom act. we'll see how far it gets. one of the co-sponsors is alexandria ocasio-cortez >> oh, really? maybe they're trying to break the island pattern, david? >> break the what? >> the island pattern that you flagged. >> yeah, the tesla island pattern. >> meanwhile adam jonas of morgan stanley today says they're getting flooded with calls about tesla. and he goes on to reiterate his relatively bearish stance that 2% penetration, it's too early to call winners. >> i just think that we're -- when i look at that deutsche bank, when i look at the movement in many of these banks, i say to myself, you know what, europe coming back, that 500 -- maybe 500,000 tesla plant next to berlin could be a winner, even as ford is closing six plants again, this was up in an interview. you either think tesla is a technology company on wheels, as i do, or you think it's had its day, which is hard for me to understand how it could have its day. >> they're cheering for their $400 million market cap company. >> they ought to take a nap. >> qualcomm does beat by 14 cents. revenue was ahead. david mentioned earlier they do see a hit not just from corona on their own operations but to the wireless industry at large. >> yeah, i think that was a shame they had to do that because 5g penetration -- they indicate where it is and it's actually quite good, it's a good story 5g if you want to give up on qualcomm, i think you're doing it at your own peril i did not detect any real weakness beyond corona some companies are out there telling you to be cautious about corona others are just skating. if they had skated, the stock would be at 92 >> right but they did discuss the impact it will -- can possibly have. >> yes. >> china is an incredibly important market for qualcomm. >> big penetration there it's just getting better and better it was quite a confident conference call until they mentioned corona. >> right they talked here about everybody -- you know, the big -- the verizon, t-mobile. >> it was very positive. >> even sprint and obviously at&t the expansion of their 5g coverage and how important that is. >> this quarter they said it's not going to be that great and i really thought it was because of china and corona you have like a young china, and then you have a royal caribbean. royal caribbean, virus headwinds overblown. okay, this is mccrary research, overblown. it basically says that things are pretty good. i don't know. >> rcl is definitely -- it's held the 200-day messed around there for a couple of days but at least $2 off of the lows at the end of january. >> i think that's significant. look, there's -- if we're containing it, then i understand that i still feel that it's not a stock -- there are enough stocks out there that i don't need that one but people are pretty bullish. >> you mentioned twitter and they're giving this metric monetizable dau is up 21, but ad revenue up 15, 21 in the u.s ned siegel said they want to increase head count 20% this year. >> there are people who could say are you kidding me how can you do this kind of spend? other people say, wow, they have enough demand to spend once again, i happen to believe in twitter because i like companies that have to increase head count to spend, but it does hurt their so-called leverage model, if you have to keep adding people in order to get the job done. >> expenses already up 19. >> yes. >> in q4, but obviously best levels there since october so since jack came in, i think was a dual ceo, stock hasn't gone very far. >> no. >> certainly relative to the s&p. >> no, it hasn't there are a lot of people who just say can we have a full-time ceo? their pushback is it's absolutely full-time he is very much involved i come back and say, well, if he were even more involved maybe the stock would go even higher i think so >> you do? >> i don't think that the telecommute is that great. i don't care where he is i like face-to-face periodically he probably comes in but i think a lot of people are just saying, you know what, i've got to wait. this makes me uncomfortable that he's there i feel when i talk to ned that it's really pretty terrific. i like it. i do i like it. >> well, the market likes it too. you were saying in the mad dash the stock is up even more than anticipated before the open, 14%, largely on the growth and user base. >> but it's health care that i like the most. cigna reported a quarter that was remarkable yesterday humana's quarter was fantastic. united health's was terrific so we've got a lot of good news nj in that health care segment. that's my sweet spot it's domestic. >> peloton down 9% sounds dramatic. it really only takes you back to january 27th a big guide below on sales and revenue miss. >> miss by 3%. i look at it and just say it's a very heavily shorted stock it was almost as if people willed it down the company is actually, i think, doing quite well. there are a lot of people who say, listen, all it is is a bike your wife hangs her undergarments on it. i come back and say, yeah, she does, but a lot of other people have it and like it. she just doesn't use it. it's one person, so it may not be that -- >> it may not be indicative of everybody, yeah. >> do you have one >> i don't, no. >> you don't have anything. >> that's true >> you're a monk what's it like to be a monk? do you talk to people when you go home? >> i try not to speak. i don't like to be spoken to >> jim, did you expect more from trilio >> there are six firms that took the target off jeff lawson was on this morning for a truncated interview. i'm not thrilled with the way jeff handles things. jeff used to be on my show maybe he picked the right show this time. you take the contract they got, they got the paypal contract that's got to require a lot of people, big hiring he should have announced the paypal contract when he got it instead all we hear about is spend. he handled it very poorly. i am choosing my words because of my new jimmy chill position i am --so i'm -- i'm chillin all i can say is that's not the way to talk to the investing public you don't let us find out that a bomb was dropped in terms of expense. so i wish jeff well. >> you're done with him. look at you. monk-like. >> i be chillin' i chill. i want to thank my oldest daughter who said if you don't have anything to say, don't say it so jeff -- >> nothing to say. >> jim, i do want to touch really quick on some restaurants. yum, really all the attention is on the pizza hut comps which in the past three years have gone from minus 7 to plus 4, now back to minus 4. >> yeah, talk about episodic i find yum to be very frustrating. this pizza category is just such an oddball category. it can't be relied upon. they do have great international business i just feel like look, if you want to be in that business, go buy the stock in mcdonald's. by the way, burger king, which is qsr, they didn't deliver. they had disappointing numbers. >> look at dunkin today. stock is down 3%. >> i just think people are equating these they shouldn't, with corona. because of course yum has no yum china because they split that off. but i do think that there's -- without a doubt there's a group of people that don't want to own these stocks right now congregation stocks. they don't want to go where people congregate. >> how about pershing getting out of starbucks with a 73% return in 19 months. that's helped him put together a year of 8% >> good for him. >> he had a lot of suboptimal years prior to that. >> yes. >> and then he stopped talking >> right >> he sort of went the musk route. i think it's worked out for him as well. >> yes, it has. >> stopped talking, stopped fighting, started investing again. chipotle was a very strong position for him but they had a good year last year. >> chipotle was monstrously good i want to talk about another, tyson. tyson down 12 straight i took that -- i didn't get the falling knife, i have a conference call at 11:30 and have to address the falling knife with tyson my take there, this is all backward-looking and they're going to have a great position in china, particularly after they just cut the tariffs. but they better get on the case and tell a better story because the story itself that i worked on is better than what they're saying a lot of companies i find that they're getting the story out incorrectly. they have good things to say. >> what does that mean >> well, tyson, clorox, these are companies that are doing pretty well. when you read their releases, you don't think they're doing that well. new status let's get the stock down >> a lot of stocks down today on earnings. >> isn't that something? >> which is weird because of the s&pers we have in right now, 22% of revising q1 up and that is the third best percent since 2011. >> we have these outliers. betkin dickinson that's another one you wait a second day and you get get a value. tyson, second day value. but first day also it's boom, like we've had so many this quarter, then they just slaughter it they're slaughtering the pearls. have you noticed ibm goes up every day? >> yes, i have noticed i have noticed ibm is up 17% for the year, which is pretty extraordinary, particularly -- >> i think ginny has picked a cloud-based strategy and cloud is doing fabulously whoever has it. >> guys, we've got a few interesting m & a related stories this week. the split from merck that we talked about yesterday and the story of this approach from ice from ebay and we got a little color, jeff sprecker on the conference call this morning gave us a little more sense as to what they were thinking about there. ee he said listen, we both match biers and sellers. we both collect and organize data we both build useful analytics to enhance the transaction experience and there were clear parallels between new ideas in the market for centralized clearing which we didn't have at the time and internet-based paypal and our recent statement related to eby, like many other firms that we converse with, the company for reasons of its own was not interested in delving into the range of ideas that we hope to engage with them on and thus we're not able to move forward and validate whether any of our ideas have any true merit. he's talking about that. talking about how they brought meg whitman in a number of years ago, way back, quite some time ago, to talk about it. but that explanation as to what they were thinking and a clear indication of their interest. >> yeah. i think it's underrun, undermanaged. >> ebay. >> yes, i do there's a lot -- it's a good business that has no growth. they sold their stubhub for very little money versus what i thought they could get for it. >> and ebay you see is moving up on those comments. >> right. >> which in a way indicate at least they still want to get something moving if they can it's not unsolicited there was no bid made per se, but they are certainly trying to get some of those shareholders at ebay, come on, talk to them talk see what they want to do. >> i think something is -- obviously the stock is telling them -- i don't have any knowledge, but -- >> we'll see people told me yesterday they thought the approach was vague >> vague it's in the paper for heaven sake. >> vague >> what, like they're kind of interested >> no, i don't know. >> kind of pregnant? >> clearly he's making it a lot less vague. >> i don't think it's vague. we have to move on, but i'm saying, david, not vague >> we did lose our gains momentarily there on the dow bob pisani is on the floor where we have an ipo to play with today. hey, bob. >> not as much momentum as recently but a lot of excitement for the ipo of casper. here it is here's some of the officials standing here. we don't have any indications, we've been reporting here, they did price at $12 here. this is after prior price talk in the prior few days 17 to 19 and that was lowered, pricing at the low ending of the range, $12 right now. a lot of discussion about what's going on and a lot of pushback against companies that are not profitable a lot of issues about selling direct to consumer, how challenging that is. ask peloton, ask direct companies like that and the intensity of the competition in general. but a lot of interest still on that we don't have any indications right now. i'll be here all morning giving you some idea. here you see some officials, including the ceo right behind me talking about what the opening might be like. a lot of excitement at the nasdaq because big companies going public at the high ending of the ranges here schrodinger which is a big discovery company, backed by bill and melinda gates, this priced above the range, $17. they put data in software and it helps suggest models for drug development. really interesting business that they have got there. a lot of excitement about that also ppd, a biotech research firm out there, they priced at the high endi of $27. they run labs for biotech companies out there. if you don't have the facilities to be high-end labs, you can use their work there a lot of interest in that pricing at the high end as well. as far as the markets go, you see it's basically flat here exxon, chevron running out of steam a little bit china stocks up, industrial stocks up. a lot of rotation this week. if you look at what we call the high beta names, names that move when the market is moving, semi conductor stocks or oil names, they have ought outperformed the market, so texas, lam, devon, marathon, underperforming have been the low volatility names that did very well in the prior names. these are associated with consumer names like colgate or honeywell or walmart and procter & gamble they're the ones that are lagging. today maybe a little indetermine at we'll be here all morning and what i get indications of where casper might open, we'll get back to you. let's get to the bond pits as well. plenty to watch at the cme in chicago. good morning, rick. >> good morning, carl. there is plenty to watch in treasuries all global sovereigns are finding rising yields, lower prices however, not nearly to the extent of the reversals that we've seen in the equity markets. look at the 24-hour of 10. we did reach up and trade 1.68 lately we seem to always hit the high yield outside our time zone, before the sun hits new york once again it occurred today we are drifting. now we've drifted back down to levels that put us unchanged across the curve except for 30-year, which are actually lower in yield look at the year-to-date of 10s. you can see that small v forming. the open and zoom back to august, it's very fascinating because we have basically three rather important bottoms the most recent is right in between the previous two but if you go back to a 10-year chart, that gives you important information. there's a lot of consolidation down at these levels, but it does make bond traders nervous having more than two bottoms on that chart, usually reversals are double bottoms the triple means at some point we may revisit yields closer to 1%, but most traders don't think that's going to occur in this cycle. finally, the dollar index. here's a week to date. a four-session chart of the dollar index it climbs basically at a 45-degree angle. it's up about a cent from its lows and continues to hover at the best levels on a closing basis since the end of november. carl, david, jim, back to you. >> rick santelli, thank you very much we're going to stay on top of casper, await the first trade and talk to the ceo later this morning. the dow sets a record high at the open up 115 but is settling back slightly into the red nasdaq, best week now since november of 2018 through the at&t network, edge-to-edge intelligence gives you the power to see every corner of your growing business. from finding out what's selling best... to managing your fleet... to collaborating remotely with your teams. giving you a nice big edge over your competition. that's the power of edge-to-edge intelligence. 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beautiful, isn't it? yeah. td ameritrade now offers zero commissions on online trades. ♪ but in my mind i'm still 25. that's why i take osteo bi-flex, to keep me moving the way i was made to. it nourishes and strengthens my joints for the long term. osteo bi-flex. find our coupon in sunday's paper. let's get to jim and stock trading. >> what do people do, how can we have value added what can people do i thought it was ridiculous the stock of google got hammered and a great opportunity. it is now above a trillion dollars again. this has to do with the fact that if you actually looked at what they are doing in cloud and youtube, search not that bad you'd say, hey, they're pivoting they're doing a great job. yet people looked at some headline generated by computer and decided they were doing poorly this stock is doing very well because the company is doing incredibly well. >> certainly going from zero to 15 billion in 15 years is incredible >> amazing let's look at it and say we'll see really great numbers in cloud. again, ibm cloud, alphabet cloud, the cloud obviously at amazon and then azure, deciding to go -- cloud is a fabulous semyon laher growth story and alphabet now because of thomas now running that division. he is so good. >> their growth rate was lower than azure and they are not close to anywhere near the size. >> i have a thesis here. >> okay. i'm just saying. >> you have to wreck my thesis >> yeah. >> that is irrelevant as your comment toward me. >> i was right on point. they just reported the number. >> that's the past >> the revenue growth number -- it's the future. >> like tyson the past wasn't that good. the whole headline, they just said right now that things are better i am saying that when you sit back and look at alphabet, there's a lot to like. why don't you go take a little nappy, davie >> why wouldn't you be right eventually people just buy everything it seems like >> go take a nap >> my nap time is usually around 2:30, 3:00 >> look, you're right. it wasn't that great a quarter i'm just saying the stock -- the company is doing better and there's a lot to like. okay there. ruth did a great job thomas is good >> say one thing to the guy. look at him. >> you hurt my feelings. >> how about what is the one thing on "mad" tonight we should ek petke >> we have mccormick, the spice company. in honor of david i'll take some of that hot sauce they have and pour it in my eye. okay just to satisfy your demand. and cordani came on. i said it was the greatest stock. everyone laughed not unlike they laughed and i was right. here are some franks in your eye. you can put that stuff on, including david's eyeball. >> see you tonight, jim. when we come back, casper's opening trade. an interview wh e o th e w wn twocewi more than just the business you came for. whether that's keeping up with what you always do... or training for something you've never done before. that's room for possibility. ♪ good thursday morning. welcome back to "squawk on the street." i'm carl quintanilla with sara eisen and david faber at post 9 of the new york stock exchange a little volatility to start this thursday morning, up 115, went slightly red on the dow, now up 37 as we watch all things coronavirus and increasingly trade today. >> we start with more records for wall street. the dow and s&p hitting new highs. losing some early gains though here as investors digest a slew of earnings. mattress seller casper making its public debut. we'll have the first on cnbc interview with the ceo after the opening trade. and don't miss an exclusive as well with the ceo of philip morris international vaping remains a focus just a day after those hearings on capitol hill we'll start with updates on the coronavirus. the death toll is now crossing 560. eunice yoon is in beijing with the latest hi, eunice >> reporter: hi, carl. wuhan authorities are under tremendous pressure tonight. they have less than 24 hours to meet a government deadline to test all the suspected cases by the end of day friday. the big concern is that wuhan residents have been complaining that a past practice to send people home if they have mild cases or don't seem as though they are showing too many symptoms has led to several families grieving the loss of multiple members, now, of their families the wuhan authorities have set up pop up hospitals, 11 clinics now to try to treat some of these people who have these mild cases. president xi jinping has described this fight against the virus now as the people's war, and he has also earlier this week threatened if people did not take serious action and some of these measures more carefully, then they could potentially lose their jobs. all of this is happening at a time when china has announced it could reduce tariffs on u.s. products this would affect $75 billion worth of goods including crude oil, soybeans, and pork. it is set to take effect on february 14th. the chinese say this announcement is reciprocal it's in reaction they say to a similar move by president trump late last year they also have described this as a way have beijing stick to their agreement, however, plenty of economists have looked at the timing of this and it really hasn't been lost on them that it's all happening at a time when the economy looks as though it could suffer some serious damage from the coronavirus outbreak so ubs, for example, has said that the chinese tariff reduction is fiscal stimulus nomura has said it is an indication china wants to extend its, quote, honeymoon period with the u.s. after the trade deal signing also the chinese decision is being described as a possible way to have the chinese push for some flexibility on other parts of the trade deal. the global times editor had suggested it would be seen as a good will gesture by the chinese people if the u.s. were to provide some flexibility when it comes to some of the bigger u.s. purchases. in terms of the overall trade picture, people are looking for tomorrow the trade data, export and import data out of china is going to be released on friday even though it is not going to include likely any impact from the virus outbreak, people are expecting these numbers to look weak because of the lunar new year holiday guys >> quickly, eunice, is there any update as far as the quarantines and how long this area, this huge area of china is going to be shut down >> reporter: there isn't any update as to when it is actually going to be eased. as of right now even more places are being locked down as authorities try to contain and control this virus spread. >> eunice yoon, thank you for the update let's turn now to the markets. flat action this morning despite the dow and s&p hitting fresh record highs earlier in the session. fidelity investments director of global macro and the wells fargo asset management multi asset strategist join us now good morning to both of you. are you surprised to see how quickly and how strongly the markets have rebounded here, given, still, the large uncertainties in china >> i'm not totally surprised i mean, it's kind of a noble thing but the market ran up 17% in four months, which is a huge run up, so it has hit a little bit of a wall here we're kind of back at the highs. we fell 4% i think what's happening these days with investors that when they want to hedge risk, which is of course what they've been doing, it has been easier to buy bonds. the path of least resistance for the equity markets have been up for the last 11 years and for bond yields it's been down rather than sell your equities, which have kind of tended to go higher, it's been easier to buy bonds which is why we saut collapse in bond yields from 195 or so to 150 and now we're back to a little bit higher >> what would you tell an investor to do now that we're back at the highs? >> i always say the same thing if you have a diversified portfolio you don't need to do much other than rebalance at times. you know, a 60/40 portfolio since the beginning of 2018 has matched all the upside of the s&p but produced only 60% of the down side. maybe at the highs someone should have rebounds because the 60/40 may have turned into 70/30 and if the s&p goes say to 3,000 which would technically not even be a big deal though it would be a 10% decline maybe a rebalance out of bonds into stocks is in order. other than tweaking the edges, i don't think there is that much to do. >> what about you? multi asset strategist how do stocks look at these levels >> it depends on which stock you're looking at. my team broadly speaking, where it is still bullish on equities overall. if you want to think about saving nasdaq we would prefer riding the moment up of tech as opposed to being in the s&p 500 because we think there is good earnings momentum as well with a number of those companies in the nasdaq versus s&p. but we actually are a little bit more optimistic about outside of the united states as to the extent to which this can -- this sentiment can spill over to other jurisdictions as well especially emerging markets in europe we think there is very good long-term value opportunities in e.m. and in europe and you could be at a point in which you get a reversal obviously that's been a tough thing to call. but with earnings season under way looking better than expected and actually some of the global pmis in the emerging markets taking a turn for the better, we think that actually provides a good fundamental backdrop for overweighting e.m. in europe relative to the u.s. >> ten-year, 166 today bmp today says we're going back to 195 does the market have one eye on yields is that the reason why getting or surpassing these record highs is going to be a challenge >> i think surpassing the highs is not necessarily going to be a challenge, but that rally has been put on hold as your other guest said, kind of the e.m. cyclicals rotation we started seeing last october has been sort of put on hold my guess is the markets are going to hold on here until we actually see the earnings recovery that has been so priced in actually materialize. >> that is going to come later than we thought. exactly. so on the bond side, you know, i think the bar is very high for the fed to cut rates i really don't think they're going to they don't want to we would need to see a serious dislocation financially. so in that sense the bond market needs to reprice itself like the forward curve is pricing in two rate cuts. i really don't think that is going to happen. so back toward 2%, i think, is do-able and really not damaging in any way i don't think a 2%, ten-year yield is going to really cause the stock market to blink an eye here >> do you agree with that assessment that we're sort of -- we have some cushion up until 2%, and do you expect volatility in the spring if powell means it when he says he's going to take away some of the repo support? >> yeah. that is something really to watch is if powell is serious about taking away that repo support. perhaps what they'll do is extend the repo support and actually wrap up their assessment, their strategy assessment and create some sort of permanent facility for repo support, which i think would allay a lot of people's fears instead of just taking away the support and adding it back at a later point. so the timing of this i think is a little tricky for powell to navigate but broadly speaking we think for the ten-year treasury we are looking to see whether we move above 1.9. it is one of those situations where you kind of draw a chart and you look at, well, maybe we've got some support with yields around 1.5-ish, some resistance at 1.9. if you get above 1.9 or 1.92 suddenly that resistance can become the new support and then you can move back up rather abruptly as we've seen in the past so on my team we're actually monitoring it very closely, not necessarily positive/negative. we're neutral at this point on yields but that can change if we suddenly break above 1.9% on the ten-year treasury. there is not a lot to suggest it should move that much higher soon but as we've seen if the data suddenly gets really bad maybe the yields could move lower. if we suddenly get inflation numbers picking up or growth is proving to be a lot more resilient, then we could see those yields move higher it is one of those situations where it is almost like there is sort of a distribution of risks out on the tails so we're sort of threading the needle at the moment with yields it feels like >> so we are knee deep into earnings season as we mentioned and there is a new wrinkle this season and that is companies dealing with china and the coronavirus, whether it's from a supply perspective or demand perspective. nike has been caught in the cross hairs. we talked to the ceo yesterday john donahoe here is what he said about their exposure and what they're seeing in china right now >> our first priority as a company is to tend to the safety and health of our teammates in china, the employees of our partners, and to consumers consistent with what is going on right now roughly half of our stores in china, both the nike owned stores and partner stores are temporarily closed those that are open are operating under reduced hours. and so there's lower traffic and that is why we announce yesterday there will be a reduction in our china results this quarter >> this is having a material impact what would you tell investors to do with stocks that have been hit on the expectation that earnings will get cut by what's going on in china? >> yeah. if this is a delay of the global rebound which i think is the assumption, it generally is with these kinds of developments whether it's an earthquake or a virus, and so, you know, when we look back to last year, when the fed cut three times, the market removed kind of this severe left tilt as a possible outcome from the market and the market rallied with the pe going up 33% in anticipation of the earnings rebound. market is a little bit over its skis because the rebound is now maybe a quarter or two further down the road, but on the other hand, when you look at the actions that the chinese government has taken in terms of the quarantine and the stimulus, you know, like you would see with an earthquake, the economy stops but then when it recovers it recovers -- >> so you're saying a dip on those stocks >> basically -- if you missed the rotation the end of last year, this is the second chance. >> good to see you both. thanks >> thanks. >> thank you mattress seller casper is making its debut right here at the new york stock exchange. a lot of people are on the floor awaiting that open bob pisani of course is covering it for us. what have we got, bob? >> reporter: a little bit of good news for casper after a rough 24 hours we have indications $14 to $15 right now. remember, it priced overnight at $12 after earlier indications earlier in the week of $17 to $19. quite a hair cut for them. $17 to $19 to $12 but now looking $14 to $15 the important thing is the pushback from investors about money losing companies as casper is the days of growth at any cost are maybe not over but a lot of pushback you have to be profitable and if you don't they'll push you for a hair cut also we see the selling to direct consumer model which is what they represent as rather challenging. ask peloton and smile direct they've had issues as well then there is the intensity of the competition overall. a lot of well known, old school firms are in the business. testimony pu tempur sealy, other competitors out there. less known, purple innovations, they compete directly with casper and are profitable though barely a lot of competition out there the other thing that is important is you can't blame this on the poor market or the ipo market being lousy that's often an excuse about these ipos ipo, etf, the basket of the last 60 most active etfs out there, historic high yesterday. historic high for that so names that have been beaten up this year, we've talked about lyft, uber, zoom, pinterest, had a tough time going to the close last year have all rallied this year so the market has come back on the ipo business finally, the last few ipos out there have done really well on top of that. we had one medical last week that's been a big hit. we had arcutis biother putics. that's been a hit. reynolds consumer, reynolds wrap, as basic consumer as you can get, not high tech at all. even that is up 15%. why? there's been a lot of pressure to keep the prices down here you saw that with these, you saw it here today with casper. as for when it is going to open i'm not getting any strong signals from any of the people in the back. there's the designated market maker in charge of the process he is in touch with the goldman sachs desk which is building the book as we call it right now and as soon as i get an indication when this might open -- i'm not getting any positive nods right now from pete -- i'll let you know back to you. >> all right, bob. keep us posted a reminder, we'll have a first on cnbc interview with the ceo of casper philip krim and founder of course coming up as soon as it starts to open. >> when we come back tesla's volatile week continues. the stock is under more pressure today but recovering from 4700 this morning where will it go from here do not miss a special report on the coronavirus outbreak right here on cnbc 7:00 p.m. eastern time s&p 3343 beyond the routine checkups. beyond the not-so-routine cases. comcast business is helping doctors provide care in whole new ways. all working with a new generation of technologies powered by our gig-speed network. because beyond technology... there is human ingenuity. every day, comcast business is helping businesses go beyond the expected. to do the extraordinary. take your business beyond. let's look at tesla this morning. rebounding but what a week it has been we're not even done. the company also announcing it is temporarily closing its china stores amid coronavirus fears. phil lebeau has more on that for us and always a lot more >> reporter: a heck of a morning, david at one point it was down under $700 very briefly down to like $699 now it is back over $750 what a wild ride this has been in fact, if you take a look at the stock, we are giving you a one-week peek at the stock, you know, as you take a look at what it's gone through it is now down more than 20% compared to where it was at its high point on wednesday. as david mentioned, some of the tesla stores or all of the tesla stores in mainland china have been temporarily closed. they've been closed temporarily since sunday they have 24 stores in china it is the closure of those stores plus the potential impact on the giga factory over there shutting down production it has analysts saying do we really know what we can expect out of tesla in china in the first quarter? frankly, that is not just a tesla question but for the entire auto industry as you look at tesla over the last month remember that a big part of its business is still here in north america. this is the interesting factoid. when you look at the estimates for sales in january tesla sold more, four times more than all of the other electric vehicles in the united states in january. speaks to the dominance that it has in the electric vehicle market right now >> yeah. phil, we can try and pretend the stocks move has anything to do with the fundamentals or new news we know that >> no. >> but while i got you, let's talk about real news toyota by market cap the largest single auto maker in the world did report numbers interesting in there, anything to share from you? >> they raised their profit outlook. it surprised some people especially like all auto makers toyota does have exposure to what is happening in china and china has become increasingly a big part of the toyota business. so i think a lot of people sat there and thought listen given what we know or don't know about what's happening in china, are they that confident they can raise their full-year profit outlet that is what happened. toyota has done that i'll be curious to see, david, over the next two to three years the inroads that toyota makes when it comes to electric vehicles because it really has been very slow relative to gm, relative to volkswagen, other auto makers in terms of investing in electric vehicles technology and saying, yeah we got full electrics on the way. >> phil, thank you time now for an etf spotlight today, taking a look at spdr s&p oil and gas production etf ticker exop pulling back this morning after the energy sector's best day yesterday since late december. xop down about 17% or so for the year so far. currently trading down another 1.5% as for the u.s. oil companies in the etf all lower. exxon down the most by about 1%. oil has been trading since it peaked in january, guys, on this idea that declining chinese demand will hurt the price of oil. yesterday we saw a bit of a relief rally but today it's back to the downward trend. >> yeah. got within a quarter or so of 50 once again we'll watch that for sure. when we come back we are awaiting mattress seller casper's first trade after pricing its ipo at the low end of an already cut range. we'll get the opening action and interview with the ceo when "squawk on the street" continues on this thursday bernie madoff wants to get out of prison early about 140 years early. the man behind the largest investment fraud in history says he is dying and is asking for compassionate release. you've covered every twist from the madoff scandal and you have the details on this one as well. scott? >> reporter: yes, bernie madoff says he wants to spend his final months with the remaining loved ones that he has that's what's in the court filing that came out yesterday he told "the washington post" recently he still suffers from guilt and he wants to see his grandchildren and explain to them what happened nonetheless, after a little over ten years behind bars, he has hired an attorney who specializes in getting elderly inmates out of prison. that attorney cites prison records showing that madoff has less than 18 months to live and having expressed remorse for his crimes the filing says he should be given compassion. madoff first revealed to me in 2014 that he was suffering from stage four kidney disease. he told me at the time he was foregoing dialysis the implication being he didn't expect to last very long of course, he has lasted a lot longer than he probably expected i last heard from him in july when he was moved to the prison medical unit in north carolina for his end of life care he told me then that he was fine a spokesperson for the u.s. attorney's office in manhattan which is expected to oppose the request declined to comment. so did the trustee, irving picard, who has thus far rounded up about $14 billion out of the $17 billion in principle losses, madoff tell the post that he helped get some of that money back but others have repeatedly denied that was the case said madoff has not been any help at all. guys >> scott, what's the timeline on when this would be resolved either way >> reporter: it's hard to know of course he is racing against the clock if you believe the court filings. he now has probably about 14 months to live according to the doctors' estimates in the prison these things take time remember bernie ebbers who was released from prison early in december died this past sunday it was several months before a judge heard that case. the judge asked to hear from victims. that would almost certainly happen in this case. there would likely be some sort of hearing it's definitely months away if it happens seems fairly unlikely that it will but he's trying everything he can >> yeah. it seems unlikely. funny. so he was dying in 2014 when you spoke to him he was fine in 2018. and now he has only months to live again >> well, he said in 2014 he had kidney disease i had seen him the year before at the prison in north carolina and he seemed perfectly fine then we talked about this in the podcast we did a year ago or so that is still available. he said he was fine when he moved into the medical unit. clearly, he's had these health issues even before he went away to prison. but now there are changes in the law the first step act that ask courts to look at this for elderly inmates who are at the end of their lives and he is trying to take advantage of it >> scott, thanks we'll see what -- how it develops scott cohn who as david said has covered this from the very beginning. let's get a news update this morning and get to sue herera back at hq >> here's what's happening at this hour. a high speed passenger train derailed in northern italy, killing two rail road workers and injuring 28 people two of the injured were in serious condition. the passenger train run is part of a popular high speed rail service known as red arrow israeli security forces clashed with palestinian protesters in the west bank city of hebron amid a new wave of violence including a palestinian motorist who slammed his car into a group of israeli soldiers, wounding 12. israeli police shot and killed a palestinian who opened fire at forces in jerusalem's old city a capsule carrying a crew of three from the international space station landing in kazakhstan among them, the u.s. astronaut whose 328-day space mission broke the longest continuous stay in space by a woman and the last of the legends from the golden age of hollywood has died kirk douglas starred in dozens of films and a career that spanned nearly 70 years. he was nominated for an oscar three times. he won an honorary oscar in 1996 for his lifetime achievements. kirk douglas was 103 years old you are up to date sara, back downtown to you >> all right, sue. thank you. as we head to break take a look at shares of philip morris international. having a beat this morning stocks up almost 4%. the overall dow has dipped negative down 19 we'll have an exclusive with philip morris ceo in just a little bit ♪ yes i'm stuck in the middle with you, ♪ no one likes to feel stuck, boxed in, or held back. especially by something like your cloud. it's a problem. but the ibm cloud is different. it's open and flexible enough to manage all your apps and data securely, anywhere, across all your clouds. so it can help take on anything from rebooking flights on the fly, to restocking shelves on demand, without getting in your way. ♪ ♪ beyond the routine checkups. beyond the not-so-routine cases. comcast business is helping doctors provide care in whole new ways. all working with a new generation of technologies powered by our gig-speed network. because beyond technology... there is human ingenuity. every day, comcast business is helping businesses go beyond the expected. to do the extraordinary. take your business beyond. geth headlines from the world health organization on the coronavirus. they point out the total number of cases has dropped for the first time day on day as reported 28,060 564 deaths they do point out once again no vaccine to prevent infections. in their words to put it bluntly we are shadow boxing we need to bring the virus out into the light so we can attack it properly. the latest headlines from the world health organization today. let's get to the cme this morning and check in with rick santelli for the santelli exchange >> reporter: good morning. thank you, carl. i'd like to welcome my special guest. he needs no introduction long resume. professor, let's get right into it you know, we're at a time where the headlines of late, christine lagarde and many global central bankers in europe and japan are nervous that they just can't get it done with the tools they have and that their tools have dulled and they aren't going to be able to address should weakness come. you argue that fiscal policy, which many of the european bureaucrats want to take a larger presence isn't the answer there or anywhere at this time explain. >> fiscal policy works you can stimulate demand with fiscal policy. but it is very hard to do it in a clinical, surgical way to fight business cycles. fiscal policies very political look at the state of the union last night asked if these two sides can reach technocratic decisions the way the fed does in europe or anywhere. on paper it looks good you shift the money curve, the i.s. curve it all works fiscal policy is very political, hard to time they're going to try it. every central banker sort of quietly says, there's not much we can do. let the fiscal authorities operate. i think it means we'll have more volatile business cycles >> you know what your logic is in my opinion impossible to disagree with. as a matter of fact, the new threads on the if is fiscal sid include mmt. deficits don't matter. if you have a printer and a large forest you can do whatever you want scary. on the other side of the ledger central bankers and ours starting with alan greenspan wanted to write the word recession out of the webster dictionary but yet those recessions had a way of cleansing the economies of the globe and it certainly seems like there is a lot of sediment forming. >> well, there are certainly theories that you need recession to get rid of the weak firms and build up the strong. i don't know about that. i think the modern central bank has been one of the great innovations since canes but, unfortunately, it is sort of dead in the water today. the fed has some ammunition. i don't think as much as my friend ben bernanke thinks they have some in europe and japan there is next to nothing. so it is a real question of what is going to happen when there is another recession. i think central bankers said give fiscal policy a chance. that is what everyone says but it is very political how is it going to work? how are they going to time it? what does it mean? for some it means make the government as big as possible. for others it means cut taxes as much as possible i think it's not going to be a long-term answer >> you know, once again, we're at a spot where i would think that prudent common sense, people listening to the discussion that weren't necessarily steeped in economics, would agree with everything you've said thus far. but isn't there also a subtle problem that central banks, let's speak to ours directly, have amassed so much debt and they need to buy debt to keep the music playing, that maybe it is just a slower form of what fiscal policy would screw up in a quicker pace your final thought >> that's absolutely right what central banks have been doing with some of these alternative monetary instruments is sort of a very low grade fiscal policy. it works a little bit. it doesn't work very well. because they have very small boats compared to the big navy of the government. but they'll do a little bit of that and pray that fiscal policy works. again, i think we're in for more volatile business cycles until they fix monetary policy >> i couldn't agree more as a matter of fact, i was hoping you had a door number three. thank you for your time, professor. sara, back to you. >> all right thanks >> there is a door number 3 next time >> we've got two big interviews still on the way for you don't miss the ceo of tobacco giant philip morris international a day after the e-cigarettes hearing down on capitol hill we're awaiting casper's first trade here at the nyse and will have the ceo first on cnbc "squawk on the street" returns in two minutes dow has turned positive again now up 12. with a nation-leading $150 billion commitment to infrastructure, we're creating state of the art, 21st century transportation hubs, constructing new bridges, bringing high-speed internet to every corner of the state, and committing to low-cost clean energy. with infrastructure built for the future, the companies of tomorrow can thrive here today. see your future at esd.ny.gov. there's 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cigarette and heated tobacco shipments to fall up to 3.5% joining us in a cnbc exclusive is the ceo of philip morris who joins us from switzerland. andre, welcome back. good to see you again. >> thank you very much, david. >> we've been talking a few times now about the future of combustibles and the heated category, even the vaping category now we have this esg thing to play with. i wonder if you think the way that assets are rolling into that, does it pose an existential threat to the sector >> well, first of all, i think we made enormous progress in 2019 in heated tobacco products because we're reaching now 14 million people that use heated tobacco products and almost 10 million have switched completely out of cigarettes. i think that contributes obviously to the decline of cigarettes because as smokers move out of cigarettes into smoke free alternatives, cigarettes will decline. in addition to the secular decline of the world markets, around 1.5% to 2%. i think it is a naturaldecline that will happen and we hope it will accelerate as people move out of cigarettes. we are well equipped to capture the majority of people who would otherwise continue to smoke who switch out and move to our products so we feel very good about the momentum we have as we enter 2020 and the results of 2019 outlying, you know, the strong performance and the same continues as we move into the new year >> you listen to that capitol hill hearing yesterday though and it is clear that regulators don't really care about the delivery mechanism whether it's smoke, vape, their target is nicotine delivery at large that's -- there is no way around that in your business. what is the answer to that >> well, i think first of all nicotine is needed for adult smokers who would otherwise continue to smoke. otherwise, they would not switch out of cigarettes. i think at war here is what happened with youth use of the products and i think we discussed on cnbc a number of times what the measures that are necessary to reduce the use of youth following the fda process, well established and will start in may for heat vapor products we have age controls in raising the age for purchase we have technology eventually that would activate the devices only after age verification. i think the combination of these measures should minimize use by unintended audiences but at the same time, we should not forget there are 40 million people who smoke in the u.s., 1 billion in the world, and they will continue smoking if we don't offer alternatives i think the policy discussion should be how to maximize adult smokers switching to these alternatives and minimize the impact on other smokers, especially youth if we have the right conversation with the regulators i think they should be addressed and can be addressed that is my belief. actually if we look at what happens in the international markets, because we apply all these principles, we have absolutely no red flag regarding teenage use of the product on the contrary, we are maximizing switching adults. i think the strategy is in place. other markets around the world, we strongly encourage them to have regulation about nicotine products we cannot let any of these products be unregulated, but the regulation should be incentivizing people who smoke today to switch and minimize the unintended consequences. and then as i said, this is physical that's what i believe and what we are working every day to achieve. >> to carl's point about esg, you and i spoke in davos a few weeks ago where all of the discussion was on sustainability efforts and stakeholder capitalism and you were out there making your pitch along with so many other companies i am wondering how that's going and how much pushback you've received from investors and fund managers as a tobacco company in this era of corporate responsibility >> well, as we discussed, this is going to be an increasingly important issue. i think if it is important, i believe us as a company and many companies the first thing we can do is reduce the impact of our product which is cigarettes and we're working on this by offering our consumers smoke free alternatives and as i explained making very good progress the progress could be faster if we have a consensus among the public community these products are the right ones in addition obviously to continue restrictive measures on cigarettes we should stop the confusion that have clouded the e vapor category so that people understand that cigarettes is probably the worst way to have tasted nicotine and there are better ways. of course for those who don't quit in addition to all this i think as a company we do a lot, as i explained, we are at the top of the climb, a climate least, very good in terms of agricultural processes, the most advanced to avoid forced labor, child labor, making sure the farmers have decent income. we have certainly a lot of attention on employees we are the first international company that has an equal salary certification and i can go on and on we have to talk more about this. a lot to say and lot more to do. >> andre, finally, if i could just come back to sort of the corporate side of things, capital allocation and the like, late september you called off of course the talks between philip morris international and altria about a potential merger how are you thinking about capital allocation, return to shareholders at this point as well, in addition to obviously the r&d efforts that you continue >> well, we have a very strong dividend pay out, clearly. as we explained to our share holders we want the ratios to come back to normal, commensurate with ourcredit rating when this is done, clearly, we can introduce again the subject of share buybacks. this is in the minds of shareholders i think already our dividend policy is outstanding and we had continuous increase of dividends, so we are very focused on rewarding shareholders and meeting the long term. i think everything we do on the business side, transforming our business, moving away from cigarettes, into alternatives are better for shareholders, public health, and more sustainable can maximize shareholder value in the long run. >> certainly a challenging corporate mission. always like getting your take. appreciate your time >> thank you for having me still to come, we are still awaiting casper's first trade. we'll bring that to you of course when it occurs. followed by an interview with the company's ceo. but first, over to john fort for a look at "squawk alley. >> david, what we've also got to look at sonos, that company reporting earnings last night, up better than 13%, touching $16 a share for the first time since around the time it went public we have the ceo with us on st9 mi up on "squawk alley. test test test let's keep an eye on shares of peloton this morning, slowing revenue, seems to be the story there. lee horowitz joins us on phone for perspective. lee, you said in a report that i think the stock action likely suffering from technical overhangs related to ownership structure. is it overly penalized >> we think the quarter looks really good. subs, revenue, gross margin, adjusted ebitda. what's plaguing the stock today is perhaps a little bit of softness relating to q3 and peloton is 30% off its lows. you have a number of investors playing for the quarter and had to take their gains as the quarter unfolds, particularly ahead of if pthe ipo lock-up ate end of the month a little bit of a buyer strike until we get through the technical issues >> the subscribers continue to be strong? >> yes used to come in with low expectations, 1% on a monthly basis. gross additions look healthy we think this ultimately serves to prove out the fact there is a large addressable market ahead of peloton that can support robust subscriber growth for many years >> is it a bike company or digital company? hard to tell from the results. they want to paint themselves as a digital company. how do you answer that >> it's a little bit of both obviously, they're taking what is an offline experience of this fitness and digitizing in a way. so, you know, there's a broad secular shift from an offsideline service to on-demand services you think of netflix and disney, on-demand car services through uber and lift. these are the kinds of secular tail winds of wanting to have the services at your fingertips to execute them, whatever you want to do under your own time constraints. we think peloton benefits from those secular tail winds at a high level >> what's your price target and how do you get there based on a multiple ebitda or some of the parts? >> our price target is now $34 we look at it on some of the parts. when we look at aggregate valuation, you know, peloton trading around 4 1/2 times 2022 gross profit, obviously not all that cheap when you look at a set of perhaps some this similar tech platform companies like row cue, trading at 11 times, you have tech media companies like siri trading at eight times, spotify at seven, netflix at 12. the valuation looks stretched when you think about how strong the unit economics are for peloton subscription model >> we'll keep an eye on that stock getting hit badly today. very strong numbers, though. lee, thank you >> thank you let's turn to sara and see what's coming up on the big "closing bell" show a few hours from now >> we have a big focus on earnings with uber, activision, pinterest, wynn, all gearing up to report results after the bell we have bobby kotick on his company's results and an interview with dunkin' ceo dave hoffmann following those earnings this morning, largely beer than expected for dunkin' and today's closer is afl-cio richard trumka we'll discuss the new trade deals and what it means for labor. that all starts at 3:00 p.m. another good lineup. >> that is a good lineup say hi to bobby for me >> thank you >> you won't >> you should literally says david says hi. >> for all my guests, right? >> are you making fun of me again, carl? trying to bring my love and friendship to the world. >> it works. >> no one knows if you're sarcastic. that's the problem >> in the next hour, we're watching ipos. casper will look for an opening d e o 14.50 t15 anthceo moments away t the leg! when i started cobra kai, the lack of control over my business made me a little intense. but now i practice a different philosophy. quickbooks helps me get paid, manage cash flow, and run payroll. and now i'm back on top... with koala kai. hey! more mercy. 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