Transcripts For CNBC Squawk Box 20200213

this could be a different reporting. ner looking at doctors looking at x rays. >> we talked about it. is it an accurate number we are getting? when healthy people get it and you can't the coronavirus from necessarily the flu or a cold. you don't know this doesn't give me -- or feel real good, the w.h.o. was apiecing chiapiec appeasing china. they said don't worry about it looking at the treasury market 10-year was back a little pressure there to yield back below 1.581%. pepsico is just out with quarterly earnings came in at $1.45 i share revenue better than the street expected $20.6 billion. grew by 4.3% better than anticipated. the company said it sees 7% earnings growth this year. if you are looking at numbers, if you go from 5.53. the street was looking for 5.95. they say the number they are expecting is 5.88 which is going to be looking for about 1 percentage point decline from forth exchange based on current rates. organic revenue they are expecting for 2020 at 4% below 2019 but still strong organic growth >> coronavirus, the number of confirmed cases jump overnight partly because the wuhan province is using a method that can identify the virus faster, which, the faster you do it, i want the info. although it wasn't good news eunice yoon joins us with more >> that's right. the province that is the epicenter is changing the way it confirms its cases it has two groups. one called con firnled with a test kit and other people are a group clinically diagnosed they are confirmed using a ct scan because of that new change, we are seeing a jump in the numbers. where there still are numbers where they are seeing changes in order to obscure the figure. one of the reasons that is out there, people who are a sem tom magnetic, don't show symptoms are not included in these numbers. these numbers are going up they are putting down further restrictions >> for many in beijing, this is becoming a common sight. the infection stations are popping up the stations are meant to sanitize people's closing and shoes. they spray inside every two to three managers they are working on ways to disfekt cars too carwashes now disinfect your car for free but don't expect anyone to clean the inside of your car. the staff here are as nervous as anyone else, which is why they sanitize your car before you get in they put up slogans to encourage the public >> security at my apartment building are wearing hazmat suits, i have to have my temperature taken, show my government i.d. and apartment key just to get into my own home >> what would happen if they found you had a temperature trying to get into your apartment building >> it varies but for a lot of places you do have to go to the hospital there have been some situations where people had a temperature and the authorities there wanted to make sure you get to the hospital people run off and then are collected and taken to the hospital there is a lot of inconsistencies. >> it is nowcovid-19 the way that it came about, is there skutle butt there in the way it is growing. sars has gotten out a few times? is there skutlebutt or what is the current thinking on this strain that got out? >> i think the vast majority believe this originated from the wet market if you go to a wet market in china, i presume the one in wuhan is the same. you have a lot of animals in close contact with people. it is not the cleanest environment. there are plenty of theories there that perhaps because wuhan has a lab there. a p4 lab there. there is a biomedical expert there checking out the testing kits there is a theory it could have been part of a bio weapons program. that's a theory. i heard a counter theory that americans created this because they want to make money off of the chinese by creating a problem here and creating a solution in the form of vaccine. >> they fired the one individual and they did install the major general in the military and chief bio weapons expert >> yes >> they don't want us to think that they are doing things that just feeds. >> she has a lot of experience with sars. she's known as smon who has the experience in 2002 it doesn't mean anything we'll probably never gottfried get to the bottom of it. >> okay. i hope everything works out fine and it is gone in a few months this has all the makings of a movie or a novel there are worries something would get out of the lab i was in a p3 lab in college a p4 would not be around on a normal university campus separately, organizers have canceled the event the world's largest trade phone. tech companies pulled out amid the fears. >> we've been watching them pull out. >> don fork goes every year. a lot of the ceos. samsung was planning to do a lot with that new flip phone >> if you want to learn more about the disruptions. tune in tonight,out break coronavirus. we have corporate news or scandal category i don't know we'll see. barclay is saying its ceo jeff stayly is being investigated over links to jeffery epstein. >> saying he developed a relationship with him in early years. he concluded that he had been transparent about his relationship the report in 2019 market was in line with expectations the stock is off by 2.5% my understanding is that the relationship was during his time at jp morgan you also know mary erdos had a relationship he was a member of their private wealth bank. jeff stayly at one point went down to visit him after he had been convicted >> went down >> down to florida >> not the island? >> i have to look back >> you did speak to someone what we are talking about with a relationship >> right this was a business relationship or a friendship. there was a period after he had been convicted where he was being released >> there was a time where he took his yacht to visit epstein's island >> so there was the island he had been going and visiting him. so the regulators are looking into this. british regulators and u.s. regulators are looking into a lot of things. some corporate news. little scandal i don't know where that will land >> health of an island i don't know where that is nice part of the world very nice. >> you've seen it from a different island from afar. i'm going to add to that from st. thomas, you take a sciff out to a pizza place called pizza pi. he didn't like this pizza boat being there because you could see his island and what was going on there, i guess. the word was he didn't want any eyes around but it is beautiful. >> that's the story. you should know that glen dubin introduced stayly. there was the transaction between dubin and jp morgan. time for the squawk planner apriling happening at 8:30 a.m. eastern time on the earnings front, we've heard from pepsico, we'll get reports from roku. matel, nvidia, expedia all after the closing bell we'll talk about fears jolting and looking at how the dow will open up about 224 points a watch including boeing, next >> announcer: today's big number, $6.3 billion that's how much market cap micron gained so far this year shares of the chip maker have jumped in 2020 hitting an all-time high yesterday. at fidelity, you'll work with an advisor on a flexible wealth plan. and with new brokerage accounts, your cash is automatically invested at a rate that's at least 20 times more than other advisory firms. personalized advice. unmatched value. at fidelity, you can have both. unmatched value. when it comes to your business internet, which is more important? ♪ ♪ okay, i wish i didn't have to choose. like the more i think about it, the more i want to jump to each room. what if i said you can have it all? ♪ ♪ comcast business gives you connectivity that goes beyond. that's what we want! that's speed, reliability, and security, all from one provider. touchdown! get started with internet and voice for an amazing price. call today. comcast business. beyond fast. welcome back the dow, s&p and nasdaq coming off record closes. let's talk about the dow's march to 30,000. climbed for the first time more than two years ago we'll talk to john roke. managing director. >> thank you >> it has continued straight up with minor pull backs. >> it went side ways from here and here the break out here accounts for about 30,100 this is the only index that has not gotten peek. s&p has and above it this one still on the march. we think it is reasonable to hold there >> what are the hold ups >> boeing is a holdup. when we look at the dow. >> you mentioned boeing. i'm going out of order but you've got what we could call the boeing chart there is reason the dow has not made progress like other indices. the peek is here and tracing out the distribute tiff top. we think it is better to reduce holdings it is taking to the top. we like the open lower >> you can see the downward slowing. the momentum indicator has peeked and rolled. weigh think this is a better sale than buy. >> you mentioned you liked ibm above a down trend line in 2019. above it here. you are getting the exact opposite for what we have for boeing it is starting to turn up. we have this downward sloping trend line we have a chance to consolidate a little bit >> when you are talking about the daily swings this morning, the dow is down about 230 points >> i think it is daily churn down opens don't concern me. if we saw a down close sharply three or four days in a row, that would be much more of a concern. that happened even before trading. this is pressure free. it usually bottoms around 10:30 or 10:45 >> thank you so much it is good to see you. >> when we come back, shcharlie munger not holding back. >> of course, that's part of the reason some of the companies i've been affiliated with have been successful. not that we are so smart, we've stayed sane. a lot of what goes on is absolutely nuts. some call it one thing, i translate as [ bleep ] earnings. >> find out what else as "squawk box" comes right back. ♪ woman: what gives me confidence about investment decisions? rigorous fundamental research. with portfolio managers focused on the long term. who look beyond the spreadsheets to understand companies, from breakroom to boardroom. who know the only way to get a 360 view is to go around the world to get it. can i rely on deep research to help make quality investment decisions? with capital group, i can. talk to your advisor or consultant for investment risks and information. ♪all people, all people, all people are tax people♪ ♪if you filing by yourself let me see it clap it up♪ ♪clap it up, clap it up ♪if you got a question to ask a cpa can help you there♪ ♪help you there ♪got a w-2 go ahead and wave it in the air♪ ♪wave it in the air ♪now take a picture ♪easy upload is a mobile feature♪ ♪all people, all people ♪all people are tax people intuit turbotax ♪ ♪all people are tax people ♪ ♪ ♪ ♪ don't get mad. get e*trade, dawg. but we're also a company that controls hiv, fights cancer, repairs shattered bones, relieves depression, restores heart rhythms, helps you back from strokes, and keeps you healthy your whole life. from the day you're born we never stop taking care of you. welcome back berkshire hathaway's charlie munger spoke the 96-year-old has seen a lot and says he is watching inflation closely and the actions of central banks >> through the inflation you know the economists of the world thought they knew a lot more than they did what has happened is weird in response to the great recession, all the nations in the world are printing money like crazy and have bought all kinds of investment assets they've done things that nobody in the economics profession would have under the scale, even five or so years ago yet the inflation has been very low. we have a lot to be modest about when we talk about economics >> munger expressed concern about the potential for new bubbles. he says there is a lot of trouble coming because of wretched excess. >> at the height of the craziness created at the morgan bank he had a home sewing company, selling at 50 times earnings home sewing, great god we are not that crazy yet. a lot of what's happened is not crazy. a lot of these companies are valuable some are sure to fail. i don't think our leading tech companies are sure to fail i think it is not nearly, the current situation is not nearly as crazy 50/50 is absolute dementia >> he said what he's seeing concerns him but not as much as back in the nifty enougfifty das >> talking about the crazy ride tesla has been on. he charlie munger is the one who founded byd investment in china which is a direct competitor to tesla. coming up, today's biggest individual movers. we'll show you what kind of home $165 million will buy you in los angeles. i don't know how you get nine acres in beverly hills and how much that would set you back each month with a 30-year fixed mortgage we head to break looking at yesterday's biggest winners and losers ♪ through the at&t network, edge-to-edge intelligence gives you the power to see every corner of your growing business. from using feedback to innovate... to introducing products faster... to managing website inventory... and network bandwidth. giving you a nice big edge over your competition. that's the power of edge-to-edge intelligence. ♪ ♪ don't just plan to retire. plan to live. an annuity helps cover your essential monthly expenses, so you're free to live the life you want. find out how an annuity can give you lifetime income at protectedincome.org good morning u.s. equity futures this hour are down i don't know if i'd say down but not out. down 227 i don't even think that matches the gains we saw yesterday when it is red like that and when there are coronavirus fears, we take note. nasdaq down 90, s&p indicated down 25 and change cisco shares under pressure. reporting earnings of 77 cents a share. a penny better revenue was also above but did fall 4% from last year it was above expectations. it was lower cisco expects revenue to fall by as much as 3.5% this quarter customers are taking longer than normal to discuss earnings noted that guidance has not taken into account >> early warning saying it was dropped. they didn't miss revenue expectations by much i think more is about trying to figure out what was happening with customers mgm resorts say jim murren is stepping down being looing at this chart from yesterday, an initial spike in shares of his company. then you see the shares drop when they said they were pulling outlook for 2020 because it will be difficult to gauge concerning the coronavirus given las vegas and macao. >> he's going to work for hillary. >> this is like real estate porn, is that what we can call it >> and we are voyers >> jeff bezos shelling out $165 million for his new home he's buying the warner estate from david geffen. no agents were involved. for context, if he fiensed -- financed this for 30 years, the mortgage would be $700,000 i think the bigger story is david geffen everything he touches turns to gold he's done it in art and real estate >> in the old days when we have that great laugh track of jeff bezos, what i would do right now is still say, hey jeff, you do realize your monthly nut will be $750,000 and then have him laughing it is like jeff, that's a lot of money, isn't it? >> pocket lint >> literally >> when he sold shares, he would say i'm funding blue origin. now i think he's selling shares and buying property. >> what if we take me doing the laugh. run me doing it. wouldn't that be good. i'd say, jeff, are you sure you can afford $750,000 a month? >> coming up, former mayor bloomberg making a push. later, president trump's fed nominee judy shelton heads to the hill today what the nomination could mean for the president and the economy. 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>> i think it will be very, very challenging. >> i want to ask you about super delegates. you get to some kind of brokered convention it sends the entire party into disarray if he wither to win the nomination because of the super delegates that would almost undermine what is happening here if you sr va voters, the key issue is who can change the white house and face president trump? they need to decide, do they want to make a point with the candidate or defeat the president. he's the candidate i think the best who can collect progressives and moderates >> what do you think that the key things he talks about have nothing do with the economy. he talks about jobs to some degree most is focused on climate, guns, getting trump getting out of office based on character do you think he has to touch on the economy? >> or is that the move to the center >> i'm not sure i'd take that on number one, changing the white house. going through the four issues, i believe health care, climate, education and the economy. the economy has two parts. grow the economy and shared success. when you look at raising minimum wage, running a trillion deficit is just not logical. >> i'm not playing devil's advocate i believe this myself. it comes to the point where mayor mike is the nominee. the entire democratic side is not going to vote for president trump. you assume who are progressives going to vote for if not mike bloomberg, how many aoc, bernie democrats stay at home there is no energy not we, believe me but that they don't have a progressive candidate. there is no evidence so they don't turn out >> as i said, the number one issue when you poll is a change in the white house >> you know what i mean. you think young people will rush to the poles to the polls to vote for a billionaire? >> this will come down to several small states michigan, wisconsin, arizona, north carolina, florida. >> you think they want a new yorker to run things >> they have two choices >> how is he going to confront the challenge? the tape that came out and what he said about the minority community. >> it was a weird answer >> i think when mayor bloomberg left office in 2013, he said he would have no comments on anything related to the city, none he lived by that when he decided to run for president, he thought he had to confront the issues. he said two things one, in hind sight, i wish we had reduced stop and frisk at a faster rate. and i apologize. that's what he said. i think it is a forceful answer. people have to process it. i think his record on reducing crime and recruisiducing incarcn and it will hopefully crunch theith issue. >> end of big gulp >> you win >> a concern ofwhat the chines government is repoinrtg on the coronavirus outbreak the impact on businesses in china and here that comes next. liking the now platform? 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[ slow dance♪music plays ] sfx: record scratch music (plays throughout): [ 'watch me walk' by spencer ludwig ] yo dj, can i put in a request? ♪ don't have no sass about this ♪ ♪ i'm on my way i'm on my way ♪ ♪ can't take no class about this ♪ ♪ i'm on my way i'm on my ♪ like this! ♪ this is a moment you plan for. to start your investment plan, find an advisor at massmutual.com sfx: [ mnemonic ] futures are trading lower although we were down about 220, 230 points earlier on the dow. we're now down less than 180 the s&p is indicated down just under 20 nasdaq was down almost 90 now down 65, all on renewed fears about the coronavirus. earlier today china said it confirmed more than 15,000 new cases and an additional 254 deaths this, of course, comes as businesses in china attempt to reopen after the extended lunar new year holiday joining us now to talk about that jim mcgregor, chairman of the greater china region at apco worldwide and former chairman of the american chamber commerce in china and here to talk about what tourism means to china. greg, i'll start with you. you point out that for lunar new year you did visit chinatown and you have a very good feel of how business -- whether there is any dampening of the animal spirits. and you would say at this point there is but it's unfounded. >> yeah, unfortunately there is. i was in chinatown over the weekend as part of a show of support for our chinese businesses and in chinatown, in flushing, in sunset park, business owners are telling me that revenues are down 40%. >> 40% >> 40% it's unfounded there's been no confirmed cases of the coronavirus in new york city we have a terrific health department. >> although we had the mayor telling us that we expect it to land here, and the governor. >> yes and at some point it will, but similar to how we handled sars and ebola, our health department is on top of it. and certainly i think that consumers should not be afraid to go into the chinatown's across the city and support those small businesses >> so, jim, looking at it from the angle where you said, and that is from being a china expert what are you seeing and how serious is this right now to chinese business and how serious could it get >> well, businesses are trying to open step by step a lot of the foreign factories are maybe up to 10%, but the logistics aren't there it's hard to find trucks to get parts to the factory a lot of the workers are still at home. in the offices, people are not opening their offices unless it's mission critical because the heat is turned off they don't want the air circulating around these buildings, so people are there freezing sitting at their desks and don't take elevators, they walk upstairs. meanwhile, the businesses are really pushing to open, but everything is getting pushed back they were going to open the 10st, 17th, 24th hong kong announced its schools won't open until march 16th. they don't know what's real, what's not real, what are the numbers. i've been meeting with some friends in the national security establishment from the administration last few days, and they're very worried because the cdc is not allowed in. w.h.o. only has two people in beijing negotiating to go to wuhan. they're not letting the foreign experts get into wuhan to really look at this, so why what are they trying to hide >> that's the question because you would always like to be transparent but maybe the cdc or the w.h.o. would have some good suggestions to try to deal with this situation so not only does it look bad, it might be self defeating and makes you wonder what the motivation is. the only thing you come up with is it started earlier and it's much worse than they're letting on. >> yeah. i think you've got that right, joe. and the government is -- they're asking for help around the world. there was mayors who were calling foreign business asking for help, they were desperate to get masks and protective clothing and sanitary goods. when the local officials are that desperate looking for help and the central government is stopping the foreign experts from getting down to the center of this virus has got the whole world shaken up and with the supply chains, everybody's supply chain rolls through china whether it's wedding dresses or big screen tvs. >> gregg, can you tell us, we obviously had time to prepare at this point if we're not prepared now, it's our fault. what are we doing? >> so i think what we're talking about here with the misinformation or the lack of transparency is adding to the unfounded fears here in new york city and i think one of the things people should realize is that we're a very transparent city and we are very prepared we have the best health care system we have the fire wall, the cdc has limited individuals coming in to specific airports. so again, there's been no -- there's been no confirmed cases. and we just want to make sure that new yorkers understand that they can still support our small businesses. >> have we been -- as new york city been bringing in testing kits and anti-viral medication >> no. it is not at that level at all. >> okay. >> and we are obviously our health department is monitoring. and later today the mayor is going to be out in flushings to show a sign of support, but business owners are hurting. and it's because of the lack of transparency, you know, from china. there's a lot of misinformation being spread through social media networks. >> yeah. >> i think that's what we need to counter. >> jim, do you believe it came from the wet market or do you think there's something more diabolical at work here? what's your sflu. >> i very, very much think it came from the wet market it's very clear. i think that conspiracy theory of coming out of the lab, i just don't buy it at all. >> gregg, thank you. >> thank you. >> good luck. >> thank you. >> jim, thanks we'll see you. when we come back, the confirmation hearing for fed nominee judy shelton is slated for today. we'll talk about her prospects ahead of the senate vote our retirement plan with voya gives us confidence. they help us with achievable steps along the way... so we can spend a bit today, knowing we're prepared for tomorrow. wow dad, do you think you overdid it maybe? i don't think so... what do you think, peanut? nope! honey, do you think we overdid it? overdid what? see? we don't think so, son. technically, grandparents can't overdo it. it's impossible. well planned, well invested, well protected. voya. be confident to and through retirement. ♪ futures lower on new coro coronavirus fears. new numbers and market reactions straight ahead. the war on judy shelton. the controversial fed pick heads to the hill today for the first time we're going to discuss what she brings to the table and the future of the fed. plus, bernie sanders, joe biden, elizabeth warren or mayor pete, who will wall street back? a look at where the money is going as the second hour of "squawk box" begins right now. ♪ good morning welcome back to "squawk box" right here on cnbc i'm andrew ross sorkin along with becky quick and joe kernen. look at u.s. equity futures this hour fears of the coronavirus are impeding things. >> reemergent. >> dow looks like it would open off about 183 points right now s&p 500 off by 20 points nasdaq off about 67 points steve liesman is at the table doing a ho hum. >> it's not a lot yet. >> not yet. >> we were 260 yesterday. >> but given that virtually every morning this week we have been living in the green, the green screen, this is different. >> it is. president trump's fed nominee judy shelton heads to capitol hill today that's where lawmakers are likely to question some of her unconventional views on monetary policy steve liesman has more on the president's controversial pick steve, good morning. >> yeah. one of the senators said you want to tune in today. both republican and democrat nominees have serious questions about her views on monetary policy and fed independence that appear to change based on who is in office. in an example of shelton's shift on why the fed should act, here is what she said to reuters in 2016, you have a central bank most influential in the world, channelling low-cost to investors. here is july 2019 to rick santelli. >> when you consider that more than half of american households are invested through mutual funds or pension funds in this market, i don't want the fed to pull the rug out from under them by taking a position that is not conducive to further providing the liquidity for this growing economy. >> here is shelton from a "wall street journal" op ed in 2014 on lower rates. it is ironic that concern for wage earners serves to justify mon pumping by the fed when the low-grade fever of perpetual inflation becomes. 2019 journal interview she said, quote, i would lower rates as fast as efficiency and expeditiously as possible. unlike other fed officials, shelton openly praised president trump's pro-growth policies. her change is with the president's policies in place capital should be cheaply and widely available it's a slippery slope i offer when you make monetary policy based upon your agreement or disagreement with fiscal policy. >> can i go back to the quote, though, what do you do how do you change your opinion well, when the facts change i change my opinion. would it be fair to say back in 2014 a lot of people thought that all of this action by the central banks would lead to higher inflation and maybe five years later they changed their mind over time >> i want to be fair about this but a lot of people on the certain side of the aisle thought that and then when president trump came they changed. it's something that's been noticed that people thought that the hard money were hard money people irrespective of party but that turned out not to be the case. >> but everybody's view of inflation has been modified and about interest rates in general. you know what we really should have been watching, i think, back then was gold remember it got near close to 2,000. >> but it didn't harbor -- it didn't per sage the inflation that everybody thought it was. >> it never moved. >> right. >> guys like -- what's that one guy einhorn were all guying gold because of central banks it stuck at 1200 for years and years and years, down from 2,000. which should have let us know that the debasing of the currency globally there were other factors offsetting that. >> becky, another answer to your question she doesn't say she changed her views because her views on the impact of central bank liquidity on inflation has changed she changed it because of her change in views on fiscal policy. >> i mean, i will also say she certainly wouldn't be the first nominee who has changed their position because they're trying to get more in line with the person who president trump nominated. >> right. >> you yourself don't like -- you're not a fan of a lot of growth policies. >> which ones am i not a fan of? >> tax cuts. >> i was advocating for tax cuts before go to becky. go to becky. she's confirming it. >> you wanted it paid for. >> well, actually before i wanted it paid for, joe, i wanted loopholes removed you know what happened -- gone down to 9% >> you don't think we can go above 2% growth. >> that's been shown, joe. you're back down to 2. >> it's a fools there. that's after china -- >> whatever. >> but you can't announce this is my program. i'm lowering taxes to this because i'm going to get this growth rate and say actually five other things happened. >> yes, you can. >> joe, i'll make you a promise, when the facts change, and i'm proven wrong i'm happy to change i'll do it publicly on national television. >> we all have our predispositions. you get enough mail to know you do. >> my mail that's the good evidence. >> we all do we all have our own. >> we all have them. >> i am not in favor of doing -- >> they would be playing music over me if they could because they're dying us to get to the guests for me on what we think of judy shelton's nomination and what it would mean for the president and the economists we're joined by the director of the heritage foundation center for the federal budget and carl smith, vice president of federal tax and economic policy. what do you think about this change in opinion on what she sees in terms of monetary policy at this point? >> i think we'll have to wait what shelton has to say about it in the senate hearing today. i'm quite confident she'll be asked about it, but the views she holds aren't that different. we're living in a very different environment with the fed op right under a new normal the emergency measures we thought they would long have quit, they're continuing to do so and paying interest on access reserves that's really reduced liquidity in the markets and that's also one of the main factors why we haven't seen the inflation that many economists redikted when the fed was first starting to engage in quantitative easing. the fed has a lot more policy tools than just rate cuts. something to consider there. >> carl, what do you think of shelton's nomination what would happen if she were actually passed by the senate? what will happen to the fed? >> so i'm not a fan of shelton at all i don't think her underlying views have changed in any way. she's been consistent about what she believes for 20, 30 years. she's hard money she believes in fixed exchange rates. i think everything that she says now is an attempt to appease trump. i think those are two bad things in one so i don't think hard money policy is the right policy for today. i think maybe in the '70s that made sense the fact she's willing to throw fed independence overboard is a double negative. >> steve, let me ask you, how would the fed's views be altered if she is passed today >> so everybody i talked to says that the fed can with stand an outlier or two i think one senator was quoted as saying that five judy sheltons would be a problem, one is not chairman powell was asked yesterday in kind of shadow dance question about this hearing today about whether or not diversity of views is a good idea on the fed and he said it was. it was a bit likehe put his stamp on the nomination today. ou go back and look at what he said. it sort of sounded like i'm okay with judy shelton. i don't think he wants to fight the political -- >> how can you possibly say you're opposed to diverse opinions and vies? >> right, right. that's true. that's true. it might have just been -- it felt like one of those setups. sometimes there's a question planted with the senator look, we have to sort of lay the cards on the table the issue is not so much her being a fed governor question is what happens in 2022 -- >> that was the question i was asking during the commercial break. and i want to know whether you think -- she has a chance? >> if she could become the chair and then really getting back to becky's question and comes to a question of motivations, do you have a fed chair or a fed governor who is doing what they're doing because of who is in the white house and the fiscal policy and not based on some theory of monetary policy that's the question. >> romina, what do you think the challenges will be for the federal reserve over let's say the next two years >> i think the federaler and really central banks across the globe are treading in deep water. they don't know what to do seems like what we thought about money and how central banks are supposed to operate are no longer necessarily true. i think judy shelton will add important diverse viewpoint and that would be moving away from discretionary policy towards more of a rules-based framework. i think that's a really important view in this environment where we're having so much money getting pumped into the system from japan from the european central bank and of course also from the federal reserve. it's the pro-growth fundamental policies that the president has been pursuing that have been driving up wage growth maybe we don't have so much liquidity challenge in the system as we need to continue to chip away at regulatory policies that are holding back productivity and wage growth. >> do you think the president trump would prefer her as the fed chair over jay powell and if not jay powell, what do you think about kevin warsh who pops up in these conversations? >> i think it's important not to have group think on the fed board. that's i think where shelton comes in and adds that different perspective that's more based in hard money as was already mentioned but also rules-based framework but the fed has been actually doing good work given the environment that they found themselves in. we should be considering other policy tools to reduce the fed's role in the markets when it comes to the repo markets, for example, and also the regulatory powers that the fed has assumed since dodd-frank passed. those are some areas that we need to look at and not be so focussed on rate cuts. >> in shelton's defense, i think one of the things romina is saying you have other central banks doing other things like, for example, keeping rates negative and the president's idea and one that appears that shelton backed up, hey, we have an idea of what ideal policy is. but in the real world, these other banks are doing this the fed should respond what's wrong with that >> well, so i think that's mildly consistent with shelton over time. she's for fixed exchange rates and for coordinated policy but she's always been for coordinating away from what other central banks are doing, critical of all the extraordinary policies been in and my biggest fear is if she became chairman, if trump were to make that unfortunate nomination, that she would reverse and go back to her hard money policies as soon as trump was out of office and that i think that's the biggest fear. we're in an environment where our star is low. we're in an environment we're fighting against deflation and chairman with those views is quite dangerous for the u.s. economy. >> thank you for joining us. steve, we'll see you later. coming up, we're going to talk markets worries about coronavirus and the xerox hp former ceo of cowen. let's check on southwest airlines after it extended 737 max-related flight cancellations through august 10th. "squawk box" coming right back >> announcer: still to come, the utility sector is sitting at all-time highs since the coronavirus outbreak as investors flock to safe havens we'll speak to the ceo of duke energy about quarterly results and find out if the fear factor could push the sector even higher "squawk box" will be right back. ? it begins with a distinctive approach to managing money. that for over 85 years has focused on keeping confidence up when markets are down. an approach where portfolio managers work well independently. and even better together. who don't just invest, but are personally invested. can i find a proven approach designed to deliver results? with capital group, i can. talk to your advisor or consultant for investment risks and information. talk to your advisor or consultant when it comes to your business internet, which is more important? ♪ ♪ okay, i wish i didn't have to choose. like the more i think about it, the more i want to jump to each room. what if i said you can have it all? ♪ ♪ comcast business gives you connectivity that goes beyond. that's what we want! that's speed, reliability, and security, all from one provider. touchdown! get started with internet and voice for an amazing price. call today. comcast business. beyond fast. welcome back to "squawk box" this morning futures pointing to a lower open as investors get word this morning that china has started including clinically diagnosed cases of coronavirus in its figures for confirmed case counts resulting in a surge of new cases and markets are clearly concerned about all of this as the spread on the economic impact. we'll see where it really lands. we want to speak to -- we're not talking about him being -- his name is kim fenerbesk. >> and you hurt my feelings already. >> kim is here, ceo and chairman the market reaction and much more this morning. good morning to you. >> good morning. >> help us here -- and i want to talk about xerox hp in a second. help us in terms of how you think investors are supposed to think about this today >> most important thing is i don't have it. >> that's the good news. >> that's all i care about actually it's odd that it's become an investor issue and not a humanitarian issue in some ways i think it is a looming disaster and no one knows where it's going to go. we have total capacity in china. so we have no facts. >> so therefore you do what about it, though as an investor. >> as an investor i would do nothing, ignore it for the time being. i suppose i pull back on some retail things, i suppose but i would not overreact. >> that seems to be the conventional wisdom. >> to your point, i have no original thought on the topic. >> i don't know that anybody understands what's happening. >> i don't think there's an obvious market reaction to it. it seems mostly contained in china. but again, as i said, it's total capacity >> what i will say is jim cramer said yesterday he thinks that gdp in china is going to 1 to 2% for the quarter. does that matter when it's the second largest economy >> yeah. >> if that's true, investors should be worried. >> if that happens -- >> you don't agree with that >> it's not that i don't agree, i don't think it's known yet. >> maybe you should do something. >> you can pull back and be defensive now, i suppose, but i wouldn't. >> i'm thinking we should order a few testing kits in new york i didn't think that was a great answer we have no anti-virals. >> so you're that nervhat nervo. >> you think the market -- >> it's not that just as much as preparation. >> i think you could have some ready to test. the most important thing is the detection, i mean actual kits. i would like to know they're doing clinical diagnostic -- they're adding those numbers in. >> because they can't test enough people. there aren't enough tests. >> and they have a shortage of everything in china. they have a shortage of hospital beds and masks they have a shortage of testing. they have a shortage of everything. >> this changes nothing for your investment thesis. >> only because i think it's too early to tell. the only obvious response i could think of is to pull back from some supply chain companies that are relying on china. i suppose you could pull back, accordingly, on ones that relate to that. >> otherwise are you bullish >> yeah, i'm bullish i think the economy is strong. i don't know if it has a lot of growth left in it, but i think it's really strong, so i think it's safe. >> what does that mean, you don't think it has a lot of growth. >> i don't know that it has growth i think the economy now is moving well. and it's solid i think we have all the numbers that are out there are very positive numbers. >> you measure growth even lower unemployment numbers which will be hard to do. we're probably going to see it in wage gains at this point. >> we could get to a certain level and it's pretty solid. if it doesn't go up -- >> we have a great economy it's not growing exactly. that may be somewhat ox moronic, but i don't think so. >> i want to pivot to the hp xerox fight. tell what you say the state of play is. >> state of play right now is xerox has made overtures. >> yes. >> with increasing intensity and fervor and hp, much like china, has been opaque. >> what do you think is going to happen what's going to change in this process? what has to happen >> well, i think the -- i think xerox has spoken to a broad array of hp shareholders. >> right. >> they seem to be meeting with lots of enthusiasm hp has an investor day in or earnings release in late february >> february 24th. >> and they said they're going to respond in some form then i think the heat is going up the combination makes a terrific amount of sense. so. >> for more xerox than for hp? is that fair to say? that would be one of the critiques. >> no. i would say it makes more sense for the hp shareholders. so, the term about hostile, hostile to hoom is the question. it may be hostile to management in some ways they fear for their job. it may be hostile to the board if they fear their slots but it's not hostile to the shareholders it's their company >> if you get on the board, what will you do? >> i'm going to discharge my fiduciary responsibility if i'm on that board, we'll evaluate whatever offers come in and do what's best and frankly i've been around this business a long time, i'll do what i can to maximize shareholder value. >> and nothing else? you don't have a strategy, a plan beyond that that's a basic plan. anybody can say that i can say i'm going to get on the board. >> i'm anybody in that context, yes, i will say that >> you studied this company. >> yeah, but i have not studied this company in the sense as to say i'm going to change their strategy or what i would do if we endured, if there were no transaction what i would do is i would inject some life into it i think it needs innovation. i think it needs a thoughtful strategy going forward. >> i think andrew would like you to consider some of the other stake holders. you keep talking shareholders. just get woke, will you, kim f you want to live in today's world? >> that was not where i was going. >> i thought you wanted to expand it to gen 12, 15. >> i assumed if someone is going to put you on the board you have a strategy and a plan beyond saying that -- >> that's not going to fly around here, fennerbesque. >> so from the outside i have read and i think i have never sat down with management i've never heard their detailed strategic plan or sat down with anybody at the company to talk about where they think their business is going. i think that chopper in with two weeks of information is lunacy, i think. >> xerox is in a much better position now because it's up 90%. >> exactly, joe. >> so it takes care of a lot of the other stake holder stuff falls in line if you can -- the first thing you really need to do is enhance your value but you know i feel that way i know that. >> how do you do that? >> however you need to do it >> i don't think -- >> you do all the right things you do all the right things. >> i think to go in as an hp director and have some plan on how to turn the business, change the business with a company that just basically sat stagnant for a long time. stock price has done nothing for a long time. hp stock has doubled in the last year and the only -- i think xerox has. i think hp has gone up 20% all of which came after the overture from xerox. so i think there's a lot to get done i think there's a lot of people that have been at that company for a long time and not had a lot of fresh, new thoughts for a long time. so i think you need to inject new thought. i think a new board of ten smart people and me could go into that company and make -- >> ten smart people and me that's not 11 smart people >> thanks, joe i was hoping you would say that. i don't think i have snappy answers from the outside i think it would be arrogantas to what i was going to do to change hp. >> kim, thank you. appreciate it. >> pleasure. coming up, what did alibaba say about sales in china since the outbreak of the coronavirus. we'll speak to an analyst about the potential impact on the consumer later this morning, senator mike brown is making the rounds he'll be here and we'll ask him about the proescontroversial fey shelton. 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"outbreak: "outbreak:coronavirus. revenue beat wall street forecasts for pepsico. organic revenue grew by more than 4.3%. the stock up by 32 cents we're watching shares of alibab alibaba. it also reported increases in both total users and mobile users. notably, it did not assess the possible impact of the coronavirus on its business but said the company was supporting the effort to try to fight the outbreak you look at the chart, you will see the stock was down before the numbers were reported due to the increasing number of cases that were reported in china for the coronavirus. you see the pickup in the stock price a little bit after the company came out with these better than expected numbers futures under some pressure this morning let's check things out you'll see the dow is indicated to open down by 200 points nasdaq down by 80 points the s&p down by 22 this is just a day after all three of the averages closed at new highs. reminder for you catch us live on the go on the cnbc app 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duke energy just out with fourth quarter earnings. the company reported 91 cents a share, 4 cents above estimates revenue slightly below wall street forecasts joining us now is lynn good, ceo of duke energy very close to an all-time high, lynn over the years, very consistent dividend, i think, around 4% also, i think $50 to about almost 100 now over an eight-year period of so. so something that people looking for yield and safety could definitely go to duke energy, i would think. would you suggest that as a core holding? >> i would agree and i've lost audio. >> you've lost audio that's not good. >> maybe i can talk for a moment about the stock. >> have you got audio or do you want us to go to break we'll go to break and come back because, you know, in a yield starved world, there's a reason why utilities have done pretty well we'll try to get the audio it's hard to interview someone -- what's that. >> we will go to break. we'll go to break and get this fixed with the audio. also who will win with wall street with the 2020 elections which money is getting money for the high wall street donors. and what it means for their bid. >> announcer: up next, did the coronavirus put a cloud erov the alibaba earnings will the hilton app help us pick the starters? great question, no. but it can help you pick your room from the floor plan. can the hilton app help us score? you know, it's not that kind of thing, but you can score free wi-fi. can it help us win? hey, hey! we're all winners with the hilton price match guarantee, alright? man, you guys are adorable! alright, let's go lose this soccer game, come on! book with the hilton app. if you find a lower rate, we match it and give you 25% off that stay. expect better. expect hilton. rowithout the commission fees and account minimums. so, you can start investing wherever you are - even on the bus. download now and get your first stock on us. robinhood. whether your beauty routine is 3or 57,... make nature's bounty hair skin and nails step one. it's the number one brand uniquely formulated for silky hair, glowing skin and healthy nails. nature's bounty, because you're better off healthy. we are back with duke energy just out with fourth quarter earnings the company, as we said, 91 cents a share. stocks near an all-time high, yielding consistent return for shareholders over the years. lynn goode, i was really unfortunate you didn't have audio because i was saying such nice things. >> i could hear you. which i appreciate the introduction >> comprised of the dividend of 4% and 4 to 6% earnings growth we operate in jurisdictions witd really strong capital plan as we add products and services and value for customers. so really well positioned for the future. >> $50 billion capital plan over the next five years to go into the electric utility business, gas infrastructure business as well as commercial renewables. that should keep things percolating at the company in your view? >> yeah. so the business is going through transformation as you know, as we pursue cleaner forms of generation. this san opportunity for us to add renewables, add battery storage, invest in the delivery system and also the gas infrastructure, to make sure all of that fits together to deliver seamless service to customers. so we have been able to demonstrate strong growth in earnings and strong growth for the future really targeting 4 to 6% growth through 2024 >> so, lynn, if you are modernizing the power grid, which is so important in terms of conservation but also just in terms of reliability and i'm sure that you don't -- i don't want my power company to get hacked where i don't have any power for six months that would be the end of the world. you must spenda lot of time making sure the power grid stays reliable and doesn't overuse, isn't overused for energy. >> so i think storm hardening and resiliency and also resiliency against cyber and physical attacks is something that we focus on absolutely everyday and the utility industry, the electric industry has been very focussed on making sure that we're making the investments in order to harden the system in a way that protects our customers into the future. and we have had experience over the last four years with extraordinary hurricanes from matthew to irma to dorian last year and the investment is necessary to return service quickly to our customers so they can resume their lives, our industries can return to service is a hig>>n the areas where you operate, do you have a feel for the strength of the local economies in all those areas is it inelastic or can you tell whether things are going well? >> as i mentioned, we operate in florida, north and south carolina -- >> sun elt. >> yes and those three states are in the top 5 for population migration. every state also is exceeding national average on gdp growth we also serve nashville, tennessee, which is at the top as well. and so we are positioned in an area that is growing and along with that is a need for growing electric and gas infrastructure in a way that really builds the company. but we are delighted to be a part of economic development in each of our states so that we are also a part of attracting industry with low-cost energy and reliable energy so our states and communities can thrive. >> so if we 10, 15 years from now, the way you power the grid will be primarily what, natural gas? what will it be? >> you know, the transformation is under way and duke, along with the rest of the industry, is working very actively to reduce carbon emissions. our goal is to be at greater than 50% by 2030 and to net zero by 2050. for us that means nuclear is the foundation it means renewables, it means battery storage, great energy efficiency and it means natural gas probably for a couple of decades. we are also advocates for research and development on new technologies, new science that will be in place in the 2030s and 2040s. it can take the form of longer storage battery or advanced nuclear or carbon capture, but i do think, as you said, there will be a transformation in those sources of energy over the next several decades. >> just wish that cold fusion would have worked, lynn. remember that? that would have been -- >> i do. i do. >> have you applied for nuclear permits? how long does that take now? probably takes -- that's why you said 2050. probably takes until 2050, right? >> no, it takes a couple of years to renew licenses. we announced in september of this year that we intend to pursue license extension for all of our nuclear units we have 11 of them operating in the carolinas. >> andrew likes nuclear now, lynn, right? >> i've always liked nuclear. >> as he should. >> he's a big nuclear proponent. >> those aren't applications for new ones >> those are applications to extend 50% of the power in the carolinas comes from carbon free nuclear. it's an extraordinary asset. as we think about a carbon free future. >> when is the last time a nuclear plant was built in the united states? >> been a while. >> florida, north carolina and south carolina, sounds like my vacation plans half the time. >> very good. >> you want me to come down and use a lot of energy. >> absolutely. >> conserve a lot. conserve a lot of renewable. i don't know i got to figure it out thank you, lynn. it was good to have you on this morning. >> thank you, my pleasure. alibaba just out with its earnings this morning beating on both the top and bottom lines. we should point out the figures that you're seeing now is chinese yuan john freeman, vice president of equity research at cfra and mike santoli from senior markets commentator is here as well. mike, since you're sitting heerks i want to ask you, how much we should take away from the alibaba numbers, also how we should think of the coronavirus situation in china >> yeah, this is a leading case of does the past information matter that much to the stock right now? obviously beating on top and bottom line, the stock goes between being a china play and being a global fang. right now it's acting a little more like a china play the fundamentals are fine. you could make the case coronavirus somehow makes their business better positioned than other physical retail, but right now it's being treated as kind of magnified play on what you think about china growth. >> john, is that right should it be right if that's the case >> yeah. i think that is correct. i think it definitely is more china correlated maybe than it's ever been. i downgraded to a whole from a buy a couple months ago just because of all of the uncertainty regarding the trade issues and, you know, and so i had a feeling that was going to hit. and you know, the results are very impressive. again, not just on the top line but on the bottom line as well, showing that strong inherent operating leverage that's in this business. we have seen the movie before with amazon, there are some differences, but effectively it's the same investment thesis, right? >> let me ask you about that to me alibaba and amazon are two wholly different companies i always find that comparison to be in my mind quite strange because i think of alibaba as a capital-light business, much more like an ebay. they don't actually own the factory -- the distribution. they don't own much of anything. not much of anything but they don't own that whole chain where as amazon is a capital intensive heavy business, no >> it's certainly more capital intensive but the thing i focus on is the cloud. for amazon, for example, cloud is, you know, 10% of revenue now. or 8, 9% of revenue but it's 68% of profits so you have this ecommerce retail business, yes, that's different from amazon, but you have inside it a growing cloud business that is growing 62% year over year for alibaba, right? and then it also levers very well and is getting very close to break even. you know, from there, it's really going to be a strong contributor to eps much more so incrementally than ecommerce. >> that cloud business is growing exponentially inside chi china. >> do they need to break out of china? >> i don't think they need to for a very long time perhaps in the pacific rim they can get business there there's no doubt about that. you know, so, there is -- there are areas of expansion, but there's plenty of opportunity just inside of china, i believe. >> i want to circle back to mike, but just before i go, you have a strong buy on alphabet. one tech company to buy, that's the one? >> one large cap, yes. yes. that's the one. >> john, can i ask you one more question you put this on a hold several months ago because of the china trade talks. are you considering changing your rating now that the trade talks have been resolved obviously have the coronavirus there. a lot of people speculate that will be a v-shaped recovery once coronavirus is out of way. >> you would think but coronavirus is not quite out of the way and that's a bit of a black box for me because epidemiology is not a strong suit it's hard for me to discount that, r,here's the one side coronavirus is going to help ecommerce because people shop from home but it's going to slow the economy, maybe all the way up to a point, down to 5%. that can't help alibaba's business overall i think those offset i'm back to where i started and i'm good with my target roughly where it is right now. >> mike, what do you think of this early morning selloff more broadly in terms of the markets. >> obviously you're taking back what you got yesterday the market got very extended in this stuff that seemed insulated. that chart of amazon and alibaba, last couple weeks amazon has gone vertical all this money in a hylic widty low growth situation going into these huge marquee tech stocks that got us a bit stretched. right now you got the market in a position where it can't absorb the hint that the premise that coronavirus is getting better is not true. >> let me ask you about that kim said he would suggest doing nothing because we just don't know anything. it's such an opaque situation. >> i would say do nothing based on your expectations for how this plays out in terms of the virus and growth i can't disagree with that very much. >> you think that's conventional wisdom on the street which is why we keep hitting new highs as of yesterday. >> it's somewhat conventional wisdom but hopefulness in there that says we might get like last year an easier central bank slate without having to go through domestic economic pain i do think the street was being a little optimistic about exactly how the u.s. market can come through this, but you know, i don't think it's implausible i think that's the way investors were leaning >> okay. john, thank you. mr. santoli, thank you coming up with some steep tax proposals by joe biden, bernie sanders and elizabeth warren, who will wall street really support for the democratic nomination? are they considering jumping ship and supporting president trump 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protected against new ransomware, malware and phishing threats. every 10 minutes feels pretty good. comcast business security edge automatically helps protect all the devices on your network. call today. comcast business. beyond fast. welcome back, everybody. news just out from tesla the auto maker plans to offer $2 billion in common stock. elon musk will buy up to $10 million shares larry will buy up to a million dollars worth of stock and 30 day option for the underwriters to purchase about $300 million of additional common stock on t would happen the shares hav this news out just in the last couple minutes looks like tesla shares on this news down about $40.86 to 72643. the sharp rise has gotten the attention of just about everyone, including berkshire hathaway berkshire has invested in a rival chinese electric auto maker and when it comes to tesla, there's not a whole lot of love lost. >> i would never buy it and i would never sell short i have a third comment the man in los angeles he once said something i have taken to my heart never underestimate the man who overestimates himself. i think elon musk is peculiar. he may overestimate himself but he may not be wrong all the time. >> that's one of the nicer things that charlie munger said about him. shares of tesla are up about 150% over the past year, but on this news of the stock offering the additional $2 billion worth common stock, stocks off by about 5.2% >> okay. meantime, with bernie sanders scoring victory in new hampshire and vice president biden's campaign struggling, who will wall street back in the 2020 election i want to welcome bill cohen here, cnbc contributor and long-time call you like a wall street denzian or something like that. >> yeah. maybe. >> and -- >> denizan >> former cke restaurant ceo you saw lloyd bank out with his tweet which is probably only helping sanders, frankly but the question is among the democrats on wall street, what do you think they do if elizabeth warren or bernie sanders is the nominee >> probably vote for trump i mean, i think look, i think they would admire, say it's not mike and i think they really appreciate -- >> mike bloomberg. >> i think they really appreciate this idea that he's fomenting or that he will support whoever the democratic nominee with his many billions i think they really like that, but i've had more than one wall street guy and more than one corporate ceo say, look, bernie and elizabeth warren, i just can't go there it's a bridge too far. i can do pete. i can do klobuchar i can do mike bloomberg. i cannot do bernie or elizabeth warren therefore the devil i know as much as i hate him is better and his policies, economic policies i can live with, i can muddle through. >> that is staggering. bernie on the predicted websites is clearly the favorite right now. that's crazy isn't it >> personally i think that's crazy. i mean -- >> it's crazy on the websites. >> it's crazy on the websites. >> he just won -- >> i can see how he wins the democratic nomination. >> that's what i mean. >> i don't see how he beats donald trump. >> that's what i mean. but it's amazing that the democratic party might pick bernie you know what, they're setting themselves up for the criticism that he -- they screwed him last time they're setting themselves up that the establishment is not going to let it happen. >> sometimes this happens. look what happened i'm old enough to remember george mcgovern, lost 49 states. i loved him. i was 18 >> right. >> i loved him. >> but you would still love him. >> probably still love him i still would love him >> andy, i want to turn around and ask you a different question which is to say on the republican side of the aisle, if bloomberg were the nominee, how many classic republican business people do you think who have been supportive of trump because they didn't like hillary clinton last time when they switch this time >> i don't think you would have a lot of them. you could have some. i think we've got problems on the right the trump supporters have problems with bloomberg on tax policy and such and i think bloomberg has bigger problems. bloomberg is going to lose, he's never going to have that 25% of the democratic vote that's supporting bernie sanders. his supporters will believe that bloomberg bought the election. there's an article by charles blow really attacking bloomberg from the african-american community's perspective. trump's got approval ratings in the 30% range among african-americans, which is very high for a republican. if he gets 20, 25% of the african-american vote and he could if bloomberg is the candidate, it's landslide win for the president. so i don't really think republicans switching to bloomberg is really going to offset the problems democrats have if bloomberg is the nominee. >> okay. unfortunately we're out of time. this conversation was way too quick. >> it is too quick i agree with the denisen. >> we can keep the conversation going. >> i was nodding my head in disagreement i think andy who i admired what he accomplished is completely wrong. bloomberg can work his way to be the democratic nominee, he'll get a lot of support. >> but how excited would bernie and aoc and warren democrats be to vote in the election? >> they'll be excited to beat trump. >> joe, i think they'll be excited to beat trump. >> didn't happen in the last election didn't go to hillary once the election went forward. >> worried that bernie getting screwed again. >> that's exactly right. they'll be so irritated. they're already believing that in iowa, you know, that party screwed him. they're concerned that bloomberg is going to get to debate by essentially buying his way into the debate and then there's all this super delegate problems that the bernie supporters have. >> can i ask you a question on that the thing that i actually do find staggering is when business people have a problem actually with bloomberg only because classically in a normal world you would like at him, i think, and say as i said before, he's the most accomplished, competent business person that you know frankly. >> a lot of times we have very, very accomplished people in the business community who then go out and want to pursue policies that aren't consistent with the rest of the company, rest of the country growing economically i think we see that. >> do you think he was successful as a mayor? >> i do. >> it's very strange to me >> so he's got a great track record as a mayor. >> he does have a great track record >> as a businessman. what more could you ask for. sort of the anti-trump in that regard >> climate change isn't my primary objective and i don't take my private jet to tucker's town and preach climate change the gun control -- >> trump did the same thing. he took his private jet to tucker's town -- >> right but he's not preaching climate change. >> he's not a climate change guy. what trump has been incredibly successful the first three years i think that will overwhelm anything anything bloomberg did as major. >> purely on character, who do you like better? >> look, i like donald trump he's a funny guy i enjoy being in his presence. he's done a great job of president. a lot of what he gets criticized for is defending himself. >> he has direct access to the american people which no president had before he's done a very good job defending himself. look what happened with the impeachment and the mueller probe he had to defend himself. >> he's done so very effectively. >> i was not talking about hiller i was talking about bloomberg. >> you didn't complain for eight years about their character. >> first of all, that's not true i did. we had conversations about the foundation we had conversations about all sorts of things that took place. >> you didn't seem quite as energized. any way, thank you, cohen. thank you. still vote for mcgovern. i love you. >> absolutely. >> i voted for mcgovern, too i was 22 years old. >> i was young, too, believe it or not he did conjure up certain energy we had lived through the '60s. >> hey, man. >> dude. >> nixon was not exactly -- >> who voted for jimmy carter? >> so did i. >> so did i. >> but if nixon were around now i might vote for him again i've changed thank you. >> thank you. >> pleasure. some news just out from tesla, the auto maker is planning to offer 2 billion in common stock elon musk found 10 million laying around. you talk about pocket lint, this would make me not want to buy it if oracle larry ellison, hey, help us out here okay, i'll be $1 million worth larry ellison, $1 million, no thanks any way, he is on tesla's board. he'll buy up to a 1 million in stock doesn't seem like a lot. phil lebeau joins us now does that give you a lot of lln from larry ellison >> what does give tesla lovers, confidence, listen comments he made he has been the biggest champion of elon musk and what elon musk has done at tesla. again, that's going back before he was on the tesla board. so, yeah you could sit there and say, well, he should buy more than just a million dollars i have no idea why he decided only to buy a million worth of tesla shares this is what we're seeing from the stock today. premarket, down 4% after tesla announced that it is going to be doing a common stock offering, raising $2 billion as you mentioned, elon musk will be buying $10 million worth this gives tesla the financial flexibility it needs so that the balance sheet is in the right spot as it continues to make the investments to expand production, you know, they just had the china factory that has just come online now you have berlin, which they hope to open up, to build and open up by the end of next year. so you put that all together, this gives them that capital that is so important that they're going to need in such a capital intensive business as you take a look at what we're going to show you the deliveries of tesla vehicles. 365,000 vehicles roughly speaking is what they delivered last year. the expectation is that this year tesla will build at least or i should say deliver at least half million vehicles. then you can look from there as they increase production in europe what will deliveries be like let's say in 2021, 2022, 2023 so this is a big move, not an unexpected move when it comes to tesla. again, $2 billion common stock offering. >> is elon musk literally on january 29th i just want to read you what he says we are still generating positive cash in light of that, it doesn't make sense to raise money because we expect to generate cash despite this growth level >> doesn't surprise me that he said that and did this if you go back and look at their stock offerings in the past, andrew, whether it was during an earnings call, whether it was during a conference call with analysts after a particular event, he would poo-poo the idea i i don't think we need to raise money. we're in good shape. yadda yadda yadda, at some point, six to eight weeks later they would raise money. >> we're 15 days later i just wonder if you tell investors again that we don't think we need to raise cash in 15 days later you're telling the public that you are raising cash whether that's a problem. >> i don't think it's a problem. i don't think they perceive it as a problem look, he can come back and say, my feeling is that we didn't need to and had a chance to think about it and came back and decided we did need to raise $2 billion. the track record is pretty clear here he has down played the idea of needing to raise more money because they're on the cusp or just starting to become cash flow positive. therefore they didn't need to raise cash he said that in the past and turned around and done it. >> i will say, look, he might be crazy and opportunistic when you have seen the stock run up this much it's a pullback of just 4.5% 150% over the last six weeks or something. >> becky, when it shot up a week and a half ago, there were more than a few people who said you would be a fool not to take advantage of this opportunity with the stock jumping up to 500, 600, $700 a share at one point going over $900 a share. everybody said you would be a fool not to take advantage of it at this point. >> he would be a fool not to take advantage of it i wonder how many people buy in. you're not getting diluted when you talk about the growth that's come up if you're an existing shareholder. >> right, exactly. >> phil, while you're here, can we also ask you about is southwest airlines news. >> sure. >> they're extending their kans laxs of the 737 max flights all the way through early august is this something they're doing more getting more signaling suggesting it's not going to get approved by the faa or abundance of caution >> a couple of things at play here, becky. one of them is you have got hundreds, thousands of southwest pilots who need to go through certification, the new training for the 737 max. that's going to take four hours for each pilot to do that. they've got three simulators already. they're going to have more simulators coming online over the next several months. it's simply a log jam and logistical issue in terms of when do we think we'll have our pilots trained in order to get the max back into service. yes, they are saying august 11th right now is when they expect to return to service. that's two months later than what was expected previously and what their competitors are saying at this point but at the same time, don't be surprised if they potentially could slide this forward a little bit i know this will be perceived by people as another piece of bad news when it comes to the 737 max, but i have to tell you and over the last couple of days it's been noticeable when i have talked with people particularly regulators, there is a shift in terms of the expectations for when the max is recertified and ultimately ungrounded. nobody is saying it definitively, but you can see the train has left the station in terms of what they expect and the expectation is increasingly that boeing will have everything in place we'll do a certification play in the next few weeks and potentially you're looking at maybe late april, maybe may or early june that you could see the aircraft ungrounded. again, that doesn't mean you flipped a switch and start flying these everywhere, but it does give the green light to the airlines that have the parked ones that are already, they were pulled out of service to begin the certification training for those pilots. >> that's another when do you do when the facts change for elon. >> right to me you would be crazy not to try to take advantage. >> the question is whetherthe stock will end up by the end of the day because part of the whole strategy -- the bull case is if you can get rid of some of the debt, then it's a great thing if you can sell this equity. >> someone brought in larry owens a ton of tesla. >> $2 billion worth. >> i still don't understand. >> it just means there is additional demand. >> step up, larry. i would have immediately thought i can't buy a million. that would look silly, right that's like one of us buying a dollar's worth of tesla. literally. >> i don't think it's a dollar probably less than that. >> probably not a dollar. >> but larry is a complicated guy. i've always been under the impression -- ialways been under the impression that larry is relatively cash poor off the margin of his own stocks now to the deadly coronavirus. china hubei province where the virus is believed to emerged, reported a number of record new deaths the spike is due to new reporting methods for the virus confirming cases using ct scans instead of rna tests the local health commission says that helps to isolate patients faster hubei province extended school shutdowns and business until february 21st. some disruptions hitting industry across china. economists have been trying to measure the virus's economic impact and now using some unconventional methods to discuss this and so much more, leesman is back. >> good morning. the uncertainty about the flu data from china along with the general unreliability of chinese numbers has economists scrambling in just one example, nicholas cofounder of data tech research is watching publicly available pollution data from wuhan. >> i saw this. >> told me, quote, wuhan is way below the rest of the country in terms of pollution which fits the narrative that it's still locked down. we downloaded a bunch of this data yesterday here is one of the metrics he find find particulate matter in the wuhan air where you can get six different measures it shows a plunge for the first part of february and well below the monthly average even after the end of the extended lieu mar break. pollution has come back just a bit. in this case, a potential sign of at least some rebound in economic activity. at jp morgan, they're monitoring a host of indicators including coal consumption which is down 40% and real estate activity down 90% below historical averages among the most interesting gauges that they have calculated, traffic delays in guangju. the data for the bustling port city shows traffic delays never bounced back >> what normally happens it comes back and this is sort of the number of multiples of travel time. those delays began increasing a bit in the past couple days but you can see they trended back down yesterday and remain far below normal patterns. the lengths analysts are going shows how unreliable they think the chinese data is and now critical china is for markets. if you look at these pollution maps, they're very interesting beijing and the northeast industrial center is all red and it's always all red. which means terrible air quality. and because of what's happening now with the lockdown in the center of the country and where wuhan is, it's yellow. just with by reference, the air quality index of wuhan is 76 it's normally well above 100. >> can't we just ask the chinese how things are going in wuhan? no, we can't >> if we could, joe, i wouldn't have done that report. it's all crunching pollution data. >> part of the problem. >> that is the problem >> we got to do back flips to try to figure out what's going on here. that's not the way to manage. >> everybody is looking for an edge to say -- >> that's not the way to manage a pandemic. >> something i can understand better that's going on relative to data. they're looking at tourism numbers, at the airline numbers, all sorts of things that are really fascinating ways to get around the unreliability of the data. for more on the economic impact and the human impact of the coronavirus is a former fda commissioner and the former deputy assistant secretary for economic policy at treasury. dr. mclellan, you may be the person who can best tell us what the human and the economic impact of this is going to be. first of all, address steve's point that the information we're getting, we're trying to have to make this up on our own. where do you think the situation stands right now from the best information you've gathered? >> well, the situation in wuhan is going to be difficult for quite some time to come, i think. the local public health authorities are pretty overwhelmed with cases m they have developed a new method of accounting cases because there's not the method of gold standard case of detecting whether someone has the virus or not and there clearly are a lot of continued containment efforts under way that are going to have a big impact on the economy in the area and hopefully will help contain the spread of the virus locally as well. >> we had an official in from new york city earlier today just asking what the preparations were he said at this point they have not started to amass any sort of testing units that we could be handling if we saw an outbreak here in the united states. how prepared is the united states, and have we learned from past experiences with sars and other situations >> i think we definitely have learned. there is a lot of preparation going on now by the cdc in clap ration with other agencies throughout the federal government they are preparing additional supplies, the cdc has already made a pretty rapid diagnostic test available throughout the u.s. to local public health authorities so that when suspected cases come up, they can be tested rapidly within a few hours and containment procedures, isolation, quarantine if necessary can be implemented. this is a very different situation than what china is facing where we are aware of the challenges that could be coming and have some preparations in place to help contain it but i do think we are still in a difficult period here where the virus could spread and it is important to go ahead with these kinds of preparations. >> let's talk about the economic impact or at least our best guesses at some of these situations clearly a huge economic impact for china. do you anticipate that that will end up having an impact on our economy? >> it could. you know, our economy is diverse, it's large, it involves trade with china and there will unquestionably be some impacts but i think those will be dampened as well and in the united states, i don't think anyone here needs to be making plans now for significant direct economic disruption from the virus because all of these preparatory steps are in place i do think it's going to be with us for some time you all may remember there have been outbreaks of new viruses before, h 1 n 1 just in the last decade before that sars. this is probably more like an h1n1 case a little higher mortality rate than that for people who are -- have a compromised immune system or lung problems or elderly, but it's not as bad as sars in terms of fatality either so we have made it through a viral infections like these before and hopefully the containment will prevent this from becoming widespread infection in the united states. >> dr. mclellan, thank you for your time today. >> great to be with you. >> we should also tell you about some news just out from ralph lauren the company saying that it kpks to take a hit from the outbreak of 55 million to $70 million this year. about two thirds of the company's stores in china are closed at this point you can learn more about the fallout for companies on special report tonight outbreak coronavirus starting at 7:00 p.m. eastern time. coming up, the president's latest controversial pick for the fed facing congressional grillings today in d.c we're going to talk about it committee member mike rounds will join us from south dakota ahead of that testimony and what investors should be watching we're also keeping an eye on twitter. president trump billionaire versus billionaire taking on mike i don't like it. take a look at shares of tesla. they're lower on the news that they offered $2 billion in common stock, elon musk and larry ellison will both participate in the offering. back in a moment with td ameritrade you've got courses, tools, and help from pros. it's almost like you're training me to become an even smarter, stronger investor. exactly. ♪(rocky theme music) fifty-six straight, come on! that's it, left trade right trade. come on another trade, i want to see it! more! ♪ 80s-style training montage? yeah. happens all the time. ♪ when it comes to your business internet, which is more important? ♪ ♪ okay, i wish i didn't have to choose. like the more i think about it, the more i want to jump to each room. what if i said you can have it all? ♪ ♪ comcast business gives you connectivity that goes beyond. that's what we want! that's speed, reliability, and security, all from one provider. touchdown! get started with internet and voice for an amazing price. call today. comcast business. beyond fast. welcome back to show judy shelton heading to capitol hill today lawmakers are likely going to question her nontraditional views on monetary policy one is senator mike rounds, republican of south dakota he serves on the banking committee. great to see you what do you think of her and in particular, what do you think of this view that she has espoused that we don't need a fed? >> well, to begin with, i had a chance to visit with her in my office, had a good discussion with her asked her questions about some of the comments that had been attributed to her. i didn't find her to be nearly as unreasonable as some of the pundits have suggested i thought her discussions with regard to a very stable, sovereign metric are very stable, sovereign coin was appropriate. i think that she will -- >> gold again? >> yeah. there was a discussion about pegging to gold. we actually talked about that for some time. and look, i don't think she's nearly as in tune to making major changes as a lot of people would suggest. but i think the healthy part is that she will bring a rather diverse background and a different way of looking at some things i think that's healthy on the board. in fact, i asked the chairman yesterday about group think. and he clearly wants diverse group of people on the board with him he's not afraid of that. at the same time, in talking with dr. shelton, she makes it very clear that she understands she can have a different point of view but still be part of a team that's kind of what we're looking for. >> a lot of people are speculating that if she gets on the board that she may actually become the next chair of the fed. what do you think of that? >> well, i've heard that rumor, but i can tell you, look, i really like the job that chairman powell has done i'm a believer in fed independence i think he's done a good job of navigating through some rather challenging times. at the same time, he stayed focussed on exactly what congress has told him they're supposed to do which is to work at keeping inflation down and work at keeping the unemployment level as low as possible if you look at it right now, it looks like it's working. >> would you consider shelton independent. i ask because there's a view among at least her critics that she is not just much more in tune with the president but likely to work at his behest >> well, i think first of all you're not going to find this president or many other presidents that are going to suggest someone that they don't believe has a similar point of view than what they do that's part of the privilege of being a president. >> jay powell has proven to be at least up until recently potentially at odds oftentimes with the president >> and yet the president made that recommendation for him. and once chairman powell was in place and so forth, we expect him to be independent. i would expect that dr. shelton would be independent as well and i think she'll bring different ideas. it does not mean necessarily that she'll bring ideas that she's going to go to the well for, go to do battle on, but to suggest different approaches and to suggest different alternatives is a healthy discussion to have in fact, chairman powell yesterday said that they welcome that not just from the members of the board but from the different banks around the country. they listen to that. so i don't have a fear of dr. shelton stepping on to the board and being one of the seven members that is having a very good discussion, but at the same time, when they're all done being part of the same team. >> okay. senator rounds, always good to see you. we look forward to that hearing later today. >> i do, too. >> thank you still to come, responsible for youth addiction, that's how the attorney general of massachusetts characterizes e-cigarettes maker juul. she is suing the company for allegedly creating an epidemic among young people she will join us live in a few minutes. we'll be right bac , yeah, i ain't petty, ♪ ♪ looking fly, yeah, they ain't ready. ♪ ♪ i can shine, i can shine, ♪ ♪ i can shine. ♪ i'mma do what i'm made to do. ♪ ♪ i'mma do what i'm made to do. ♪ built for excellence. you start from the foundation up. the excellence is reaching dreams and 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as we celebrate today's milestone, we are even more excited about the future. congratulations datadog. coming up, jle cimobsslas and cpi are on the way "squawk box" will be right back. when you look at the critical issues facing our world, what do you see? we see a billion more people breathing free. we see access to fresh food being the global norm, not the exception. we see homes staying cooler, without the planet getting warmer. at emerson, when issues become inspiration, focusing core strengths to create a better world isn't just a result, it's a responsibility. emerson. consider it solved. ♪ welcome back to "squawk box. rick santelli here with live, breaking news. we have our january read on consumer price index expected up .2, have that. we're up .1. i don't see any revisions to any of the cpi data. if you strip out the all-important food and energy, you're up .2 exactly as expected year over year, up 2.5 that is a little bit hot, sequentially following 2.3 if you look at core, food energy year over year, 2.3 roughly is expected same as the rear-view mirror but there's an asterisk on this, 23rd month in a row that it's 2% or higher. i know that peter and i like to pay very close attention to that let's get to initial jobless claims last year was 202 revised up to 1203 add two more current read of 205,000 on continuing claims always week in arrears smidge under 1.76 million to 1.698. look at the markets, toying with the 160 level. not that it's a huge area. couple weeks that it was the high we took it out yesterday only to come back. there's no buoyancy to interest rates here or abroad the dollar index has been roaring in 2020, backing off just a smidge and of course we all know there will be hearings on some fed officials today so the markets would be paying very close attention. back to you, becky. >> rick, bond prices higher or lower? >> right now at 160 they're basically a little bit lower in yield, higher in prices. >> higher! >> they're off the low yields. >> we just wanted you to say higher, rick i love when you say it. >> higher! >> there you go. >> rick, thank you we'll check in with you again soon. in the meantime, the state of massachusetts is going after juul for alleged will marketing its products to end people and, quote, creating a youth vapor epidemic maura healey claims they bought ads on cartoon magazine the new allegations are at odds with claims from juul executives that the company never intentionally targeted teenagers. joining us right now to talk about the suit is massachusetts's a.g.more ra h aa healey. >> great to be with you. >> let's talk about the documents that you found that seems to contradict what juul executives said in the past. what did they show >> they totally contradict what juul represented for a long time juul said we're about getting adults to stop smoking cigarettes when really what we know from our investigation and juul's own documents is their whole effort was to try to get kids hooked to get kids to start vaping because they wanted to create a whole new class of consumers i'll tell you what we do know from our investigation, we found documents showing that juul actually rejected an ad campaign that was directed at older people and instead used one that was directed specifically at young people, making them look cool and hip through the use of fashion models, trying to recruit celebrities and social media influencers that are really popular with teens. we know that they placed ads not only on websites like nickelodeon but also on homework apps so kids in middle school doing their math homework would get a juul ad, seriously obviously we have the data showing they sold juul into massachusetts to kids who were under age. so, i mean, the evidence is overwhelming about what this company's intention was. and unfortunately they were really successful. we've got a lot of kids hooked. >> there's no ambiguity. it shows they very specifically wanted to target children on a homework app on the cartoon network website, on nickelodeon website, it wasn't some massive buy at a larger company and accidentally wound up there? >> no, not at all. in fact, we have the documents showing the correspondents and the dialogue with the creative ad agency and the discussion and the determination at juul to let's not go in the direction of the older ad, you know, campaign targeting the older people and adults let's go in the direction of an effort to campaign and target a young audience so unfortunately 1 in 4 kids right now in this country are vaping we have never seen an increase like we have seen with this substance of vaping. i can tell you just from listening to parents and coaches and teachers, i mean, it's an epidemic it's a public health crisis. and it's just really upsetting that this company in a drive to make boat loads of money and they brought back 3.3 billion last year alone, this was all on the backs of exploiting kids and getting them hooked. these are kids who never would have started smoking to begin with unfortunately they're vaping. >> what's your goal? to shut the company down >> well, it's to get them to stop bad practices we don't want them misleading with their marketing we don't want them targeting young people we don't want them selling to kids underage. >> my guess is they'll said we stopped those practices. we're not doing that anymore. >> sure. but the jeannie is out of the bottle it's too late. that's why we're seeking money in damages yeah, we're seeking money in damages. we have a lot of kids who need a lot of treatment who need a lot of help now for nicotine addiction. we have kids here who were getting kids out of school, kicked off sports teams, colleges been put at risk simply because they have become addicted we have kids who are sleeping with vaping devices under their pillow at night and are being treated by pedestrians so, you know -- >> no question that juul bears responsibility for this and look at the media companies and the homework app and say they bear responsibility for accepting those ads. >> well, certainly we have a broad look but i'll tell you we have taken action against a number of e-cigarettes companies. i've shut down eight companies that were selling online to kids underage here. but let's face it, juul created this market. juul is 75% of the market today. they were the first to market. w this product and really made it popular so a lot of third-parties have come on board and will certainly be vigilant and hold them accountable, as we have already. but juul really created this and started this that's why they need to be held accountable. >> thank you for your time, attorney general healey. >> great to be with you. coming up, elon musk about face tesla announcing a $2 billion stock offering just weeks after musk said he had no plans to raise capital. plus, warden school finance professor jeremy segel on the dow's march to 30,000 which he talked about a long time ago what could potentially derail that move higher we'll hear from him as we head to break a reminder you can always watch or listen to us live on the go on the cnbc app. stay tuned you're watching "squawk box" on cnbc possible every single day. with technology that helps you offer shoppers a better experience. take your company's app. we can add in all sorts of capabilities, which help your customers manage rewards, offers, and payments on the fly. and now, applying for credit can happen in a flash. that way, more people can start shopping with you on the spot, wherever they are. how's that for changing what's possible? i cowe can do theyour screening at her house. hi. this is the man that's going to check your eyes grandma. cognizant ai solutions are helping healthcare companies advance diagnostics and prevent blindness in patients with diabetes. everything looks good. you have beautiful eyes. ♪ ♪ welcome back to "squawk box. we have a news alert on the fed and president trump's nomination of judy shelton. steve liesman has some news to bring us this morning. >> we have been talking about jay powell's response yesterday through a question whether or not he supports diversity on the federal reserve. some familiar with his thinking some suggested whether or not he really is supporting judy shelton's nomination or would support it if he were asked and responded directly he was asked yesterday gentlemen narly about diversity on the fed. wait a second, it do you have been anything. let's hear what jay powell said real quick. >> i'm strongly inclined to think that you need to hear all sides of a case. in fact, when i was at private equity investor, i used to speak against my own deals just to force people to defend them so i would get really get a sense i believe in things. it's critical to have diverse perspectives. >> i will be the first to admit, i interpreted that as kind of a wink and a nod, like it's okay to have judy shelton. >> favorable for judy shelton. >> the senator you just had on we asked the question interpreted the same way people familiar with this thinking said maybe not. >> yeah. to me it's more like how do you possibly say i don't want diverse opinion. i want a bunch of yes men on the table. >> i think you read that correctly, becky my inclination is to read the tea leaves too much sometimes. >> take it one step further, what does that mean then if she actually either gets on the board which is i imagine likely but once she's there, not happy about it. >> i think the concerns out there that are shared by republicans and democrats are shared at the fed. a person who supports the gold standard approach, a person who has changed her views quite a bit from one administration to the next, a person who would be very highly connected apparently to the administration, i think that raises concerns at the federal reserve. >> but your handicap is she still gets the nod >> i don't have a handicap on this i don't know we talked to some senator's offices yesterday, some high level republicans and high level democrats. i didn't have anybody say she's a shoe-in. i didn't hear that all i can say and i'm not doing this for rating purposes it's something worth watching it will be interesting. >> going from miles and miles from neutral to cutting rates three times is sort of changing your mind a lot. and curing favor with the trump administration. >> that's true. >> powell has the same -- you could level the same criticism. >> you could you could. but you would say that powell had i think reasonably consistent >> still hammered by trump. >> a trade war and whole bunch of things that happened. >> now we have coronavirus. >> right. >> we have such clarity coming as you noted that we're measuring sulfur dioxide levels to find out -- >> fine particulate matters, joe. >> becky is the -- is the particulate pollution going up a little bit because of economic activity is coming back or going up because there's cremation >> i'm not going to go there >> that's a real sick thought. >> i do know it's an interesting linkage between the pollution levels and economic activity >> steve, thanks. let's get back to that big news from just a few minutes ago. tesla announcing it plans to raise $2 billion through a stock offering phil lebeau is back with us from chicago. phil >> becky, we saw the stock under pressure pre-market when this news first came out. and it remains so. down about 3 or 4% depending on when you're looking at it. there it is right now. down a little more than 4% it's a $2 billion common stock offering by the way, the underwriters, they also have the option to taking in another 300 million, buying into this, which would raise up to 2.3 billion. elon musk, the ceo of tesla, says he will buy $10 million from this common stock offering. meanwhile, director larry ellison says that he will take or buy $1 million from this offering the price that they're buying at, $767 remember, it was just two weeks ago when tesla reported fourth quarter earnings during the analyst call elon musk was asked about would he be considering raising capital right now? seems like a smart thing to do the stock at the elevated levels where it was at even then. here is what elon musk had to say at that point. >> so, we're spending money i think efficiently and not artificially limiting our progress and then despite all that, we are still generating positive cash so, you know, in light of that, it doesn't make sense to raise money because we expect to generate cash despite the credit level. >> two weeks later, things have changed. by the way, let's look at annual deliveries from tesla. one thing to keep in mind is that this is a company that will be investing heavily over the next couple of years they delivered 365,000 vehicles or just under that last year the expectation is that they will deliver at least 500,000. that's their guidance. at least 500,000 vehicles this year remember, they now have the china plant that is up and running. and they plan to have a new plant that they will build and then get up and running within the next year and a half, two yearsoutside of berlin, germany. so, when you look at the capital that will be invested, there are a lot of people saying, hey, look, this is a smart use of your money also, guys, we want to touch base on a recall that tesla announced last night it is for 15,000 model xs, model year 2016. there is a power steering issue. i've had a few people say to me, well, is this a big deal is the stock under a lot of pressure today i don't think it's going to be a big deal for two reasons one, this is a proactive voluntary recall of an issue similar to what they had with the model s when they announced a recall of about 126,000 model ss before 2016 that didn't have a huge impact either also, there are no accidents or fatalities that are attached with this recall guys, we see hundreds of recalls every month issued by nitsa. we rarely report on ones where it's 15,000 vehicles there you have it, tesla announcing this vehicle recall, 15,000 model xs. >> okay. phil, stay with us want to talk to mike santoli about all of this. also, dan eis on the squawk news line let's go to dan real quick you happen aabout this, upset about this given what elon musk just said 15 days snag. >> look, i mean, when you look at the situation for tesla, regardless of what it said on the call, it's a smart strategic move it takes any doomsday scenario around crash kruncrunch off the table. this from a board perspective is something, even for the bulls. i think the tesla story potentially changes with this in terms of now what's happened on the balance sheet. and i think it's going to be hard for bears to make their case >> i mean that might be the case i do think, though, that it's a good test of exactly what got the stock up to these levels $2 billion first of all the market cap in the premarket is down more than the value of the offering. so, it clearly is juinterrupting the story of scarcity. this is 138 billion market cap company $2 billion is a material number for their balance sheet and for their debt position and so as logical as it is from a corporate finance basis, why only 2 billion this stock trades $40 billion in a routine day, right this is like 5, 10% of someda y daily volume. >> right now it's down more than 4% you could make the argument by the end of the day it could be flat, it could be up, it could be down 10. >> of course it could be 100% >> not above. >> there's nothing about what the bulls would say about the prospect of this company that's inconsistent with the stock price that's either $200 above or below where it is right now that's how far and fast it has come that it just kind of -- you can't pretend that the market is perfectly calibrating the prospects of this company just because it went vertical. >> dan, back to you, in terms of bullish argument which is the one ultimately you're making, this provides a floor? >> i think it puts a floor and fuel in the bull engine around the 3 buildout and europe and bear and conspiracy -- it's really about the cash crunch now they solidified the balance sheet be deliveries going up into to the right. just a massively smart move by the board and musk to make this move right here. >> okay. we will see what the shorts are going to get the shorts are happy. >> who knows who is left on the short side and at what price levels and so, you know, to me that's not a principle driver of this stock. i think it really is a lot of new money for various reasons that decided to -- >> how long do you think they hang on? do you think they're in for a while? >> i think a lot of true believers on both sides of this stock no, doubt about it. >> is your throat okay >> no. >> you have a tickle >> i'm fighting through it >> cool. go >> i'm beyond the contagionsy. >> i thought you already had it in davos >> you had it before davos >> markets opened -- if markets opened right now, we would be about 700 points away from the dow 30,000 level let's talk more about what's powering the rally, joining us jeremy siegel from the wharton school of finance at the university of pennsylvania good morning. >> good morning. >> one of the things may be no e more associated with dow 30,000 than you and 20,000, and i think you even have gone higher than that so we know that you've been right and you said stay long, you've been bullish. but we did say that you talked about something that might derail the bull market is there something specific that's changed in your view, or are people asking you and you say this could happen? do you have a different viewpoint now on the long-term bull >> suddenly anything can happen. what i'm pointing out is that we are creating around 20 times this year's earnings, or my estimate of this year's earnings that is not unreasonable, low interest rate environment in today's world, but it's certainly not cheap. i also worry about momentum players. i think in the last two or three years we've had more and more momentum players that jump onto trends that's what i talked about in january. now, we had the virus come in, kind of interrupted it now are we going to get back to that trend, what i saw two years ago in 2018, remember, we were straight up in january again when people forget about valuations, the market could get too high we're not there yet, but right now this year i expect 5% to 10% total return i'm a little bit down today on the opening, but we were at 4 yesterday, so, you knohe gas ta? that being said, we're, what, 2% away from 30,000 i think if there was good news on this virus front, we would pop above 30,000, i think, without question. >> so these, like so many individuals, you're not mentioning it, but there's short term, intermediate term and long term stances that you take long term are things in place for more gains over the next five years above 30,000 do you think? >> oh, yeah. from a 20 price earnings ratio, you look for about a 5% return after inflation. if we have that 2% inflation, that gives us about a 7% return. i look at over the next five years on stocks. now, that's about a 2% dividend and a 5% capital gain. now, year-to-year we know there's a lot of volatility that could be way up and down, but the 7% return is a little bit lower than long-term historical because we're a little bit higher than the average valuation. but look at -- where else are you going to go? treasury bonds are 1.5%, savings accounts are 1% or less. that's still a very good return in today's world so less than long term, but still pretty healthy for long-term investors. >> so that would be -- okay. what do we do to do -- >> 5%. >> 5%. so we're going to double again in ten years or something or 12 years? >> well, yeah. i mean a 5% return on the average would double i guess in about 14 years from 30,000 to 60,000 when we look that far ahead. so yeah, we'll eventually get there. i mean i don't think many people are worried about that long a horizon. but let's face it, those people, younger people today planning for their retirement, 30-year iras, you're going to get 7% return in the long run from today's levels that's something that still argues strongly for stocks in long-term portfolios in my opinion without question plus the fact we've got to remember dividend yields today are higher than bond yields on treasuries we've not had much of that experience in the last 50 years, but today they are and that's another strong factor in favor of stocks. >> i don't remember whether you anticipated this long-term stretch of these low interest rates and low inflation. that didn't go into your models ten years ago, did it? >> no, i don't think anyone did. i think the biggest surprise is the world low interest rates we're beginning to understand them they're more than the central bank, they're demographics and people saving and also very important the treasury bond has become a favorite hedge instrument against stock market risk which means risk portfolios and hedge managers are holding tons of it so the demand is insatiable. and i think we're going to stay low for years. i don't think we're going to get treasuries above 2.5% for years. >> that's amazing. >> and i think that's something that investors have to contend with that's also stocks. >> thanks, professor we'll always have the white dog cafe no matter what happens. >> absolutely. we'll do that again, joe. >> let's do. >> it was fun. >> it was. thanks, professor. i want to get down to the new york stock exchange and talk to jim cramer real quick on tesla. also noticing there's a lot of money. this is a bullish sign on the stock. where are you? >> look, i think in the last ten days the world has changed you could argue that ralph lauren ten days ago said things were great put out a notice this morning saying china is really going to hurt our numbers you can argue what elon is doing is saying, look, the stock is much higher now, i need the money. maybe we don't know when china will come online we have a lot of demand all over the place. if this man wanted to get 2 billion, he could get 2 billion with one phone call. i think anyone who begrudges him with the stock all the way up from where he reported is nuts why not take the money the world got a lot less certain in the last ten days. >> jim cramer, we'll see you in a few minutes. you don't want to miss scott minerd later today my grandmother, lily sorkin, turned 101 today remember, we did 100 last year today is her happy birthday, and happy birthday, grandma. i'll be on the phone with you in just a little bit. >> happy birthday! that's awesome. ayun, u'ears old, lily sorkin. st tedyore watching "squawk" right here on cnbc. our retirement plan with voya gives us confidence. they help us with achievable steps along the way... so we can spend a bit today, knowing we're prepared for tomorrow. wow dad, do you think you overdid it maybe? i don't think so... what do you think, peanut? nope! honey, do you think we overdid it? overdid what? see? we don't think so, son. technically, grandparents can't overdo it. it's impossible. well planned, well invested, well protected. voya. be confident to and through retirement. dana-farber cancer institute discovered the pd-l1 pathway. pd-l1. they changed how the world fights cancer. blocking the pd-l1 protein, lets the immune system attack, attack, attack cancer. pd-l1 transformed, revolutionized, immunotherapy. pd-l1 saved my life. saved my life. saved my life. what we do here at dana-faber, changes lives everywhere. everywhere. everywhere. everywhere. everywhere. let's get a final check on the markets this morning we've seen red arrows all morning long but we have seen improvement. we are right now down by about 126 points below fair value for the dow. we've been down over 200 points most of the morning session. the nasdaq is off by 56, and this comes after all of these averages closed at new highs if you're looking at the 10-year note they're right about 1.605%. that does it for us today. we'll see you tomorrow on valentine's day. right now it's time for "squawk on the street. good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with david faber and jim cramer china switches its methodology on the coronavirus resulting in 15,000 additional cases and the testing -- the thesis of a rebound. europe has been watching that same macro dynamic all day today. the 10-year briefly dips below 1.57 and oil is hanging on to 51 coronavirus cases surging as the

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