Transcripts For CNBC Squawk Alley 20240713

Session lows, dow down 250, obviously yields a big part of the story. Were on pace for our first weekly drop in three weeks for all the major averages as a selloff steepens today thanks to weak pmi data nasdaq down another percent today. Where do you look for value now . Jake paulson and mark mahaney. Good to see you both good morning. Thanks, carl. Jim, what separates today from another gardenvariety growth scare and are bonds suggesting that were looking at a global recession . Yeah, i think this is less about the coronavirus today, carl thats the catalyst, but i think this is all about the bond market and are yields going to break to record lows in the united states. They already with the 30year. Well see if the 10year holds i think its creating fear what does the bond market know that the stock market doesnt . I would suggest that the bond markets message is not as bad as people think, because when you look at it, bond yield are back to where they were back in september, but credit spreads have tightened over that same period of time i think what the message of the bond market, that combination is yields are down because inflation is awol, but if it was of a growth story, youd expect credit spreads to be blown out they are not doing that. What we have today is almost recordlow bond yields with recordtype credit spreads thats a message of inflation is down but growth is okay. I think thats the same message the stock market is saying, carl 8 of the 11 sectors are up, suggesting healthy, real growth. The sectors that are down are in the inflation sector, energy and materials. I really think the message of the stock market is inflation is low gubut growth is okay i dont think its as detrimental a message as people think. Its challenging to put this into actionable ideas given the limited universe, but what ideas do you draw from a day like today . Lets see i think core internet fundamentals seem to be largely intact we look at the largest names that came out in the december quarter earnings we did see a little deceleration in the ad names like facebook and google but were going into a year, this is a very robust year for advertising because of the elections, the olympics, primarily because of those two factors. You want names you can buy that will give you exposure to that at a reasonable price. I continue to think that facebook and google offer you that youre paying 22, 23 times earnings for names that are growing earnings 20 , you know, plus clip. I think valuations are highly attractive if off big advertising year like this is. You want to be long with these stocks mark, the other side, a couple of surprises this week, zillow and dropbox anything to extrapolate from those . Theyre smaller stock, market cap around 10 billion for dropbox and a little bit more for zillow but they kind of outperformed in a way that saw them rise more than 20 on the week yeah. Zillow is were on the sidelines on zillow. Its had a wonderful move off the bottom we completely missed it. Its doubled i find this very interesting their core premier agent advertising business has started to reflect that always bodes well for stocks theres still this big bet however that companies are making on the ibuyer market we havent seen proof of profitability but theyre showing scale and you cant be profitable unless you scale. They have the first part of the thesis right if they can translate that into some sort of movements towards profitability in that market, theres substantial upside in the stock. Were waiting for that group point. Dropbox is a different story when they start announcing Share Buybacks they have the cash to do that. They show more movement on the free cash line thats starting to prove out as a modest grower but high potential Free Cash Flow Generating Company thats an asset you want to be long your points about inflation being awol right now i wonder if that is going to continue to be the case. I mean, air freight rates poised for a major spike in the asiapacific region given whats going on with supply chains there. U. S. Is trying to source from other places other than china, leading to increases in things like components from u. S. Companies and the like are we potentially at risk of a big spike in inflation the longer this coronavirus situation persists i do think, morgan, were going to have Inflation Numbers start to rise in the balance of this year. I do think that growth is pretty good i know were going to take a onetime shot here from the coronavirus. Hopefully its not longer than that, and it will put a dent in First Quarter global growth, maybe second quarter, but i think well get that back later in the year. If we do, growth in the u. S. Is really strong. Were at 3. 5 unemployment i think thats going to eventually if theres an deceleration, getting to the other side of the coronavirus, i think inflation will become an issue in a hurry over en in the commodity market, morgan, theyre telling the same message. Most Commodity Prices are down except for one notable area, the industrial Commodity Prices. Thats the stuff thats most sensitive to Economic Growth its risen 5 to 6 off its december lows, its biggest upside move since it peaked in early 2018 so commodity market is also suggesting that inflation is weak but real growth is accelerating i think if real growth does come through, well have all commodities start to rise and youre going to see Wage Inflation and poor consumer inflation i think continue to climb higher while we have this story at the moment of lack of inflation, we might be in a very different situation by year end. Given the fact weve seen this flight to safe havens, this risk and sentiment in the market playing out again today, jim, you sound like a man who is risk on where would you be putting your money . Where are you putting your money . I think were going to have some of both leadership. It wont be value or growth the rest of this year. I think growth will continue to outperform and i would continue to own a core holding. I agree with mark. The tech stocks are getting a little overvalued but theyre also following fundamentals. Real sales growth of s p 500 companies continues to outperform the overall market. Real sale s growth of s p 600 ar outperforming and theyre following the performance up i think that continues but i also think if we agree at some point as a consensus that Economic Growth is having another upward tilt, kind of like we did in 1718, then i think youre going to see only of the cyclical sectors pick up as well, recovery in commodities stocks, recovery in industrials, and i think emerging markets also come back i would sprinkle my bets beyond just growth and keep my growth bet as well. All right jim, mark, thank you, guys have a good weekend. Thank you thank you and we just name dropped dropbox, the big earnings mover of the morning deirdre bosa is in San Francisco with more on that quarter. Deirdre . Good morning, jon shares are trading well above the ipo price. Things dont look so bad last night the Company Beat Expectations and showed investors it can return money with a 600 million Share Buyback while also hitting a key milestone. Take a listen. By the end of this year, our goal is to become a profitable business on a gap basis. This extend beyond 2020. Longer term, we plan to drive accelerated Margin Expansion as we continue to innovate and extend our platform into new markets. Yesterday we told you about short seller spruce point capital, which has called dropbox a melting ice cube but with shares up more than 20 today, this short seller is likely licking its wounds. Still, guys, i want to underline the questions that remain. Drew houston himself admitted there is still work to do. Over the longer term, Share Performance is ugly and the company is adding paid users at a slower pace. Theyve been plagued by worries over user conversion and competing in a very crowded cloud space as it tries to move up market and captures more of the behemoth space theres apple and amazon this quarter likely isnt enough to alleviate all of those concerns jeffries raising its price target but says the lack of growth catalyst keep them at hold bank of america maintained its buy and said dropbox is orienting investors towards a lower growth, faster Margin Expansion scenario back to you guys dreer dra, ive always got to look at dropbox next to box, which went public earlier, has a lot of similarities, moved into sper surprienterprise it seems like its based on the plan for profitability and the buyback, that disciplined play other than that, are there differences you see between dropbox and box, how theyre messaging to the streets and what their strategies are . Both companies would say theyre more of a collaboration tool this is the hot space to see you see zoom and slack operate and dropbox has a new desktop app partnering with zoom and slack. But theyre both trying to move more into the enterprise space whats interesting, too, is we talked about the short sellers looking at dropbox weve seen activist investors go after box. Clearly there are folks out there who think theres more value to capitalize on but when it comes to dropbox, slower growth, larger Margin Expansion makes you wonder if it deserves the premium valuation that some of the other companies in this very hot space are able to take. So far, sternly, it hasnt kept up with some of those p e ratios deirdre bosa, thank you still to come, inside facebooks secret project p and how it led conservatives to wield more power inside the social network. The reporter who broke that story joins us next. Stay wh itus at fidelity, online u. S. Stocks and etfs are commissionfree. And when you open a new brokerage account, your cash is automatically invested at a great rate. Thats why fidelity leads the industry in value while our competition continues to talk. Talk, talk while our competition continues to talk. Weveryone, looknk isntat your phones. The design thinking, the digital engineering, security, blockchain, and we will be first to market yes. When we do we launch . Unfortunately, in 2 or 3, hours. Why the delay . Cognizant is helping banks use Digital Technologies at scale to advance speed to market. Which of your devices are protected by daily security updates . Daily security updates. Daily . I dont know. The only thing. Im struggling with this. Some providers you have to manually download updates to each device. Comcast business securityedge updates every 10 minutes to help keep your connected devices protected against new ransomware, malware and phishing threats. Every 10 minutes feels pretty good. Get secure, reliable internet and voice for an amazing price. Call today. Comcast business. Beyond fast. Welcome back to squawk alley. In the weeks following the 2016 president ial election, facebook discovered dozens of pages peddling fake news all nearly overseas with a distinct lean to the right. The social Media Network would only move a few and not all from the most senior republican who feared a backlash from conservatives who would feel ail yes nated on the platform. Thats the subject of a new report from the Washington Post giving us a look at project propaganda or the facebook machine they created shortly after Donald Trumps surprise victory craig timber, the reporter behind that story, joins us now. Good morning good morning. So what in your judgment is the big surprise here . As you state early on, the stated goal of facebook is to be neutral in these matters, but in trying to appeal, appease maybe conservatives, they ended up tilting to the right yeah. I mean, it was obvious to me from having covered the company, they kept making decisions that fundamentally fell in line with what republicans were pushing for. But it also became clear to me that the pressures were real the president s tweeting about the company and congressional hearings, being accused of bias, and the Justice Department and state attorney generals are investigating them they have real political issues and its not surprising thatve had to adapt to that what are the pressures inside facebook or the forces you would say are maybe pushing them in a different direction from this . Because while were in another election cycle right now and theyre bound to face questions and pressure from both sides about seeming bias, are they going to run the same playbook i think they are going to run the same playbook. They are very reluctant to, you know, attempt to judge whether something is true. They always say were not the arbiter of truth thats become a kind of mantra for the company. That comes from Mark Zuckerberg himself. Hes been very firm on that point. In addition to that, there are all of these political pressures. Theres now increasingly some republican voices inside the company. Theyve worked to rebalance that because coming into the 2016 election they had essentially one or two republicans in that company, so theres been a real effort to kind of rebalance the ranks, and that of course has had consequences in the way decisions get made so just walk me through this a little bit, because i think back to 2016, right, and there was everything that played out with russian accounts, Misinformation Campaigns, you saw that 37page indictment from Robert Mueller as well back in 2018 that also pointed to the fact it wasnt even just the Trump Campaign that was affected by this but also Bernie Sanders campaign at the time weved that company put in place many more employees, make changes, talk about a war room we went to the 2018 election it seem wes saw less abuses, ress less manipulation. To hear you say we could be poised for same type of situation in 2020, what do you mean by that facebook has staffed up come batting the kind of foreign interference that happened in 2016 unfortunately, they were not prepared and did a poor job combatting it. If the exact same thing came to pass in 2020 and they discovered it, i think they would act against it theyve been extremely reluctant to deal with other kinds of misinformation and disinformation, particularly when theyre from domestic actors they dont want to get involved in whether a politician is lying, dont want to get involved in whether any sort of Political Group is pushing the truth in a way that would mislead people they dont want to be in the business of saying something is true or is false that ties their hands because if theres outright falsehoods on their platform, Everybody Knows theyre not true and theyre not acting against it as it did with the nancy pelosi video that seemed to show her drunk. Where is the line bloomberg had a video this week in which he used selective editing to pair a moment when he was on camera and his debate partners were on camera. No deep fake but certainly changed the tone of the message in the video would facebook allow that video . Im sure they would your argument is exactly the argument they make to us all day long once we start saying no to the nancy pelosi video, where does that line end up its an authentically difficult place to find it where the right line is. Theres a couple of lines around hate speech and a few other thi things, but when it comes to truth and falsehood, they are not going to get in that business that distinguishes them from other social Media Companies in addition, they are absolutely not going to limit the ability for politicians to target in narrow ways, microtargeting, the decision with political consequences to it speak of, twitter is testing some new potential features to weed out information on its platform including a communitybased point system that would label false posts or misleading posts by politicians and public figures with a bright orange notification. So, i mean, i wonder how they could do this because political ads almost by nature, a lot of them, are kind of misleading and on twitter you have retweets that seems to be a strategy by some politicians to get a more outrageous message out there without saying they sent it themselves do you think this could work, craik . Is. Its great question credit to nbc for breaking that story. Its fascinating to me that twitter is willing to go into this territory that facebook has refused to go into twitter is preparing apparently to label some statements as not true or misleading and thats a line facebook has refused repeatedly to cross. In a way i think well get an experiment of these two giant and influential social Media Companies trying to wrestle with issues that are authentically really difficult i didnt write the story because i thought facebook was acting irresponsibly. I saw them wresting with real issues that were difficult and was being pushed around by Political Forces that we all are frankly aware are out there. So then what do you think they can do . Because if youre not relying on truth, if youre not really willing to define what that is, arent you ultimately swayed by Public Opinion one way or another . It seems like thats what happened to facebook if you dont want to define whats true or not, then you have to listen to the loudest or most popular voices. How do you think this plays out for twitter if they can color something orange someone will say then this should be orange or that shouldnt be orange at all and there we go. Ive been wondering the same thing. Theyve got a really big, difficult job in front of them, by which i mean twitter, in attempting to set up standards that are going to going to stand up to scrutiny and to operationalize a system of labeling things based on truth or falsehood this is precisely the game facebook didnt want to get into its interesting that twitter will try it will take some manpower and some resources, and they are absolutely going to come under fire when they do it in any way thats not perfect or frank plyi a way that disadvantages one side or the other. Were living an experiment crowdsourcing is interesting with twitter sometimes the crowd is a bunch of bots. I think its people with blue checks next to their names, journalists and what not well get an ed did tweet button before we get orange tweets wouldnt be a bat idea. I dont think thats going to happen thanks for joining us. If you cant get enough squawk alley, watch us live or anytime on the go onthe cnbc app dont go anywhere. Dow is down 237. In record time. Ng to pas at emerson, when issues become inspiration, creating a better world isnt just a result, its a responsibility. Emerson. Consider it solved. And when you open a new brokerage account, your cash is automatically invested at a great rate. Thats why fidelity leads the industry in value while our competition continues to talk. Talk, talk now you can, with shipsticks. Com no more lugging your clubs through the airport or risk having your clubs lost or damaged by the airlines. Sending your own clubs ahead with shipsticks. Com makes it fast easy to get to your golf destination. With just a few clicks or a phone call, well pick up and deliver your clubs ontime, guaranteed, for as low as 39. 99. Shipsticks. Com saves you time and money. Make it simple. Make it ship sticks. Energy has underperformed every other sector of the last decade but is it put to shame when stacked up against tech . We break down why. Its still a drop in the buck bucket, especially with energy you can see the performance starts to differ around the middle of this time frame of ten years. Energy pretty much stays flat, tech soars to more than 400 the start of 2020, tech soars more than 400 techs weighting has grown from 19 to 25 energy now a third of what it was. It was 12 , now 4 in december, 2009, exxon was the s ps most valuable company with a market cap of 328 billion it was followed by tech names like microsoft at number two and apple at number four, which had market caps then of 270 billion and 190 billion respectively. Fast forward to present day and exxon is the 20th most valuable company in the s p its market cap sits around 250 billion. Its plummeted 70 billion in the last decade. Very different story for those tech names microsoft and apple both saw their market cap jump above a trillion dollars in that same time period and the tech stronghold continues at the top of the s p with names like amazon, Google Parent Company alphabet and facebook. Mean while on a performance basis, 4 of the 10 worst performers over the past year, energy names, marathon, bcabot, occidental thank you european markets sent to close in a few minutes seema mody has the breakdown similar to what were seeing here, european stocks are lower across the board were also watching the move in the currency market, this king dollar narrative really being played out overseas with the euro now down about 3 against the dollar higher today but down against the dollar this year that is the worst start for the euro this year, since 2015 markets also overlooking that better than expected european pmi data, notable strength in france, Business Activity expanded faster than expected as those died down last month capital economists, their take is the data provide some insurance that the impact of the coronavirus on the eurozone economy has been limited sectors leading europe at this hour, energy, bp, royal, total all down as oil here is down nearly 2 on the day lastly, Goldman Sachs this morning cutting its 2020 Earnings Growth estimate for the luxury sector, saying the virus will wipe out Growth Prospects saying it is expecting more negative earnings revisions for a number of these luxury retailers. Putting these moves into perspective for the week, heres where Global Markets stand germany and france down about 1 to 2 , the loss pronounced more in asia with south korea and japan. Seema mody, thanks. Lets get a news update. Courtney regan is back at hq the kremlin says that allegations of election interference in the u. S. Are not true and are the result of paranoia u. S. Intelligence officials telling u. S. Lawmakers that russia was interfering in the 2020 Election Campaign to help President Trump get reelected President Trump called it another Misinformation Campaign by the democrats day four of jury deliberations in the Harvey Weinstein trial. Annabella shor ra will be frunt and centerer again when the jurors are expected to hear a rereading of the large portion of her testimony they focus on emails weinstein sent targeting her mike pompeii ya arriving in oman from saudi arabia his meeting includes one with the sultan of oman and three new Inspiring Women barbie dolls have been revealed ella fitzgerald, billie jean king, and Florence Nightingale they are part of barbies mission to raise awareness to the limiting factors that prevent girls from reaching their full potential back over to squawk alley. Im into it. All right. Courtney regan, thank you. Getting a check on where we stand across the major averages, extending losses today with the dow down 187 points, the s p down about 0. 8 , putting the dow, the s p, and now the nasdaq in negative territory for the week back in two. At fidelity, online u. S. Stocks and etfs are commissionfree. And when you open a new brokerage account, your cash is automatically invested at a great rate. Thats why fidelity leads the industry in value while our competition continues to talk. Talk, talk while our competition continues to talk. When yowhat do you see . Itical issues facing our world, we see breakthrough medicines getting to patients in record time. We see harnessing natural gas unleashing the promise of clean energy. We see engineers simulating the future to improve today. At emerson, when issues become inspiration, focusing core strengths to create a better world isnt just a result, its a responsibility. Emerson. Consider it solved. A down day for chips and some suppliers taking a bit of a toll on apple this morning, down about another percent after warning on guidance earlier this week our two guests join us welcome and happy friday to both of you im wondering when were talk about coronavirus and apple, what do you think to sort of paraphraselangston hughes, wha happens to an iphone deferred . Are people going to end up buying just as many a bit later when coronavirus fears lessens or will some sales be lost our takers are iphone products, apple products are naturally swappableso if you want an iphone or air pod, chances are youll wait one week, two months to get the product. We dont think the demand is lost, potentially pushed out the nuance becomes the more this thing gets pushed out, especially iphones, you will run up against the iphone 5g launches so this could be demand pushed up from february, march, april to september, potentially. I wonder about the overall ecosystem effect of this should the virus concerns continue. We have companies dropping out of the rsa security conference now facebook and sony dropping out of the Game Developers Conference Im not sure if sony was that committed to begin with. Could this eventually affect developer conferences from apple and google which are, granted, three more months or so out . If so, what are the implications i think the likelihood that the u. S. Based conferences are impacted in terms of attendance given the rsa data point you pointed out, sure, thats possible with respect to demand, i agree with ahmed that there is youre just pushing out demand we do think that demand is probably going to push out to fiscal year 21 as we think this issue will persist into the june quarter, so, yeah, these game developer conferences in the june quarter will probably be affected as well as far as iphone demand, no. I dont think there will be an impact in its entirety finally, i would just point out that if youre not buying an iphone in march or june and youre ready to buy an iphone in september because the coronavirus has cleared up, youll probably wait another month or two to december quarter, and thats why we shifted revenue to fiscal 21. Just listening to you speak about the fact we could see the recouping in terms of that iphone demand later on down the road, i just wonder, though, the longer you have people that are out of work and factories closed, for example, the more companies that come out and say that as this situation persists that theyre not actually able to afford to pay their employees, once things normal e ize and people are able to start collecting paychecks again, are they going to choose that more expensive iphone or defer that purchase or maybe find something more afford frable from a competitor the vast majority of buyers in china are middle income, so i dont think that will be a Significant Impact there finally, there were some reports yesterday that apple was trying to diversify some production into taiwan all that weve heard about for the past several years is their heavy reliance on foxconn. How much elasticity is in that chain . Theres a modest amount a little bit in taiwan we are starting to wrap up a fair amount. Theres a little bit of elasticity, but the reality, you have about six weeks inventory in the channel that could help. Then you have maybe about 20 borrow estimates of Production Capacity outside of china. That could be a tailwind as well watch for the Services Report in the next quarter because the more people are going to be quarantined, we believe the App Store Revenues will be affected. That could be a small offset to the iphone challenges. We will watch it. Thanks happy weekend. You too thank you ceo of vgot join us in a moment rick santelli, plenty to watch today. Oh, my goodness historic rates on the long end, rates weve never seen in 30year bonds, and the coronavirus after trade infractions leads to many questions that i want to discuss, all afterhere t bak im searching for info on options trading, and look, it feels like im just wasting time. Wasted time is wasted opportunity. Exactly. 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From the day youre born we never stop taking care of you. Top of the hour this friday, with the dropping yields, the rise in gold and the dollar, what that says about a correction is one drawing closer . Well ask black rrocks kate moore. Plus our call of the day, a burger stock with a tasty trade lately what now well discuss that and take on the 22 stocks that matter most to hedge funds, debate whether theyre right for your money we are about 20 or so away well see you then all right, scott, thanks. Lets get over to the cme group and get the Santelli Exchange for this friday. Hey, rick. Good morning, carl. Once again, lets restate the of obvious. It is friday much news on coronavirus, especially from the korean side, south korea, so we know theres a nervousness associated with weekends when investors globally cant tweet their positions. Having said that, the big issue is japan, south korea, flows of guess where theyre ending up . Look at the 30year chart. Weve traded well low the alltime close ive said it a million times, if you ride a roller coaster the only important thing is where you get on and where you get off. Where the market closes, what goes into the books. Lets see how it looks baxedon a 1. 95 yield by the end of the session. If we look at 10year note yields, guns hot because we are testing that 1. 46 low. Once you get bast that, the Double Bottom from july 2016 is making traders more nervous than comfortable. Ill take a double, please, isnt necessarily something you say to a bartender Double Bottoms and double tops are solid patterns in the treasury complex violating that 1. 35 level could mean big momentum to lower rates. Finally, okay, we started the trade war with china in, what, early 18, march thats when tariffs started going on we signed it officially ending it phase one, midjanuary of this year. In that short time, basically right on top of that we see the coronavirus appear in china. The point is, how much adjusting was done after that deal was signed lets rephrase that. If we never had a trade infraction and coronavirus would have showed up, it would have been much worse because supply chain diversification was already under way. We can debate how much under way. And many of the ceos have expressed that just because trade was signed on phase one, they werent going to stop at that and coronavirus is just going to make it accelerate why . Because really what this is, and jim cramer, my hats off to you, when you brought up insulin today, jim bianco and i were discussing it, making our own medicines, its something we cant weave into the Global Fabric of various countries. We need to do more at home that to me sounds like deglobalization, extracting ourselves to make sure were not again dent on things were very dependent on in our own country being made by others if we get more deglobalization, most likely speeding up, it will bring about more inflation the more we make here, the less realtime supply chain there is, theres going to be a higher cost does that mean it will have a huge negative effect on the Global Economy it may have a big negative effect on some economies like japan, like china. But in the end, it will still be muted in the u. S. , albeit with all our debt, if rates do start to go up, theyll go down first, i think. Thats the point we need to all start paying attention morgan, back to you. Rick santelli, thank you. Still ahead this hour, jeff bezos and elon musks star turns in star trek. Eall explain that after t bstitution and when you open a new brokerage account, your cash is automatically invested at a great rate. Thats why fidelity leads the industry in value while our competition continues to talk. Talk, talk while our competition continues to talk. Whether your beauty routine is 3or 57,. Make natures bounty hair skin and nails step one. Its the number one brand uniquely formulated for silky hair, glowing skin and healthy nails. Natures bounty, because youre better off healthy. Which of your devices are protected by daily security updates . Daily security updates. Daily . I dont know. The only thing. Im struggling with this. Some providers you have to manually download updates to each device. Comcast business securityedge updates every 10 minutes to help keep your connected devices protected against new ransomware, malware and phishing threats. Every 10 minutes feels pretty good. Get secure, reliable internet and voice for an amazing price. Call today. Comcast business. Beyond fast. Welcome back to squawk alley. Facebook and sony pulling out of the Game Developers conference this morning due to coronavirus concerns, adding to what is becoming a long list of tech events being canceled or severely impacted by the rapid spread of the outbreak kate rooney has that story for us from one market thats right facebooks not alone were seeing a wave of big techs backing out of events because of coronavirus, and that could threaten San Franciscos booming conference economy facebook has already canceled its global summit in march citing a, quote, athe bun dance of caution around the virus. One of the Worlds Largest cybersecurity conferences, rsa, is set to take place in San Francisco next week. Ibm and at t have pulled out this year along with 13 other companies. The snowball of coronavirus cancellations started with the mobile World Congress in barcelona, and were still pretty early in Conference Season take a look at some of this years events. These are a huge boom for San Franciscos economy. According to one estimate, last years conferences brought in nearly half a billion dollars to the city even before the outbreak, they were facing headwinds, rising costs of visiting San Francisco as well as the homeless cry ses for some of the factors oracle cited for moving its conference to las vegas it cost the city an estimated 45 million in revenue facebook cancelling its conference this year will cost the city 7 million. Its not only conference organizers, restaurants and hotels taking a hit, startups and investors rely on these conferences to network and get deals in the pipeline. I spoke to one frequent eventgoer who says shell be relying on zoom and skype meetings in the meantime kate rooney, thanks for bringing us the latest joining us now is the ceo of global ticketing platform viagogo. Welcome. Thanks for having me. I do want to get to this topic around coronavirus and how its affecting the events business first, given the fact you did close this acquisition, i would imagine it feels like a skweet victory given the fact you cofounded stub hub in Business School before leaving the company for ebay what is the game plan in terms of integrating these two companies . In terms of integrating the companies it is exciting. The ability to bring together via go go, we built the Largest Global distribution outside the united states. Stub hub is the largest in the united states. We now have the largest distribution so fans can get any ticket to any event anywhere in the world any device, any currency people can get any ticket they want whenever they want. Are you planning to run them as independent companies or are you going to merge the platforms and the operations as the uk looks at it, they have to stay independent as they follow the review. After that, we will figure out what we can do. You had to take on debt to do this, 4 billion, right . How much does that tie your hands to do m a and spend to expand there is a lot of market out there. We are conservatively structured we paid 4 billion but it is in the range of 2 billion in debt. The great thing about their businesses they are not only tech businesses which are growing in the live event space but they generate a lot of cash. This is very conservatively leveraged so we can have the flex together do what we want to do. Given the fact that via go go has this reach, has the coronavirus impacted you as we sit here today, it has not. Most of the live events where we have seen cancellations have been in china, taiwan, and singapore. Most important for everybody we hope that they get it under control and that they solve the health crisis. Right. Right now it has been isolated to asia specifically and mostly china. In the past we have seen outcry from broadway artists about the secondary market and the level of inflation it brings to tickets is there policy risk still regarding redistribution of event tickets . No, i think really when you look at it again, stub hub, which has been in the states for 20 years it has been operating. 20 years . 20 years. And tremendously popular with fans it is a voluntary transaction with buyers and sellers and creating more access before this existed you were out on the Street Corner trying to talk to a scalper. It is democrat Advertising Events and giving people greater selection and safety it has been among us for two decades. There is no sense among creators they are losing out on revenue somehow . The creators or the issues of the tickets have already been paid because they already told the tickets. It is very different than streaming. Someone would be getting a song for free creators could also use our platform to directly sell to fans it will generate growth for creators event bright went public in the fall it was trading in the mid 30s. Now it is around 20, 21 a share. Not a great performance. What do you think is the challenge valuing that company and what does it tell you about how Public Markets might valuate a company like yours. Event bright is complete different than what we do. I cant comment on what they do. When you lock at the size and scale, we are moving 6 billion worth of tickets in a highly profitable way with a ton of cash flow around the world there is no comparison there are Different Industries at a different scale with different cash characteristics i think the market will recognize those attributes. I want to go back to your comment about cutting out the middle man and creating the opportunity for creators to sell directly to fans on your site. Sounds like it could be disruptive what do you think about the landscape in general as you see consolidation. Any time you can eliminate friction in a transaction process to get to consumers it is a positive thing. I think people will feel that as consumers and i think it is similar to what you have seen in video and streaming. Peep want what they want when they want it and the way that they want it i used to have to know that the sale was happening a of the on saturday morning at 10 00 a. M. At the local record shop i do think the scale players will win thats the way i think about it. Eric thank you for joining us here at post 9. Thank you. Market selloff continues to got repairedlo swly here the dow is down 175. And squawk alley is back in three minutes. At emerson, when issues become inspiration, creating a better world isnt just a result, its a responsibility. Emerson. Consider it solved. Gimme two minutes. Eligible for medicare. 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