Transcripts For CNBC Squawk Box 20240713

Couple of days over 8 if you are looking at five days. If you were expecting a quick pull back, you are not getting it s p futures are off by 8. 5 nasdaq off by 31 all three major averages have lost all three of the gains for 2020 so far. We have looked at treasury yields so far. If that goes up, a tick higher well take anything. It is hard to take the big drop when you have one day at 22 keeping things in perspective. Our top corporate story. Disney ceo bob iger is handing offer the keys to the Magic Kingdom immediately. Hes not going anywhere i have a theory this beautiful succession is so orderly it is weird that it comes down to, oh, im leaving today. I want to hear what you know and some of your water cooler scuttlebutt. And go wild. My son informed me yesterday, bob iger is stepping down. Replaced by bob chapek hes been there a long time. Head of the global parks unlike Nbc Universal hes not a content guy hes a parks guy we think of it differently at comcast. Parks are important but it is a secondary thing. I would argue both Nbc Universal and disney have been very good as coordinating those parks. They are very much tied in are you surprised the parks guy will run the entire thing . Yes he will report directly to iger who will stay on. He will report to iger and the board. So his contract goes through the end of 2021. He had been ceo over 15 years overseeing tremendous growth with acquisitions of pix ar, fox, lucas film. In an exclusive interview, iger explained his decision we looked at the businesses and felt we have a great set of assets and strategy. What is next for my own strategy is making sure the creative pipe lynn is really rich and our creative engines are working extremely well i wanted to spend more of my time on that im not sure i want to be ceo during coronavirus either of a theme park here is my thought. Bob iger in the transaction. Rupert murdoch stipulates he has to be there. Prevents him from running for president. And others suggests that this is some kind of enter ray to bloomberg iger im taking that off the table thats crazy town. However, hes still going to be in this place. Becky said it. Hes not going anywhere. The two bobs are running the place. The new bob doesnt work out for whatever reason, bob iger is still there. Hes seen many transitions where people are sitting and waiting it is possible, i hope for the new bobs sake, that it works out. Weve seen the story at salesforce yesterday where the new ceo didnt work out. Kevin block didnt work out. Another kevin could step up. To me, the big question mark if you are kevin maer running disney plus, do you stay in this spot because you were thinking you were getting the top job those are the discussions around the water cooler also what happens to disney plus if hes not there if kevin maer is not there . He just stepped into that job. My point is, you want a happy person running that. Did you have any dirt the only dirt story that has even been speculated is that the new bob might have had a job offer and one. Reasons they wanted to do this quickly was to lock him in rather than let this persist in terms of transition whats the reason if you said six months, what is the difference the difference is that people will say, whats going on . Why do it that way as things come up and things leak if you are worried there is a leak coming. The stock was nowhere near where it was after the disney plus it got very expensive how bad could the numbers be . I dont think bob iger is stepping down. If parks dont work or if disney plus doesnt work, it is still on his watch even if he announced he is leaving tomorrow. Company plans to make first commercial flight early this year the chairman will be our guest in the 8 00 a. M. Hour. Well talk to him about that story. 8,000 people want to do this. You are not one of them, right id love to do it maybe after 80,000 people do it. I dont know. Your four seconds of weightlessness i went to a conference where they had those planes. I never did that karl did that i couldnt. I watch you get into your chair in the morning and you get motion sickness. Lowes is out with earnings the numbers look good. 94 cents a share better than the street was expecting. Sales came in at 16. 15. They are talking the estimates for the full year. They see 6 on an adjusted basis. To 6. 45 the street was above that at 6. 67. Not a huge reaction now. You are looking at that stock down about 25 cents. Joining us now with his reaction, brian nagel. What do you think about the guidance overall, the report is some whatmixed. That 2. 6 comp in the further quarter. Home depot did a 52 significantly less lowes did call out and talked about this a pure storage comp. They dont have the on line portion working yet. Home depot said yesterday on line sales were up 20. 8 that represents call it less than 10 , 8 of sales. Lowes point is not that we arentcounting we dont have anything to account for in e commerce, it is a mess it is not operational at this point. That 2. 6, if you assume a normalized e normalized e con, that would get normalized looking at comments, though we are only one year into a multiyear plan. Believe we are well positioned in a market. I do. Weve been talking about lowes i like it. It was a real mess he came from home depot to clean it up. There has been progress here the other thing is the operating Margin Expansion significantly lower. I found this on the web for guidance is the operating margin you got a call there too. Stephanie, do you agree with that i saw last year a big shift from lowes to home depot last year, i think the dynamic was that there were a lot more people favoring lowes over home depot. I think that turns this year we are seeing results kicking in that is sad at 23 timesforward thats not cheap while i think lowes can see a turnaround, they are way lind in terms of home depot. There is a lot they have to fix. Stephanie is with us much of the morning. Brian, thank you for coming. Looking at a 32 drop of the dow. Yesterday, we were at like 100 in the middle of the day, when someone says who runs the section of the cdc focusing on respiratory disease and they say it is not a matter of if but when, we watched the markets reacting and the comments of saying we have to get used to quarantine and school issues. For a while, we are hearing from others that it is contained here the part of the cdc says get ready for Community Spread i wish hed take it back and hope it doesnt. I would like to see more kits. We cant do it. You cant buy the as beings on amazon. I have been stocking up on water, canned soup and frozen stuff. We have to feed the kids if we are stuck at home. I dont think it is going to happen but if it happens if it happens five blocks from here, the whole city shuts down i have to read this they worked hard on this we started out with markets in turmoil. Pandemic fears fuelling the twoday selloff on wall street sorting through some of the biggest stock losers of the week they are slowing down on depressed market activity. Not just on the dire fear. American airlines down 17 . Dont miss the big lineup starting at 8 00 Virgin Galactic. Leon cooperman will join us. All coming up. Stay tuned new york state is building for the future of your business. With a nationleading 150 billion commitment to infrastructure, were creating state of the art, 21st century transportation hubs, constructing new bridges, bringing highspeed internet to every corner of the state, and committing to lowcost clean energy. With infrastructure built for the future, the companies of tomorrow can thrive here today. See your future at esd. Ny. Gov. Thwthats why xfinity hasu made taking your internetself. And tv with you a breeze. Really . Yup. You can transfer your Service Online in about a minute. You can do that . Yeah. And with twohour Service Appointment windows, its all on your schedule. Awesome. So while moving may still come with its share of headaches. No kidding. Were doing all we can to make moving simple, easy, awesome. Go to xfinity. Com moving to get started. Welcome back quote, this might be bad thats the cdc warning now saying they expect a wider spread in the United States and are preparing for potential pandemic warning for businesses, schools and communities to brace themselves not a question of if the virus will expand to the United States but when trump has expressed being furious about the stock market dive here is what larry said. Based on the numbers we know, atlanta fed gdp now 2. 6 for q1. That could change. All these regional Federal Reserve reports are not hearing chatter and there is no evidence yet of any supply disruptions. Amid those new warnings about the spread in the u. S. , a look of how the chinese are weatherering the crisis. We want to talk to eunice yoon about how now that it feels more real here to us. I know we should have always been thinking about it this way given the polite ylight youve dealing with new infection cases have been dropping here. Today, in the chinese capital, announcing all super markets have to make sure their customers stay five feet apart from each other. The end result is that people just dont feel like shopping. Before the coronavirus outbreak, he barely stepped in his kitchen. Now he wont leave it. He is holed up at home and only spending a third of what he used to he would eat out at restaurants ever day, come to this theater and travel on vacation overseas. Now he watches tv, reads books, edi edits videos i leave maybe once every three days to get groceries. You come to shopping malls and if you are not feeling well, the star kwaquarantines you here once this is over, he plans to buy a bigger fridge when the cinema is open, that means it will be safe. My guess is that will be summer if the World Economy can wait that long. The expectation is that demand will be later in the year other people said they are holding off to buy a new car at the same time, there is just genuinely lost business. There is only so many meals he can meet out to make up for lost revenue at those restaurants eunice, you are one person i follow more closely than other yoon tv i follow very closely. About your life and the latest Important News as well i was confused about the shopping customers are being told do not go near other customers. I cant realize how that is possible there have been concerns about people standing in line and getting too close to each other. Beijing said they have to ensure people are spaces out. So five feet in between customers. Thank you, we are down 7 . Maybe 8 or 9 total from the highs. There are plenty of companies in correction territory joining us now, jeff mills, chief Investment Officer and cnbc contributor and stephanie continues with us. In your view, jeff, does this feel like a 10 to 12 garden variety caused by coronavirus fears or do you expect it to be even longer lasting . It is reeally hard to know. Right now, we are within the confines of what would be considered a normal correction on any given year, about 12 would be a normal draw down. I would say we are not quite at the bottom yet doesnt quite look like capitulation yet to assume that this is going to be contained might be going too far. It was tweeted over the weekend. There is a chinese soccer team flew out of shanghai, tokyo, l. A. To brazil no testing at all. I think well see more headlines that shape the market in the near term. We have to assume that for now there are 1. 4 gazillion people in china and only couple thousands infected they are con continuing taining but there are the he ceconomic effects. We just dont know. Social media isnt helping the setup was poor we thought that this was contained to your point. There is more questions. It is hard to quantify what this is going to mean in four, six, eight months, it will be contained. Im looking at companies that have been hit very hard. Not necessarily Technology Stocks some are up 10 , 15 looking at some of the companies and consumer stocks. Travel related names, if you can get these stocks at the yield, 4 would be ideal. Im picking away at those. Jeff, have you noted that the move down was led by growth and value was even more attractive for a double whapy at this point. Is that how investors should be looking at this . Thats the case if you look at how markets behaved since last thursday, if you look at names like apple, moft, still 20 to 30 above averages you can certainly find opportunities. Looking at dr horton in terms of housing. Materially lower interest rates. Look at places like energy maybe you need to be patient a name like shanier, valued just those contracts at 66 per share. There are areas and pockets you can look for now, if thinks start to deteriorate more, that growth is maybe not the safe haven it was a fewweeks ago thank you weve had more action in these averages that can get you going a little bit. That plane you are talking about is the vomit comit youve thrown up on any kind of vehicle everything but a golf cart. The dow is up the rsi on the s p is 29. Pretty oversold. There is i difference between fear and oversold. Just because you are scared to death doesnt mean you are necessarily oversold yet quality on sale. I like that coming up, more to talk about. Shakeup at sales force. Expected successor to tstep dow. More more in the selloff on wall street. 1. 7 trillion wiped out from the s p. Take a look at futures now marginally better than where they were. S p 500 up abo 1potsdout0 in, w up about 60 points, dow up well see when we return after this when i lost my sight, my biggest fear was losing my independence. Mmm. Good. So ive spent my life developing technology to help the visually impaired. We are so good. We built a guide that uses ibm watson. To help the blind. It is already working in cities like tokyo. My dream is to help millions more people like me. Saving for avas college. Financial security. Being able to retire. On our terms. No matter what your goals are, our trusted advisors can help you reach them. Ameriprise financial. Welcome back shares of salesforce under pressure the coceo keith block is stepping down. As a result, mark will be sole ceo. He will stay on as an advisor for a year salesforce reporting beating forecast dynamic change there as you were saying, he was the face to wall street. People trusted him on terms of the numbers and what the company was doing. I think the expectation was that mark would become chairman of the company. Awf all of his other projects. Party planning in davos thats what he does. Endeavors the expectation was that keith block would run the company. Im disappointed as a share holder because transparency goes down dramatically because block was the face now is not the time to leave, i dont think. He manned the door himself. When we come back, dow futures have been swinging back and forth. Rye now indicated up about 37 points we have seen moves up over 100 points and down a couple of hundred points after over 1,900 points have by ls. Looking at yesterdays biggest decliners. There were some biggies. Check it out through the at t network, edgetoedge 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. Thats the power of edgetoedge intelligence. Good morning welcome to squawk box here lets show you what is going on with the futures especially given the last few days of carnage in the markets showing you where things stand right now coming off the nearly 1,900point sell off it looks like we are in the green for now. Dow looking to open about 11 points higher, the dow about 70 and the nasdaq just higher kind of like the weather right now. In the democrat debate, they attacked front runner Bernie Sanders. We have more on what is happening. Reporter at times a chaotic debate a lot of talking over each other on main issues. Ill tell you what the American People want, they dont want candidates to be running to billionaires for huge amounts. If you are watching right now and you are a billionaire, i will raise your taxes. If youd like to debeat donald trump, please donate the legal maximum. Reporter the candidates were asked how they wouldstop the spread of the coronavirus. Joe biden said he would use it as an opportunity to confront china directly i would be on the phone with china making it clear, we are going to need to be in your country. You have to be open, clear and we have to know whats going on. We have to be there with you reporter President Trump responded quickly over twitter defending the administrations decision to close border from travelers. It was opposed by democrats who said it was too soon but turned out to be the correct decision President Trump will be here in South Carolina holding a rally i expect a lot more shouting before the week is over. We get a lot of complaints on the show of talking over each other. That was my complaint last night. When i want to say something, im going to do this year. Everybody went over time too. Can i applaud from the sidelines or boo you tech stocks among the hardest hit. Well talk what p it means, next yes. Its the first word of any new discovery. But when allergies attack, the excitement fades. Allegra helps you say yes with the fastest nondrowsy allergy relief and turning a half hearted yes, into an all in yes. Allegra. Live your life, not your allergies. We segetting to patientscines in record time. At emerson, when issues become inspiration, creating a better world isnt just a result, its a responsibility. Emerson. Consider it solved. Supporting Innovative Companies that will shape tomorrow and Building Workforce development and tuitionfree College Programs to generate the talent companies need. With a 150 billion investment in state of the art, modern infrastructure, and a nationleading commitment to lowcost clean energy, new york is doing more than any other state to build for the future of your business. New york state, the state of the future. Learn more at esd. Ny. Gov. New york state, the state of the future. Tto examine investmentgo opportunities firsthand, like innovations in agricultural research. Because your investments deserve the full story. T. Rowe price invest with confidence. The coronavirus outbreak is hitting chip stocks. Down 10 in a week following a strong rally joining us now, strategist at wolf research. Supply chain fears from china affects a lot. Chips are always kind of a leading edge that moves before one way or another why is that . It was funny. Stocks move early. They were sensitive with things like chip prices back after a big move. Weve seen it. When you look at midjanuary semis and hardware stocks hit strategies they may have been right for the pull back anyway tech has been huge fairly narrow. I think it is ripe for a pull back there could see some down side tech is not oversold as the market you probably havent hit a bottom there is problem more to go. What would be the indication to you that the lows were in you want to see the virus play out i was concerned the stock wasnt hit at all youve got a number of Companies Hit yesterday. They said they were 60 to 70 strategy a little concerned that china is sending people back to work when they dont have containment yet. Could this create acceleration of spread. You want to see the supply chain stabilize. You gave me the numbers on what cot depth could be. What do you think the duration of this whole process could be companies were already saying two to four weeks. Maybe four to six. The f1 race in april was canceled it could take us to early to midsummer and then hopefully things will get a lot better okay. When we come back, grubhub Stock Plunged in october since then, the stock has marched upward the company ceo here to talk about what is next futures now indicating up by 100 points 1,900 points off the session for the dow. We have like 40 years of data thats incredibly valuable . I. I dont know. When did we introduce siracha . Not soon enough. These are our sales. By product, by region. Set against evolving demographics. You can actually see taste trends. Since when can we do that . Since we started working with bdends. announcer people who know, know bdo. Welcome back to squawk box could growing fears of the coronavirus lead to more consumers staying home well talk about that and a lot more taking place in this sector joining us right now grub hub ceo. Good morning to you. Good morning. Lets start with coronavirus because everybody is talking about it and trying to understand what it would mean and theres conversation about certain types of companies that oddly enough could benefit in terms of people staying home and trying to get their food brought to them. Well see i have no idea coronavirus is a scary situation. I believe the scientists and when theyre talking about pandemics im wiping down my airplane seat every time i fly we are very much paying attention on a local level we have a problem with demand and how has it worked . Its very hard to draw anlages from china to the u. S. Was its a completely different market in the states its a different system of delivery so i would be very cautious to draw parallels between whats happening over there right now in a crisis situation and how that would impact the states were paying attention on the ground and seeing how its going to impact our restaurants and our diners. Is there anything youre doing today beyond studying and looking at the numbers and things what you would do. We have all of our sensors up were paying a lot of attention. I didnt know if theres anything to do. Theres nothing to do right now because the cases havent i mean, were not having an epidemic in the u. S. Yet. Would you imagine that prices would go up. I have no idea. Prices would be a function of supply and demand. Youd have two issues the restaurants in terms of they might want to raise their prices because they might want to incentivize their staff to show up and you might have to try to incentivize drivers and delivery people to show up in the same way it takes place on uber you need people to be in a particular area. I know that you dont but absolutely, i have no idea how an epidemic is going to impact our business and pricing you look at the chart thats upright now and you can see whats happening tell us everything thats happened since then. Absolutely. So in our Third Quarter we had a shareholder letter that reoriented the industry around the new reality. What was happening is theres too many competitors spending too much money and losing too much money so we pivoted our strategy to be aggressive on supply and aggressive on incentives and thats exactly what were doing today with the launch of our grub hub plus Membership Program its an order of magnitude more exciting than any other program thats out there the free delivery is there and thats what it is right now and we have 10 cash back. Which is really incredible what has to happen to the rest of the business . And i should note by the way the head of uber eats just stepped down yesterday. I saw that were able to lead into the profit and 10 cash back and double the donations and thats part of the Membership Program. Is that an effort to put post mates out of business . I cant impact their viability as a business but i can absolutely impact. So what were doing is leading into our profits at a time when everyone else is fighting to find break even. Theyre trying to battle back. Thats my question. When you salining into your profits, are you willing to take lesser profits to try to consolidate market coverage. Yeah. The stock dropped because we said were taking our profitability from where it could be near 200 million a year down to 100 million a year were taking those extra profits and using them hyper competitively and were trying to steal shares. Diners and other platforms. Were you looking to buy one of these other companies am i looking to buy yes. We bought Ten Companies in the past ten years this is part of our Growth Strategy so im very opportunistic this year. Im just trying to be as competitive as possible. Which one do you worry about the most theres a lot of of Companies Moving a lot of money and the industry is ripe for consolidation. Good answer thank you. Nice to see you. We wish you lots of luck. Thank you. Coming up, when we return, a lot more on squawk one of the most discussed companies of the last few weeks, Virgin Galactic. The chairman is gointo jg oin us in the 8 00 hour you dont want to miss it. Back with two big hours ahead. Legendary terrain in telluride, the unparalleled landscape of park city, or the famed peaks of whistler, youve faced the hassle of lugging your gear through the airport. With ship skis, youre just a few clicks away from having your skis, snowboard and luggage shipped from your doorstep to your destination. With unrivaled pricing, real time tracking ship skis delivers, hassle free. Ship ahead and go catch those first tracks on fresh snow. Ship skis. Your skis. Delivered. Its not a matter of if but when what a city quarentine here in the United States would look like. Plus bob iger steps down as ceo of disney. He is now the soul ceo of salesforce and elon musk parts ways with panasonic. The second hour of squawk box begins right now take a look at u. S. Equity futures. Dow open down now by 11 points and which way the wind is blowing it all could change. They expect the coronavirus to spread and brace themselves and plan for potential outbreak and saying its not a question of if the virus will expand but when in italy theres confirmed cases and 11 deaths and theyre now being seen beyond the original epicenter. And a jump of 169 new cases bringing the total to 146 infected and 11 deaths china, beijing will quarentine people many investors want to know if production is picking up in china. Steve is looking at alternative indicators. So the top line data that joe is talking about shows growth of the virus while it continues to spread outside of the nation similarly coal consumption is not close to where it usually is thats a big deal in a country that gets 60 of its power from coal all of this is against hopes that china would be getting back to work by the end of the month. The knock on effect of the u. S. Could be worse other data includes shipping, real estate transactions,down 90 and pollution all of which are down from their averages in this case its a sign that factories have yet to recover and the economy has aways to go before returning to full health and this endangers the base Case Scenario of economists that look for this to be a First Quarter event. Increasing now were hearing this may bleed into it here. Steve, this is something that we have been hearing about the mixed messages they say go back to work and they say increase the restrictions that you may have trying to get in and out of your apartment complex. Theyre saying no more than four people can get in an elevator. They tell you to go shopping but then youre told dont come within five feet of anybody and all the mixed messages left people concerned. The firsthand reporting by eunice is second to none she would get it before i got it but this data were tracking is in real time its still running from 10 to 50 below. One of the things you see is the pollution he quitted by automobiles is down but maybe pollution from factories is up more so it may be that people are going to the factories and not going home and staying at the factories. Its somewhere in mid march. So 1 or 1. 5 gdp china growth. Thats what were hearing with a knock on effect to the u. S. Anywhere from. 5 that would be a median cut that im seeing in the First Quarter. The issue that im talking about here and i think the issue is when do they put that back in . Because it was spt 5 down and it w was. 5 up its a question of when do you look for the return to growth. He was talking about the 1 to 2 gdp number over a week ago. Well talk more about this right now. Put this in context. The stock market sell off wiped 1,900 points off the dow in the last two sessions. The s p 500 lost 1. 7 trillion in market value over the same time period. He is the chief Investment Officer for the americas at dws group and covering the economic angle is joseph, the global economist at jp morgan and welcome to both of you lets talk about this. If you try to extrapolate what this news for the United States base on the numbers right now, is there anyway to give some summation of what we think at this point you want to think about the depth of the downturn and then the magnitude of the rebound the longer this lasts the more it turns into a downturn inventories can absorb the hit in the u. S after awhile you start to run out of the inventories and get real knock on effects. Are we up against the line yet or no . Not yet but forecasts keep being revised. We marked ours down to minus 4 for the first uarter. Quarter on quarter and annualized. Correct. Youre seeing a negative. Has that ever happened . Not a minus 4 if you look at the sars outbreak you went from 9 to 10 approxima10 down. Did you get the Second Quarter rebound . Yes we have it up 15 annualized in the Second Quarter. You have 15 . Again quarter on quarter annualized. Just to be clear but joseph is the source of some of the data they have created a daily indicator of the things that im talking about along with the other shops that are out there so given that your data is showing this flat line on some of these things, does that seem right to you when you look at this its not just looking at things still depressed. Its looking at where the bottom is and are we starting to march our way upward when you get a big hit in the first few weeks of february and thats extending through february, maybe even starting to get into early march, if you get a rebound thats happening, even if youre still down 30 , if you were down on 50 thats a 20 move that starts to impact growth not just in the Second Quarter but even in the late First Quarter. So more stimulus coming out of china thats a good question about what is the policy response. No doubt that physical policy is the lever being pulled and we have upped our sense of fiscal thrust in china by as much as we were at half a percent to start the year now upwards of 1 to a little over 1 . Lets get to david. What does this mean from a stock market perspective and the declines we have seen the last two sessions make sense to you david . From a stock market special circumstance tif, first you have to understand that we have been paying close attention to this we look at the importance of the chinese economy to the world and china to Global Manufacturing and china to commodity demand and oil demand and what we see is a clear impact to profitability of multinationals around the world including the United States. But half of that is at risk. And one last thing its always about trying to figure out the channels whether its Commodity Prices or supply chain or investment spending but currency is something to watch here and if the fed doesnt open the door at the march meeting to a cut and probably follow through with one by the spring, we think youre going to see a much stronger dollar which is only going to exacerbate the situation. Heres the question investors are waking one this morning. Yesterday we had been down 3. 5 at that point. The futures were higher were now down an additional 3 . The s p is off 8 . Do you buy this dip . No, not yet its going to turn into a full blown correction and its not its a Material Impact toward earnings outlook and its probably going to be another year of Earnings Growth and especially a challenging year for energy, industrials, materials, retailers, all of those value stocks that so many investors were rotating into and that was a mistake and we think this market needs to reprice. Do you agree with that . Well, i think its impossible to time. So thats why i think you have to look six months out and really think youre not looking at the major averages anymore. I cant thats not the way you invest. You look at Quality Companies and you focus on fundamentals and see if theres any yield support at these companies so down 11 . 3. 3 and mondelez, loved that acquisition yesterday that they did and theyre doing such a good job internationally i think theyre going to monetize their coffee business. So theres a lot of names out there. Just small pieces. If i we seem to hold on, hold on. I want a show of hands of who will take 10 to 12 right now if we can quarentee 10 to 12. You can cap it at 10. And number two you say no i wouldnt buy now why not . Were down ninement you wouldnt buy now . You must not really believe its only 10 to 12. I wish i could know for sure do you really believe its only 10 to 12 . We always look at our forecasts and were close enough to stick with true Quality Companies and true growth economies and true virtual Economy Companies and theres no safety in energy im beginning to envision between the politics and the com. D. Ty price situation im worried about 20 down. Me too. This comes to new york city in any meaningful way. Were talking about. How could it not be here now. This is a good sign that were scared to death. This is good. And then the market is going to do we have another special tonight . I imagine thats a positive as well. Theyre not going to respond just yet they used the same language that it used in the past saying that theyll do something if it is warranted. But we have plenty of room. We have like three cuts we could do is this the moment for sarcasm. Thats another worry. The probabilities were down. This is with a you said that we have nothing in the tank if we need it. I never said that. Were too low it would be nice to have more. A 45 probability of a third cut now built in and its interesting. How do rate cuts solve supply problems i dont think the fed can either create a vaccine or create a supply and put those people back to work in china. Liquidity where liquidity is needed. Thats true. I would only point out go ahead. Well, i was listening to ste steve. I dont mean to interrupt. The dollar is already expecting the fed to act by easing and if the fed takes the stance that the u. S. Economy is so insulated from this virus i think youll see a stronger dollar and that will hit commodities harder than you could imagine. Gentlemen, thank you for being here steve, well see you later david and joseph, we appreciate your time. Also, stephanie thank you for being with us this morning its been great. Its fun. Thanks. Lets also talk about treasury yields because they are plunging the ten year hitting a new low in which inturn will push Mortgage Rates lower the latest report on Mortgage Applications. It was a mixed bag for the Mortgage Applications because rates didnt start to fall until the end of last week so total volume rose 1. 5 for the last week thats according to the Mortgage Bankers association and an adjustment was made for the president s day holiday. Now the average rate on the 30 year fix did fall from 3. 77 to 3. 73 . But the drop only started on thursday so applications to refinance a home loan they actually fell 1 for the week but were still about 152 higher annually because Mortgage Rates are a full Percentage Points lower than a year ago. Refinance volume will very likely increase much more this week because rates on monday fell to the lowest level in 8 years as the market sold off over the coronavirus now to purchase a home increased 6 and were 10 higher annually. Purchase volume has been weaker due to the incredibly tight supply of homes for sale but builders are seeing big demand and Mortgage Applications for new homes are way up last week was the calm before the storm. Thank you on the earnings front, lowes reporting in the last hour, the Home Improvement im reading. On camera. The Home Improvement retailer adjusted we saw that spikey hair that could only be one person. 3 cents above estimates. However revenue was below wall streets forecast and Comp Store Sales rise of 2. 5 was below the consensus by quite a bit it was 3. 6 . When we come back, Disneys Bob Iger stepping down as ceo handing over the reigns. Hes still going to be there as executive chairman for the rest of the year. What it means and what you need to know about the successor coming up. Before we head to a break, a check on shares of tesla this morning. The stock is back below 800 decline of 2. 3 . And down over 100 the its been a rough couple of days overall. This morning a report says that tesla and panasonic are ending joint production of solar cells sqwkoxilor new yk. Ua b wl be right back. Memory loss related to aging . D prevagen is the number one pharmacistrecommended memory support brand. You can find it in the vitamin aisle in stores everywhere. Prevagen. Healthier brain. Better life. Wthats why xfinity hasu made taking your internetself. And tv with you a breeze. Really . Yup. You can transfer your Service Online in about a minute. You can do that . Yeah. And with twohour Service Appointment windows, its all on your schedule. Awesome. So while moving may still come with its share of headaches. No kidding. Were doing all we can to make moving simple, easy, awesome. Go to xfinity. Com moving to get started. We wont call it anything until we get to the opening and then the close. Right now 30 points higher. Nasdaq up 12 points. S p up about 6 points higher but an hour and a half ago we were in the red. Thats the conversation that everybody has right now. Thats the real economy story which really becomes the market story. Yeah. Meantime, this is a plot twist for you. A surprise and sudden departure at disney. Bob iger stepping down after nearly 15 years at the helm. During that timeshares of disney rose 440 while the dow gained 150 julia has more good morning to you thats right bob iger is stepping into the executive chairman role to focus on content until his contract at disney expires at the end of next year. Whats next and what was next in terms of my own priorities is mab making sure that the creative pipeline was rich and all of our creative engines were working well and i wanted to spend more of my time on that but the only way i was able to do that was to give up the daytoday running of the company to pass the torch on to bob. Now he passes the torch he expanded disney internationally with the launch of Shanghai Disney and new star wars lands he shifted the focus to streaming directly to consumers with a launch of disney plus and espn plus and he gave the company massive new scale for the acquisition of the entertainment assets from 21st century fox. Now iger has grown and changed disney more than any prior ceo leaving his successor with big shoes to fill. You can find my full interview on cnbc. Com. Two questions, one is one of the Big Questions in hollywood and wall street is the media sy immediacy of the announcement to effectively make the new bob the ceo immediately. Did he speak to that issue and why . Well, look, i think theres a question of why this is being announced now when igers contract had been extended through the end of 2021. You know the board is focused on this issue of succession for quite awhile now expiring someone who could fill his role and remember there were many examples of people like people that were thought to be successors to iger that ended up leaving and raising concerns about who could fill igers shoes. So the idea is to identify who that successor would be and once they did identify him they wanted to give a period of transition where they werent just going to have iger continue in the ceo role until he was replaced but i think he wanted to show that he did have confidence in the person. Very quickly, second question, kevin mayer thats now taken over disney plus was often seen within the industry as the heir apparent. Does he stay does he bolt whats the conversation there and how important is that . Well see i do know one reason he was chosen was because of the operational experience where as mayer has only been running the direct to consumer business for about a year so thats a much younger business where as he was running before that. Kevin mayer has done a good job if you look at the really impressive numbers for disney plus in particular and the growth of espn plus so certainly i would expect that disney would want to hold on to him and i believe he is under contract although contracts can always be broken but certainly someone disney would want to hold on to for the company. Thanks. Look at that chart you saw it there im going to ask you some questions about this joining us now like 100 to 110 and 115. And we waited and waited and it broke out off to the races were back down at the high end of that range but we have got that on the horizon. With this news, do you buy disney since its 128 and its cheaper here is that where you want to buy it or do you worry about whats going to happen in the near term and then well get to iger and the other stuff but is this the place you enter disney. Youre waiting for the negative revision to come. Its given up so much in the last two or three weeks this isnt an entry point for one month and you trade out of disney youre going to have negative revisions. But coronavirus will come and it will go. For right now, they guide it to a hit for the fiscal Second Quarter and, you know, in terms of just Shanghai Hong Kong and right now i sort of think if it does keep going and it spreads to the u. S. And start taking numbers down for disneyworld and disney land maybe that benefit goes away and people get a bit more panicked but i agree with him. I dont know when. When did we first Start Talking about iger a lot. Hes resigned and there was speculation about whether he was going to run for president and then the deal with rupert murdoch. So an immediate, leaving immediately as of yesterday, is it still an orderly transition that the company will we study it 10 or 15 years from now and how to do a succession and this is well done or was it weird . The timing was weir. It was. The timing was not what we expected and not typical disney. You had a quarter two weeks agatha was a great quarter you could have done it on the quarter or waited for the next quarter and the iming wtiming s weird. Why now, what happens to kevin are questions that Everyone Wants answers because it doesnt seem that the answers are solid. Why now . It could have been two weeks ago. We dont have an answer for why now. Does that bother you. Yeah. It bothers me. Its not like hes going anywhere. Thats why i dont understand why all the hubub. As analysts we like answers to questions does it bother you in term of an analyst, yes. The k to. No, because hes sticking around. The announcement doesnt surprise me as much as to why it happens now. You guys are control freaks thats our job. We like to plan. We want to know why speculation was maybe he had a job offer. He was that valuable. Was there some event. But you could have done it internally. Is this a trial period . Is this like a situation where he gets the job but with iger hanging around it could work if it doesnt, do you keep kevin and swap them out later . Maybe this is some kind of is that a basketball . Basketball hoop i like that. He could get the 3 second rule and be out. Is that what its going to be like we hope so. I didnt think i go all the way back they didnt know what to do. Do you like chapek over kevin . Absolutely. More experience. More disney culture. But i seems like its star wars now its creative now. Okay, alexia and michael. Its more than one. But its weird. We usually arent its usually disney versus boeing. Compartmentalized block by block. Disney versus imminent, horrific disease coming up, the cdc saying its not a matter of if but when the coronavirus will spread in america and were in times square what would an outbreak look like in a city like new york or chicago where if you are mandated to stay 3 meters away you couldnt well discuss that in a few minutes. Heres yesterdays dow laggards. That doesnt narrow it down well be right back. Time for toydas aflac trivia question in what year did linkedin launch no. Uh uh. Is it Homeowners Insurance . No. Uhuhuhuh is it duck insurance . Nope. Ahhh do they pay me money directly when i get sick or injured . Yeah. Aflac you got it. You know aflac boom get help with Expenses Health insurance doesnt cover. Get to know us at. Aflac dot com. You know what im talkinge tabout, right karen . . Huh . You wanna let yourself woah, but you cant do it here. Or here. It hurts more when you fight it. But totally cool here. Woah and here. Woaaaahh oh yeah. Woah, kid. She gets it. [ roars ] woah get it all out. So when youre ready to let yourself woah, theres only one place to go. Universal, baby 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. Wewithout the planet cooler getting warmer. At emerson, when issues become inspiration, creating a better world isnt just a result, its a responsibility. Emerson. Consider it solved. In what year did linked in officially launch . The answer, 2003 ate all that . No. But bdo does. announcer people who know, know bdo. But when allergies attack,f any the excitement fades. Allegra helps you say yes with the fastest nondrowsy allergy relief and turning a half hearted yes, into an all in yes. Allegra. Live your life, not your allergies. 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 welcome back, everybody. The coronavirus has spread quickly throughout the mainland. It is on its way to becoming a Global Pandemic and its only a matter of time before the outbreak spreads here in the United States. Meg joins us with more on whats happening. A new milestone noted by the World Health Organization this morning. For the First Time Since the outbreak began new cases outside of china exceeded those reported in china the news comes after the w. H. O. Praised how the country worked to contain the outbreak but as news spreads europe and the middleeast raised alerts around the world. The cdc telling americans to be prepared its not a matter of if but when it spreads in the u. S. School closures and working from home and cancellation of Mass Gatherings all may be possibilities. He urged calm as he says so far the u. S. Appears to have contained the virus. He has two appearances on the hill this after democratic president ial candidates in last nights debate says the u. S. Needs to do better in preparedness. Thank you joining us to discuss all of this is the assistant professor of medicine and the offer of super bugs, the race to stop an epidemic good morning to you. Thank you for joining us im going to go straight to the question that we have all been asking ourselves, is it here already . We dont know and the reason we dont know is were not testing for it we have done 16 tests a day. Total in the United States. Fewer than 500 tests. Why the cdc came up with a test and sent it out to all 50 states and then said wait a second this is a faulty test so we havent had something to work with. The good news is a new test is on its way and the most important thing that we could do is go out and test 10,000 people today to show that this virus is not actually here and circulating. But you would, if it was more than a really small number, you would expect to be able to detect a background level of respiratory diseases. We would expect to see a big bump. And we havent. We havent seen it. So youre really worried and we need to do the tests. I did 200,000 tests already in china. So as you said were not doing nearly enough. So are they going to ship out the new one . They have to ship out a lot of those things how many can we make somebody on thehillsaid they were briefed the new test was coming soon. I said how soon . They said we dont know. They wouldnt give you a days or weeks type of estimate . No, and the cdc hasnt given that information yet when can every doc in the country see a patient and order a test on the spot and i think the answer to that is going to be data will be crucial. Has china done a good job quarentining people and do we with the amount of freedom that we enjoy in this country, are we capable of the same response that china has taken thats going to be the billion dollar question because the quarentines here may be unconstitutional the question that were going to have to address and we can only address with data is should we do these quarentines what were seeing now as people are going to look at the repercussions of quarentines and going to check on the families that have been quarentined today they found a 6yearold boy thats home by himself for days because he was with his grandfather that died and he would told not to go outside. But as a doctor that looks at outbreak control, is it an effective method. The World Health Organization said we dont support quarentines. Now we know that it bought us time so theres been a shift in our thinking on it whether or not it should be done outside of china can only be answered once we Start Testing and we know the full scope of the problem and we dont know that yet but answers are coming soon. Whats the scenario under which it works and which it doesnt . If you had an outbreak of 30,000 people in times square, you would want to quarentine if you only had three people, you would handle it differently. The data is also crucial for travel bans. If you have thousands of cases in the United States and only three cases in bahrain, you dont need to ban people from bahrain. By the time you figure out theres 30,000 people in times square that have it its too late its a 14 day incubation period. It could be longer than that. Our understanding is still evolving but more data i coming. I know that you dont like to say things that are alarmist is your gamble that it is here or not if i had to guess i think its probably very close to being here. Very close to being here but not here. What does that mean that means that we have people flying all over the worldcoming in and out of times square and coming in and out of hospitals. We dont know the answer and its a challenge for us to try to answer the question so is it here . We just cant answer that question. Do you have a better understanding of the actually mortality . Since we dont know how many people have it were overstating the problem, so its probably not 2 mortality do you think its. 2 do you think its. 02 . Were seeing an incredibly high mortality rate for people over the age of 80 were also seeing Young Healthy people die so our understanding of this is evolving. What percentage of Young Healthy people though . Very small. Very, very small. But that looks like a problem. Auto immune. Thats correct. One of the interesting thing is it infected somebody in our military a guy in south korea the question is would we have been able to detect this case if he had been stationed in the United States . And the answer when we get these tests available is absolutely and that information is coming soon. And just to end on a positive note, your book super bugs is about something totally different that might kill us. Its about all the other things that can get you after coronavirus. Thanks for that. And the market is down again. On that note. Thank you. Coming up, when we return, the ceo of Software Giant adobe is going to join us and then later the chairman of Virgin Galactic and tech investor is going to join us for the hour. Its been a huge story stock squawk box returns right after this dont just plan to retire. Plan to live. An annuity helps cover your essential monthly expenses, so youre free to live the life you want. Find out how an annuity can give you Lifetime Income at protectedincome. Org Home Improvement retailer with a mixed quarterly profits were better than estimates revenues narrowly missed estimates and a couple of food stocks on the move today shares of wendys to the down side about a percent or so 15,000 shares of premarket volume it matched wall street profit estimates and posted better revenue numbers and better than expected sales growth and were going to end on shares of papa johns up about a percent or so roughly 1,000 shares of volumes. Had a quarterly trifecta better than expected profits as well so two red, one green. Coming up, the ceo of Adobe Systems is coming up on squawk box. Keep it here and check out whats happening to futures at this hour. They traded in a 641 point range. A volatile segment squawk box will be right back. sensei a live bookkeeper is helping customize quickbooks for me. live bookkeeper okay, youre all set up. sensei thanks that was my business gi, this ones casual. vo get set up right with a live bookkeeper with intuit quickbooks. Dont get mad. Get e trade, dawg. [ fastpaced drumming ] names are all in correction territory after the declines we have seen the last couple of days and adobe that had had a strong run to start the year is up 8 over the last week joining us to talk about this and more is the adobe ceo. Its great to see you. Thanks for having me. Markets watching the dow down 1,900 points what are you thinking as a ceo seeing whats happening . What is your take on the economy right now . I think its all about the coronavirus and the Human Element of that is certainly tragic and were all monitoring that but i think in terms of the general economy were on the creative side, the notion of creativity and design has never been more important so i think the fundamental drivers with et cetera Artificial Intelligence or Machine Learning or whats happening with 5g i think the strength will continue. Have you seen things shutdown because it looks like businesses ground to a stand still in china. Well, where we are in our fiscal calendar, we end the quarter so were not commenting on that specifically but actually our sales in china as a result of people using our produc products theyre not as material as the other companies that have a larger presence. Because a lot of people werent paying for it to begin with its not going to have as big of an impact. In particular china is not a material part of our business. So, can you give us some insight . But trying to see through again, the stock market is like dropping everything right now. Investors are dropping everything as we look at the Global Economy does that make sense from somebody that can see the numbers on a daily basis in terms of the uncertainty that this causes, you can clearly see why that might raise some concerns. But depending on how long this goes i think its the duration and tenure i think it doesnt change fundamentally how technology is going to continue to transform every industry so i think the longterm secular trends are going to continue to be positive its the uncertainty that everybody is focused on right now. Here is what caught my attention. Yesterday ubs raised the price target to 430 to 360. This was yesterday as the markets were in a free fall. Theres been questions from other analysts they want to hear more about what youre doing in terms of business to business i think its crazy that people look at texts rather than graphics so i think using digital as story telling. Photo shop beyond this. Like spark that were doing for every single student that secular trend continues on the enterprise side what we have done, we were the First Company with how do you engage with your customers and i think the demand for that is how do you engage with your customers directly and everything with respect to direct to consumer, thats also going to continue. How is the move to the cloud going . Thats what a lot of analysts have wondered as well. We were absolutely the pioneer in terms of moving from box offer and when we first did that many years ago people were wondering what adobe was up to and whether its the speed of which we can now innovate, the revenue stream, the ability to price differtially its paid off in spades. How recession proof are you for both businesses and consumers . How core of a product is it the company has been growing at 20 were continuing to do well. We focus more on are we innovating with our customers rather than any external issues. How has that moved to try to get more to a situation. What was a b to c company and may be engaged through a distribution channel, that distinction is completely blurring so you want to engage directly with customers the Procter Gambles of the world so i think both in terms of both providing us with that last mile on commerce and the ability for companies to engage directly with customers, both of them are really key parts of our Acquisition Strategy and rounding out our portfolio thank you for your time. Coming up, the chairman of Virgin Galactic is going to join us for the hour. Plus the legendary investor joins us to break down this weeks mkeart volatility all of that is straight ahead right here on squawk box hows the it department liking the now platform . Every time it takes care of something for us, we celebrate. How often does that. Got it. Servicenow the smarter way to workflow. These are our sales. By product, by region. You can actually see taste trends. Since when can we do that . Since we started working with bdo. announcer people who know, know bdo. Becky quick and Andrew Ross Sorkin and our special guest host, it merges all of the different culture verdicts its good to have you here. We have more things going on. This is just one of them but compared to the last time you were on it is like why are you doing this pie in the sky type stuff next thing you know is stock is worth like 8 billion or something. Its a real thing. Its a real thing it was a real thing when we did it. We were talking off camera about he has to wait like everyone else to go up and you can put me on the weight list can i be like 10 millionth person to go and its right over here all over the map this morning. The s p up and rebounding this morning. And earlier we were up the yield goes down to all time go lets tell you how we got here markets began in the green stocks were positive out of gate as you recall. And fortunes changed and indexes fell throughout the day with investors nervous and then the cdc came in saying it was spreading illness and pandemic was likely and that everybody should get prepared. And the dow ended down and trillion dollars in market cap just wiped straight off the s p 500. Theyre now in correction territory. And just continuing. And all time low of just 1. 3 . The 30 year bond hitting an all time low under 1. 8 . The most recent stuff is the Virgin Galactic. And we have to just we all have feelings about coronavirus and the founder and ceo and also chairman of Virgin Galactic. And thats on everyones mind when the market goes down. This is the very important thing. And it could be in the middle and all the people who are immediately carrying coronavirus all over the world and probably tells me that if its in the hundreds of thousands or millionth than its akined to a flu. Thats much more of a tractable thing because we know how. If the denominator is as low as it is but then the viral spread and coefficient is as past as were being told its a serious problem. Its going to shutdown not just how cities are but its going to be something that we convenient in awhile. A responsible investment. I cant do anything about it. Billions of dollars no wonder you dress like that. Billions of dollars of equity. Its true do i hedge increasingly im trying to just get relief. Just remember that im not owning stocks. I own companies and as long as i can maintain some semblance of normalcy this will take 8 to 9 months to roll its way through the marks and for the markets to rerate and right now if i can just manage my own psychology. It means dont be leveraged. I have been meeting a lot of great folks the last three days here every time i come to new york i meet some of the best hedge funds and one of the things that really struck out to me this time around is how levered everybody is if theyre running something more liquid like a typical macro strategy theyre running 12, 13, 14, 15 times levered i have always felt like i have been on the wrong side when i see People Printing these enormous gains and i thought to myself why am i being so conservative but in moments like this i feel really calm. Youre the firstperson that said that on the set theres a lot of hedge funds super levered up out there that caught you off guard. That sounds like a potential problem when you have seen activities like we have seen the last couple of days. This is a bigger problem. So they try to have small exposures and then lever the whole thing up theyre not hedged to begin with theres a ton of correlation and when things like this happen and everything rerates and youre running 5, of, 7, 8 times then it gets exacerbated. So the thing that we havent seen is what if that happens its fair to say that youll go risk off and people will take money out of the market, that will represent the first maybe 800 points in the dow or the first 1,000 points in the dow. But its just forced sellers. Its so exciting. Were getting news that President Trump is going to hold a news conference. About about coronavirus at 6 00 p. M. This evening. I did ask him about that. It was a glimmer in our eyes in davos. He has not been worried and he sent larry kudlow out to say hes not worried the cdc has a different view on that you have taken companies from a glimmer in someones eyes all the way to where theyre major companies. Is space ahead of it is virgin ahead of itself have you been surprised based on the fundamentals can i take a step back and give you the set up . Sure. It doesnt just apply to virgin but it also applies to tesla and those two things are actually the most similar stories. First lets look at the fixed income markets for the last ten years everything that has looked like a nail has been dealt with the following hammer print money, cut rates trump tweets, print money, cut rates. And rates have gone to zero and theres trillions of excess capacity just sloshing around. And then the number of companies that you can invest in has shrank by a third. Theres no growth outside of multiple expansion and no growth outside of buy backs so everybody crowds into the five technology companies. So when you put those two things together there is a set up with no real growth or unique stories and nothing that can give you longterm outlook so when a Company Comes along that has a unique narrative and trying to do something thats differentiated high margin and could theoretically grow for ten years where theres an enormous amount of con sumer demand, thes things get repriced in ways that are nontraditional. Sounds to me like youre saying yes its a storied stock but that doesnt mean that its not going to turn into something huge. I really believe in virgin. The goal is to fly on a commercial flight this year. This year. Yeah. I think the point is that setting an arbitrary date for Something Like space flight is not the right thing do do. You want to move forward in a plan and not move backwards but give them the chance and opportunity to build a beautiful experience you want to be the 10,000th customer. You said the 10,000th customer. I said a multiple of 8,000. They are making amazing progress working through the faa and the technical capabilities and flying the machines back down to new mexico and then on top of that, all of this demand keeps piling up. 124 increase in the number of people that want to buy tickets. We have started to accept prereservations. If those 8,000 people, just those 8,000 people it doesnt seem like a lot but when you think the price could be around 300 grand thats 2. 4 billion of pipeline. Is there an Insurance Program . Yeah. No, for individuals. So if something tragic were to happen, do you know what the pay out would be relative to a regular airline . Im just curious. I think thats actually i dont know what people think about it like that. I dont know but i know there will be a really robust insurance. Very quickly, mike santoli brings up a good question. It was at half evaluation of 1. 5 billion. Now its a lot higher. Is this overdone or did things just change that drastically. Neither. You have to remember, we put 800 million into the business between secondary and primary so there arent a lot of people that can and the other thing that happened is this is what is talked about it. And then apply it to a unique story. I think people finally woke up to tesla and started to say what else looks similar to this people missed out on a 75x on tesla over the last decade and i feel just as emotionally invested and intellectually invested in virgin. He is with us for the rest of the hour and we have a lot more to talk about with him joining us by phone is lee cooperman. Lee, we have talked about the volatility that we have seen the last couple of days. And are you a buyer or a seller . And the functions of the market and go back to it february 18th and i said the market was knocking on the door and there were lots of issues that were being absorbed by the market some investor and i would say that you have to have a strong opinion about two issues one is the coronavirus does it get under control in a reasonable time rame the socialist problem well have to see. I dont think the country is so le leftest in its orientation that theyll be elected president we have to make it very clear. He is not a socialist. Socialists advocate Wealth Redistribution communists advocate nationalizing the means of production and tearing down the house. Thats his approach. I went to cuba three years ago now i have said this on your program i think more than once theyre hard working people. You go to cuba and what do you see . They get it once a month and it takes two hours to get from the suburbs to downtown havana because they do not have an organized transportation system. It costs 3. 85 a minute to get cell phones. They get no Satellite Service and no Newspaper Service and they lived in delapadated conditions it doesnt make any sense. And well have to see this play out. I listened to the debate last night. I just dont think the country is prepared for socialism. What do you say to the 50 million plus people that believe if you read the policies and take socialism aside he looks like a social democrat akined to a politician in the nordic countries than fidel castro 2. 0. I dont know. Thats not how Bernie Sanders sounds to me my main hangup has been all along the constant attacking of wealthy people the villainizing of the billionaire class. I got into the billionaire class. But i dont care much about money, okay. I dont get it you know, i look at a Mike Bloomberg, the way he is treated in these debates, the way hes attacked Mike Bloomberg lost out in a power struggle in his mid 30s. He had a vision of building the machine. He built a machine that you need in youre in the Investment Business he has built a 60 billion network. He gave away 9 billion to charity on his own well before he became involved in a big political way. He did a fabulous job as mayor of new york and theyre attacking him and he had a great line in the last debate where he said im the only guy on this platform that built a business and they all looked at each other blank. Bernie sanders hasnt worked a day in his life. At the end of the day i have been equally blessed as you but at the end of the day if the worst thing that happens is people name call us a little bit its not such a its not the worst thing in the world if it allows us to wake up to the reality that a lot of people havent been able to participate in what is really been an equity Market Expansion where folks like you and i who can be, you know, long equities in a massive way, levered up, access to certain products can do well to a degree that everybody else cant. So what people are saying is lets just acknowledge that thats happened. It goes beyond that im a believer in the progressive income tax structure. Rich people should pay more but what we have to do is a nation is agree upon what should maximum marginal tax rate be on wealthy people we have to size the government to that revenue yield. Now im prepared to work six months a year. Thats a 50 marginal tax rate depending on which state you live in youre already past that state and federal income taxes and theres a great comment that i read recently and said what is your fair share . Im willing to pay a 50 marginal tax have no problem with that. I just think that the dialogue is destructive the moderator asked me a question after i gave my presentation and said what do i think the market would do if Elizabeth Warren was elected president and i said go down 25 . I think you had a different view i heard that previously and the next day she tweets, leo, im only looking for 2 . Give others a chance at the American Dream she has no clue about anything about me i sent kids to college in new jersey i pay their tuition, okay . And i decided to take the high road when they go low, we go high i sent her a well written letter, very respectful with a closing paragraph that all of us have to Work Together to deal with the issues but there are issues i dont deny that. My approach is through education and hopefully fast Economic Growth what does she do she puts out a comment inside a trader and owned stock very constructive. The wall street journal wrote a comment that day that said he won the case what is she accusing him of . But it was nothing constructive. She was a politician in the worse sense of the word and we need people that see the issues. I like that in certain respects Mike Bloomberg is a republican and in certain president s hes a democrat we have to avoid the labels and we have to Work Together in a cooperative manner and all of this income differentiation has been the result of Monetary Policy assuming that Bernie Sanders or Elizabeth Warren were put into office and youre okay with maybe some of the criticism but from a policy perspective are you okay or encouraging of the policy and to the extent that you can appoint the head of the department of justice and say, you know, please go look at these individuals if you could say, you know, if you can account the head of the ces thats going to look into various companies in a more aggressive way im not saying that she shouldnt. Im just raising the issues. Even if you have a completely divided congress, how you see this playing itself out. It doesnt matter who gets elected in my opinion. I have generally lost faith in the power and the impact of the presidency in domestic policy for years. Its generally the case that the president of the United States is given one hall pass in the first two years of their term at which point the American Population either flips the house or flips the senate and creates spaces and its happened relatively predictably now and it will continue to happen so the question is what do we think is the most likely thing to happen . When trump came into office the only thing that they were able to get done in which republicans were able to coral the wagons was tax cuts and tax change. But Everything Else came to a grinding halt. I dont agree with that im not a trump fan but i believe the man deserves a certain amount of credit for what is going on i dont like his style so at the end of the day you have to vote your values or your pocketbook im at a stage in my life where i want to vote my values and my values tell me that it is wrong to call mit romney and its wrong to tell Rick Tillerson hes dumb as a rock. Its wrong to say hes looking up and not down but the president deserves credit. They took the foot off of the foot of the economy. Unemployments and minorities is at a record low. Overall employment is at a record high. We have opened up a long overdue constructive dialogue with trade on china we focused attention on legal immigration. All of this is good stuff. I aal apologize him to ronald ray gar. Ronald ray gar was a very beloved president. When he ran for office he said i had a three pronged program. Get the government off the backs of people and reduce taxes and regulation its not just having a conversation about people that participated. Theres a lot of stuff. The young people relate to that. Talking about the evenness that were talking about we dont need a gridlock in government. Not understand economics anymore. To not understand the capitalism got us where we are. So you can have these great high minded nordic social democratic conversations but its a dangerous place youre trying to take it. Were allowed to have diversity of opinion thats a problem for democrats. My how if you think thats okay that hes going to get the nomination, thats fine. I think you have dug democrats have i take a lot of energy in learning about whats happening. I take a lot of energy in reframing. Were stuck with bernie versus trump that could be the end result of all of this. How many let me do this, you guys wanted to talk about the market. If you go back a week ago, 34. Hubert 3,400 in the market all of a sudden, i have to be very careful but all of a sudden the beautiful lady or the handsome man developed a blemish. And the blemish was the coronavirus and then what happens is these quantitative traders take over and they create a level of volatility that destabilizes. If you have a view of the coronavirus and i tend to have an optimistic take that by june well resolve it but i have no expertise in that regard i do not think that the country is ready to elect a socialist that i think that the correction is healthy for the market its healthy. And they created a very speculative environment. We have taken air out of the bubble and thats constructive this just a guess. Were not far from a correction low. Its predicated on two assumptions that im making and then go back up. I looked and the s p is yielding well above fed funds and well above the ten year government. Companies are growing and theres the ability and theyre accelerating recession and fed or significant geopolitical events that you can have forecast and whether that coronavirus or specific event well have to see but my guess is it will be controlled thats my story. You said youre a net buyer today. Were you a net buyer yesterday too . Im doing a little bit every day. Im doing a little bit every day. I got three Earnings Call at 8 30. And six times what they expect to earn this year. They took out guidance because they cant give you guidance until they know what happens to the virus. They brought back close to 40 of their company in the last five or six years. They generate cash flow and it the multiple stocks. I do a little bit of buying every day and i do some selling too. Harvest is where i think that the riskreward isnt particularly favorable so im engaged but i think it requires a view on the coronavirus and a view of politics. Can i ask you very quickly, i know that you have three Conference Calls that you just mentioned that you have to jump off for but last week i think you said that you think Bernie Sanders is a bigger threat to the market than the coronavirus. Do you still think thats true but what made America Great is our commitment to capitalism we have flaws and problems absolutely the free everything. Sure its appealing. He wants to spend somebody elses money let him get a job and work for a living dont get me too upset. We have held you past the time we promised wed let you go keep fighting the good fight. Thank you. Coming up, when we return, bob iger stepping down as disney ceo. But who is the new guy take a look at an s p bank and stayun ted youre watching squawk box here on cnbc. Some of his most notable accomplishments include Shanghai Disney in 2016 doubling disneys cruise ships and the expansion of disneys parks with new star wars and marvel ands and he brought content direct to consumers. That experience will come in handy with disneys focus on streaming. Well, i obviously have huge shoes to fill. I mean bobs legacy in the company is just profound my role is now to take the strategic pillars and he is so well established over the last 15 years and continued to work on those and implemented those in the marketplace plus theyre laurjinching to tae on disney plus you can find my entire interview on cnbc. Com. Andrew, back to you. Appreciate it for more on his legacy we want to bring in our guest and and also the offer of steve jobs who also created pixar help us think through what is happening this year thats part of the dna of the Disney Company ever since walt disney didthat and hasnt created many great characters in previous years he strongly opposed that pixar acquisition but he had just become the ceo and he lead isner speak to the board but iger won the argument and ends up with star wars as well. And somebody has a strategic view of where youre going in an era of cord cutting and digital disruption nobody beats bob iger. Are you surprised who he selected as his successor . No, i mean, its scary after you saw what happened and obviously the theme park business is not as badly hurt for the longterm but thats bad. The good thing about disney is that its very balanced. And theyll stay at home and theyll be streaming star wars i do think that it has shown an ability to really capture the consumer and thats the main thing and it makes an emotional connection to consumers. That was a question that i was going to ask when bob first got the job people thought of him dare i say as a suit. They did not think of him as a creative genius. They thought of him as a business person. To some degree chapeck has the same reputation. Its sort of a left brain right brain situation. Whats particularly interesting is bob iger saying he is going to spend the next year and a half or however long it is being an executive chairman focused mainly on creative because as you say, he came in as a business suit so to speak he has great taste and great fingertip feel for both television and stars but he is not one of these hollywood people who is known as let me be the creative product person. So it will be interesting to see that he decided to cast himself in that role for the next year and a half what are you thinking he has this term that you invent whatever you want to say to make yourself seem amazing. Thats a business that frankly more than anything else proved the value of really good m a by using a highly levered security. Thats what they have done the stock was flat for three years. So that single acquisition was i think the transformational event and in my mind what it proves is the value of m a so if you have a Balance Sheet like disney i would kind of think why not put somebody that has an eye more toward a transactional hes an incredibly successful m a guy. And i think that portrays what he is good at. If the new guy is an operations guy you built up the company and now you know somebody that knows it well. I think disney is such an excellent exceptional example of what an old line Industry Company needs to do if you listen yesterday he said we have all of our assets in place. I thought the suggestion he was making was the difficulty is now what theyre finding and this was netflix thats going to do this is netflix has transformed the business into a consumer surplus business its going to basically take margins to zero and as they do and as they fight for subscribers the only way to survive for somebody like disney is to acquire and bolt on acquisitions over and over and over again 30 seconds final ord. Were going to be in a direct to Consumer World and lets get these brands and he did it and he defserves credit. Can you do anything . We won a bowl game. They won a bowl game three years in a row. Im talking hoops. I said i cant. I dont know if theres enough points. Its mardi gras and people are not focused. Yeah. Thats true. Theyre going to be great this year has coachella happened . Everybody wants that to get cancelled. So they can finally be cancelled. Theres people like you guys. Narrative fallacy is pretty good. Income inequality is a greater social evil. Much more from our guest host coming up but first as we head to a break if you missed it at top of the hour, trending on twitter, surprising following his interview on squawk box. Well be right back. Two disney park are closed right now. That brand and story telling will weigh outlast any type of shortterm growth that we have. I try to go to disney land as im sure that you make your way there. We talked about tesla briefly. I bought these converts a long time ago and it was like my zone three years ago. I believe in this business because what theyre moving into is beyond cars and sustainability and whether you believe in Climate Change or not it doesnt convertibles worth right now good. A large number. Are you surprised to see the stock run so quickly so fast yes. This is what i said before with rates at zero, trillions of dollars of printed money, no investable equities, tesla and virgin one are going to have a bid. If you do something that captures consumer imagination, retail is a huge part of it. Usg, consumer marketing. A complete fraud. Governance has been addressed. Thats useful. This idea you will get a stamp, my supplier, i have offset their carbon across, its a joke, jargon what people are doing right now, using it as a way, if you can paint yourself as csg, in europe you can borrow money from europe at essentially negative rates. I will come and give you a massage. I dont want you touching him, corona virus. I personally believe in Climate Change when you hear they wont finance fossil fuels and going to spend 100 million in real money everyday on biofuels every year, you say. Two things. Jpmorgan by saying what they said, will be able to borrow billions of dollars from the ecb at negative rates. You think thats what that is its obvious what it is it doesnt have to work. Theyre now getting free money from europe for saying this. You dont think they would get the money otherwise . No. Because europe has a condition to issue green bonds and checks and balances it will be really important to diligence the supply chain to the supplier to the supplier thats a hard thing. These are useful statements. Its great parking lotting again, a lot of sizzle no steak. I think we need to invest in actual companies that can go and count and go and legitimize the actual impact the companies have so that you can do the right amount of Carbon Offsets you have to have a legitimate exchange to trade them if you really believe in Climate Change you have to do hard work. Virgin galactic is going to bo be buying do you have an offset . Galactic. He just said that i need a cigarette in fact it was so good for me does that ever become an actual means of transacting, crypto, am i allowed to say crypto can i bring it up . I would like bloomberg to take this article i wrote in 2013 out of their pay wall, my view i held since today hasnt changed, everybody should have 1 of their assets in bitcoin. Or crypto. I still believe that today. I believe it is a fantastic hedge. When you go back to the conversation this morning, you see the amount of leverage the financial industry is running and think about all these dislocations or exogenous things happening you cant predict, there is a lot of risk to the down side. It will be great an average individual citizen of any country in the world has an uncorrelated hedge ive said this repeatedly,ed ad nauseum on this show, every financial instrument is correlated warren buffet says has zero value. Unless someone pays more for it. I think hes an exceptional person ive learned an enormous amount from the afar and a few interactions, he is completely wrong. Shouldnt it have gone down if it was digital gold. You have to look at volumes these are not thisly event driven strategies. You just said digital gold i didnt say that he didnt say that. Thats what people say i dont think when you wake up and see a corona virus scare going down 2,000, you shouldnt buy bitcoin. 1 of my net worth should be on something completely uncorrelated to the world and how theworld works over some period of time accumulate a position and just never look at it again and hope that insurance under the mattress never has to come due if it does, it will protect you because then it will be hundreds of thousands or millions a coin. We have to go bank stocks, what are you . Im a net seller, other than amazon because i think facebook gets regulated. I think google has to go through divestitures to get regulated. Amazon keeps growing by 25 every year like clockwork, an incredible incredible business thank you lets get down to the new york stock exchange. Jim cramer joins us. A point in time. 87 points on the dow were all over the map today are we searching for a bottom, do you think yeah. I think what were looking for, like dr. Falke said yesterday in the talk we are believers and not going to sit there like scientists i know its pollyanna to say we have something right now while we will get clusters in the United States, there are people doing good things i dont want to get to the moment we had ebola and someone dies in texas and it is game over for our civilization. Its game over for that. You had a great discussion today and its not too late to get optimistic when everyone is getting pessimistic. Thats a new statement from jim. Ive been really bearish. Down seven i have to get more positive, not the end of the world i checked my ap watch and she says not the end of the world. Thats siri. E thank you, jim. Seyou in a couple minutes. Stay tuned, squawkbox, well be right back. 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. Its more than just fast. It keeps all your devices running smoothly. With builtin security that protects your kids. No matter what theyre up to. It protects your info. And gives you 24 7 peace of mind. That if its connected, its protected. Even that that petcamera thingy. [ whines ] can your internet do that . Xfinity xfi can because its. Simple, easy, awesome. [ barking ] i want to thank our guest host today the hour flew by thank you. Were out of time. Keep an eye on the markets and listen to what jim cramer has to say next we hand it to squawk on the street right now. Good wednesday morning. Welcome to squawk on the street. We are looking for some signs of exhaustion after 2, 3 down days on cornerna virus fears. Futures did crack below 3100 but higher yields. Europe i