good morning, it is 8:00 a.m. at amazon headquarters in seattle and 11:00 a.m. on wall street. "squawk alley" is live ♪ ♪ ♪ good monday morning. welcome to "squawk alley." i am carl quintanilla with morgan brennan, jon fortt at post 9 apple shares are still reacting to news of iphone price cuts in china, and netflix shares down

ahead of earnings later this week amazon is in focus as the bezos divorce story unfolds. mark mahaney is with us, and dan ives and tom forte good morning to you all. let's do netflix given the run up since christmas eve, are we coming in too high in earnings season >> no, i don't think so. i'm more struck by instead of the runup, the run-down the last couple of months this is one of the most dislocated of large cap internets, this and facebook we had numbers off the september quarter that went up we think the outlook is positive for this year. i know there's a lot of overhang with the competitive ott launches, apple, at&t, time warner, disney but we think netflix can power through it, add close to the same number of new subs in '19 as '18 if that's true, we think the stock can continue to rally. >> pose the same question to you. given it is the first big faang

to report, to what degree does it set a tone for the quarter? >> generally i thinking 2019 you'll see performance of faang stocks diverge for netflix, it is their ability to add customer subs to drive the performance in 2019. i think 2019 could be a good year for netflix as well >> how about apple you make the argument that something new is basically needed, and that might be m and a. haven't seen a lot from this company in the past. >> in our opinion, the clock struck midnight for apple in terms of content it is an install base. you have to put more content from a video perspective in there. it is right to look at a24, lionsgate, and sony. they have been going after viacom, cbs, this will be the biggest mistake that cook and

apple made that's the way the services flywheel will work in terms of the install base. >> mark, along the same lines, what about amazon? do they have now all of the pieces that they need to keep it going? you are very bullish on them i believe the price target is 2300 which indicates quite a bit of up side from here a, do they need anything else, b, are you concerned about the jeff mckenlz ee bezos situation and what it does >> amazon, i think the most consistent fundamentals in large cap internet probably belong to google and amazon, and amazon should have had a really positive fourth quarter. there wasn't any dislocation in terms of whether all of the macro data points look like they were positive in terms of online retail sales, whether you look at data. they did something people didn't

realize, they got more aggressive with free shipping promotions in the fourth quarter. that's probably why they guided as conservatively as they did. we think near term numbers for amazon should be fine, and the asset has become less and less expensive is the way i like to say it you can buy amazon lower than 20 times cash flow, i think it is a great opportunity to own the stock. we think this is one of the better points on amazon. >> do you agree? >> i think amazon is incredibly well positioned for 2019 cloud computing efforts are very strong we know they had a very good holiday. i think amazon will have a strong year this year definitely. >> when you think faang will diverge, what goes to the down side >> facebook has the biggest challenge for 2019 they have a bit of an identity crisis apple put out a 12 story ad at the consumer electronics show about protecting your privacy. finally consumers are starting to care about that, i think it poses challenges for facebook

this year. >> i wonder what you think there are notes that argue the opposite today that the turn in sentiment could happen quickly. >> it could happen extremely quickly. we are going into a fork in the road earnings season specifically for faang there's focus in terms of china for names like apple, then look at ones not exposed like mike pence which continues to be a rock of gibraltar in terms of large cap tech. >> i want to go back to you, mark, on the divorce situation is that something that investors need to watch in terms of whether it continues to play out amicably we have 16% of the company at stake, right >> i was trying to avoid the question, jon. >> i figured that. >> you're not the first, mark. >> i'm just not sure that's uncharted territory for me, i'm not sure how it plays out. i really don't know.

is it a new risk i guess so so i'm sorry, it is a curve ball i think investors will still largely focus on the company fundamentals, so i am hoping and i think that's what's going to happen that's my best answer to your question. >> tom, same question to you, especially given the fact that i would imagine there are investors out there that have invested in this company, not just because of fundamentals but because of the visionary track record of jeff bezos >> sure. here is how i think about it jeff bezos says he runs it as if he owns 100% at 16% or 1%, he will continue to run the company as if he owned 100%, managing for the long term. that's what helped the stock do so well until now. i don't see that changing going forward. >> and given what we saw happen with wynn, is that something that investors should keep in mind, making sure the ownership

situation is amicable if she ends up with a significant stake in it. >> the other thing, if you look at amazon versus babe, there's no super voting shares this isn't a case where bezos has voting control, even with 16%. i think the influence he has is tied to the track record and his vision for the company i don't think that changes >> dan, more weak data from china, more headlines regarding u.s., china trade, whether we potentially get a deal there how do you expect it to play out in terms of coverage in earnings >> it is the biggest risk for tech outside regulatory. a name like apple, that continues to be a dark cloud on that name, but if you look through the supply chain, companies like pow wow talking about increasing expenses from china. it is creeping in. in our opinion this is a white knuckle situation with china

i think this is really in our opinion biggest risk to tech stocks with apple with a target on its back in particular front and center. >> almost all last year, people said regulation was the tail risk do you think china replaces that >> not even a question, 100% china. >> what happened to regulation, is that gone or on hold? or subservient to what happens in china. >> it is reflective, you can allow stocks like facebook and others you see reflecting valuation. and the biggest thing now in china, it is still that kind of opening the door, you don't know what's behind it in terms of potential. i think it is the uncertainty in terms of tech. that's the big worry thing we hear from investors. >> mark, what do you make of that, and which of your names do you think is most exposed to china in a negative way? >> i think long term it is negative to not be involved in the chinese market most companies that i look at

have did i minimum must presence because of local good competition, that's amazon's problem, or because of some government media regulation sensitivities. that's google's problem and facebook's problem there are chinese advertisers using google and facebook to market their products and services outside the country regulation is a bigger issue for them i don't think if it is peak reg, but we had a lot of regulatory pressure gdpr, that $5 million fine google had to play, and slew of congressional hearings and testimonies. my guess is the environment this year won't be as heated, so you could see rerating of shares because regulatory overhang will never be removed but it will lessen this year. >> trade it in for something else, at least for now regarding china. thanks good discussion.

let's get over to wilfred frost with market flash on the british pound. >> 0.6%, paired it a little from 0.4% this is general optimism or optimism improving towards theresa may getting votes through parliament on the topic of brexit tomorrow, including following robert peston saying it is either her type of brexit or no brexit at all, might be working. some are coming around to vote in line with the government ahead of the vote tomorrow that said, she doesn't have a majority with just her own mp. still need a lot of other things to fall in line for her to get over the number of votes tomorrow to win the vote we're up 0.3%, 1.2% year to date little improving optimism, still by low 1.29.

>> we'll be watching that closely. still to come, kara swisher will join us here at post 9 with her take on apple's drop off, jeffbezos' divorce and more. that's at 11:30. stocks off lows of the morning look at the worst performing stocks in the dow in today's session. iphoneow dn, pfizer and merck down more "squawk alley" to come. stay with us so lionel, what does being able to trade

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welcome back to "squawk alley. with chinese trade data and pressure on stocks, major averages are well off worst levels of the day. dow down about 120 points. with us to break it down, keith parker anbar d barry bannister. good morning to you both barry, we have seen earnings estimates come down pretty aggressively you think they're too high still. why? >> last summer we were $10 below street consensus the marks off the december low has a dead cat bounce cyclical rally where people try to catch a falling knife on earnings estimates, but world economy isville very weak, dollar comparisons are difficult. i would be a little skeptical of

dramatically higher given we're at the right pe and estimates are still coming down. >> keith, do you agree we're hearing more about an earnings recession do you think that's in the cards for 2019 >> i think an earnings recession is difficult lot of comparisons to 2015 and 2016 but in that environment, collapse in oil and energy earnings was 9.5 percentage point head wind to s&p earnings. that's more difficult now. second, the dollar rallied 20% in that environment head wind to earnings both cases, yes, oil prices dropped, but not to the same degree we saw then the dollar moved higher, but nowhere near the magnitude of the move in 2015 and 2016. >> how many more days or weeks before the government shutdown starts to weigh on the markets >> well, the partial shutdown is

effecting noncritical aspects of the government i don't think it is more than a damper on consumer sentiment due to the media's coverage of the event. right now, i'm much more concerned about weak dataout o china. >> but there are people not getting checks at a certain point, one would think that would start to have an effect on the fundamentals of something, you don't think so? >> well, it is several hundr hundred thousand not getting checks, any effect would be femoral. financials, energies, materials, some of the weakest earnings outlooks had some of the biggest stock moves, that's the falling knife i was referencing earlier. the market is placing hope we found the bottom, apd i don't think we found the bottom, particularly if you look at china and europe data coming out the next few months.

>> keith, what's the biggest risk to the markets, is it china, is it all of the turmoil in d.c., especially if this signals we'll see bigger fights over things like debt ceiling this year? >> i would agree with barry that what's happening in washington is less important than the growth backdrop and u.s., china trade negotiations, where i think that impact on sentiment and spillover effects to growth should talks breakdown and down side case we get further escalation in trade tariffs and tensions i think is the biggest risk to markets because march 1st, if things don't improve, we could see another let down in markets which then spill over into hit corporate september mea - sentiment. >> barry, the s&p target is 2750 looks like it is still up side of 10% walk me through that

so far you sounded more cautious or bearish that number seems like good gains for investors this year. >> i believe 2750 would be closer to 6% and it is in line with earnings growth which we expect some earnings growth this year one of the interesting things about the market is that we are at the appropriate pe ratio, given a low level of rates we have low real interest rate and real yield backdrop. that keeps the pe ratio 16, 17 times 2019 range it is up to the earnings we need to find a bottom in the earnings and i don't think we've seen that yet. we still emphasize the defensive trades we expect bull flattening curve inversion and got a lot of that, but i think the ten year yield comes down and ten to two in verts, that's a bad omen for

earnings when we come back, earnings season off to a good start citi, what to expect for their quarter and other banks tomorrow. first, major averages revisiting levels we saw earlier. dow down 150 s&do aos18 back in a minute

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citigroup with a miss on revenue. stock is higher on pace for a sixth positive session in seven. wilfred frost has more on what to expect from the other major banks this week. >> jon, let's start with the miss on revenue first. it came from fixed income trading. here's the ceo addressing that >> we did not see the level of transaction activity we had originally expected this quarter. g 10 rates in particular as clients largely stayed on the

sidelines in an uncertain macro environment. thereafter, the environment continued to deteriorate, characterized by volatile market conditions and widening credit spreads. this resulted in a risk off sentiment where market making became even more challenging in december across rates and currencies and spread products >> equity performance was better, still down 4%, stripping out the one offs of the other banks, morgan stanley most tilted to competitive trading fixed income banking fees were down highlighting this is not an easy quarter for capital markets for anyone citi beat eps, down to better cost control expenses down 4% that said, lower compensation will be due to traders may well be repeated. in general, the group is trading hard loan and deposit growth was

fine, asset quality was solid, net interest income strong a worst case scenario for a cheaply valued sector was averted. guys >> thank you. financial is the sole sector in the green on the heels of the citi results. european markets are closing. seema mody joins us with today's action >> yes, they are the market is fixated on data from china, saw data from exports and imports declined in china. data from europe is not good european industrial production falling sharply on the back of a manufacturing slowdown in germany and france that's the steepest monthly drop since february of 2016, comes after the world bank cut the forecast for global growth for 2019 and 2020. that's sending copper prices lower, it is weighing on a number of european miners. even though luxury stocks in

europe that rely on chinese demand, lvmh, kering, down 2% in today's trade. we also draw attention to the turkish lira after president trump warned that the u.s. would inflict economic devastation if they attack kurdish militants. geopolitics a part of the discussion check it out, lira dropping 1% it is still down 3.5% so far in 2019 separately, awaiting house of commons to vote on theresa may's brexit plan. as to the prospect of leaving the eu without a deal march 29th, predict.org shows 20% chance of that happening >> thank you very much. let's get a news update from sue herera >> good morning, carl. good morning, everyone here is what's happening at this hour talking to the press on the south lawn of the white house before departing for new

orleans, president trump denying he was an agent for russia >> i never worked for russia and you know that answer better than anybody. i never worked for russia. not only did i never work for russia, i think it is a disgrace that you even ask that question because it is a whole big fat hoax teachers in the nation's second largest school district are going on strike this morning in los angeles, they're demanding better pay, smaller class sizes. l.a. unified school district keeping schools open with substitute teachers. the strike is effecting a half million students at more than 900 schools. and pacific gas and electric facing potentially large liabilities over deadly california wildfires which killed 88 people will now file for bankruptcy it follows the resignation of the chief executive a day earlier. the company stock plunged in recent months. you are up to date that's the news update this hour back downtown to you guys.

morgan >> stock is plunging today, down 49% on the latest news sue herera thank you. after the break, what are the implications for amazon and jeff bezos, following his divorce, and what's the deal with apple another chip supplier reporting weak sales kara swisher from recode joins us next. don't go anywhere. i consulted with your grandmother's doctor. we can do the screening at her house. hi. this is the man that's going to check your eyes grandma. cognizant ai solutions are helping healthcare companies advance diagnostics and prevent blindness in patients with diabetes. everything looks good. you have beautiful eyes. ♪

steve liesman sitting down with former fed chair janet

yellen he joins us with some of her comments >> here's the question is the fed done? former reserve chair janet yellen said that could be the case, telling me at the national retail conference, we may have seen the last interest rate hike of the cycle she said she doubts the fed will go much above the 3% median estimate of neutral. she suspects interest rates remain low for quite a long time on the controversial balance sheet runoff that she began, she said she's surprised to see so much focus on it with interest rates so low she said there's little effect for markets and the economy. yellen endorsed comments from fed chair jerome powell to rethink the runoff plan if it proves to be a problem on the broader economy, yellen was upbeat on the consumer but

cautious on the economy. said global growth is less synchronized, trade tensions have increased uncertainty for business the tightening of financial conditions, lower stock market, higher rates could contribute to a slower economy this year, yellen said. back to you. >> all right steve liesman, thanks. joining steve and janet yellen on that panel was recode co-founder kara swisher who is with us now at post 9. that's an interesting panel. >> i have nothing to say about interest rates. >> janet and steve okay tell me, omni channel has to be a big topic and it fits in, the idea of mixing physical and digital retail. >> all talking digital. >> everybody is doing it lots of pressures that janet was talking about. what stood out for you >> what's interesting, right

after we went on, the ceo of target came on and he was talking a lot about this, the idea that target can meet anybody's needs anywhere i think that's the line from a lot of people, it is not a line, target has been making incredible technology investments. i think the issue is how you keep up with amazon and not just amazon but the global retail economy which is changing so quickly, especially in china so i think that was interesting to me. >> one of the things that jumped out to me in terms of the conversation on stage today is was the amazon effect on inflation. >> yes. >> that inflation has been tepid because amazon and tech in general are putting down pressure. >> they know what the price really is. there's so much data, prices that used to be more easily not known to consumers are very much known. and i think that's probably the case they didn't talk a lot about the government shutdown. i asked janet yellen about that. i was wondering if that effected consumer spending if it keeps going, and i think she agreed it could be a problem over the long

term if it continues for a long enough time. >> i wonder what you think of the in store digital experience. you've written so much on privacy. are we going to be okay, walking into a store, being recognized by our face, having things suggested in real time >> i brought it up with steve. i said you're going to walk in a store and that's going to happen i said if you remember from minority report what when you went in, i think that's the case, wearing something, checkout, there will be areas you don't pay, you don't have to give your phone, it will be on you. and there are some experiments >> don't think push back would be significant >> i didn't people would put pictures online and give up this much information but i think they will. >> people will be scrutinized not just for what they bought at stores but what they looked at >> exactly it is going on in china. there's big questions around this surveillance part of it where facial recognition and

what you do and ideas of social scores, it is very controversial. what you buy is an integral part of things. i don't think it will be as prevalent as in other places but it is important for retailers to think about. >> moving on now to apple, that company is lower again this morning as another iphone chip supplier releases weak sales numbers. this follows a report from last week that apple would cut another 10% of iphone production kara, your column a bit ago asked if this was the end of the age for apple. not saying that it is the end of apple. >> not at all, by the way. >> just the idea that apple is defining the era that we're moving into. >> yeah. >> with all of this going on, with these numbers and services, what's your answer >> well, i don't know. apple is still an amazingly strong company, bottom line, all of the fundamentals of apple are fantastic by any stretch pe ratio is low, 12 or some number that's so low, they have all of that cash, amazing

products, brand recognition. the issue is what can they do with services, what can they introduce in terms of new products we're used to apple releasing a blockbuster product. the money they're putting into services, especially the streaming thing which will be interesting, i don't think the previous person, i think said they would buy a studio, i'm not sure i don't see that i think they'll be a perveyor of services. >> you don't think m and a strategy changes >> i don't see it. maybe i'm wrong about this, but i don't see the current executives that they have, but with 5g coming, there's all kinds of opportunities question is less around a blockbuster product, and they've pulled away from screaming and yelling about one product. but the iphone may have played out in the current form it is in we'll see what the next one is there are rumors, new rumors today of another new phone that might be more dramatic change.

but i think they have users locked in to apple products. question is can they keep them locked in with other things. >> begs the question whether it is apple or tech more broadly, what do you see as the next market moving, society moving innovation >> i don't know. i think i have always been interested in ar i think apple is deep into that. we'll see where it comes there's not a new trend yet that's bigger. i think probably transportation would be broad one or location based, like you were talking about, sensors and those kind of things haept been a big company out of silicon valley, a new startup that's hot. >> there was no iphone before the iphone every other big product like that, the spoils were split among multiple companies, microsoft, intel this is the one where apple got the bulk of it profit wise >> uber wouldn't exist without apple. all of these wouldn't exist without apple.

i think everyone got the benefit from that. >> uber is not getting profit out of it yet. >> the iphone did well for everybody. >> including amazon, everybody you want to ask the divorce question. >> chief executive announcing he and his wife of 25 years are getting a divorce, leaving questions for investors over the ownership implications for amazon they have about 16% of the company. i would argue this is important because that ownership along with bezos' vision allowed him to have a long term view of the company. >> it is a large ownership, but it is not a controlling stake like mark zuckerberg has i haven't seen mackenzie in a long time, i knew them early she was integral to the company can, very involved in the early days of amazon i don't see her being, and she has been defending amazon for years when books came out. i don't see her being any kind of malevolent threat

i think they'll work cooperative together a lot of their announcements have been seemingly cooperative. and knowing her, i don't know her very well, but i did a long time ago, she is not the kind of person she's an incredibly intelligent, not someone given to -- she isn't someone i would see doing anything but what's right for amazon that's my take on her. again, it seems like they're handling it in a pretty -- marriages end, but i don't think she would do anything. >> when it comes back to the omni channel issue that they're talking about at the nrf, it seems like if amazon hadn't bought whole foods, it might be on the wrong side of the story they're rolling out amazon go stores, but that takes a long time now they have a physical footprint they didn't have before. >> they do, but they're doing it in a different way if you do retail, you have to do one of a couple things have experiential things, have great customer service, you have

to have merchandising that's different so people come there for a good reason. i was thinking last week, i took the kids to los angeles, one street, they have golf land, there were kids around the block for this it was an experiential thing i don't know what i was doing there except for paying $150 for a sweatshirt, but it was really interesting when i was thinking this was an exciting retail presence it doesn't mean there won't be physical retail, it just has to be a certain way customers respond to it. you also have to have data and everything else around the consumer you just can't have a store, fill it with inventory, hope people will come any more. i think that's the old way. >> i don't know if i am feeling whole foods is experiential now. it seems like there's opportunity there, hasn't necessarily been implemented. >> i agree i don't think the stores are better because of amazon except that you get some discounts because of being a prime member. that's nice i guess. the question is what will they do with that, how will they

innovate retail. >> alibaba was talking about it. >> they were there today at the event, too i think we love to get alibaba back to code what they have been doing in retail has been really interesting. you're going to see a lot of innovation in retail it is a question of, what i opened up with, there are not going to be stores any more. i meant there are not going to be stores the way they are what it is going to be, we'll see. it is interesting timetion on facebook >> sure. analysts and strategists saying they can continue to grow. >> they only gain in digital advertising, google and facebook again, the same thing. they're it there's not many places to go to reach the audience i think the question is can they sustain innovation, get people to stay on

you see people talking about this, it is not a small thing to think about people starting to wonder the efficacy of facebook. that's going to be question, not a short term >> do you agree with some prior guests that threat of regulation state side has receded >> they can't open the government >> beyond march 1st? >> i think facebook is down 412 on a list of things to fix we're going to be in politics from now until 2020, and nothing else will matter i don't think you'll see a lot of activity, like i have been saying, i think i said it previously, regulation that was coming, they can't operate >> the window seems to have closed. >> maybe not, but they've got a lot of things to do in washington that has nothing to do with tech now >> starting with turning the lights back on. >> maybe so. that might be a good idea. >> might help. kara, thanks for being with us >> thanks. coming up, the government shutdown, rolling on, now in the

24th day record, how the work stoppage is impacting operations on land, air and sea. that's after the bakre stay with us the dow is down 91 points. alerts -- wouldn't you like one from the market

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needed to do one thing more than any other. now numbers are out. he will tell us whether they did it, what it means for your money. the ge jump, the stock up 25% in a month we discuss that. about 15 away, carl. see you then >> scott, thanks. the effects of the government shutdown reverberating on air, land and sea as more than 300 cargo ships remain floating in waters offshore, unable to dock due to a technicality caused by the shutdown contessa brewer is in connecticut with more on that story and the impact of the shutdown on business contessa >> reporter: the technicality is big ships require a certificate of financial responsibility, cofr, when they come in u.s. waters, it is like they have insurance when they come in. they have an announcement they're not processing applications for cofrs

300 ships are at sea, not able to come in i got off the phone with a global supply chain company, ch robinson, he says there are slowdown, not significant, but things like duty refund payments are not being made or companies that have been awarded tariff exclusio exclusions, they're paying the tariffs and hoping for a refund later. i spoke with the head of the port of long beach, the second busiest port he is fielding worried phone calls from clients, even though custom and coast guard is showing up on the job without pay. >> as we move forward, what appears to be the largest shutdown in the nation's history clearly some questions posed to me by some of our customers, shippers, retail associations, there's a concern with regard to

impacts of a shutdown. >> reporter: i heard from amtrak they say their business remains up and running, even though federally charted, funded through travel revenues. we heard there were no domestic freight problems because the safety administration, federal motor carrier safety administration is funded by the highway trust fund, not the dot budget they report nationally there were double the sickouts as normal saw closures in houston and miami, causing slowdown for passengers there guys >> contessa, 300 ships is quite a number i think back to the bankruptcy a couple years ago, you had ships and sailors stranded at sea. is this similar in the sense that sailors are stuck on ships and can't come on shore or is it less difficult >> reporter: you know, in all honesty, we haven't been able to find those individual ships. that was reported to us by a

business that helps these companies clear regulatory hurdles. so finding the individual ships is difficult they would have to be some 12 miles out at sea, not close to the ports. when i spoke to the head of port operations in long beach, he said he is notgetting reports in to him. i reached out to the port in puerto rico, somebody i talked to right after the hurricane there, he said that the customs was doing a good job, they were still showing up, trying to clear some of these slowdowns, but it is likely to come to a loggerhead if the shutdown continues because again, they're not processing cofrs on a timely basis. >> contessa brewer, thank you. as we head to break, take a look at shares of pg&e getting crushed, down 48% after the company ceo stepped down over the weekend. a rough couple of months for the northern california utility as they announce plans to file for

bankruptcy the next step for &epg we'll have that after the break. stay with us a luxury car to create more teched out than silicon valley? with a cockpit fit for aspaceship. hang on. radar that senses things the human eye can't. busted. and the ability to make a thousand decisions before you even make one. was all this, really necessary? what do you think? ♪

i am a techie dad.n. i believe the best technology should feel effortless. like magic. at comcast, it's my job to develop, apps and tools that simplify your experience. my name is mike, i'm in product development at comcast. we're working to make things simple, easy and awesome. welcome back shares of pg&e getting crushed again following the departure of its ceo over the weekend and the announcement it will file for bankruptcy >> p grkg&e shares were down mo than 38% after they said they

plan the file for bankruptcy by the end of the month if p grkg&e were to be found li for the wielldfires the liabili would exceed $30 billion that does not include punitive damages. pg&e expects its losses will exceed its available insurance and assets the company's says structuring is in order to support orderly and fair resolutions to its liabilities. the utility plans to file for bankruptcy on or about january 29th the ceo geisha williams has stepped down they service 16 million custo r customers in northern and central california the bankruptcy would not be expected to affect service of customers. it will likely increase rates down the line. back in september of last year, california lawmakers passed a bill which would bail out

utilities fiaces wildfire liabilities. in november, the campfire broke out, the deadliest fire in state history killing 86 people. on january 4th, the utility announced it was searching for new directors. shares of pg&e are down more than 80% s&p and moody's have both downgraded the credit ratings to jump this will be the first big event for california governor who just took office last week. he says he's been in touch with utility and responding is one of his top prioritiepriorities back to you. the s&p up more than 10% in more than three weeks. still down since earning forecast peaked back in october. the question is what is price in the stocks now

i thi >> i think you can safely say some kind of a slow down is priced into stocks they were probably bracing for the possibility of a real earnings recession i think right now above 15 times ford it's more of neutral valuation i think we can come down from the published estimates in 2019 down into the mid single digits and absorb that. the problem is the process of those numbers coming down. company by company, analyst by analyst. guide down by guide down isn't all that great for stocks. it's about whether that all happens in the context of people saying that's okay we'll avoid a recession. the global economy might be finding its footing. we can latch onto a trade deal i think it's kind of priced in as well or something moving toward an agreement with china i think the bigger surprise

would be negotiations fall apart. credit markets are still the lynch pin. you have to have credit markets. they have recovered nicely from the deficits in december but not improved in the last couple of days it's bit of a funny juncture that we're at. i think you priced in she down but people are not there in terms of saying it's going to slide from here. >> ton to chew on beginning with more banks later in the week still down pretty tight range here s&down05 p wn 14. squawk ralley continues. with fidelity's real-time analytics, you'll get clear, actionable alerts about potential investment opportunities in real time. fidelity. open an account today.

2018 was another year of records for elon musk spacex it's laying off 10% of its work force with 600 employees saying continuing to delivering for our customers to skucceed, spacex must become a leaner company either these developments even when attempted separately have bankrupted other organizations this means we must part ways with some talented and hard working members of our team. the company is still financially

strong the president of space says did say the company the profitable but it has big plans also later this year, the ne nextheavy lifting. conducting 18 launches this year spacex needs money it had as of earlier this month raised 273 million out of 500 million dollar funding round back in november, it raised 250 million in its first ever high yield loan sale. it's continuing to expand and moving aggressively into areas

of business. other companies have gone bankrupt to try to pioneer >> not the only company to announce lay offs. there's been a few let's get over to the judge and the half i'm scott wapner the wear of the repetest is mike wilson about to be right again? it's 12:00 noon. this -- here what morgan stanley ee stanley's mike wilson is saying today. what citi's numbers are saying about the rest of the big banks. the big call on western digital that has the stock taking what it all mean