in california and 11:00 a.m. on wall street. "squawk alley" is live ♪ good wednesday morning welcome to "squawk alley." i'm carl quintanilla with jon fortt at the new york stock exchange a bunch of highs to watch but netflix not one of them today. >> not one of them shares of that company falling quite a beat here on missed guidance the sub story in the u.s. is driving that stock, currently

trading down about 2% now. stev steven cahall of wells fargo will join us to talk about the numbers. steve, i will start with you, your takeaway. >> our concern continues to be the cash profitability scaling in netflix they added a lot of subs last year there continues to be a sub growth story but we're not convinced they're doing so profitably last year they added around 50 million subs but the sub has not improved i think it will take a lot longer to come through brutal economics in streaming now. >> good morning. thank you for having me. in part, this is a bit of a battleground stock i think there were elements for both the bulls and bears the reality is looks pretty good, naturally international and they're weathering the disney plus storm relatively well i think the story for the bear

camp was q1 guidance was weaker but there are still a lot of unanswered questions in regard to long-term pricing power, our central questions, as the services that will be rolling out in the coming months. >> steve, what do you have to believe to be bullish on netflix from here? it seems to me the initial story on netflix was supposed to be how efficient they could be about growth, about knowing what subscribers were going to want, and i guess spending less over time to have low turnover, retain subscribers, longer engagement now they're scaling back that engagement metrics and it looks like they're spending a lot to keep these subscribers what's to say that is ever going to turn around >> yeah, i think you got to believe in the pricing power i'm bearish for that reason. i think if pricing power will come in at any point it will be when apple, amazon, disney, max, peacock go on the offensive. we see the price coming down

from where it's historically been netflix is a well-run company but not the monopoly in streaming that it was. so i have trouble believing it will come back as strong as it was the last couple of years. >> are you surprised he's so stubborn on ad supports saying there's no white space there essentially? >> i'm not i thought the comment he made that was good was there's no low hanging fruit in digital advertising. i also think it changes the dna of that company, once you become an advertiser, do you become beholden to advertisers? do you end up being a broadcast television network over time i respect the dna they have in the company and not wanting to change that. >> if the marginal cost to the consumer of streaming is essentially zero and price is so challenged as steve just said, he's got to get the money from somewhere. if it's not con up soars, why shouldn't it be advertisers? >> i think it just doesn't fit their model. they've been about simplicity and delivery and price value

relationship as you heard, it comes down to long-term pricing power and i think that's what they will stick with, subscription model and not shift. i think their disadvantage relative to facebooks and amazons who have analytics on that front and the pricing power comes down to the engagement. one of the positives is they're seeing increase viewership year over year. if they continue that, that could suggest they have pricing power but that will be the litmus test. do people continue to walk more netflix year over year in the face of alternative competitors or not and that could come down to whether we need our sleep or not. >> yeah. and i want to remind you the viewership metrics seem to be changing for netflix as well but it feels like a bifurcation happening in the company you have stagnation, increased commission what is perhaps a pricing peak here in the u.s. in terms of subscriber growth. while international continues to

ramp up. you see some of the streaming services like disney launch overseas, does the story overseas start to look more like the one here in the u.s. >> i think that's one of the central questions. i think there's no question that the principal streaming battleground right now is the u.s. they will continue to face more competition here overall than they do elsewhere. at least and at margin they will face more competition overseas and that's what investors are bracing for. that's one of the concerns and guidance looks a little conservative for q1. we know disney plus will enter new markets in europe and that will carry over to the subsequent quarters. of course, you have hbo max coming in several months and peacock launching on nbc if all of those services reach subscriber targets they laid out over the next three, four, five years, that raises the question with respect do you lose your share or not >> steve, is it to say netflix is being forced or maybe forcing itself into a premium position

here apple said they will play there by having fewer offerings that will just be great i guess disney is going to play in that arena with part of hulu. but doesn't netflix have to somehow create some sort of content whether it's 4k or scale or something that will make people pay more, that will differentiate them >> i think scale is the operative word there i think their strategy is to have something for everybody so it's less about having one, two or three things. whether that's the mandalorian or "game of throat thrones," it's something for everybody and that's why they mean more to the individual title than broader scale. i think it's price-to-value, for $10, $15, $20, is there always something to watch my concern is there's so much more content competing with it you will see a hyper per miss cuety of the consumer. you can jump between these services with a little reckless abandon. there will always be something new to find there.

netflix is maybe no longer the only place where there's always something new anymore. >> we thought grubhub had the lion's share promiscuity thing the time spent necessary to count as a view, is that really moving the goal post it seems pretty bold if it is. >> i will tell you, you go further than "the eirishman" yo wonder how many folks got through it after the first setting. but you don't know if they changed with some of the other services out there i think you will take a leery eye at some of the stats to fully buy into it. but the key is have the right -- the right goal posts that are apples to apples as you move forward. >> steven okay hall, will power, thank you for joining us today you guys are down about 2% still ahead, busy morning. tesla to 900

that is the bold case for wedbush this morning we'll talk to the analyst behind that call.

credit i spoke to him very recently

he also doing the rockets. he likes rockets, and he does good at rockets too, by the way. i never saw where the engines come down with no wings or anything and they're landing i said i have never seen that before and i was worried about him because he's one of our great geniuses and we have to protect our geniuses we had to protect thomas edison and all of these people who came up originally with the light bulb and wheel and all of these things he's one of our very smart people, and we want to cherish those people that's very important. but he's done a very good job. shocking how it's come so fast you go back a year and they were talking about the end of the company, and now all of a sudden they're talking about these great things he's going to be building a very big plant in the united states he has to. we help him, so he has to help us >> and that was the president sitting down with our joe kernen earlier in davos likening tesla chief elon musk

to thomas edison and the inventor of the wheel, calling him a genius, which i think few would dispute. this comes as an incredible run for tesla shares in the recent weeks coming the first publicly traded u.s. automaker to cross over $100 billion in market value. wedbush taking its price target up to $5.50 this morning, and that was about $30 a share ago saying the bull case for the stock is as high as $900 but neutral on the stock the analyst dan ives is here now. always great to have you i have to give you a little bit of a hard time i feel like you're endorsing warren and klobuchar in this note you go up with the price target almost 50% but it's still behind where the stock is now yet you say it could run to $900 do you like it or not like it? >> that's a great point and valid. our point of view is base case you're looking at $550 but it all comes down to china.

china's bull case is worth another $300 per share really what we are saying is right now if the china thesis continues, in terms of what we are seeing in underlying demand in the giga 3, bull case you can get to $800, $900 a share. the view is in our opinion it's a further step towards being bullish and i believe it takes out what we believe could be the bulkiest but so much relies on china. >> but it sounds like you're saying you don't believe the china success is going to play out, or at least it's so risky, you're still neutral. >> yes, i think right now there's still some barriers in terms of domestic competition. there's underlying demands sustained from the trajectory and can giga 3 ultimately do 150 k per year i would say right now we're starting to see signs of it, which is why we're getting more bullish. and it comes down to if they can do that, china is the fuel in the engine of the bull thesis here, which is what we want to

lay out in terms of the next year or two. >> how do you get to these numbers, whether it's $550 or bull case of $900, we're still talking about a company that never had a full year of profitability are, other than handful of quarters. i realize the bull market triggered this rally but nonetheless -- >> the line in the sand earnings power. it comes down to where are the $20 earnings power. >> when did that happen? >> if you look at the trajectory, if the china thesis holds, you can look in 2022, 2023, where they can start to get that leverage in the model in terms of the earnings power that's really the valuation. rye now it's an emotional bull/bear story because of where we are because of the eb thesis, especially in china. >> to the term you have worries, are you more worried about supplies or demand >> demand.

you see supply in shanghai with the giga 3, you feel like the trajectory is there but it comes down to demand with competition, specifically in china. you put numbers around, 500,000 units from a delivery perspective, we believe 150 k can beat china you start to that rejectry that out, we had a million vehicles for 2024 that was sort of how we viewed it right now that could be pulled forward two years early and that's how you get to these bold cases, which is where we -- >> you're saying cars in china a year after megxit? >> a million total cars. whereas china from that thesis would be about 250 or 300, about a third. china is so key. it's really the hearts and lungs and overall bull case for tesla. >> you see near term u.s. demands for earnings next week is the issue, particularly model 3. near term it's u.s. demand

monday mondayle 3 longer material china? >> yes, i view it as gear terms moves out of the u.s. to china you will see no necessarily excitement from the u.s. piece, it's really about europe and china. the drum roll is about deliveries, can he get to 500,000 deliveries in a year and as you talked about, what's the profitability? if you get the profitability, then trajectory, you get the $15, $20 earnings power which why we try to scenario analysis going into the next six to nine months. >> stocks moving fast. van ives, thank you. still to km -- shares of ibm getting a boost ter afa revenue growth for the first time in four quarters. the more you push yourself,

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but great minds are driven to seek out the complex. they see what others don't, from an angle others won't take. they learn that embracing those challenges is what sets them apart. i am justin rose, and we are morgan stanley. it's a return to revenue

growth, and somewhat of a promise to stay there. solid quarter for big blue, sending shares higher this morning as ibm reports a return to revenue growth after five straight quarters of decline you can see the stock higher by more than 3% cnn's rudy giuliani was in davos talking about those results and how the red hat factored in. >> we returned to growth under any terms you look at. and i think the big thing, as you asked before, this demonstrated the acquisition we closed at red hat. ibm and red hat are better together red had tt had record volume growth and ibm, we accelerated through the year with 23% growth this to me, that has put us now in a position of growth, sustained growth for 2020. we said revenue, we said eps, free cash flow and margin

expansion. >> so all of that is on the table, guys. it's a tough story you look at the one-year chafrt, yes, they are higher two year, five-year charts don't look as great. they're telling the story of growth in cloud, which, of course, investors want to hear the cloud revenue it talked about this quarter was third to amazon and microsoft google though gets talked about a lot as a third mega scale cloud player how does ibm position itself to credibly make that claim to cloud power? we will see this year how it continues to play out. it's all about sales forces and big deals that these companies are trying to announce, making the case that they're bringing the industrial cloud. >> yes also interesting they're seeing growth of the new mainframe computers as well. but still struggles in legacy businesses with growth services and jim cavanaugh saying on the

call they're looking at structural actions to reposition that business overall as well. >> in a way it's probably easier if you have slow growth legacy businesses that don't make a lot of profit. then when you have a cloud business that's profitable, boy, that shows up on the bottom line in a brand-new way but ibm has been shedding those businesses for a long time remember when they cut the pc business loose so you end up with z-15, mainframe business does great profits but it's not growing that fast. it's hard to see newer businesses with their profits really having an impact. >> meanwhile, does paying off the the debt for red hat take back the buy-back fall >> that's a good question. we will see as the year goes on. ibm has been famous for being really good at financial engineering. at this point though investors want to see growth in newer businesses, under play in cloud. they want to hear that story told that's what the valuation is tied up in. >> bottom line 2020, still the

show-me year for the company in the meantime global marks and seema mody has the latest. >> european markets, and speaking of ibm, the stock moving up, stoxx up 1% and pulling back frackally and take a look at burberry shares, down as much as 3% after reporting its sales in hong kong were cut in half due to the ongoing protests and weaker demand from chinese tourists they launched a campaign inside china ahead of the lunar year campaign, which cfo julie brown said received positive early reception. despite attempts to rebrand burberry, it's worth noting shares of burberry underperformed its peers in the luxury space for over one year

and daimler is warning its 2019 profits would be negatively impacted by the litigation cost of diesel admission scandal. this is the third profit warning in less than nine months and chrysler cfo giving an update with peugeot, telling us the automakers hope to have a deal sealed within a year or so. back to you. >> thank you very much let's get an update as well with sue herera. >> good morning, carl and good morning everyone here's what's happening this hour the united nations calling for an immediate investigation by the u.s. into information they received which suggests u.s. billionaire jeb bezos' phone was hacked perhaps using a whatsapp account belonging to saudi prince mohammad bin salman to influence reporting on the kingdom by bezos' "the washington post. opening statements beginning in the harvey weinstein trial. the prosecution plans to show weinstein has a pat area of committing sexual assaults

defense attorneys intend to argue weinstein was only involved in consensual relationships. the death toll rising to 17 in the coronavirus outbreak virus in china with more than 500 infected officials are imposing restrictions on travel out of wuhan china and stepping up screening at transportation hubs and terry jones, a member of the monty python troupe that revolutionized british comedy, has died his family said he passed away last night after a long battle with a rare form of dementia he starred in and directed python films as "the holy grail" and "the meaning of life." terry jones was 77 that's the news this half hour i will send it back to you guys. >> may he rest in peace. one of the greatest in comedy. >> absolutely. when we return, apple's right to pvaricy and mark zuckerberg for president we will explain. ♪

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let's get back to the running story of the morning, and that is netflix. julia boorstin joins us from l.a. with what we heard last night. hi, julia. >> hi, good morning to you, carl netflix shares are down about 2 1/2% this morning after the company reported domestic subscriber additions as well as guidance for the first quarter and said both fell short of expectations so international users did grow faster than anticipated. ceo reed hastings said the

disney launch midway through the quarter had some impact and will continue to as that service launches in europe in march. >> disney plus has a lot of big product catalog in one show, "mandalorian" and will take away from linear tv and a little bit from us. but, again, most of the growth in the future is coming out of linear tv. >> netflix saying -- hastings saying netflix is well positioned with growth for viewing for subscribers continuing to increase he showed a chart of global google searches for the new show "the wisher" to show the competition for shows like "the mandalorian" and amazon's "jack ryan" and apple tv's "the morning show" but acknowledged disney plus has not launched worldwide yet. he said 70 million households choose to watch it instead of counting subscribers

that watch 70% or so of a show or film, the company is reporting on accounts that has chosen to watch a title for at least two minutes, which no surprise, boosted their viewing met terrorism. 63% of analysts have a buy or overweight rating on netflix shares credit suisse with buy rating, quote, we do not see any other streaming service launches packing the same punch that disney plus did in the first quarter of 4q. and disney saying concern about competition provides a buying opportunity on the stock back over to you >> there's a lot in there. thank you, our julia boorstin on netflix. let's go to mario from the verge and talk more about this why are they so selective in what they disclose in terms of metrics, every time they give us something new, it looks suspect. >> i think you're looking at reed hastings and showing trends and saying this is our market

opportunity to find a key metric by a third party you can use to measure disney plus and peacock and netflix if you are an investor or if you are an advertiser. >> do you trust them >> "the witcher" is a great show it was a fantasy show. they didn't have to market it. but it blew up it's a great show. is it a "game of thrones" or "mandalorian" remains to be seen so i think he's saying we have a big hit show and can make these. whether or not the u.s. metric with time watched, he's comparing himself to youtube and comparing himself to bbci-player, but not going up against traditional tv, which is where he needs to be. >> i wonder about the changes in metrics, boosting the number by 35%, how much those metrics are less about investors and more

about acquiring talent given how heated the content competition is now. >>ing loo, they're spending money. ultimately it's about money and then audience. if you look historically traders on netflix, they complain once they show to a netflix, they feel mercy to the algorithm as any other platform because they don't get that additional marketing support, billboards everywhere the way disney can promise them with their reach across linear -- with their reach across theme parks i think that will be a continued fight to say netflix this more than just where all of the people are, it's actually a cultural experience. the other more traditional players are very well set up to do that. >> the bottom line question is, is this a fair fight between netflix and all of the other streamers? because if it is, doesn't netflix lose i mean, look what disney's got in terms of library and brands that they bought over time look at all of the money apple has. the story on netflix was supposed to be they had better algorithms do they? >> yes, is there going to be a

netflix theme park are they going to have to come up with multiple additional revenue streams? >> are they just a media company, data play >> they spend a lot of money on content. they have one particular way of monitoring content, and a little product placement signed the shows. disney spends a lot of money on conflict and 45% revenue on content. appling, they just want you to open the app check out this app we will spend a lot of money to get you to open it netflix has to diversify its revenue base they have not said how they're going to do it but can they hit the opportunities as they need to and hit the opportunity to scale as everyone else >> key question. the president sat down with our own joe kernen in davos and apple's grip take a listen. >> i am, i like it a lot i think we should do some encryption i think we should start finding some of the ad people out there that we can do with apple.

i think it's very important. frankly, i helped them a lot i have given them waivers because it's a big company and made a big difference. and you know they compete against samsung, mostly samsung, from south korea it's not fair because we have a trade deal with south korea and samsung would get the no waiver and have to pay tariffs. so i did waivers but i want them to help us a little bit. apple has to help us i'm very strong on it. they have the keys to so many criminals and criminal minds, and we can do things when they had the problem with the recently in florida -- i won't go into it because it's so horrible, but they could have given us that information that would be helpful. >> we don't need a backdoor way in getting into the wrong hands either do you -- >> you know what, i understand both sides of the argument. >> and this won't hurt -- >> you're dealing with drug lords, you're dealing with terrorists and if you're dealing with murderers, i don't care

we have to get -- we have to find out what's going on. >> the president met with tim cook for breakfast in kvz earliear davos today. cook knows the presidential is transactional. now he has to weigh what i will be given versus what i have to give. >> i think apple has ended up in a very difficult spot. if they give the united states government a backdoor, they have to give that same backdoor to china. they have to give that same backdoor to india. they have to make it like the united states government when it needs a physical unlock can get one but no one else can. or do what they've been doing, leave icloud backups unencrypted. they thought about encrypting the icloud backups but they decided not because of the fbi pressuring them. that is a problem. the data is far less secure than the marketing suggests the government can get a warrant and get your icloud messages

everyone's icloud data except the chinese population is stored in the united states that means if you're a foreign government and have an iphone and backing up to icloud, it is potentially possible for the united states government to spy on your leaders. that is an entirely thorny mess of issues. it's hard to see a clear solution i think trump's sophisticated understanding of the situation has led him to a place that i think is sort of morally wrong which is to say i gave you a tariff waiver. now you have to unlock the phone and open up pandora's box of privacy. >> it's called leverage, isn't it he's the king of leverage. >> he is but the danger of providing that backdoor is so extraordinarily high, not only for the average citizen who doesn't want to be surveilled but for the functioning of our government, functioning of our business leaders -- >> there's no reason for tim cook to do it it sound like what you're saying. it's not a great position to be in but he can't create a backdoor because it blows up the business, right? >> you know, i think that's

where it gets really murky i saw sasha last week and he said there are models we find escrow and find ways to keep those keys secure. none of them are as secure it's just not doing it the big problem for cook is if he has the moral conviction and not do it, he faces takes the heat, faces down the president and samsung. but in trump and barr get together because of terrorism and violence and drug lords, we will write a law that get in the backdoor there's no conviction to get past that so he's walking the line very carefully. >> and altering their marketing message. and joe spoke with zuckerberg about the possible run for president with the facebook ceo. >> he told me you're number one in the world on facebook he said congratulations, you're number one >> should he stick with his

guns >> i would rather have him do what he is going to do he's done a hell of a job. he's going to do what he has to do i heard he's going to run for president. that wouldn't be too frightening, i don't think but he has that monster behind him he said you're number one. that's very nice it's always nice to be number one. >> another interesting relationship who needs who more facebook needs trump or does trump need facebook? >> you're saying he's transactional. he's saying you're number one and the scrutiny is off. it's true trending news is shared on facebook more than anywhere else and facebook is very, very wary of pissing off conservative media and politicians. i don't think trump really understands the complexity of whether or not micro targeting should be banned, which is what the policy discussion on facebook and google are. >> you don't think so? the trump campaign is really, really good at microtargeting. >> i think his campaign does i think the amount of

transactionality with the president himself is at the broad surface. we've seen it with cook. we've seen it with zuckerberg. we've seen it with pretty much every deal he's made he cares about the broad strokes, optics. nuances of the policy discussion about how facebook should regulate advertising, i don't think most people understand it at a high level. whether or not his campaign is good at using the tool or not, i don't know if that's bleeding into the policy prescriptions. >> and arguably it's not up to the executive branch anyway. it comes back to congress having to come out and legislate if he wants these changes. >> yes, and i think that's really tough there are extraordinary first amendment challenges against facebook and i think that comes down to -- >> by the way, there's first amendment challenges with political advertising on broadcasters too that doesn't get talked about either. >> not so much -- >> not to get into that whole area but -- >> the mechanism of broadcast television is airwaves are a scarce public resource the government has some interest in managing it okay, we can come in with cable television, i can do

whatever i want. you guys have no idea what will happen next when i'm on your show with the internet, it's the same deal and i think that's why all of the heat is on section 230, not on actually regulating the speech of the platforms and such. >> yes. >> finally this u.n. report calling for an investigation into allegations that the saudi crown prince was involved in the hacking of bezos' phone, for that we're going to turn to robert frank at hq. >> good morning, carl. a study funded by jeff bezos found with medium-to-high confidence a whatsapp account associated with the saudi crown prince was involved in hacking bezos' phone a report said the saudi crown prince mohammad bin salman met with bezos for dinner in los angeles in april 2018. they exchanged numbers and the prince sent him a file over whatsapp that immediately triggered what they're calling massive unauthorized ex-filtration of data. this all stems from leaked

photos and text about bezos' extramarital affair with lauren sanchez. bezos long claimed the saudis leaked those images as revenge against "the washington post" for its support of the journali journalist jamal key showingy, who was murdered in 2018 the saudi government said this is absurd and we called for the investigation to have all of the facts out. they said last year all of the materials came from sanchez's brother, michael sanchez "the wall street journal" reporting last year michael sanchez got paid $200,000 for those texts and photos what's interesting here also is during that swing through silicon valley when bezos met with mbs, the crown prince also met with tim cook with this google founders, with bill gates, with oprah, with lots of other people who i'm sure today

are checking their phones. guys, back to you. >> you can say that again, robert thank you. the threat here between bezos and "the washington post," amazon, the white house, apple, it's very fraught, is it not >> it's extraordinarily fraught. the idea michael sanchez was the one who provided the information and saudi government was hacking, those are easily connected. someone had had to send a whatsapp message and he had to trust it and open it that remains to be seen if that's the link. it is very fraught it also connects the backdoor conversation a little, which is hardware backdoor into the phone implies the government in possession of your phone can go unlock your phone and read it. but that does not prevent whatsapp from having vulnerabilities. it does not prevent ios itself from having vulnerabilities. you see the stakes of security conversations are so high and so fraught, now they involve massive amounts of government intervention and very fraught politics in the region i think just saying it's going

to be transactional, we will get a backdoor because we have tariffs, that is tim cook not holding up this end of the bargain. >> let's talk about this as spyware. a lot of people are not thinking about the fact even your iphone, ios can be hacked. that's part of the takeaway because spyware is not just effective on android it's been effective on ios as well. >> yes i think what does a market for the spyware exist? because governments around the world want a backdoor into the phone. they pay the research teams and pay the hacking groups if you give them a backdoor, maybe the market goes away and they dissipate and the government starts reporting vulnerables and helping secure the phones. that is a very difficult calculus the groups that make money by hacking phones. >> yes, and in the meantime there are opportunities for security systems, spyware systems. i imagine if you're the ceo of a

tech company, you would rather see that economy flourish than be a person in the position having to make a tough call with your own hardware. >> i think there's a lot of call for regulation from that company because they don't want to be the face of the problem. i think being the face of the problem right now allows them to shape policy and they've got to step up to the plate and declare what they think the policy should be. that said, none of them want to spend their time talking to consumers about encryption and about privacy. they all want to sell you features and get you on the apple tv app. >> yes, mission number one a lot of ground covered. thank you. >> yeah, we did. >> good to see you reminder as we head to break, can't get enough "squawk alley" watch us live or any time on the go on the cnbc app downloadt da itoy. are commissi. and when you open a new brokerage account, your cash is automatically invested at a great rate. that's why fidelity leads the industry in value while our competition continues to talk. ♪ talk, talk

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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. at what's coming up at the top of the hour. jim cramer is here to tell us if stocks are overvalued or just high as the s&p hits another record and the one big cap tech stock that jim cramer says is finally safe to own. that and more when we see you at noon jon, we're a little more than ten away looking forward to it. got cramer with us. >> we want to know, i guess we will find out on the show. >> you got to wait it's a tease. >> yeah, yeah. meantime, a recent surge for stocks like uber and lyft and beyond meat signaling to

investors the ipo market might be roaring back. bob pisani explains from the floor. >> recent ipos have been doing well, watch the ipo etf, a basket of roughly the basket of 60 big ipos. the white line here in the last year, rocketing to historic highs. here's the s&p 500, you can see that underperformance, the big, big underperformance of the s&p and that is new highs against for ipos the reason this is happening is some of the underperforming ipos, relative losers last year, suddenly have rocketed up, let's call it buying the losers last year from 2020 uber up 20%, lyft up, these are not typos of the uber and lyft are about 15% of the ipo when that starts to rock, it pulls the ipo to the up side we had a couple terms announced. here's one from my childhood,

reynolds consumer. we're talking about reynolds wrap and hefty trash bags. baby boomers know all about that same with one medical, very big health clinic backed by significant capital venture, we will have terms in the next few weeks. several others, of course, we're waiting all year for airbnb, robin hood they may come in the next few weeks about the mattress company. ge health care, general electric, this is potentially a huge ipo that may be -- may be $60 billion. that could be twice over market capitalization of airbnb and postmates. i'm fairly confident we will see a lot of this front-end loaded over ipos this year. why is this because of the presidential election cycle. the important thing is historically this is very well studied. when you have an presidential year for ipos, the first and

second quarters are the strongest. everyone wants the stuff out before elections third quarter dramatically slows down and then after the presidential election in the middle of the fourth quarter, things start picking up that's why i'm saying i think we will have a fairly good first half of the year, a in the next couple of weeks back to you. >> bob, i know you've been on that case pretty hard. bob pisani watch shares of boeing here. it's helping to drag down the dow. ou5% away from a two handle and abt a 1 1/2-year low back in a minute

welcome back to "squawk alley. phil lebeau has more from chicago. >> united just wrapped up its earnings call. during that earnings call, the company was asked repeatedly about the max and it now says it no longer plans to fly the 737 max this summer. that should not be a surprise given the announcement yesterday from boeing that it is unlikely to see the plane ungrounded until some time mid this year. if you look at the three u.s. carri carriers, remember, they officially have it off the schedule through early june. united planning to bring it back we don't have a specific date. again what the company said during the earnings call, it's not going to fly this summer typically the airlines look at the summer ending on labor day at least through august, does it come back some time in september, later, october, november they're not saying at this

point, simply that it won't fly this summer. >> so, phil, question for you. how much time does it tape, typically, when we've seen groundings in the past, the faa gives boeing the green light say it happens this summer for return to service. >> yep. >> what is the time period between that happening and the airlines being able to put these planes back in the air >> depends what the requirements ultimately are in terms of pilot training and that's one of the issues being worked out here there will likely be some simulator training that's required how quickly could an airline like united, southwest or american do that in terms of the schedule, when we went down anded with the head of scheduling for american airlines at their operations center he said, look, at a minim minimum, we would love to have at least 30 days, more likely 45 to 60 days so we can set up our schedule the planes are in the right position, the crews, maintenance, everything is in the right spot no doubt all the airlines will be moving as quickly as possible to get the max feathered back into their fleets. it does largely depend, morgan,

on what the requirements are for pilot training, how quickly they can get the pilots into the simulator, out of the simulator, ready to go. >> on that front, phil, they did say they will have a full motion simulator for the max up in about six to eight weeks. >> yep. >> and they're comfortable in terms of simulator capability. but it's clear it's a very good time all of a sudden to be in the simulator business. >> right and there are not a ton of them. i think the number is 34 when you look at the number of simulators worldwide that have max capabilities and a good chunk of them are here in the united states. but when you look at -- look at an airline like southwest, and all of the pilots. they don't have them specialized. there's no specialization saying you're a max pilot, you're a regular 737 pilot. uh-uh. they're all 737 pilots you have to filter all of those pilots in through the three simulators that southwest has. then it becomes a real logistical issue when we finally get the rules for pilot training and then the okay that, okay, this is what it is

we're ready to go. >> yeah. and, of course, it's going to be how all of this trickles out to the supply chain as you get this plane back to service and then work through the backlog and then production starts up again, too. we could keep talking about this but we'll save it for another day. phil lebeau, thank you. >> you bet. >> take a look at virgin galactic soaring up again, stock is up 7% right now it's bn qtehetetheeonui t sal rally. "squawk alley" returns in less than three baby company. but we're also a company that controls hiv, fights cancer, repairs shattered bones, relieves depression, restores heart rhythms, helps you back from strokes, and keeps you healthy your whole life. from the day you're born we never stop taking care of you.

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that, of course, apple's infamous 1984 super bowl ad, out 36 years ago today you know what that means today if that ad were a person it would probably be married with one kid and another on the way, starting to think about the 20-year high school reunion and wondering where the time went. >> still not a homeowner. >> right.

>> apparently planters has killed off mr. peanut and during the super bowl they'll have a funeral for that 104-year-old mascot. >> that's cruel. mr. peanut on the floor of some barbecue joint or something ouch. >> we'll watch boeing. texan tonight, a huge tell on the futures for semis. let's get to the judge with cramer and "the half." >> fear or fear not? record move making you money and making some investors nervous about what might come next it's 12:00 noon and this is "the half time report." >> new historic highs. is this market getting too expensive? "mad money's" jim cramer weighs in netflix taking a hit missing the market again what to do with the stock now. boeing under pressure. shares at their lowest level in

over a year on the bacof