good morning and welcome to "squawk box" live from the marketsite in times square joe, becky and andrew are on their way back from the world economic forum in davos. our guest host is a cnbc contributor. checking on the futures market pointing higher by about 60 points or so for the dow the s&p and the dow are a little negative all close to all-time highs. the nasdaq had a fresh one just yesterday at the close treasury yields, 1.73 or so on the 10-year. down from the start of the week. we are at 1.80 on friday's close. the mystery virus.

china says 26 peoplehave now died from the virus. the total number of cases in that country has risen to 830. 10 cities are on lockdown today with about 40 million people south korea and japan have confirmed their second cases the world health organization says the outbreak does not yet constitute a global public emergency. eunice yoon has the latest from beijing. >> reporter: the state media is putting total confirmed cases at 900 with 13 cities with travel restrictions there are signs that local authorities are having trouble diagnosing the people because they don't have enough testing kits according to local media or medical workers trained to use

them china has been investing a lot in health care over the past couple of years. still a system run by the state and has a shortage of qualified workers and personnel. wuhan is a wealthy city but not as wealthy as, say, beijing or shanghai other cities are to a disadvantage wuhan is building a 1,000-bed hospital in less than 12 days to ease the bed shortage. hospitals have been calling on the public to make donations for protective gear. they've been making that appeal themselves separately from that, several companies are on high alert, including disney, which shut its shanghai park or is going to shut the shanghai park on

saturday that is a popular tourist d destination. authorities are encouraging people to stay home. it is now coordinating companies in order to try to get tv companies to donate some of their series to the provinces so that people can have something else to do at home that doesn't involve much travel. >> eunice, we've discussed this. can you gauge for us, particularly in a city like beijing which is some distance from wuhan province, what the level of fear and panic is like and how it hassle vated over the last 24 hours? >> there is definitely a level of fear and concern. i would say on a personal note,

just walking around beijing, the ratio of people wearing masks is probably one in two. today, another personal story, my compound called me and is calling everybody within the place i live to see whether or not anybody has travelled to wuhan. authorities here are taking things very seriously. they are worried about the spread there is a lot of questions now. the state media has been quoting doctors saying a fever isn't necessarily the first sign of a problem. it is working like a common cold you might not have any symptoms and be able to spread the virus. because of the concern and the mystery around the virus, there are several tactics and measures being taken in cities that have

not been quarantined >> when i read cities are in lockdown, what does that mean? how effective is it? can people move from place to place if they try to evade whatever is put in place >> it depends on where wuhan is really under lockdown the only way you can get out is in a private car and you drive it yourself out or if you convince a taxi driver to take you. so right now with wuhan, it is very difficult to get out of the city in some of the other 12 cities that have those suspended services, for the most part, people can get out if they are using private cars or means. so far, the suspension is for public transportation. there are still ways to get out of those cities. for the most part, authorities are encouraging people to stay

at home. they don't want to have the travel from all of these people and potential for a spread of the virus. >> eunice, thank you the shanghai index down about 2.4% for the week. tech giant intel reporting better than expected revenue help by pc and chips the company says earnings and revenue this year will come in above analyst estimates. saying this is driven by cloud computing demand you can see that jump there. don't miss intel ceo bob swan at 11:00 eastern time broadcome has struck several deals to provide for apple in a separate deal last year to

provide radio frequency parts. coming up, pay day, jpmorgan ceo jamie dimon gets a pay increase stay tuned you are watching cnbc. at leaf blowers. you shoud you should be mad your neighbor always wants to hang out. and you should be mad your smart fridge is unnecessarily complicated. make ice. making ice. but you're not mad because you have e*trade which isn't complicated. their tools make trading quicker and simpler so you can take on the markets with confidence. don't get mad get e*trade and start trading commission free today.

a big pay day for jamie dimon getting a 1.6% raise to

$31.5 million after the bank post the record earnings including $1.5 million in salary and $30 million in incentives. $5 million will be delivered in cash, $25 million will come in stock compensation >> last year, jpmorgan chase stock was up the index significant performance. most of his direct reports are around the $20 to $22 million mark getting about 2% increase they were the best paid outlast year in 2018 and again 2019. the comparison is james gorman who saw a 7% pay cut despite strong performance as well there were some layoffs for his firm last year

he got $27 million to dimon's $31 million. >> so much of it is still in stock. incentives are much more aligned. it is good for share holders >> absolutely. they all need it still to be in stock, which is par for the course >> even with what would be a small percentage, 1.6%, a lot would argue, his recent comments about socialism will push him into the conversy about pay. the absolute number will still look enormously large. >> bernie sanders criticizing him for accepting the bail outevbailout

even though it was forced. >> ranging in the ceo to medium pay comp that is always going to look bad and is bad the bank ceos will say, we are boosting rates ahead i think bank of america is the first to get to $20. jpmorgan may be transitioning to that but is around $17 to $18 now. perhaps jamie dimon is the best exam people of this for a track record to say, look at the value i've created they are a market cap of well over $400 billion. any share holder would say, we are happy with that. >> share holder would say, well he's been there so many years. one of the criticisms of the pay for executives is that it is

short-term in nature here, you've got an executive who has been there a long time and is creating value. there is a lot of incentives there for everybody. we can argue about how much he's supposed to get paid but he's created so much value a lot of people have benefitted from. >> if you are looking for ammunition to criticize them, the big announcement he made encouraging stake holders, isn't actually his pay, i do think it is the buy backs he shouldn't be restricted to forcefully build a manufacturing partner. you could argue the buy backs could be increased a little bit. i don't think it is his pay that

will stand out we talk about broader stake holders. >> everybody relative to his root cause to the issue. a certain segment will fix ate on that. that they'll go up higher than those rank and file employees. you are never going to get away from that. >> we always say the pure metric shouldn't be a target. actually the best way to improve that is to get rid of low-paid workers. >> there has to be a lot of factors to look at 1.6% raise to $31 million. in davos, saying they are optimistic about the economy and banking business is going well >> the u.s. in particular, the underlying strength to the

consumer continues to be very strong >> the economy is doing fine the consumer is strong 70% of the gdp is the consumer >> banks have been the unloved sector over the past couple of years. that will turn >> livestock is still cheap. in the past three months, the financial sector has gained 8% joining us now, managing director let's pick up with the story we were just discussing do you think mr. dimon is worth the money he's paid? >> well, there is a very big die c -- die cot my most of this is performance based related to that. that's one piece to the puzzle

the other side of it is the come zags between managers and people in the front lines that are as important as the head person pulling that together is again the basis of where we kind of go from here. there is a big difference and things that can be addressed >> i'm sure you saw the story about wells fargo. what do you make of the $17.5 million fine for the former ceo that has come a few years after the original regulators of the scandal which was 3.5 years ago. what do you make of the timing and the size of this fine? >> what we are looking at here is a regular lator looking back at a manager and executive they are trying to set a tone at the top. saying, okay, if you are going to get paid this amount of

money, you are going to be held accountable to make sure you are looking at all the pieces of your company and not allowing these things to happen you can feel that that would be a shutter through many of these ceos accumulating this wealth that can lose it if they don't take very strict focus on how they are looking at compliance and making sure everything is being taken care of within their companies. >> good morning. coming into the earnings season has been tough now that we got the numbers, what do you make of the stocks right here >> actually, the fundamental improvement has been consistent and moving higher over the last five years the stock prices relate to what is the fear factor for recessions the last financial crisis has an

skity built in when you see the fear factor move off the table, you start to see the stock prices do well when we saw in this earnings season is no different from what we've seen in 12 in a row. consistently moving higher 15 to 16% return tangible books growing and still 2.5 to 3% yield. >> can you still buy the names. >> all only a couple of bucks off their 52-week highs. >> we are taking that to be more selective. bank of america has been a favorite they come in or out. they are in right now. those valuations have been pushed up. if you look at super regional

banks that have a little bit out of favor and some things they are doing. citizens financial group continues to grow loans and generate business. they have a really good efficiency program in place. there is still some relative value here >> what did you think of what he said that it deserves that discount is there room for expansion there? >> it deserves the discount because of what happened in 2008, 2009 and 2010. they have made a shift in terms of capital and liquidity, risk management it has to prove that out you have to go through a shake out to prove you have better risk management and trade up towards the market as that goes through the process.

we are at the high end of the range. we have to be selective if that fear factor comes back in. it will will gauge whether or not that will happen >> i look at the year to date performance. morgan stanley is up the rest of the sector is down do you think that is because those two names are very cheap coming into the year have we seen morgan stanley coming out hope that those two and the investment banks have really turned the corner. >> those are two stocks we've looked at. that is what we've talked about. that is how they'll return a lot more capital to investors and increase their earnings. >> goldman is being more transparent as to how they'll make money >> the other banks, they've all

had a good run the companies still focused on the lending. wed wealth management and m&a activity it's a show-me story each one has to show they can grow until we see the full cycle play >> thank you for joining us. still to come, goldman sach saying they won't take their company public without one diverse corporate candidate. we'll talk about the ripple effect when we come back at synchrony, we're changing what's possible every single day. with technology

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time for today's executive edge goldman sach chairman breaking some news with the squawk gang in davos yesterday announcing a new policy. >> starting on july 1 in u.s. and europe, we are not going to take a company public unless there is at least one diverse board candidate with a focus on women and moving towards 2021 focusing on two. it is a small steal but a waysta

way of saying we think it is right. >> what do you think >> i'm glad the private sector is taking the initiative if it didn't, i think you'd see more regulation like in california it is a more effective way to achieve the goals. when you have that kind of incentive. if you want goldman to take you public, you need to do it. at the same time, i would say to all the women and diverse candidates looking to join a board, make sure you know why are they going to call you in the middle of the night, if something goes wrong, why would it be u theyou. if it is not you they call, you are there for the wrong reason what skill set do you bring that nobody else has? think about those.

you don't want to be that token person i remember when i first started anchoring here, i got e-mails saying you got that job because you are hispanic >> an interesting side of this is that of the ipos in the last 12 months, the ones with a woman on the board have performed better also stating we don't care if we lose a little bit of business on this i'm not sure how much we would lose to help them to find a candidate. on top of that, we require other companies to match the pledge. it would be significant step in getting early staged companies to start to alter the terrible

statistics on this topic it is an interesting way to change for the companies that haven't done enough on this. >> it is some what sad i don't know if that's the right word it takes something like solomon doing this because the quote/unquote systems are not working. boards are not diverse enough with women or minorities >> it will be where they say look outside our traditional group of people and look harder to find someone. historically, you call on people that you know. there were very strict guidelines we don't have that many women who are ceos yet this will be a nice added incentive to broaden the view.

>> talking about goldman look at the investment banking stables. you are talking goldman sach. they are the ones stepping forward. >> if there are women that are frustrated out there and other diverse populations. when i first started here at cnbc, the vast majority of hours here were anchored by solo men that has changed dramatically. >> this wasn't a direct response to wework. it is hard to think that that played significant part. i discussed that with him in october. either way, it's a good step only a small step but nonetheless the first ones to be >> a giant leap. coming up, a boeing-built

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♪ good morning welcome back to "squawk box" live from the marketsite in times square making headlines, discover latest earnings topping estimates but shares are down this morning as the company's chargeoff rates increased. shares of ericcson on track for the worse day since july reporting smaller than expected

increase in profits. the company being hit by higher costs. skyworks is lower despite reporting better than expected numbers. forecasting second squauquarter revenue and warning that some stock could sell off maybe some has to do with broadcobroa broadcom strike deals with apple. being lo looks like the dow would open up about 78 a boeing-built satellite has the potential of exploding in orbit. it suffered serious damage to its batteries.

boeing says the satellite is several years beyond its life span >> boeing, boeing, boeing, boeing >> it is past its life span. what damage will it do in space? >> just the mere fact that it has boeing's name on it. >> they can't do anything right. >> it is rocket science, right coming up, the latest on the coronavirus and the impact we'll talk about the airlines sector and the risk there. you can watch us live on the go on the cnbc app. we'll be right back.

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welcome back the dow said to open higher by 73 or so nasdaq by about 50 s&p about 8. just negative for the week on the s&p and do yw as we stand. the mystery virus. at least 26 people have now died

from the coronavirus the total number of cases has risen to at least 830. 13 cities in china are in lockdown measures today or about 33 million people. authorities have canceled lunar new year events. as of now, the world health organization says this does not constitute a world health emergency. eunice yoon has the latest what can you tell us sorry, eunice is not joining us right now. she will join us later in the show >> the numbers are very large but actually a very small percentage of the chinese population right now and lockdown, you can still move around the country pretty freely if you have a car. not sure how effective it is going to be of containing it

>> exactly it would be a limiting factor. >> the lunar new year is usually a huge number. many airlines stocks with flights to and from china. united and hawaii with the most exposure delta and american, they are monitoring the situation closely. >> we as an industry, i know, handle this exceptionally well we stay in touch with the cvp, the cdc, our own medical staff working with those agencies to ensure that our customers and team members are safe. thats what we'll continue to do here >> joining us now with a look at

airline stocks nice to see you this morning what do you think we should be thinking about as airline investors. holding stocks specifically united >> things are very contained and worth keeping a close eye on it i think it is instructed to look at what happened with sars or h 1 n 1. in those cases, you had revenues from those regions decline significantly. but only over an eight-month time frameassuming this can be handled as we did with sars and h1n1 it is worth monitoring for now, these tend to be relatively shorter term impacts on the overall industry and

importantly, the u.s. airlines are much stronger this time around with good balance sheets and a healthy margin >> it is kind of a double whammy not that there is ever a good time for anything like this. this would seem to be an especially bad one given underlying issues today because of the boeing issues >> with the boeing issue, i think it is more impactful from a lost opportunity standpoint. lost opportunity from revenue and efficiency that the max aircraft would offer these airlines that are missing their aircraft it is also really tough for the pilots and flight attendants who are not finding as much hours because the airlines aren't

growing as much. that said, it is not really hurting margins and balance sheets in a negative way helping yields for the market overall. it is a tragic event especially if it becomes worse from an airline perspective, they are probably in a good position to handle >> have we ever seen an airline go bankrupt? you start to see these stocks decline. you think they have recovered every time something like this has happened dollar cost average, in theory, there is a recovery on the other side unless one of them were to actually fail. have we seen that? >> no. in fact h1 n1 happened during the global final recess. during that time, you didn't see

a single u.s. airline declare bankruptcy the group is in a much stronger position today with better balance sheets the probability is very low. >> if the sell off becomes more severe, you'd be a buyer, sounds like >> yes exactly. it is too early now to go in in a big way. >> it could get worse. it is usually eight months and five months in there that could be double-digit declines i would see it as a buying opportunity. >> understood. have a good weekend. thank you. i don't know if you saw the graphic put up, the increase of travel but going back that far when they weren't permitted to travel 1990 was almost zero because of

the tight communist control there. >> one of the things to talk about is airlines. full disclosure, we own delta and united delta are not as exposed to the middle east. great balance sheet. 3% dividend yield. i think oil prices coming down will help. that is kind of the blue chip of airlines to own. united is more exposed to the far east they've already been hit by hong kong they called that out in their earnings call but still had strong earnings. if you think about all of the travel in hong kong, china will affect them as well. united is the better stock to play if it comes down. they have the most exposure. >> the blessing and the curse of what united has done their business is so favored

because they have expanded so broadly into the far east and asia when something like this happens, they end up more exposed than most. >> when that happens, that is trending eight or nine times earnings similar to financials, there is something that happens global, geopolitical these stocks get hurt. first things investors do is short this as a long-term investor, these are the opportunities of the stocks that get really hit looking for these to buy them. looking out a year or two down these are the opportunities you want >> flat this morning after a soft week. coming up, intel shares soaring and a debate on whether there is still room to run. >> announcer: don't forget to subscribe to our podcast you'll get interviews, content

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>> that's much money investors pulled out of hedge funds last year the worst year for hedge funds. >> the slow down in the chip sector maybe over. beat on the top and bottom lines and offered an upbeat outlook as well shares rising this morning as they did after the numbers hit up by 6%

angelo joins us now. what is your take? what drove this beat >> to us it wasn't much of a surprise i think the magnitude was more of the surprise. the actual fact that we're now seeing a turn in the overall business, you kind of started seeing the signs of the recovery at the end of the 3rd quarter but the real beef here is really on the data center side of things in our view that's really what investors care most about. that's the long-term secular growth story for intel and the fact that we saw 19% growth out of that side of things is the surprise and what investors should be focused on. >> intel was the value play in the semi-conductor space looking at the read through in the data center, there's other players like nvidia, how do you see that effecting those players? it looks like it's been a few quarters, about a year actually.

is this better for the other stocks or specific to intel. >> no, as far as our concerns we have a whole recommendation on shares we do think there's going to be a leg down in pcs in the second half of this year into 2021. you want to play the data center side of things it would be a great way to play it the growth story is enormous the multiple, you're really paying a high multiple there we love it there also a great way to play it but all across the board, data centers remain a great secular story along with 5-g. >> they're good. 2011 and we don't think it's sustainable when you look at what's driving the growth on the pc side of things. it's the enterprise side of things it's the windows 7 support

it's the second half of the year. >> stock is going to open at a new high this morning. >> this is the valiant play within the industry. especially given the fact that you want to take it in terms of semis. maybe it's a good way to play the next couple of quarters but we do have concerns going into the second half of 2020 into 2021 so our view is there's better ways to play it. >> the sector has run up very strongly does that give you confidence. >> you typically want to be early in the game and you want to be early getting out of it. we have now took a turn in

we have actually seen the actual turn and you want to play the secular stories at this point in time. at this time, connectivity is the great way to look at it. and we think it's a good way to play the industry right now. >> good report stock down how much of that has to do with the broadcom apple news do you think? >> we do have broadcom and we think that's great news for them i think whether or not they're going to sell that rf business sky works has been considered the potential buyer. we don't think that ends up happening but our view, yes, this is all about a market share story when it comes to the industry so the broadcom news probably does impact them. >> so you would recommend sky works though. >> we would. both sky works as well as broad

come because of the long-term secular story involved in 5-g. >> thank you for joining us. >> on a programming note, intel ceo will be appearing exclusively at 11:20 a.m. eastern time. >> coming up, this morning's top stories plus economic earnings and data mysteries and trade talks impeachment proceedings. what matters to the markets and what doesn't 'll debate that when squawk box comes right back when it comes to your customers' expectations, there's one thing you can be sure of.

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containing an outbreak the coronavirus outbreak spreading. the impact is straight ahead. >> the ripple effect the sectors that you should watch out for and what you need to know coming up. >> plus tesla's stock run has elon musk dancing all the way to the bank a look at the electric run and what to watch for when the company reports next week as the second hour of squawk box begins right now.

good morning and welcome back to squawk box on cnbc joe, becky and andrew are returning home from a big week at the world economic forum in davos. with us in studio today is the portfolio manager at douglas c. lane and michelle who is also a cnbc contributor nearly a 100 point gain to the dow. the nasdaq ability 55. keeping our eye on those companies that have reported better than expected expectations have been rewarded by investors those that have missed have paid the price. >> what is driving these

earnings >> well, it's always everything. the leadership and concentration of the rally and then a little bit on earnings. take a look at the chart of the nasdaq 100 against the s&p a look at this a lot this shows you that nothing has stopped the big tech and growth stocks we see a little bit of the flattening out of the average stock but not much of a concern yet. yes the gap keeps widening but it's also in an up trend so so far okay although we're having narrowing and heavier concentration in the rally a global risk appetite measure as we had the news spread. you have had a little bit of an impulse strengthening when this line is going down it's getting stronger against the dollar but you can see it's coming off after a low for the yen but essentially we still have this in the relationship that shows you that risk

appetites are healthy and then s&p against earnings, this sort of is the bulk of this bull market and you see an acceleration in the top line that's the s&p 500 as you have this flattening out of earnings around record levels that gap is getting wide there's nothing magical about the exact proportions of this but earnings have to start coming through for it to be a very overvalued market that's where we are as earnings come. >> let's continue the conversation a big week for earnings coming up 3-m, apple, mcdonald's, amazon and facebook, just some of the big names and joining us is the chief equity market strategist nice to see you this morning. >> thank you for having me back. >> how do you feel about the markets? >> we're feeling good. we had it forecast for last year we ended up at 3,200 we thought the rally would continue this year at 3,500 on the s&p and we're now north of

3,300 so what we thought was going to be a nice sort of 10% year where we are almost there we only have about 5% left so that sort of raises the prospect as mike talked about, there may be a correction at some point in the middle of the year plenty of things to talk about from a volatility standpoint and by the end of the year we'll punch the positive ticket with that number between 8 to 12%. >> so this was app interesting week in terms of commentary we heard. he told the squawk gang mark cuban told me the other day, you can make that case but 99, no, what do you think? >> well, i think the choice of that date was very interesting because as we got into the blow off of the tech bubble and whatever stock valuations were much higher we're sitting in a situation here core pce sitting at 1.6% and

treasury yield at 175. stocks are trading at 18 times earnings and 45 to 30 times earnings. you have treasury yields up around 6 or 7% at this point we think shares are valued and that will allow stocks to grind higher over the course of the year. >> what do you think the biggest risk right now to the rally is cramer had a list on his show of maybe four or five things and among those was apple. apple reports earnings this coming week and i'm wondering what treasure you think is on the market at large. how big it is. how wildly held it is. how much it means to the market. if apple disappoints could that

many b the match. >> so the piece that i wrote this week, apple was not on the risk theoretically the coronavirus as we're heading into the chinese new year period. the tech companies, particularly apple do very well during this period with the lunar new year because a lot of new technology and new phones are purchased if there's a significant decline in confident based upon what's going on maybe that has an impact the other two issues exactly how bad are boeings manufacturing issues how much does that bleed into the second quarter or the second half of the year >> that was at the top of cramers list. >> the third issue is a lot of skepticism about what we believe will be the positive impact from the trade deal signed recently

there's a number and don't think there will be any economic impact we disagree with that assessment but maybe that has an impact on apple as well in asia. what are some of the specifics that you have to identify. >> there's two issues that we're focused on the key element from the phase one deal is that we're going to get $200 billion of exports over the next two years largely focused on ag. corn, soy, and pork. they're saying that the chinese are simply hoodwinking us into getting us to lower the tariffs. >> but when push comes to shove they're not going to make the purchases. we disagree. the chinese are in a situation where they're not doing us any favors they desperately need the stuff we're going to sell them in terms of the swine flu epidemic

impacting it the chinese people eat more pork than the rest of the worldcom biened and as a result of the infection they have been forced to put down more than half so they need to purchase our soybeans to fatten up the healthy pigs and import pork from us to help with the deficit created. longer term, we have noticed a significant decrease in economic activity here in the united states based upon a decline in ceo confidence and reduction in productive growth. and we started to make progress on getting that deal consummated. phase one and phase two in the next year or so. does that improve ceo confidence and do we start to see an improvement in cap exspending.

>> it seems as if the formal estimates are low enough for most companies apple is one where the bar is pretty high. it hasn't been mostly an earnings story it's mostly been about the backdrop of extremely strong cash flow earnings companies and people are saying that if this cycle lasts we want to own this for a long period of time. you have earnings that focus you on the micro does the global upturn happen on time does everything going on in asia mean we have now bond yields coming back now? we have a flatter yield curve. so has the market gotten ahead of itself in terms of when the reacceleration actually occurs that's going to be the question. >> thank you for having me.

>> all right sticking around for a little while longer now the numbers are just coming out. >> and the numbers just coming out including $2.03. 2 cents above estimates. very slightly above forecasts. the company says revenue growth during 2019 was driven as well as increased spending and a nice percent or so jump. >> it's going to be really interesting. >> to your point, are people in business spending more money. >> i will discuss a little bit more as we get more details. coming up, the impact of boeings production changes sending ripple effects through the industry we'll take a look at the impact and possible outcomes from here. before we go to break, let's have a check in onarts mke 90 points on the dow and etfs are commission-free.s and when you open a new brokerage account,

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guidance was pretty decent 8 to 10% on the year going forward in 2020 eps forecast 885 to 925 a share and jumping about 2% >> i don't have a black card >> that's okay it's going to be a really good indicator of corporate health as well. >> so the company card the black card. >> i think if you ask what the annual fee is -- >> you can't afford one. >> exactly >> i do not have a black card. i've never had a black card.

it's funny when the earnings release one of the metrics they put out is what percentage of the customers are digitally engaged with them on the app or the website. 81%. and in all of these companies trying to prove just how much more they are engaging with their customers and meeting the customer where they are now which is essentially on their phone. >> what per cent of banking do you do on your phone i do 1000% or close to it. >> how do you do it? get your statements in the mail or something. >> likely to open around record all time high. coming up, the impact and what it means for your portfolio and later a look at tesla's massive run that has elon musk dancing

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well, a big day for boeing later this morning pending weather. boeing ceo this week said he's certain the 737 max will fly again but until then economists are trying to figure out the impact it's production changes will have on the economy since boeing is one of the country's largest manufacturing exports. crunching those numbers for weeks because it's been an issue for weeks. >> i had to recrunch the numbers. news that boeing is wishing the return to service beyond the year prompting another round of cuts to the economist forecasts. now the second quarter is in

play first quarter gdp by half a point. and in production of the max they dialled in the rebound of the second quarter now they're forced to take out the eraser again they'll take a half point off the second quarter this is the forecast of just one economist, action economics into a fabulous job of tracking the high frequency data. so what happened they took out the half point for the first quarter and put it into the second quarter. now they have to take it out of the second quarter and put the rebound into the third quarter you can see the fall out fall out of civilian aircraft here and this is manufacturing shipments of nondefense aircraft it's a single quarter. >> some economists are skeptical. and holding off on where he has a changeable sense of when it

will occur gdp doesn't capture it they announced it would lay off workers and new ceo david calhoun said this week production of the max would begin months before deliveries start. trouble for economists and investors alike? the next time boeing meets the deadline for return to service for the plane will be the first time. >> crazy impact. crazy that it's off half percent. >> it's amazing. first of all how much -- first of all, so many economists on the street now have been forced to become experts in airplane production it's like all of a sudden they become experts in meterology and snow that's another great job

i'm no expert but i'm actually thinking they will struggle to ever bring this back. >> it's pretty interesting it's pretty dicey right there. he's not an expert but how do they bring this back do they bring it back? >> being a little sceptical of anything that boeing says or does is justified. >> we had a very long concern about it. >> let's bring in the expert. >> the expert. >> i mean, what percentage chance do you put on never coming back? >> i'm not an aeronautical engineer so i'm not going to weigh in. >> he's an economist you have to learn to become an aeronautical engineer. >> so what i would say is you

get a sense of the numbers that have been put in inventory already and that's exactly where you get the basis points and knock an effects with production so even if they don't fly it yet, if they're producing 42 planes a month they'll go into inventory and get the rebound there. >> i want to stop you. i have been through the numbers like you have on this. there were hundreds of planes in inventory. >> yeah. >> i don't understand why they're going to start production again until they start to join inventory. maybe they have to restart the line they're afraid that the technology or the labor force could wither or whatever the reason but there's a huge inventory of these planes and he says they're going to crack up delivery

>> they have an unfilled backlog to fill and one of those customers is china and china and part of this trade deal with 76.7 billion in china includes aircraft orders and deliveries now china has 232 737s at the moment another 27, 777s and 12 787s all sold, they probably got a good deal on it. that's close to $40 billion of the 76.7 billion. >> right so of this trade deal now is china going to jump ahead in deliveries in order to meet the goals of this trade deal or how is it going to be -- how is it u.s. government going to see progress toward this agreement. >> it's interesting to point out there's a lot of things that are going to distort growth in the first half of this year.

the trade data has been very interesting and that imports a crater in ways we haven't seen outside of recession you now have the coronavirus going to import the data from china. where does it stop where does it end up where do we put the rebound? where is the cutoff? we also have manufacturing weakness out there that people are starting to dial in a rebound. so i don't know if the first half of the year is call it a sub 2% growth write off and i think the market, you could know better than i would for this second half. >> it's been coming down the next couple of quarters. and i guess the key question for boeing is replacement cycle. do people start moving away and maybe go back to the old 737s or

just get other planes that they have that's a factor that we haven't talked about because if that happens then you can get production but on the other airplanes. >> what happens if they produce all the planes and no one wants to fly them. >> that's more of, you know, an airline specific thing maybe at the outset but don't you think these planes come back and everybody looks at the equipment that they're going to be flying on and says no. >> let's turn to the economics maj major. is there a price at which your fears are overcome to fly the plane? do they have to discount the flight on the plane? not only discount it to the airlines that buy them. >> i think that issue would be totally binary if consumers don't want to fly the plane. >> there's no price. >> i think a price discount on it would make them even more scared you can fly for free on this

sketchy plane. >> i guess that's the definition of take a flyer. >> what if the plane never comes back then what? >> the plane will be in some way -- the airframe itself is not the problem, it's the software so just switch out a different software system. that may take more time to develop. >> i don't know if that's true >> it needs this software to kick in to offset the possibility that the plane could stall. >> because of the engineering facts of the plane where they move the wings exactly >> another thing that i heard which is that it was the financial department that designed this plane. >> they put more people in it. >> it could probably be massive radar and fly under government intervention.

>> he just talked about a government bailout to boeing >> moving up in the polls. up next,the director of the national institute of allergy and infectious diseases. we'll be back. at fidelity, online u.s. stocks and etfs are commission-free.

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welcome back meg joins us now with a look at some. >> it's been a quick response from the pharmaceutical industry this week we heard from a normal that said they're either hunting through libraries of existing compounds to find treatments or working to develop entirely new treatments on the treatment front our companies. gilead said it's investigating whether an experimental compound that show activity between sars and mers may work for this

virus. an experimental drug for ebola is working similarly to develop a drug candidate for this virus and screening existing compounds and working for new ones now the mark values are smaller than we usually mention and this is where some of the stock volatility comes in. we saw this as well during the ebola outbreak in 2014 and ultimately importantly it was larger companies that advanced vaccines to use in the field scott. >> thank you for more on what we know about the virus we're joined now by the director of the national institute of arkllergy and infectious diseases. >> thank you for being here this morning. >> good to be with you. >> how concerned should we be? >> i don't think this is a high risk for the american public and the american public should not

be worried or frightened but this is something that we need to take seriously and the health authorities and the various agencies of the government, health and human services, homeland secure are taking this quite seriously but there's a difference between taking something seriously and having the american public be trie frightened about it. they don't think that they should be but they shouldn't blow it off. as you know from the news every day more and more cases are appearing in china and countries outside of clhina. >> the who is not declaring this a global emergency is that the right move or are they making a mistake? >> many people say they should be doing it but they have certain strict criteria that triggers did declaration of a public health emergency of international concern. whether they're going to be doing it again they keep going back they may revisit this in the

next day or so and you'll see they may make a change but right now they have decided that it's not quite the time to do that but as you know there's a lot of people that dpisagree with that decision. >> she just lead into our report on companies that are working upon vaccines and stocks et cetera that could be impacted. how quickly could we get a vaccine up and running, do you think? >> well, for example, we're working with one of the companies to develop a vaccine on a platform and we're dealing with several of the companies that you mention regarding drugs. we think we can within the next three months and i think that's a pretty good number i don't think that's an exaggeration that's too optimistic and it takes a few

months to get enough data to know at least whether you're dealing with a compound at stake. so three months from now to get into a human and another three months to get data and the real problem is when you want to develop something to use for people if you have to use it even on an emergency basis that's going to take several months more but the process already started in developing vaccines and as you mentioned a moment ago in starting to test some of the drug compounds. >> another issue is the trustworthiness of the chinese do you think that the chinese can be trusted on this issue on when they say they have it under control? they don't given some of what happened throughout history with sars. >> well, they're doing much, much better this time around

than what happened in 2002 and 2003 and it was an embarrassment for them because it slowed down the response from what we're looking at right now, the response here, they have been really quite transparent. i can't tell you exactly what's going on in china because i'm not there. but from the feedback we're getting in real time basis, it's an enormous difference in a positive way compared to what happened with sars >> the cdc established five airports, san francisco, lax, and he can speak to this as well that would intake all the people that would fly in but there's entry screening going on at those five airports. i also wanted to ask you about what's understood about when this virus is contagious

do patients have to be showing symptoms and have fever? because we know that the patient in washington state, at least we heard he wasn't showing symptoms when he came into the country and now health authorities are tracking 43 of his close contacts how likely is it that any of them could potentially get sick. >> well, it's unlikely but it wouldn't be surprised if one of them did but it's unlikely we do not know now what the duration of time when someone is shedding virus before they develop symptoms there are a number of viral illnesses for example like influenza in which someone can shed virus they get symptoms to bring them to the notice of somebody. we don't have definitive information now about shedding a virus and we're going to get that information pretty soon as they patients are starting to be studied but if they were shedding virus before symptoms

it would not be surprising >> if you were a us. business person would you travel to china? >> well, when you say china is one thing. china i wouldn't mind traveling to but the state department is saying no travel. >> understood. we appreciate you being here thank you. >> you're welcome. >> coming up, bernie sanders rise in the polls is being fuelled in large part by his focus on inequality. robert frank will join us after the break with that story.

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the top 1% have seen a increase in revenue while the bottom half of american society have seen a decline in their revenue. >> recent data shows while inequality is still very high it is declining for the first time in years wages for those at the bottom are growing faster than for those at the top according to the bureau of labor and statistics, retail food, nursing homes, raising 4.5% a year and in middle income industries raising at 3% and high wage earners that include managers and executives have seen wage growth decline now the measure of inequality that shows that the share of income held by the top 20% has fallen for the first time in a decade even wealth inequality that's total assets. that's shrinking

it fell to 32.2 to 32.7 and the share held by the bottom that's up slightly they hold 1.6% of the nation's wealth the u.s. has the highest level of inequality among any developed nation except for turkey $2.2 million each over the last three years. that is versus $4,000 for the bottom half. so i don't want to be called an inequality denier here but the direction is that inequality is declining over the past two years. >> the underlying issue is when you have a very hot economy and employees are desperate to get employees, that's where you see the biggest move in the labor numbers and that's finally happened the slack has finally disappeared so low unemployment numbers directly feed into this. >> right this has been touted as the blue

collar boom. it's also driven by all the minimum wage legislation that's taken place in seattle. >> only fractionally begins to upset. >> correct. >> robert, thank you very much let's bring in the national union senior fellow that's also president of strategies and megan green. thanks for joining us. do you think it's right to focus on the inequality point as opposed to the headline strength of the economy which probably plays into the president's hands. >> yeah. it is absolutely right to focus on inequality. the co-efficient which is the most often used measure of income inequality hit the highest level ever in 2018 so we are talking if there's a turn and at all it's from incredibly high levels and i

think you're right to actually point out that, you know, wages have been growing faster among the low wage earners than the high wage earners because that's what a hot economy and running the labor market hot is designed to do. but again, we're talking from really low levels. so faster growth and there's a bunch of structure factors that feed into wage and income inequality as well and they include things like, you know, our patterns of consumption which are overwhe overwhelmingly services now. they're low wage low hour jobs and things like market concentration and you have super star economies things like the demographics those are all big, long-term structural drivers of growing

inequality for the us. and other countries. and those are going nowhere. so it's think it's right for the sanders campaign and other politicians to be focussing on this issue. >> do you think that it will make a difference though highlighting the levels of inequality or do you think the headline numbers for the economy are playing into the president's hands. >> for sure. the democrats have their work cut out for them in a hot economy because it would be very unusual for trump not to be able to be reelected and that's why you see democrats focus on inequality the case they need to make for voters is not just that they're the better choice it's that things will be worse if they get elected. it's not clear at all that that will be the case we mention the labor market. over the next couple of months we'll have to look and see if the wage numbers continue to rise but they co inside with ho people vote. we have seen noncollege educated voters becoming more republican

where as college educated voters become more democrat the managers aren't getting as high of a raise as the folks at the bottom tiers of the working class, if that continues, that will continue to be into that narrative for republicans saying they have a handle on the economy. i don't know about the rest of the democrats talking about a wealth tax and inequality is going to correct for that when americans feel like they're better off particularly after not seeing any wage increases. >> if the middle ground may well be more attractive than to the current president because of the strength of the economy, do you think people are underestimating the balance of probability of who is more likely to win between biden as more of a centrist and bernie sanders as more of a progressive. do you think that his chances are better in that light if he turns out that base of his >> yeah.

the debate is whether people feel like it's benefitting them. there's a big question for the middle class that's largely carved out so to your point, i do think that we might be underestimating support for those like bernie sanders highlighting inequality. and he has the best chance. >> thank you for joining us. >> all right coming up, elon musk and investors dancing with joy quarterly results out next week. it's going to be a positive open at least at this moment on wall street dow open higher by 94. nasdaq by almost 50. s&p by more than 8 could be anoerecd th rorsetting day on the street. we'll be right back. this is the age of expression.

everyone has something to say.

but in a world full of talking, shouldn't somebody be listening? so. let's talk. we are edward jones. with one financial advisor per office, we're built for hearing what's important to you. one to one. edward jones. it's time for investing to feel individual.

good to see you this morning. do you have a sell on this >> yes, i do $249. >> that's correct. >> you're aware the stock is 572. >> absolutely. >> how are you feeling this morning? >> i'm nervous for people that have been buying it in the last couple of weeks. you look over the last three months, what has really changed? we knew china was going to happen we knew it was a knockdown they could show us pretty much any production number they wanted out of the facility there will be buyers in china. we always expected that to be successful but that one basically known. you look at the quarter. the last quarter that was a very good quarter that's the one thing that has changed in the last couple of

months they sold more out of the channel than what they produced. this quarter they produced, well, 7,000 more cars. that's working capital that's what has changed. that cannot happen cannot continuously sell more than what you produce. >> the next quarters earnings is what changes this is a momentum we expected this quarter to come. >> on top of that too. >> a lot of people were stocked out. so the guidance is number one, right? earlier last year i should say the stock probably hangs in there. the quarter itself will not be

as interesting as far as the forward looking statements and i expect the overhead from the chinese factory to weigh down margins and then you have to pull forward with the cliff of subsidies coming into the end of the year so it's multiple things that do work against them for commentary and valuations -- >> so they're bringing forward subsidies are going to expire and people thinking about buying are going to hold out. >> in the u.s. in the u.s there will be a component of the sales that it will cliff. >> so when you model this out, what are you discounting in terms of regular growth versus kind of what the price is saying right now? >> so, you know, 19 was 27% unit growth this year i'm modeling about 27% unit growth.

stocks 50% still so that means another 180,000 units which is pretty aggressive considering that the stage of maturity of the company. they have been executing well. another 180,000 units in 2020 is aggressive. >> you said as it relates to china you were dismissive of that saying well it was known but isn't it fair to say that they quote unquote figured out china quicker than most people thought? that they started producing from there quicker than most people thought? and that turbo charged to use that word the stock more recently. >> so the facility in china is a knockdown. it did come together with blising speed. very different than the experience in the fremont facility but what is a knockdown? a facility where you bring in parts at different stages of completion and assemble. so, you know, only 30% of the

content is local to china that's actually used in that facility so we need to be careful in giving them too much credit for that if 100% of the content was local or 80% of the content was local that would be a different experience the most cynical view of a knockdown is that you can bolt them on there and start your stopwatch and turn it off and we have 100,000 capacity. china was known. it was known that there was a knockdown and they were going to be successful. there's buyers in china, plenty of people with money in china so it will be a successful market for them but the rate of growth and the unit expectations i think are getting frothey. >> but the lesson in all of this as will said is momentum is a powerful thing to be betting against. in this stock, maybe more than any other.

the momentum behind this, isn't it difficult to be in a position of having a target of 249 when the stock is at 572. >> a very large chunk of the run off has been retail. my bread and butter has been emerging growth stocks so small cap, microcap, emerging growth stocks. that's how tesla behaves they correct violently when they correct and we could very welsey a fairly substantial correction in tesla stock. >> i respect the way you haven't chased it up while still having a sell which a lot of people have done which is a bit of a halfway housekeeping. >> exactly. >> but 249 is a long way off where we are today what's your time frame do you think this quarters earnings if it was a big miss sees a 50% drop in the share price or do you accept in the short-term the next three to six months you're likely to be

somewhere off. do you this this could be a collapse in the short-term. >> a 20 or 30% correction is significant over the next small numbers of months. could it go down to 249 this year absolutely it depends on how china actually plays out. remember, china auto sales are weak there's been mischaracterizations about the nature of the chinese market the tesla vehicles are not comparable to the core of the market >> thank you for joining us. >> thank you 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 while our competition continues to talk. the famous meat lover's pizza from pizza hut. over a pound of meat and cheese for just 10 bucks. it's more pepperoni for your penny, more beef for your buck,

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live as the final hour of squawk box begins right now.

good morning, welcome to squawk box on cnbc live from the nasdaq market site in times square. joe, becky and andrew are making their way back from davos. our host today is michelle and also joe, the senior managing director and also cnbc contributor. take a look at futures they have been higher throughout the morning. looks like we'll have another record setting open on wall street dow would be higher right now by almost 94. nasdaq by about 50 and s&p just about 9 points take a look at yields that have been under pressure as of late yields have been falling there you go the ten year note is at 173.

something to keep an eye on. dow component american express better than expected earnings and revenue for the fourth quarter. intel also beat expectations results were helped by improvement in personal computer and data center command. also gave an upbeat current quarter outlook and announced an increase stocks up 5% intel ceo will be on squawk on the street and sticking with the chip theme, they supply apple with wireless components in 2023 and a deal worth an estimated $15 million. apple currently accounts for about 20% of the annual revenue. >> fast moving developments in

chinaened aaround the world. here's what we know now. the death toll stands at 26 people with 830 confirmed cases overall. china is stepping up measures to contain the spread of the virus and encompassing more than 33 million. authorities have cancelled lunar new year events in many places including beijing and it's suspending business in five cities at the center of the outbreak shanghai disneyland is closing until further notice south korea and japan confirmed their second cases as of now, the outbreak does not yet constitute it. >> eunice joining us now with more >> the total number of confirmed cases at 907 and 26 deaths so now that the authorities have

been locking down several cities the focus has been moving toward whether or not the government has the resources and the ability to manage the situation on the ground. there's been several reports, especially in the epicenter of the outbreak that the city doesn't have enough doctors and not even enough testing kits in order to diagnose new cases. the state tv broadcaster said the chinese military are sending in their medics. an outbreak of this magnitude would be a challenge for any government but for china that's still a developing country it is really in a tough spot the health care system reflects the situation it's borrowing a practice that beijing deployed in 2003 during a sars outbreak where it's creating a hospital, prefabricated buildings and 1,000 beds

and authorities here are taking the outbreak and trying to contain it nationwide. it's taking more extreme measures to keep people from going out to the lunar new year holiday. china said it's shutting all 70,000 movie theaters as of this weekend. it's ordered all travel agencies to stop selling tour packages as of today this comes after disney announced its going to be closing it's popular theme park in shanghai. as of saturday, the park would normally be seeing hundreds of thousands of visitors during this 7 day lunar new year period and of course as you guys could imagine, all of this goes very poorly for the economic growth numbers here. >> yes thank you so much as always. according to a new washington post opinion piece by former fda commissioner, the world is best prepared to deal with an outbreak than when sars hit in 2003 but it still remains vulnerable he is currently a resident

fellow and member of the board of pfizer and cnbc contributor good morning thank you for joining us so the world is better prepared. is that because china is being more helpful this time where do you gauge what they have done so far >> china has been very helpful they only admitted that they have an outbreak of unusual pneumonia after something they provided to their own physicians linked to social media videos appeared on twitter showing them taking people off of airplanes and testing people on airplanes and they only admitted that they had human to human transmission and 15 health care workers that were sick which was a key fact the fact that doctors are getting sick more than suggests and proves it's human transmission now this has sustained human to human transmission and all the information we're getting shows this is far more contagious than

what we first assumed. and i'm not sure that there's 830 cases. there might be 8,000 cases and more we're probably missing mild and moderate cases. >> that will go away themselves or surface in a severe way in due course >> no, they'll go away right now 830 people have been confirmed to have the illness. about 25% of them have see vevee illness. but it suggests this isn't as severe not everyone is getting very serious illnesses. probably a lot of people with sub clinical illness or mild cases and they think they're getting home and not getting tested but it does seem to have sustained human to human transmission in china and reach an epidemic level in china. >> we're showing 30 million people on lock down. that's what it says on the

bottom in fact, if you have a car, you can drive. the only thing that's of issue are planes and trains for example. is that enough to contain this how do you tell 30 million people that they can't go anywhere if anywhere china could i suppose. >> china could impose it better than we could but these things don't work trying to isolate people what it's going to do is discourage people who are sick from presenting and have they missed the golden window this has reached epidemic proportions in china that doesn't mean it's going to be a global pandemic what we're going to end up seeing in other nations are isolated outbreaks in the united states we'll be running into the spring and the summer so we probably will have isolated outbreaks that doesn't mean it's going to translate into an epidemic outside of china. >> it happens less

>> yeah. so it might be harder to have respiratory droplets transferred in a different kind of human environment but it means people aren't in close contact. so you don't see spread of communicable diseases as easily in summer months because people are outside. it breaks the cycle of spread. >> what do you think of the w.h.o. decision. fa ur the doctor was critical of it in our earlier interview. why not get ahead of it than after the fact >> well, i think they should have they have a criteria it probably could have gone either way in terms of that. they were probably concerned about the economic implications for china as well as if you put more pressure on china at this moment in time would it exacerbate and make it harder for them to respond to this. they probably should have done it

it does give countries more latitude in terms of what they do they'll be reevaluating this i think pretty soon. >> given what you have said about this is more contagious than people realize, do you think there's more cases of it than one in the united states even if it's not as severe >> hard to tell. probably is the answer and he said this morning he wouldn't be surprised if there were other cases around this individual so there are going to be outbreaks here we'll probably see clusters of outbreaks. that doesn't mean it will be an epidemic. >> we were seeing with sars in 2003 the first case was reported in november of 2002 do you think the market was treating this where we could have a experience where three or four months from now we'll be talking about this and if we are, we'll see the negative

contraction we saw in consumer oriented retail spending like we witnessed in hong kong in 2003. >> it's hard to see this abating. it's hard to see the chinese being able to get quick control out of this. there was a paper suggesting that this is more contagious and probably many more cases than what we're reporting in comparison this appears to be more contagious and less severe but the question is has it achieved sort of that golden point where it's contagious enough to spread rapidly but still severe enough to cause a lot of harm. we don't know that yet there's a lot we don't know because you worry about something that achieves the sweet spot between being able to spread efficiently and keeping it's host alife and well enough to spread it but it's still causing severe illness this is a new virus. probably hasn't seen it's before so the young and old this is going to cause a more serious illness. >> as someone in a position of

import at the tables can you understand it? >> why did they take five months to not be forth coming about sars. >> if the tables would turn, the u.s. would not do this at all. >> not at allment we had information about outbreaks. that's the expectations. it also helps in response. maybe they can get control of this before they have to admit the impact on their country. i don't understand all the credit that they're getting. i understand they made the sequences available early and there's more information sharing but the information sharing has been slow. we knew that a week go

chinese a little longer to put that out >> coming up, a chance for boeing to get a much needed win. the inaugural flight of the company's new plane is set for today. it's got it's own set of problems though. we'll tell you about those and speak with a long time boeing shareholder when we return stay tuned you're watching squawk box on cnbc dana-farber cancer institute discovered the pd-l1 pathway. pd-l1. they changed how the world fights cancer. blocking the pd-l1 protein, lets the immune system attack, attack, attack cancer. pd-l1 transformed, revolutionized, immunotherapy. pd-l1 saved my life. saved my life. saved my life. what we do here at dana-faber, changes lives

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welcome back to squawk box futures are pointing to another positive open and a record setting one on wall street highs of the morning right now at 8:15 a.m. and an hour and 15 minutes to go and the dow would be higher. nasdaq by 51 points as well and the s&p has been pretty much steady with a gain open of around 9. >> which all of the indices have been positive for the week that's still back from the lows we saw days ago. issues surrounding the 737 max

here's some of the latest developments s&p faced boeings rating on credit watch negative southwest and american said they're discussing compensation from boeing and boeing ceo said he's certain that the max will fly again as we head into the weekend though the company's focus is temporarily on a different plane. one boeing would really like to get a win on phil joins us now with more. hi, phil >> hey, wilf we're talking about the 777x this is the next airplane and it's scheduled to make its first flight today you might be saying what's that all about? think about the 777 which is a widebody they have been selling for a couple of decades now. now slightly longer, lightly

wider. now it's been pushed back to next year. that's the plan here this is the program that's had a number of issues that has slowed the development of the 777x. they're 11 feet longer than the current 777 wings. there was concerned. that's why you have the wing tips to fold up and the developments slowed by a number of issues including the ge 9x engines. they're huge and being developed and were developed for the 777x. they will power the airplane this will be the first time that we see these in action when the first flight happened today. this is an airplane that's certified by the faa and that's when the faa working with boeing will make sure that the plane meets all the standards it's supposed to meet.

it will likely be much more rigorous than perhaps they might have been in the past. >> so we know, of course from the 737 max that that plane, one of the reasons it ran into problems was that plane was meant to be a slightly longer hold version of its predecessor. does it include the other issues like needing to move the wings further forward? or is that not applicable at all? and that is at the heart of the problems when you look at the max right now.

this first flight was supposed to happen last year. now programs tend to be slower than initially planned but clearly the issues with the max have further delayed to a certain extent boeings efforts when it comes to getting the 777x off the ground. we'll see if it happens today. >> thanks. stay with us, okay we have more on boeings issues with the 737 max he is a partner at granite investment advisers.

it's nice to see you waivering at all on that >> no. >> do you trust boeing >> we forward our expectations we don't think this is binary anymore where you get return to service and it takes awhile for it to rerate and the customer and consumer to regain confidence. >> what happens if the max never gets back in the air and what happens if people don't fly it >> so we have a 275 if the max never gets in the air. they still have the wide body portfolio and 777x they were just talking about

>> give me the context how much worse is that >> the stock hit 300 this week so it's kind of reaching that breaking point that is things we never see another max so boeing has to spend ten years of a development cycle to build that future small aircraft. >> i think 5%. put us into the mind of the shareholder? >> it's been a frustrating year, year and a half for boeing i reiterate what your other guest has said and it's very unlikely it's not going to fly again. you're not going to set up to build planes before you're set to do deliveries this summer if you don't think it's going to

fly again. boeing needs to regain the trust of the republic and flyers and that will take some time phil has something for you guys. >> i heard you asking sheila about if the max never flies again. that idea has been percolating more with the latest round of delays i have to tell you, i have talked with the number of people at the faa which is the primary regulators that's going to have to certify the plane first and even the most critical people don't believe this plane will never fly again. so while i know people say you can never say never we thought this plane would be in the air by now i can tell you that the belief is this plane will be certified and will be deemed safe to return to service.

there's nobody looking at this saying i don't think this plane should get back in the air. >> so i think everyone keeps questioning management and questioning how we regain trust and certainty that the business model is the right business model. this morning we have the 777x being brought to the market and it's expensive how could we have any confidence looking forward that even once we're past this max issue that this is the right management team and this is the right strategy looking forward >> so we have seen several management changes and the communication is hard because this is something that no one anticipated would take close to a year, so i think that's that on the 777x phil talked about a

backlog of 300 firm orders or so that's across 10 operators it's usually the middle east that likes to buy the bigger planes we're more bullish on the 787. that's the smaller wide body we like that aircraft because you'll have more liability with an aircraft like that versus a 777x carrying 360 passengers around. >> in terms of the new management and pushing back expectations when the 737 max will fly again, do you think that's just trying to set the barlow so they can beat it and if so, why didn't they push it back further? i ask because how badly do you think the stock would react if they had to issue another delay or a small one given that this is the new management trying to shake off as she referenced to the issues of trust that the old management had. >> well, i think that management is trying to kitchen sink this quarter. everybody knows they can take a

large charge for the production issues and for the recommendation to the airlines so in our mind, calhoun is coming in and really setting the bar very, very low in order to beat it. haven't had a positive piece of news out of boeing in 8 months it hasn't worked for the 777 or 737 or the space program they need a win and they're setting themselves up for one. >> we'll leave it there. thank you. >> thank you. >> still to come, the analysts that just upped his price target on apple to the highest on wall street squawk box back in a couple of minutes. at fidelity, online u.s. stocks and etfs are commission-free.

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now withdrawn moves that would make it harder to shelter huawei they follow objections from the defense and treasury departments. >> the rational when i read the

story is that their concern is that the revenue of these companies so much that they no longer do research and development that they have been so upset that they haven't done to have our own 5-g, et cetera it's a real dilemma. they're a company that focuses on the private sector when china is involved in what is huawei and whether it's private sector. who knows. >> it's fascinating that this debate continues and it's incredibly interesting that europe has such a different position on it overall. >> compared to the united states. >> that they're more willing to use huawei equipment. >> part of that is because it's already imbedded to a certain extent in 5-g and 4-g networks that a change would be expensive or even impossible based on where the foundations have come out so it's not necessarily that they totally disagree with some of the intelligence that they have been given but it's that they basic will i have no

alternative and that they would proceed with huawei but try to impose all sorts of added security protections because that's their only option it's not do we agree with you or not. it's we haven't got any options. >> coming up, impeachment, a new virus in china and trade deals and the rate of global growth. which ones are factors in the most we'll add mohammed el-erian because he joins the debate just ahead. >> still to come, a deep dive into apple as investors await one of the biggest quarterly reports of the earnings season top analyst dan ives explains his new price target now the highest on wall restet stay tuned you're watching squawk box on cnbc

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raising the price target on

the iphone and make it to $400 that makes it the highest price target on wall street and joining us is dan ives that's the analyst behind the call. what's the main reason for this? iphone sales pure and simple or multiple expansion. >> high conviction in terms of iphone 11 and 3 to 5% of expectations and we were going to a super cycle and in terms of 5-g especially from our asia chip i feel like 220 million units going out. i think at this point you could be above peak 2015 iphone 6. that's why for us the sum of the parts numbers continue to go higher this stock in our opinion has it. >> it's already related a lot in the last 12 months so you think there's more on purely relating as well. >> meaning multiple expansion?

>> i think they're only halfway through the rerating and the reason they say that is its been a big core of the thesis on the service. so i think 60 billion of revenue and 600 billion in terms of that services business what that value is you start to put that together with the iphone franchise and that's how we get to what i believe by the end of next year would be 2 trillion. >> are you in the camp of people that hope that one day the whole company would be valued by the services company they're trying to argue that it is like a subscription and that helps some of the parts. >> it's more of the former because it's been a big part of you are thesis here. go back a year ago and you have

151, it was always the installed basis. we think right now that's only 8 to 10% from a services perspective. you start to kind of look at the penetration rates and services and that's why in our view it's just starting to happen here and the next few years i think we start to get into the sweet spot. >> so the multiple will go from what to what i've been hearing this more than a decade. >> yeah, so if you look historically, apple, 12 to 16 times where it traded. the whole view right now is that you're going to start to get to low to mid 20 multiple from an eps per spespective but you havo view it as the sum of the parts. what's the iphone core franchise worth and the services business. this is going to rerate what we believe is a $400 stock by year end because of the dynamics of the super cycle and services. >> reflecting a combined

multiple above 20. >> i'm not disagreeing with you. it's there already we had a conversation a couple of weeks ago where you asked me if it was warranted to view apple in the same fashion as proctor a procter & gamble. >> and i said ludicrous. i'm wrong. i'm wrong. this is now being rated as a consumer stock it's the same as a mcdonald's at 27 times or coca-cola at 27 times. so to michelle's point we have seen multiple expansion double over the last 12 months. you're now at that point where it's being valued as a consumer stock. the rest of your analyst community they disagree with you. they have the price target, 6% below where it is today. you have 27 buys, 14 holds and 7 sells. why are they wrong and why can this experience further expansion. >> that's why it's such an emotional story now in terms of apple where it should trade.

ultimately some of the signature wrong in my opinion is underestimating the services penetration and where that's going to go combined with what's happened it comes down to you're going to sell 400 million iphones the next four years. that's going to put a growth in iphone but on the services piece in my opinion, that's something the next few years >> i'll just remind people that it was much worse than 10 to 11 and maybe the next 12 months that protected because they're going to help them and make sure that everyone upgrades without significant innovation and one cycle that's beaten estimates. it could easily go away. >> that's fair as an apple shareholder. i would push back on that and just say they seem to have the

ability to introduce new products and they have done that in the wearables with the air pods air pods potentially could be the third biggest revenue generating business for apple over the next 18 months. >> do you -- that's a great point. air pods, 5% of revenues next year we think they sell 85 or 90 million units. that's a good example of the innovation >> it could still be offset by multiple contraction if that were to happen another quick point is what do you think about buy backs? they have plenty of cash to do buy backs but is the share price high enough that that doesn't make sense to them and if they were to slow that down does it hurt the share price? >> yeah. just in terms of what has been happening there. i think buy backs continue but i do believe that they're going to have to look at more m&a not just on the core iphone side but the content side if you look at the cash neutral

strategy, buy backs are going to continue and that's why right here going into next week it's just another step toward it. >> you're not worried about expectations being over the moon at this point given the stocks move. >> they better deliver next wee and not just deliver. >> i think that's what we see but more importantly in terms of marchand june and you look at the pipeline in terms of what we see with 5-g this is one that the street is continuing to underestimate just what this 5-g super cycle is going to look like which is why we continue to be bullish on it in terms of the multiyear thesis. >> one thing that could help is a big sticky dividend. anyway, we're being told we're out of time. thank you. >> thank you. >> great to see you as always. coming up, stocks making the biggest move ahead of the opening bell plus the chief economic adviser on what is driving investors the most and as we head to break, a

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>> nice to see you on this

friday. >> we are riding a massive wave of liquidity it has worked extremely well and i would see why you would go against the very strong momentum what's happening in china is another medium term uncertainty. investors right now are just focussing on the short-term and the short-term has rewarded them in every asset class. >> are you unveiling a new ipad later or something like that >> i was just going to ask >> or were you watching andrew ross sorkin get news action over this week as well? >> this is my commitment, okay i am in michigan i didn't bring a shirt or a tie but when asked can you help us out, i said sure so this is it. this is how you see me as long as you don't see my jeans and my shoes, i'm fine,

okay. >> i was just making sure. i like the look that you're rocking today. seriously though, the biggest risk to investors right now is what do you think? >> well, there's a few one is global growth is not picking up despite optimism. two, it's not clear that we have stopped deglobalizing. three, central banks are becoming less effective and four, we are overpromised liquidity to the end investor. so there are lots of risks out there. the major question is when riding this wave of liquidity do you go up in quality to become more defensive for the medium term or do you come down in quality to try to get more returns in the short-term? i prefer the former. i think that you should be increasingly more defensively oriented while keeping a claim on the upside but most people are doing the latter and that's why i think later in the year we might have a lot more financial

instability chlts the global growth point and the central bank point what did you make of the first press conference. >> so i think she's a great communique to. i thought it was interesting that she was upset with this notion that the central bank policy is predestined. they're trying to get us away from being conditioned to expect central banks to always provide liquidity but they're not succeeding and she is trying to tell the marks, hey, you can't rely on central banks all the time the trouble is that message isn't getting through and she's going to face the same outcome as powell in terms of markets continuing to press central banks for more liquidity. >> do you -- i would be sceptical of her saying that when she is someone very upset with the yoiunited states for er

having let lehman fail i don't know that i would believe her either. >> this notion in central banks that you need insurance stimulus insurance stimulus it's not going to have an immediate impact but you might as well ensure it's very deeply imbedded and after the scare of the fourth quarter of 2018 it's going to be very difficult for central banks to step back and at some point investors become less risk. >> it's very difficult to call that point. >> we keep talking about liquidity. liquidity seems to be finding a risk appetite for growth are you concerned with that maybe being a little bit too euphor euphoric >> it's important to look at different asset classes. we tend focus on stocks but

what's the ten year doing at 174 when stocks are doing what they're doing? you know, what is the -- what is it doing in 21 basis points? that tells you liquidity has lifted all boats and we have to understand that. this is not a fundamentally driven rally this is much more liquidity driven rally but do you know what, you continue doing what has worked well and it has been wonderful for investors so i understand. i myself continue to ride this liquidity wave but i'm doing it increasingly in a more defensive manner. >> where are you on u.s. gdp for the year ahead not just economic reasons but the elections? do you think picks up a little bit of extra steam now we have the phase one deal and holds pretty strong through to the election >> yeah. i think we're looking at probably a 2 to 2.5% i don't worry about the u.s. economy when i look at the global economy but i really worry about europe

europe is very near stall speed and that's about 1% growth and when you get to stall speed the risk of recession goes up so if you want to look at weaknesses, look at europe and look at the mounting challenges to chinese growth they are managing a very tricky medium term middle income transition, where the risks are in the global economy. it's not in the u.s. >> mohammed, if i told you through earnings season thus far earnings growth is negative yet we're going to open this morning with another record high for stocks, what do you say to that? how do you reconcile that? >> i will tell you more of the same, that's what we have seen previously we saw it happen last year and i can point to so many market anomalies, correlations that have broken down, volatility that refuses to step up. everything has broken down because the liquidity inflow has been so strong that it overwhelms everything else, and

it overwhelms earnings as well so you know, these are all indications that we are living in this wonderful world of liquidity but be careful there is an end at some stage. it's just very difficult to say when >> what do you think of gold, mohammed >> i think there is merit in looking at gold of very few hedges left out there, very, very few, unless you can tail hedge but that's quite a sophisticated strategy, so you know, gold belongs in a portfolio. i would just, you know, not go overboard on it. i think there's too two-major challenges and investors have to take seriously one reconciling short term favorable momentum with mounting medium term uncertainties and second, finding some risk mitigation out there that they can have in the portfolio that is still valueed atrad attractiy

there are very few right now for the retail investor and that's an issue for the long time >> do you think the market is too complacent about this virus you look at ebola, the s&p went down 10%, and not that far of a period, and people are saying now stocks are ripe for a pull-back. they just need a catalyst. do you think this could be it or no >> only if it really spreads the markets have understood when you have low probability, high impact events, and this is a low probability high impact. low probability in the sense that it's not likely to spread worldwide. high impact that if it does we have a major issue the market understood when you have that sort of mix it's better to fade it immediately that's exactly what we've done this could knock up to 1% growth off china, that's meaningful it will have a huge impact for those who supply travel services and internal trade services to

china, so it will have focused effects but i understand why the market's reaction is to shrug it off and say it's contained, it's isolated it's not a macro theme >> a very jobsian looking mohammed el erian. >> well up on the peninsula. >> thanks for having me. down to the new york stock exchange, jim cramer joins us down there, as always, jim, good morning to you i don't know we should kick off with some of the earnings, intel, amex. >> intel is amazing, take profits. they didn't read the call, people are overwhelmed by the conference calls they talk about data center beginning, pc sales unbelievable ai fantastic these are long-term secular growth themes. as the stock moves too much? you don't buy it up today but it's real good we had a lot of good news

yesterday. i was listening to mohammed but i'm a stock guy and i'm looking for a company that really disappointed and i'm having trouble doing that, skyworks was fantastic. brockor and gamble was so much better than the analysts said it was. union pacific how much they could make with expenses way down and america's best is fantastic. we all want to take profits and all think it's going to go down big, we all worried' netflix back up 25, tesla, i don't know. some things are strong >> jimmy, it's scott skyworks, good quarter obviously, stocks down >> all right, that's typical >> is it broadcom? >> whether they're going to buy that division, the rf division skyworks is run, liam griffin did a great job but there was nothing new other than continued great job. if it comes down, you want to buy it i think it's much better than say texas instruments. the ultimate 5g stock.

broadcom got the big contract from apple, stock up 15. 4% yield, i like that. the ca technologies which is good because they're linked to ibm's mainframe so look i want to find holes, and the worst stock was ericsson in the old days before i was jimmy chill i would have definitely called them clowns because they have secular tailwinds and they can't do a thing with them. i'm jimmy chill now so i have to look at the other way. >> "jimmy chill. >> i like the other jimmy. >> that jimmy is gone. my daughter in spain aid the jimmy chill is working people are liking me on twitter, never go back. >> to jimmy psycho, that's what you said jimmy psycho >> i can't call them morons and chowder heads. that's forbidden. >> jimmy psychohad a heck of a run. >> the ijimi hendrix with the wife i don't know what that jimmy is. there's a lot of jimmys. >> one last one.

we had a massive week for earnings, a big discussion with an analyst recently about apple. do you think the bar is pretty high for next week >> oh my god, that's why i thank you, scottie, that's the biggest stock in every single index. i know you have tony all the time, scott, because he's a particularly nice guy, but he expresses all the things that are really worrisome obviously, katie huberty from morgan stanley comes out and says you got to chill >> i watched your list last night at 6:00 on "mad. >> what kind of life you have to watch from 6:00 to 7:00? what terrible life do you? >> preparation for today, that's what that was called >> thank you most people miss it. that's okay. i'm chilled. >> see you in a couple of minutes. an exclusive interview later with intel's ceo bob swan, "squawk alley.

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we're going to open at new record highs, a final check on the markets ahead of this open on friday, all three major

averages are higher, pretty much off the highs of the morning, but nonetheless good earnings from intel, axp, trying toget our arms around this coronavirus as well. >> see you monday. >> i'll be watching. >> good to be here >> it's been great >> make sure to catch us next week, the gang is back "squawk on the street" is next ♪ just move on up, move on up >> good friday morning i'm carl quintanilla with jim cramer and david faber the market looks past the impact of china's coronavirus and focus on global pmi stabilizing, blowout quarter from intel europe up strong 1 to 1.5% bonds ten-year 1.27. 26 people died from the fast-spreading kro he in a virus.