good morning welcome to "squawk box." we are live from marketsite in times square i'm becky quick. joe is out today sick as he has been the last several days we hope he's feeling better. we are looking at some significant red arrows this morning. dow down indicated by 150 points yesterday, nasdaq was up by five these virus concerns are starting to pick up. the nasdaq this morning indicated down about 65 and s&p down by about 20 points. looking at treasury department too. we did see some weakness after the fed came out and saw the 10-year move below 1.6%. >> it seems like the message was dovish after the fed meeting but

in a way they were almost resigned >> and that balance sheet will continue to expand >> yes, for april. beyond that, it seems like what is going on through the rest of the world will be hitting it >> right >> we have our squawk planner for you. forecasters in a major bank ranges busy day for earnings. all in the next two hours. amazon and visa set to report after the closing bell we have a lot of numbers hit after yesterday's closing bell

which we'll get to including tesla and elon musk. >> hang seng fell by 2.6%. the nikkei was down 1.7% the shanghai composite remains closed the number affected in china s hassen the death toll now rising to 170. this outbreak is expected to take a serious toll on china's economy. eunice yoon has more for us. >> reporter: it is a grim milestone. it is causing economists across the region to wonder whether they should rethink the economic

forecast for the year. beijing was expected to set the growth target for the year around 6% when lawmakers meet in march. there is a government think tank that said for the first quarter, they saw the economy slowing below 5% that triggered a lot of alarm bells for other economists. mizuho sees a drop from 5.9% to 5.6% fich expecting a slow down eiu saying lower by 1.5% there won't be as many people going out watching movies or going to restaurants because of the outbreak the size of the economy is much bigger research houses say exports won't be able to save the day.

there have been several provinces now that have announced more delays when companies will be able to to come back to work. most companies will be able to come back in a week or two the expectation is that the government will eventually want to ramp up more stimulus some are saying the economy could be aggressive infrastructu infrastructure spendsing >> those dates now, of february 9. i guess we watch what happens. you could continue to see those dates move back again. >> absolutely. in fact, i've spoken to many manufacturers, nobody really believes that that february 9

date is set. that is because there is still not a lot of faith that the outbreak will be contained by then there was an unusual decision by a beijing court that gets at the issue of transparency. that is the high court here in beijing had decided and ruled that medical workers that fraged the flu-like illness in a chat group and then improperly treated. that was seen as an alert to local authorities that maybe they should be more forth coming with information because in china, it is common for people to be punished or in some way called in for questioning if you write what is

supposedly a rumor on line it is not really a con deucive environment for sharing information. >> i heard a report about how china is treating this different from sars. a person came from germany to china and was found to be infected they shared that information quickly. that is different from the sars situation in 2000s what feels different i hear a lot of people saying we don't know what is happening and the government isn't telling us? >> that's right. during sars, the government was highly criticized because it was very slow to share information it seemed slow generally in reacting this time around, it might have been slow but then moved very aggressively and seems to be

making up for it in the way that authorities have been responding still because of the environment here and especially true under the current administration with president xi jinping, the fact that it is so sek retiff or so top down, it makes it difficult for lower levels to inform superiors what is going on it brings into question just how much they know >> thank you so much we'll talk about the impact on china's economy. and reportedly making dramatic claims about southwest airlines a report out will say more than 17 million passengers flew on southwest jets with unconfirmed maintenance records.

also saying both wing tips of a jet were smashed when a flight tried to land in gail force winds. calling their reporting lax. for a load of road warriors this is scarey. >> a southwest spokes women strongly disagrees it is a question that is an issue that will get more >> it tells you the oversight of general aviation is under more scrutiny >> exactly when we come back, we'll talk about the company -- is it the gift that keeps on giving? >> it gives and it takes >> tesla surging up 50% this month along.

we'll see what he thinks about this dig from elon musk. >> a lot of the retail investors have deeper insights than many of the big institutional invietors. how well does your financial advisor know you? if they saw you on the street would your advisor recognize you? at ameriprise, we see you as more than a client. that's why our advisors care about what's important to you. they offer personalized advice to help you prepare for what's expected and even what's not. giving you the freedom to live financially confident. because to us, you're more than just another face in the crowd. with the right financial advisor, life can be brilliant. ameriprise financial.

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♪ tesla delivering a record number of vehicles in the fourth quarter and expects to deliver a lot more sending the stock to new highs ahead of the open. extending the wild ride with a gain of more than 50% in just this month, alone. gains make it more likely that elon musk will unlock the first stage package and keeping market cap above $100 million watching elon do a bit of a jig at a presentation in shanghai a couple of weeks ago. going to phil lebeau in chicago

>> reducing shares after hours beat by a fairly handily margin. free cash flow of $910 million 2020 delivers up at least 39% because they are saying they are going to top 500,000 in vehicle delivers in 2020 the company delivered just over 360,000 vehicles last year most had them in the range of 465,000 to 475,000 in terms of how many they expected to deliver. tesla says it will deliver at least half million the big point they made on the conference call saying they are seeing extremely strong, early demand for the model y

>> we are not worried about demand we are worried about production. we want to make sure we get that production going on the model y. >> the tesla model y going on sale this year they will begin next year with production in china at the shanghai plant as you look out into the future. i know you'll be talking about analysts today, you've got berlin they expect that to be up and running by the end of 2021 you've got a company here expanding rapidly. elon musk made a point in the conference call to say repeatedly, that they can meet the demand for model y and model 3 as they ramp up production in china. >> thanks for sticking around.

senior research analyst with a sell rating and price target so four months ago, the stock was at 240 we are going to open today at 640. it seems we had a good quarter, and still say why are we trading lower than 640 >> what we have is fer vent enthusiasm and fear of missing out? >> we went into the break with this comment from elon musk who said the retail investor is smarter right now. >> right now, some of the large hedge funds are playing this as a momentum play. they are using the knowledge of

mechanics and ability to get a little edge there to trade for momentum to add to what phil said, one of the things that made the stock perform well after the market was the model y. last year, they started talking about summer time production january. we cranked our target and we cranked our estimates. >> can you speak to one thing. i don't know if you saw this a lot say, look, they put out this head line number where they are not really profitable. later on, they now self-funding. are they self-funding? that would mean you are profitable not just on an adjusted basis but a gap basis >> you could fund your own

growth >> there are three things going. headline numbers say we are profitable even though the gap numbers say they are not and then they say they are self-funding >> i think self-funding is probably a little bit of a stretch. there is probably the ability to issue debt you could see that easily reflected with a valuation half of where we are now. that is not necessarily what i think is driving the stock there was an analyst peppering musk about raising capital his logic was a little flawed. >> the analyst's logic was flawed, you think? >> yes to me, they seem to make sense >> why a 50% run is it shorts stepping out, a

look at what happened. how do you make sense of it? >> first off, china. last summer, upgraded the stock. last summer, down graded there is really bullish sentiment out there. people know the key european brands make all their money in china. the volume of luxury vehicles in china is fantastic there are more millionaires on a dollar basis in china than in the u.s. the market could end up being fantastic. the ev market in china is different than in the u.s. they are valid cars for that market but people are taking pieces and extrapolating to china. that was the first part of the big run. from there, there has been a lot of pile on they have the new roadster,

shanghai, the truck, the semi, model y. what am i missing? they have a tremendous portfolio. people are getting excited about multiple things to be running it up here. >> becky, to interject here. one reason i think the stock is moving higher. this fear of missing out if you believe we are at an inflection point in terms of electric vehicles taking off, who would you play right now spare me the talk about the competition is coming. it is not there. it is not there. it may be there at some point, tesla dominates this market. if you believe we are at an inflection point, you what nt to be in tesla. that's why so many people have moved into this stock. >> that's right, phil.

>> that's like discussing plant-based meat even though it is one company. >> you are right >> there are other ways to play the ev market. kree is the material supplier to everybody making silicon car bite moss fits allowing you to make a smaller battery tesla is the primary customer but everybody will be using those. using material from kree or a secondary competitor they are a perfectly valid way to play evs for a company executing pretty well at this point. >> maybe not as much as the fan appeal as tesla and elon musk. coming you, we'll show you

what some companies and ceos are saying about the coronavirus outbreak and looking at shares of facebook earnings out from dupont matching estimates on the bottom line and reporting lower than expected revenue that stock luke like it is down about 2% we'll be back after this what do advisors look for in an etf? don't just track an index, help me meet a client's need. is the fund built to sell or built to last? etfs are only part of a portfolio.

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we are now managing a very dynamic situation in china related to the coronavirus >> from our standpoint, we are taking precautions in our facilities in china to make sure that is well protected >> we've seen demand pull from coronavirus on things like cleaning materials and disinfek tants, nonwovens for masks and wipes. >> those were comments from ceos of starbucks, ame and dow ink. amazon says it is now restricting travel to china.

and goldman ceo also saying he is very concern. >> we have about 1,000 in the region we are very concerned about our people and their families. we have a lot of people working from home and we are restricting travel like many companies but we are watching very losely. we are concerned for our people and doing everything we can to help and protect >> among those watching these developments closely is the fed. fed chairman jay powell expressed concern. >> it is a very serious issue. there is likely to be disruption to china and likely globally based on travel restrictions and business closures already imposed. the situation is really in its early stages and it is very uncertain about how far it will spread and what the macroeconomic effects will be on

china. >> we'll have more of the impact of the coronavirus ahead and more for the earnings reportings coming in the next hour. we watch the equity futures. they are continuing to weaken. dow down 220 on concerns of the coronavirus and what it will mean for the globe economy s&p off by 28 and nasdaq off been 87. looking add yesterday's san s&p winners and losers ♪

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good morning take a look at u.s. we can yieqy futures. we would open down about 206 on the dow, nasdaq looking off by 86 points. >> eli lily beat estimates revenue well above what the street was expecting driven by newer drug offerings the company also giving guidance for the current fiscal year. we are only in the first quarter but they are saying they back their 2020 view of adjusted earnings street was in the middle at

$6.76. they still see their adjusted gross margin that stock up by about 1.30% tesla shares beating analyst estimates. elon dancing right there testing positive cash flow going forward. vehicle deliveries should receive 500,000 in 2020. it has a lot of people excited >> five years ago, the goal was 500,000 in 2018. they caught up >> we will be free cash flow positive and net income positive with some exceptions you are showing a little skepticism here. >> you can't get in the way of it the stock has more than doubled in four months somewhere in between, it seems

like realities this stock does best when they have clear momentum. dollar volume in tesla is sometimes double >> we are going to talk to a long-time performer. >> i have a feeling of how big and how fast will be get to the size of the market that you think tesla is marketing i think at this point you have to have pretty high expectations microsoft shares up higher driven by consumer products and cloud services microsoft azure business grew 62% on the quarter finance chief amy hood saying

the range was wider than usual because of uncertainty to the coronavirus outbreak which is a theme we are hearing a lot from other ceos just about everybody making a mention. >> for sure, another move from microsoft is impressive. shares of pay pal under pressure it took a tax hit of 19 cents per share. company's first quarter guidance was weaker looking to back off this morning shares of recent ipo align technology company's earnings and revenue beat expectations. they expect business to take a hit in the coronavirus with 20,000 to 25,000 fewer shipments

of invisiline. >> smiledirect is the competitor >> the difference is, invisilin you have to go to the dentist. >> a reminder that china is big in all of this >> right you've got wuhan shut down and saying they are not going back to work until february 9 we have seen wild moves in las vegas sands, macao are he have knew came in lower than a year ago and since the quarter ended. the coronavirus has slashed visitation rate more than 70%. stock back down. coming up, the latest of the

coronavirus. the spread and what it could mean of next steps on the china trade deal and later, earnings from coca-cola, verizon and more. you can watch and listen live. headed to work, open your cnbc app and you can watch it we'll be back in a moment. >> announcer: today's big number, $10.6 billion. that's how much market cap general electric gained yeerwistday th the stock posting its best day since october having your clubs lost or damaged by the airlines. sending your own clubs ahead with shipsticks.com makes it fast & easy to get to your golf destination. with just a few clicks or a phone call, we'll pick up and deliver your clubs on-time, guaranteed, for as low as $39.99.

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the number of confirmed cases of the wuhan virus rising overnight. now at 7,900 topping the number in the sars outbreak in 2003 the death toll rising to 170 for a look at how the virus is impacting future talks on phase two of the china drtrade deal, welcome to our guest we haven't talked about this trade deal in terms of the coronavirus impact take us through your thinking.

>> nobody wants to talk about it we spent so much time, blood and effort trying to come up with a deal we got it. now this new shock to the system which puts it all in doubt you won't find a businessman who thought they were going to be a winner from this deal comfortable that they could take it to the bank all bets are off for the moment. >> explain what you mean >> we look back to sars as the best comparison. they didn't call a quarantine or slow down people's movement until april. after the chinese new year, the congress in march. by the time they told people to stay in place, the big movements of folks were already over now we've got every migrant

worker being told to stay home or just staying home there is a lot more out of position right now nobody knows exactly how to move that into numbers. >> this is a different type of virus too. we are already seeing more people infected than in all of sars and that was over 18 months and it is happening quickly. but it seems like the death rate is lower too >> we have fewer people in china with the wuhan virus than people with the normal flu in the united states. 7,000 deaths in america from normal flu the question is not where is the impact right now but what are the projections. it is a new virus. it has a new protein sheet on the outside of it. it is hard to be confident to know how bad it will get

transmission, mortality, morbidity making people sick not quite as bad as sars but it is hard to say because we are at the early stage of this right now. >> not the main issue but it is going to make it harder for china to make good on commitments on commodities prices are one thing that are down >> absolutely. demand on the economy is really punched down service industries, movies, restaurants and consumer stuff factory economies, workers who are out of position and managers who can't get a flight back into china now. >> you can't call up xi and say, you guaranteed me these things on ag buys >> the good news is everyone has a pretty clear understanding of how much trouble the chinese economy is right now

any expectation of the first month outcome would be folks understand, it's unrealistic for folks to show up >> separate issue is phase two right now, the pause button has been pressed >> i'm skeptical about phase two. this is a really tough political stuff there is really no clear way for china to implement that this year anyway that was always going to be a five-year process. if we have good will and political trust between our president and china's president, there is a lot we can do but it is not going to show up in the 2020 numbers >> we are dr. scott gottlieb on with us yesterday or maybetwo days ago talking about how he thinks it is too late to stop an outbreak in china.

it is not too late to stop one here if it goes to other countries around the globe, then what? >> i think he's focusing on the right thing as is the world health organization. it is time to talk about basic single things to reduce transmission in china, it matters there is like 1.3 billion people who don't have it. we want to keep it that way. the rest of the world, it is important. i've got kids in public school in new york city they are talking about it in the classroom. the basic things to reduce the transmission rates for this thing. that's what we need to be doing right now. yes, there will be a nasty hit on macroactivity if we understand that, we can act less surprised think about what we can do to help in the face of this, we ought to be talking about reasonable steps to reduce transmission

european companies, gentlembeij done a good job working with organizations and cdc and companies to get information out there. they are not trying to cover this up now. >> okay, dan, thank you for being with us. >> my pleasure when we come back, facebook shares under serious pressure this morning down over 7% from a hold to buy from one firm after weaker than expected earnings not sure if it's the earnings than it was about concern of other metrics on this. we'll talk about that in a moment >> announcer: don't forget to subscribe to our podcast you'll get interviews, original content and behind the scenes access look for us on apple podcast or your favorite podcast app and subscribe today.

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costs are going up at facebook, lead b to new growth concerns. the cfo explained why on the conference call last night >> fok tors driving this deceleration, increasing impact from global privacy regulation and other ad-targeting head winds. while we have experienced some modest impact from these head winds to date the majority of the impact lies in front of us >> and that is pressuring the stock ahead of the open after hitting a 52-week high yesterday during the trading session joining us right now to talk more about facebook's earnings, managing director. >> thanks for having me. >> is the street overreacting to

higher expenses to come? >> the big issue coming out of earnings is not the desell happening in 4q i thought was surprising as we just heard, you know, the impact to revenue growth and advertising revenue growth to come due in part to three main things continued privacy regulations, some targeting changes and internal facebook settings when you put all that together, it creates some concern going forward, but frankly, when you take a step back and realize facebook has 8 million advertisers, multiple new products that are coming out from a montization perspective and newer businesses around payments, there's a lot of opportunity ahead. just for now, it's understandable why the stock is down just given those concerns however, taking a step back with those 2.3 billion users, there's a lot of good things going on at facebook, too. >> yeah. they released new metrics yesterday, gave the revenue per user lines not only for facebook, but whatsapp and

instagram, told you about those things i saw a lot of different takes on that. for facebook, the app is 8.52 per user that they've got and it's a little lower if you look at the entire family of apps, $7.38 per user. >> sure. >> that i saw people looking at that saying it's a one-trick pony i think of that differently. seems to me that facebook is hanging in there, the facebook app and getting strength from the other apps as well how do you read it >> it's face nating that the core facebook app is seeing pretty good growth but frankly, advertising let's think about it, advertising on instagram just started several years ago. stories, a brand new -- not brand new, three--year-old product in terms of monetization is just now getting to a level where you have scale in terms of 4 million users and whatsapp and messenger perspective, still very early days of monetization. you put all that together, the

core facebook app is doing well is fascinating going back to prior comments that opportunity with messenger, whatsapp, instagram. >> rob, we heard the cfo say a lot of the issues pressuring margins are not really through i thought that maybe perhaps wall street was thinking that they've taken a hit. been this managed ramp in expenses, profit margins last quarter went down to 42% from 46% the year earlier where do you think they settle out at >> yeah. look, i think the company has guided longer term to call mid 30% operating margins going forward. these numbers were better than what we expected we thought costs would be higher and the company in 3q came out and gave their guidance for full-year operating expense for 2020 i think it's a big possibility they'll be coming at the lower end of those expectations. from a revenue perspective,

numbers come down slightly, just given what we just talked about with becky from a profitability perspective, it seems as if it would be hard for facebook to spend at the high end of their overall guidance so i actually come out of the quarter feeling a lot better about overall profitability believe it or not. >> you already had an outperform on the stock and $250 price target it's a 12-month price target >> yes. >> is there anything you heard on the conference call or saw on this report that gives you pause or makes you reconsider any of that >> well, i think the new information around privacy regulations, you know, targeting potential targeting issues with browsers and mobile os and facebook products that could affect overall growth this year, that's one thing that will cause of debate going forward. what we have known about this company from the past several years is there's going to be some conservativism in commentary and frankly again with 8 million advertisers and the traffic and engagement we're

seeing and opportunities around payment and others, there's a long runway ahead in terms of what they can do i understand the pause and what the stock is doing this morning, we would look as an opportunity to be buying >> all right ron, when you look at facebook and its competitors, it's still got a huge amount of space between it and even the second most often used online digital advertising site when you look around at some of the other players, too, who do you think you would support and say this is going to be a very good second place runner >> that is a really good question we upgraded shares of snap back in mid december on that actual, you know, thought process. when we talk about advertising perspective on snap, snap is generating about 18, $19 per user at at least we think they will this coming year. facebook is 170 just in the u.s. alone. so, we think there's a lot of room to go if you're snapchat and most importantly engagement in snap is actually

accelerating so, when we think about a number two or at least those that should benefit from the continued shift from offline to online, continues to be very strong, snap is one of them, and we couldn't feel better about what they are doing over there and the turn around we're seeing in terms of engagement that's then attracting more advertis s advertisers. we're excited about everything going on from the shift from offline to online with an online advertising. facebook's clearly doing a good job, but we just talked about some of the concerns i think snap has turned themselves around quite a bit. we're pretty excited there. >> ron, thank you for your time. it's good to see you today. >> thank you. coca-cola just out with its earnings numbers just crossing the wires. adjusted quarterly profit of 44 cents a share right in line with what the street was expected revenue did come in above estimates and worldwide organic revenue up 7% compared to estimates of 4.8%. coke also says it had its

largest gain in global market shares measured by value in nearly a decade. lots of other numbers that people pay attention to. north america, the unit case volume was flat, but in the eastern, middle east and africa, europe, middle east and africa, it was up by 4%. continue to dig through some of these numbers see what the company had to say but right now, it looks like that stock is trading up just over 1%. >> big organic revenue growth number but just meeting the estimates i'm wondering if there's a foreign exchange effect the market definitely seems to be at the top. >> we'll talk more about it in just a moment. when we come back, much more on coca-cola's in earnings, but a very busy earnings week at verizon, we'll have you covered with all of it morgan stanley advises on all of last year's five biggest deals. what he sees playing out the next year and hints o whmay be

get taken over stay tuned you're watching "squawk" on cnbc two big hours straight ahead how well does your financial advisor know you?

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good morning welcome back to "squawk box" right here on cnbc i'm andrew ross sorkin along with becky quick and mike santoli in for joe kernen today is off. the "squawk" flu has made its way. >> davos flu. >> i'm still suffering from. meanwhile, u.s. equity futures at this hour look at what's happening here. red arrows before the market opens. we would open down 175 points on the dow, nasdaq 71 points down s&p 500 off by 24 points breaking just literally as we speak, the bank of england holding its key interest rate steady meanwhile, we have a number of earnings crossing including c a coca-co coca-cola. >> just coming out moments ago coke reported adjusted quarterly profit of 44 cents a share right in line with what the street was expecting. revenue did come in above estimates. that stock initially was up by

1.1% right now trading down by a penny. this is all very early with the premarket. sara eisen joins us with more details on the quarter good morning, sara. >> good morning, becky 7% organic revenue growth the highlight of this report there was one extra shipping day. perhaps that was a little bit exaggerated. the ceo of coca-cola characterized the quarter as good also this was their fourth quarter. he said we had a big year in terms of share grains, and we have the momentum for a pretty solid 2020 the company also providing that guidance for 2020, saying 5% organic revenue growth is where we want to be. and that is above where coke has been over the last, you know, five, ten years. it's marked a big improvement over the last year and is set to continue into 2020 i did ask quincy about the coronavirus, they have a big business in terms of consumers and also bottlers in china he said there are employees that are home, but it's too early to tell how big of an issue will

be they didn't put a number around how many plants were closed or anything like that he said the key is we are still continuing to run manufacturing operations in china despite the closures and the disruption. as far as what's working at coca-cola right now in driving this kind of growth, coke, brand coke, is actually having one of its best years and that's being driven by coke zero, double digit gains they continue to see for coke zero sugar quarter after quarter, that's the number one driver of brand coke the number two is coke coffee, entered a lot of markets and done very well for them. they're also excited about coke energy, which they're going to feature in the super bowl this weekend. overall, guys on the macro outlook, quincy said there's still a heightened degree of rumbling, brexit or trade tensions, but overall he feels that coke has proven over the last year it's in a good place to execute and continue what he called pretty boring results, which is maybe why the market is taking it up and down and sort of little change right now >> sara, thank you very much

we've got more earnings hitting as we're speaking. verizon just out with numbers as well looks like verizon is out with an adjusted number of $1.13 a share, a miss of consensus by 1 penny. looking at the revenue line, operating -- taking a look through some of the revenue lines on this, the chairman and ceo says the company delivered strong operational performance in the fourth quarter. he said it was highlighted by continued wireless customer growth in both its consumer business units if you look at those two, the consumer business group they added 1.2 million retail postpaid net additions including 969,000 smart phone additioning, net additions for the quarter were 790,000 marking the highest fourth quarter phone net additions in six years. >> low to single mid-digit percentage growth and consolidated revenue compared to

2019 adjusted non-gap planning between 2 and 4% and then talking about capital spending in the range between 17 and $18 billion including what they say is the expansion of 5g new and existing markets the diversify indication of 4g and continuation of the 5 or build out. finally talk about their 2020 adjusted effected income tax rate to be projected now in the range between 23 and 25% will get you some comps about what was expected by investors. >> all right we will see. stock kind of flattened out here after that report. let's get a check on how earnings season is fairing broadly and how markets are reacting dan suzuki richard bernstein advisers joins us on set dan, i guess set us up here. obviously we had a market that many people would have said had a pretty aggressive start to the year in terms of stretching to the upside, maybe needed a correction we have these fears of coronavirus coming at a time when baked into markets was an expectation of global cyclical

rebound in the economy where does that leave us with these new doubts >> yeah. i think in the near term it puts a little bit more uncertainty on the story. any time there's a big difference between when unexpected things happen early in the cycle versus late in the cycle. early, things are cheap and lot of good things happening to offset it. it can look through that later in a cycle when valuations are higher, it just tends to add a lot more uncertainty and volatility to the market that's something that people need to keep in mind you know, obviously it's going to knock the stuffing out of near-term growth particularly in china, but as you look through, i think the question is a year from now especially given probably the stimulus you'll have to offset it, are things going to be looking better or worse? probably you could argue -- make the argument that things are better a year from now with china and the stimulus going on there. but i think that -- when you look at the underlying fundamentals, though, i think it's safe to say, i always come on the show and joe gives me a hard time of being bearish.

>> i can do that if you want. >> the reason i sound bearish, we're looking at perception versus reality market is focus on perception which drives the near term and we're focussed on reality. when there's a disconnect, i try to point out where things are worse. there's this perception that things are amazing the last six months we can bring in steve and have this economic debate that things are showing a lot more signs of slowness and weakness, even still. and i think that right now we're just at this weak point where things could be turning around seeing more of those signals outside the u.s. and then you get hit to the biggest engine. >> 2% growth last summer when we were worried about a recession sounds pretty good with the stock market up 10% in the u.s., 2% is okay, maybe not necessarily so great however, you at your firm have been defensive with regard to u.s. shares but you have been betting on china adjusting from what you said, you're not changing that view that china actually looks like --

>> that's correct. a lot of people what they'll do is when something like this happens, they'll sell with the hope of getting in at the right moment i have yet to meet someone who does that timing around those trades consistently and outperform what we're doing is focussed on that longer-term story again, next couple quarters, look bad from a profit perspective. going to look bad from economic perspective but with the stimulus that they're going to have, as the infectious rate falls, as things get warmer, you know, hopefully things will actually look much better. so we're sticking to our china claw out we're looking all around the world. most of our moves recently have been to shift and move diversify indication regionally outside the u.s. where things are looking better and cheaper and getting paid more. >> dan, you don't have any concerns about the buy right now on china just not knowing what we don't know in terms of this? >> not knowing the price because the market has been closed. >> right and will continue to be

closed for a while. >> yeah. i think obviously there's a level of uncertainty when it comes to something like this no one knows i don't claim to be epidemiologist or immunologist which is why we're not trading on these things. >> not knowing what's going to happen with the infection at this point just looking at the massive lockdown of people, the massive shutdown of factories, of workplaces, of anything else that happens there, china is trying to do their best to contain this those containment measures are going to be very expensive in the short-term we have never seen a lockdown of human life onthis scale. >> yeah, absolutely. in the near term that's going to weigh on global -- on china and global gdp and weigh on trade and profit i think that will be a big negative. >> will you be a buyer the day it opens or wait and see >> listen, we're owning china through the -- a lot of our positions are through the etf. the etfs are trading here in the u.s. you have seen it show up in the etfs they have been down. and i think that that's a normal

reaction to be expected. but the question is when you get that leg down, is that -- should you buy or should you sell that dip? i think i tend to be more of a buyer given that everybody is focussed on this without knowing the outcome. a lot of that negativity is priced in. again, name a widespread virus everybody looks at the sars. look at all the historical examples when that hasn't been a buying opportunity for somewhat of the longer term horizon. >> sometimes after a pullback, but a little deeper one. we'll see how that goes. dan, thank you. >> thank you. the fed held rates steady when it met yesterday and signaled it will continue to do so for the time being, but it also said it is watching the coronavirus closely and potential impact on the economy. steve liesman is here with more on that front. steve? >> can i completely disrupt the plan and talk about the bank of england holding rates unchanged.

there was some bit in the market that perhaps it might cut today. the pound surging -- >> not surging. >> relatively speaking. >> on this news. two members did want to cut. they lowered their growth forecast for this year, next year and 2022. and they said the fallout from brexit, they talked about possible exports being severely hit and investment as well >> you think they didn't cut because they're saving their fire power >> it might be mark carney is leaving in march, so he might be leaving that job to the next person let me talk about the fed which kept its benchmark unchanged but fed chairman jay powell saw continued global uncertainty from oversea economies and mentioned a new possible risk we were just talking about the coronavirus. >> it's a very serious issue there's likely disruption in china and globally base on the spread of the virus to date and travel restrictions and business closures already been imposed. of course, the situation is

really in its early stages and it's very uncertain about how far it will spread and what the macro economic effects will be in china. >> on trade, powell noted improvements with the signing of trade deals but said the uncertainty is not going to disappear immediately. overall, the fed in a statement moderate economic growth, strong labor market and low inflation it did downgrade household spending growth from moderate to strong, we might see something in the q4 at 8:30 and saw continued weak business investment and exports powell did not directly respond to my question about the growth of the balance sheet is behind the recent stock rally and worried when they reduce those purchases it could prompt a selloff. quote, it's very hard to say what is affecting markets. >> what do you think, steve? >> i think i got a blowoff. >> what do you think the answer is >> i think there's a chart and the chart shows that when they started doing qe again the market took off. this is -- >> even though we're not

supposed suppos ed to call it qe. >> there's no e. >> let me say what's interesting about this -- >> ql. >> i read some commentary this is more psychological than anything else. an investor said to me, if i think other people are buying because they think it's qe, then i'm going to buy because they think it's qe and they're buying and i'm not going to buy if they think -- if they're going to stop buying. so it's a very weird thing powell was very clear. it's not our intention to do quantitative easing. as mike says, there is no e there, but the numbers are very large. >> it's liquidity. >> but it's liquidity that mostly doesn't leave the banking system mostly, not entirely, mostly. >> but it's the psychology of it all. >> by the way, steve, the inference to that, though, is real qe was mostly psychological or messaging as well. >> right that's why it seemed so similar. >> so i don't agree with that. i will debate it i think they were indeed buying on the long end and forcing

portfolio choices. >> but it was also by sue ka they wanted to let people know they were there to back stock. >> that's important, too >> more importantly we lost 40 bases points in the ten year from the 193. >> we'll continue all of this before we go want to take a quick check on the futures because we got red arrows across the board. we'll show you what's going on right now. the dow looking like it would open down 172 points this morning. s&p 500 off 23 points. the nasdaq off about 66 points. coming up when we return, boeing ceo dave calhoun sit down yesterday to discuss the 737 max situation. here is what he said to us about automation in the cockpit. >> it is sort of clear to me that more automation will be required as we move forward. to prevent situations like this that occurred. but i'm not completely sold on that there is a big school that believes more flying time, more experience is in the best interest of the flying public.

>> we'll bring you reaction to those comments and more from the allied pilots association right after the break. "squawk" returns with that important conversation in just a moment what do advisors look for in an etf? i tell clients, etfs can follow an index, but which ones target your goals? it's not about quantity. it's about quality. no trendy stuff. i want etfs backed by research. is it built for the long-term? my reputation depends on it. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully. apps except work.rywhere... why is that? is it because people love filling out forms? maybe they like checking with their supervisor to see how much vacation time they have.

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welcome back to "squawk. we have a news alert on southwest airlines "the wall street journal" reporting that the government -- that the government has a report now set to say that the company has failed to prioritize safety and the faa hasn't done enough about it journal reviewed the transportation department report which will soon be released. it says southwest pilots flew more than 17 million passengers on planes with unconfirmed maintenance records over a period of about two years. the report says southwest smashed both wing tips of a jet on a runway last year while repeated will trying to land in gale force winds, transportation department will call out the faa as part of all this, characterizing its oversight of southwest as lax and ineffective and inconsistent southwest spokesman says the company reviewed the draft of that report strongly disagrees with what she calls unsubstantiated rech ed referen safety culture we want to turn to a pilot, dennis taser here.

he has over 30 years of flight experience i want to talk to you about this, coronavirus and our conversation about boeing with the ceo, the new ceo of that company. but i want to start with southwest here you read this report and you think, what? >> well, we haven't read the report obviously we've covered some of the media covered it is very concerning, but what it focuses on is oversight and safety culture ironically that's what we're talking about with the boeing max situation. so, it's very concerning to us and we're always looking at that so we'll look at this report and gather the details and like all things, even when there is very dark news, as this may appear to be, we know we can learn from it. so that's where we're going to take this. >> do you feel the different airlines actually have genuinely different safety records or not safety records but safety cultures >> well, the airlines may have

different energy behind our safety culture safety culture is very dynamic it's fluid but as far as the professional pilots go, we have but one safety culture it's not measured in one airplane being safer than the other. it's either safe or it hadn't. that means flies or doesn't. so it's pretty bianary us. confirmed passing some of these safety programs, does that not concern you? and how couldthat happen because i would assume you tell me as a pilot, when you get on a plane, you go through a whole series of processes and check off a whole series of documents and sign them, no? >> that is correct and while that bite that you just repeated, there's so many details and questions we have behind that, so we're just going to wait until the report comes out and i'm certain we're going

to learn from that and find out what happened there. sure it's not our airline at american, but our ears are perked very high because systemic issues like that could occur at any irline. >> dennis, do you think we're entering a situation where you are going to see more regulatory oversight just given the problems with the 737 max and the criticism about the coziness between the faa and boeing prior to some of the things that they have been doing recently >> absolutely. that is the energy of the day and it should be the energy for us going forward the faa relationship at american that was challenged because it was too cozy and various staff were moved around as a result, so it's a constant -- it's not a battle it's actually a constant calling we have to ensure that it's the environment we have in the cockpit what we call each other out, we cross check each other. and friendships don't matter in that scenario.

the only friendship we have is to the safety margins. so, you know, coming into the cockpit you might learn how safety culture works because the consequences of not executing that properly are quite dire >> separate lirly, we spoke to e calhoun about the 737 max on the broadcast yesterday and i want to show you what he had to say about that plane's return to service. >> we believe this airplane is safer than the safest airplane flying today every next airplane has to be that way it has to be that way for boeing it has to be that way for our competitors. so, what we call it, trying to relabel it, trying to merchandise that, no this plane will recover with a flying public when airplane pilots step on it, fly it, like it and by the way based on all the test flights we have had to date, which are many, they do. so as all those pilots return, so will passengers.

>> what do you make of that? is this plane safer than any other plane that's in the sky? >> we don't make an incremental measure on whether an airplane is safer than another. no matter the manufacturer of the aircraft or model, it's safe or it isn't. that means the airplane is either going to go or it isn't so, i do understand and appreciate the comments of mr. calhoun about the dependency on pilots we're the last line of defense for our passengers we take that seriously so, we're going to go from there. i do want to mention, he had said that the pilots have experienced this aircraft and do they like it, yeah, they do. well, we're going to reserve that comment we like what we're seeing so far, but i think his exuberance over that is a little premature. when we get all the information, the tab information, the 1302, the joab which is happening as we speak going forward, then we'll render our decision. that's how we operate in the cockpit. >> dennis, when do you think you'll be able to come on our air and give us a real

assessment of this plane and how your pilots are feeling about it >> when we see it. we have seen the training modules for the simulator, the initial areas that boeing wants to cover and we appreciate them coming in quick, but we have a lot of questions about that as well i want to make sure that it's just not a drive-by simulator session, it's full and robust. >> we have to run, but becky did push dave calhoun very well yesterday on that situation of automation you just mentioned it. you know, 20 years from now, do you think there will be pilots in the plane, two, three just one what do you think really happens? >> well, the talk about automation, becky was right. there wasn't a whole lot of clarity on that. but the bottom line is automation san additive to the safety margin, is not a replacement for pilot experience and training it was very concerned when mr. calhoun brought up inexperienced pilots when talking about the m cass system. >> me, too

>> that is not something that we're going to accept. that m cass was poorly designed. and it was the automation system that contributed to these crashes. that's the end of that. >> it was the pilot's not turning off the automation that was the problem but it was the automation that began the problem. >> yes ma'am. >> dennis, thank you for being with us this morning always good to see you and hope to see you again very soon. >> thank you let's take a look at shares of verizon, that company missing estimates by a penny talk about the numbers and the streaming wars with analyst craig mof fit. stock down by 43 cents we're watching shares of tobacco producer altria. one of the more notable items is a $4.1 billion impairment charge for its investment in e-cigarettes maker juul. and sees the number of legal cases involving juul increasing. >> announcer: time now for today's aflac trivia question. in what year did mcdonald's open its first location in the soviet

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>> announcer: now the answer to today's aflac trivia question. in what year did mcdonald's open its first location in the soviet union? the answer, 1990 the first location opened in moscow >> welcome back. let's run you through some names that reported earnings this morning and after the bell eli lily reported $1.73 per share. that beats 1.52. revenue beat expectations. that stock up 7.5% coca-cola, $1.44 a share matching wall street forecast. revenue did come in above estimates. that stock also up above 1. 3% in the early going facebook shares are plunging earning and revenue beat estimates. rise in expenses in 2019 versus 27% rise in revenue.

and you see facebook set to open down more than 7%. microsoft, however, beat expectations company reported adjusted $1.51 a share. revenues beat expectations quite a bit, coming in at $36.9 billion. shares up 63% over the past year and they will add to that it looks like right now indicated up more than 3%. tesla also beating expectation shares rising on that news earnings came in at $2.14 a share revenue of $7.4 billion. the company has no plans to raise capital though skies are rising much more on the earnings front including results from verizon and ups. "squawk box" will be right back. superior long-term results? it begins with a distinctive approach to managing money. that for over 85 years has focused on keeping confidence up when markets are down.

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♪ welcome back to "squawk. this morning's market sky tied to wuhan coronavirus

170 people killed and number of infected jumping to 7,900. the outbreak is larger than the sars outbreak. want to get to eunice yung in beijing on the ground with more on where things stand. eunice >> thanks so much, andrew. well, the death rate is not as high as with sars, but the unfortunate milestone has still prompted many economists in the region to consider a lowering their forecasts for the year the expectation has been that beijing is going to announce an annual growth target of around 6% when leaders come to meet in march at a big political gathering, but government think tank flagged that first quarter gdp could drop below 5%. so, now research houses like mizuho they see 5.6% for the year as a possibility. fich sees a low of 5.6%.

the eiu predicts slow down as low as 4.4%. much had sited the fact that china is much more dependent on consumption and services than ever before and exports might not be able to save the day. there are many cities and provinces that are very important to the global supply chain that have now announced delays for companies to resume work by at least one to two weeks. the memory of sars, of course, is very vivid in the minds of people out here, including in hong kong, where there were long lines today where people were waiting for hours to get their hands on a box of masks. so people -- some of the retailers, which were able to bring these masks in, created a rationing system looks as though from the reporting that some of these retailers were selling the masks for $7 a box, which is really quite good, guys, considering

that here in china, there's also a mask shortage and today i went out shopping to try to find some more masks and was able to find some but bought three, three masks for $30. and there were a lot of people who were also buying up those masks when they came out >> gouging >> that's -- it's higher than maybe the normal price, but actually there was another beijing store that really got hit with a major fine because they were charging over $100 for a box. >> oh my gosh. >> and so the authorities here clamped down and slapped them with a fine of 430,000 u.s. dollars. >> how many are in a box. >> authorities want to make sure there's no price -- >> $100 for a box, more than $30 a mask. >> yeah, it wasn't clear the box i got was three in one

box and, yeah, that was 30 bucks. >> okay. eunice, thank you. it's great to see you. and we will check in again soon. last night the white house announced that it is forming the president's coronavirus task force. members of that group have been meeting daily since earlier this month. joining us right now is dr. zeke emmanu emmanuel, the university of pennsylvania vice probust for global initiatives zeke, it's great to see you today. >> nice to be here. >> thankful to have you to sort through what's happening when you see the white house officially coming up with a task force on this, what does that tell you >> they're a little behind the eight ball in may, 2018, the now famous john bolton fired tim zemer who had been placed in as the head of bio defense for the national security council he's actually a person i recommended to president trump i thought he did a great job heading the president's malaria initiative and really understands the issue, they got rid of the preparedness.

i recommended because we were the midst of an ebola crisis we're reminded every year or every other year we have some major health outbreak given the interconnectedness of the world, we need the white house to be on top of it. and we need the white house to coordinate all the agencies that have to respond. thankfully the united states has the finest people at the cdc, at the nih under the leadership of tony fauch to respond to these things we're already advanced in making a vaccine, although that will be a year before it could possibly be fully tested and released but we're responding quickly on the other hand, there's nothing, no substitute for white house coordination and the fact that they're distracted by impeachment and all the other things and this is a major issue in the world, as you mentioned, preoccupying the world and maybe having a big hit on the world economy, it's a little slow. and had we had better leadership in the white house, probably

would have been much faster and much better coordinated. >> let's try to just look at it from the standpoint of where we are right now versus maybe we keep comparing china's response now to what they did back in 2003 with sars where are we in terms of maybe where we were versus ebola or where we were with sars -- >> well, by the we, if we mean the united states. >> yes. >> everyone in america should take a very big breath, slow down and stop panicking and being hysterical we are having a little too much histrionics about this let's remember we have fewer than ten cases in the united states they're concentrated in four states, california, washington state, arizona and illinois. that's it. most importantly, there are people coming in from china. there's been no person to person transmission it's not everyone from china.

>> no person, there has been person to person transmission in other countries because there's people who never travelled to china who have come down with it. >> that is true. but even the maximum country is thailand with 14 cases so, we need to be a little sober about it even in china, remember, china is a country of 1.4 billion people there have been, you know a few -- 7,800 cases that's one case for roughly, you know, 175,000 people, even if that's a gross underestimate by say 50 fold, that's one case for every 4,000 people and very low death rate compared to sars. so i think we need to put it into context. >> that's a very good point. if you look at just -- >> the death rate is much lower than for sars. >> maybe 3% at this point. i guess there's still a lot we don't know it's still early days. it's much more viral it's got as many cases as we saw in sars over 18 months it's spread more rapidly but much lower mortality rate. >> i think you've put it really

well it spreads -- it seems to spread more easily. but it's not as veer lent or deadly as sars that's a very good thing i do think we learned something about isolating people they need to be isolated for two weeks. it's not a pro-longed period of time and i think that's really important. >> is that a problem that we're bringing people back we brought 230 americans back on a plane yesterday. and they're going to be isolated for three days just outside los angeles before they're released is that an appropriate amount of time >> yeah, but let's be quite clear, they're all being tested for the virus. >> not all of them if they choose to be tested for the virus if they have suspicions it's up to those people to determine whether they want to be tested. >> correct but i think they will be tested for the virus. it's very hard to see how someone is going to say no >> right. >> and i think the other factor, you know, there are some defined

sympto symptoms it is true, people have been identified to transmit it without defined systems. it is a two-week incubation period totally so, i'm actually pretty confident that we're going to restrict the spread in the united states. people should remember not to panic. if people from china had been here for two weeks, they're not going to be spreading it >> right. >> and the best thing we have is the seasonality. it's going to go down as spring comes up >> right dr. emmanuel, thank you for that perspective and really giving people something to think about. it's great to see you. >> great take care. >> you, too. coming up, we talk streaming wars and verizon results first take a look at shares of blackstone, the private equity firm reported distributable earnings of 72 cents a share, 5 cents above estimates. blackstone saw estimates jump 21% to a record high stock is up 1% aer aft great year last year "squawk box" will be right back.

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welcome back to "squawk box. this morning, verizon missing estimates by a penny calm cast, parent of this network says they expect more

customers to cut the cord this year joining us to talk about all of it is the senior analyst and founder of moffit. good morning to you. >> good morning. >> what's happening here it feels like there's a step change happening, at least in the way the market is perceiving some of these issues. >> look, i think there's a couple of things going on. first, i think it's fair to say that the companies that have diversified are not doing as well so, comcast and at&t, which both of whom have diversified pretty dramatically -- >> into things like nbc universal and content? >> all that stuff. everything other than the core business is doing a lot worse than the core business both at comcast and at at&t. and verizon, by the way, the wire line results today are off, the wire line results were god awful. and so everybody's -- the diversify indication strategies are not working. that's number one. >> you think investors are

saying give me a clean story >> not just because the story is cleaner, not as good as diversifying away from. >> it's clearly secular. look at at&t's portfolio we saw yesterday. directv, terrible acquisition. wheels are falling off warner media, already starting to look like there's some really problematic parts of that business comcast, sky looks like now at least troublesome acquisition with no growth and obvious secular head winds and nbc facing the same kind of secular challenges as warner media so, investors have said, look, over the last year, look at how well charter has done relative to comcast the cable business is doing really well and charter has been a monster, but comcast is getting dragged down by the acquisitions. >> is this a story line that switches from time to time as investors come in and out of

favor with it? >> well, possibly. but i think these are long-term secular stories. right? now, you could argue that cable right now is secularly ascending and that sometimes changes people are concerned about the traditional media been are not flavor of the month reasons. these are secular challenges. >> let's break this down first you were talking about at&t, time warner, what do you think happens in that instance >> so, let me be provocative for a second >> you're not already? >> crystal ball and look out a little bit, it's hard to see that portfolio staying together for forever. somebody is going to come in to at&t eventually and whether it's in three years, five years, whatever, they have to break that company up. and you could imagine a scenario where some day the pieces of what are now -- if you assume that that looks like whether it's a ge or something and you refocus on a core business that

they refocus on core telecom, you spin off those assets that have been acquired and probably at huge losses and who is the natural acquirer of warner media, comcast you can see comcast breaking up into two pieces and letting nbc u say that makes sense with time warner media assets. >> you think regulators would allow for those types of combinations you just talked about? >> well, it depends. if you -- depends where that business is in the cycle there was a time when directv and dish, for example, regulatorily could never be imagined to be together. now they may come together to save -- >> could you ever believe that these things should be put together >> no, never made any sense. >> but the market has richly rewarded the combination, if you look at calm cast overtime that's our parent company. >> nbc was a very good acquisition as a diversify indication acquisition they bought at a good price. they ran it well

and they bought it in 2009 and pretty much anything you bought in 2009 -- >> look at the stock for the last ten years, though >> acquisition of nbc has worked out really well, but not because strategically it was a great acquisition because financially it was a great acquisition if you bought nbc stock as a stand alone thing, it would have done well. >> i always thought it was robbery when we were able to buy at the price we were and then able to pick off the rest of -- >> it was also operations that comcast put through. >> steve did a great job here. >> but less about the synergy between the actual cable assets themselves. >> they were sitting here they would argue with you about that. >> i'm not sure about that >> i'm not sure about that either >> the core broadband business, the chart might look like charter. >> if you put charter against that, charter has done a lot better than that because the cable business has done a lot better than nbc and the acquisition of sky has been a clear drag. >> look at all these

permutations you're talking about, you said three years, five years out you don't think this is something that elliott management, for example, in the case of at&t is going to force this issue in a more immediate -- >> it's possible but look, my guess is that nothing really dramatic at at&t is going to happen until the dividend has to be cut and to be really clear, they're not in any danger of the dividend being cut right now and so, but if the reason the stock is selling off is not because -- and the dividend yield is there for rising is not because the market is saying, oh my god, the dividend is unsustainable. the market is instead saying, okay, i like that dividend >> at&t is trading at a premium to verizon recently. it has seen advance in the stock. >> it's done better than verizon over the last year verizon outperformed by at&t by 30 some odd points in '18. reversed in '19. >> there's a premium recently in the stock.

>> yes at&t -- and it's interesting because the irony is verizon pursued exactly the right strategy by sticking to its knitting in wireless but didn't do a great job at it because they left themselves exposed by overplaying their hand on millimeter wave spectrum and now they're in a tough spot. >> always good to see you, craig. you're always provocative and we appreciate that. >> good to see you all. when we return a lot more on "squawk. the bull and br seeaca for tesla after the break right here on "squawk.

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were off the lowest sessions of day. down more than 220 points. but right now the dow futures are indicated to open down 190 points s&p down by 25 the nasdaq off by 68 "squawk box" will be right back. we'll have a bull/bear debate on ghiteain lt s rngsas nit. sometimes, the pressures of today's world can make it tough to take care of yourself. but nature's bounty has innovative ways to help you maintain balance

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♪ global health fears sapping the stock rally. futures in the red as earnings roll in. >> tesla takes a swipe at the analyst community. >> i love that retail investors actually have a deeper and more accurate insights than -- >> positivity electric quarter. what's the deal with 2020 lack of deals. we'll ask morgan stanley when deal making could pick up and talk about the ipo pipeline. also the next batch of unicorns the final hour of "squawk box" begins right now

♪ good morning, everybody. welcome to "squawk box" here on cnbc, live from the nasdaq market site in times square. i'm becky quick along with mike santoli and andrew ross sorkin joe is off today because he's sick let's look where the markets stand right now. the dow futures indicated down 200 points we have down well over 200 points this morning as well. down 222 at one point. that's probably the lowest levels i had seen. >> and the s&p down pret tir close to monday's low. so we had that nice rally on tuesday. looks like we'll back out of that. >> give back all those gains there for the month of january as well and for the new year nasdaq indicated down by about 71 points this morning and a lot of this is because of fears related to the coronavirus not being able to get a handle on what that's going to mean economically or where it might spread or how. treasury yields this morning are

well below 1.6%. this happened yesterday after the federal reserve signaled they're going to continue to buy and expand the balance sheet for the next couple months you'll see the ten-year at 1.556% also, tesla shares are charged up after reporting fourth quarter results elon musk taking another dig at analysts >> i do think i love the retail investors actually have deeper and more accurate insights than many of the big constitutional investors andcertainly better insights than many of the analysts >> joining us right now for reaction to that comment and tesla's results is garrett nelson, senior analyst at cfra, also colin rush, who is senior research analyst at oppenheimer just raised his price target outperform rating. garrett just raised his price target as well to $440 from 400 but he has an active sell on that stock so this is a true bear/bull

debate let's talk about where we come down on that and, garrett, i'll start with you, because i think elon musks comments were probably more targeted at you because you have a sell rating on the stock what do you think about what he said what do you think about the company's performance? why are you still rating this as sell >> sure. well, thanks for having me so we just moved to sell a few weeks ago because we thought at this point given this massive run-up which really started last june, the stock has really fundamentally overvalued at this point. i think you have to consider that the market cap now exceeds volkswagon, second largest auto maker in the world by market cap just behind toyota but, their sales last year were -- volkswagen sales were 30 times what tesla sold. people can say, well, you know, tesla's growth is going to be so much higher. if you look at volkswagon electric vehicle sales they grew by 80% last year tesla's vehicle sales only increased by 50%

so, i think when you look at it that way and you look at the multiples which the stock is trading, it's discounting a lot of future growth, which hasn't happened yet and there's also a lot of near-term earnings risk, we think. you know, on the call last night, they said they're factoring in china, which just started up, going to be closed next week to week and a half due to the coronavirus, and that could certainly stretch a lot longer than that so, we think there's some risk here in this stock >> colin, that's not an irrational argument. >> it's grasping at straws, in my view. >> why >> what we're looking at from a technology perspective, bit's nt comparable vw is having trouble with the id3 platform those products are late. look at what's going on with the id4 platform, they're actually at least two if not three, four years behind where tesla is at from a powertrain design as we go into the second quarter

when we get this analyst and battery technology, i think what's going to come to light is the tesla's expertise around material science in terms of bringing technology into the commercial realm that really functions through the power train effectively will become a lot clearer and that lead will be a lot better understood by investors across the board. >> having said that, the enthusiasm is well past your price target as well you have a price target of $612, stock is $636. >> we raised it last night. >> to 684. >> based on what you heard on the call last night? >> yeah. there's two elements that are going on here for us the lease accounting they're giving better lease rates than we expected and better margins on that profile. we were asking about the pricing power on the call last night they didn't give us a real clear answer what we're seeing in the market is there's no real competitive products their ability to move units at high prices is still pretty compelling and doesn't seem like it will

have any real barriers over the next few years. >> do you get nervous about the fact that the stock is up 50% on the month? >> of course you know, when you see a market like this where you have a lot of chasing, you always get concerned about what's going on with stocks. so i think what we're trying to be careful with is really looking at cash flow number. that's something we talked about on the show before they put up a billion dollars of free cash flow last night and continuing to move forward with a focus on operating leverage. >> people think this is a self leveraging company >> potentially yeah. >> potentially he said it's self funding now. >> for us in our model, absolutely if they're generating a billion to a billion and a half at free cash flow, they'll continue to generate increasingly larger volumes of cash and don't have a good place to spend it right now. from an operating perspective and acquisition perspective, they don't have good areas to get a positive return on capital. >> gap basis the company is losing a billion dollars. >> but on a cash basis is what really matters for investors, they're generating an awful lot of cash right now. >> garrett, obviously very

entrenched short community that has been targeting tesla for a while, they have gone through various arguments which is they were going to run short of cash and actually have to continue to raise capital over time. that sort of has passed at this point. also, they met these volume numbers now being able to raise guidance past half a million units this year. what do you think is the key skeptical argument right now, strictically about what's embedded in the valuation in terms of how fast they can get to even higher volumes or something else >> sure. well, to address the free cash flow argument, one thing tesla did not provide yesterday was cap x guidance for 2020. and when they start building that new factory in germany, we think that will cost upwards of 4 to $5 billion. that will be a major drag on their free cash flow over the next few quarters. and, you know, we viewed the recent movement in the stock as just one huge short squeeze. if you look back, six or seven months ago, short interest was about 25% in the stock

that has since come down to about 14%. so, a lot of the move has been due to short covering in our view and fundamentally, the stock's valuation just doesn't make sense to us at these levels. so we reiterate our sell rating. >> you know, it's interesting to point out that a price target of $440 would have been a bull case scenario for the stock not very long ago, garrett. >> that's right. they also dismissed possible capital raise on the call last night. but if you look back to last may, they issued stock at $243 a share. now with the shares poised to open about $600, why would you not issue equity at these levels just doesn't make sense to us with the amount of debt they have on the balance sheet and with the capital requirements they're going to have in the coming quarters and in the coming years this german factory will be very expensive. and so we think a sell is the

proper recommendation at this point. >> garrett, colin, want to thank you both for being here today. we appreciate it and obviously we'll have you back to talk about this. and see which one of these views plays out. also, folks, next week, don't miss long-term tesla investor ron barren will join us live tuesday at 7:00 a.m. eastern time to talk about tesla and where he sees the markets at this levels. we have a lot to discuss with him but he has been a long-term supporter of tesla shares. meanwhile, i want to talk facebook for a little bit here facebook shares are deep in the red and premarket trading despite reporting top and bottom line results ahead of analyst estimates for the latest quarter. some of the culprit, sharp rise in expenses and profit margins julia has more in terms of the details. julia? >> good morning to you, andrew you see facebook shares are down 7.6% facebook under pressure due to its decelerating growth and higher costs weighing on facebook's op right margins. those margins were 42% in the

quarter down from 46% a year ago and down from 57% two years ago. and cfo david warned revenue growth will continue to decelerate in the first quarter. >> factors driving this deceleration include the maturity of our business as well as the increasing impact from global privacy regulation and other ad-targeting head winds. while we have experienced some modest impact from these head winds to date the majority of the impact lies in front of us >> mark zuckerberg and sheryl sandberg focussing their comments on the growth potential that lies in commerce and payments across various facebook's various apps. >> our goal here is to make sure that every individual small business entrepreneur out there has the same opportunity and access to the same type of sophisticated tools that historically only the big companies have had access to so that's what we stand for, putting power in individual's hands. one example that we have been

working on is whatsapp payments. you'll be able to send money as quickly and easily as sending a photo. >> analysts are starting to weigh in deutsche bank saying it continues to view facebook's position to pursue ecommerce as the key to the long-term bull case meanwhile, pivotal downgrading facebook this morning to hold, siting weaker than expected u.s. advertising. becky, back over to you. >> julia, one quick question as we have a big m&a expert. you know i love deals. there's a big question obviously about anti-trust around facebook also whether the company could ever get broken up and effectively how connected all these businesses are did they talk about that at all on the call? >> well, of course, there is this on going anti-trust scrutiny of facebook they did not address the sort of regulatory piece of that but mark zuckerberg made the point yesterday that the back end of their apps is already very much integrated and explaining that from sort of engineering perspective, they

have woven these different apps together and they just want to make it more obvious to consumers. so the message i got from that comment is that it would be very hard to break them up even now it's not like they still have a lot of work to do to weave their products together. it's already happened. and so, breaking them up would be very hard, if not impossible. >> have regulators ever cared about things being difficult, microsoft and trails they went through that. >> becky, you make a very good point. i think the question is this a company that's already functioning as a single company or really separate companies, you know, they did acquire whatsapp, instagram they acquired in its very early days. and what facebook is saying is that these are companies already integrated, already woven together the advertising piece already works together it's already possible to sort of have something like messenger and facebook be part of one in the same thing i think the question is for consumers as they try to make it easier to send money, say, or

make purchases across these platforms, zuckerberg sending the message these -- we have been functioning as one company for a while now. so it's not going to necessarily dissuade regulators, but he did make it pretty clear that they're one entity, not a bunch of companies under one umbrella. >> julia, thank you very much. great to see you for more on this week's big tech earnings we're joined by brent phil senior analyst for technology at jeffries here to talk about facebook and actually he's here to talk about microsoft. on facebook is mark mahaney lead analyst. mark, let's start with you since we just had this conversation about facebook what did you think of the numbers yesterday? are you actually concerned about the increasing expenses or were things better than you thought >> let's see, i thought at the margin things were a little disappointing. we were expecting deceleration we got slightly deceleration than expected. the expense items were largely in line.

there was a one-time legal expense that negatively surprised people, but other than that, we had -- we did bring down numbers a little bit, near-term little less constructive i still like facebook as a play as we go through 2020. they should be a major derivative off of the surge, the increased acceleration we'll see in global advertising because of the u.s. elections, because of the olympics we still think they have these very large growth catalysts out there in terms of whatsapp monetization and commerce activity on instagram. we like the asset. yeah, near-term we were disappoint and brought numbers down, still shows material upside so we'll stick with the stock. >> sticking with $270 price target >> no, no. we took our price target down to 255 from 270 just on valuation, we got an asset now that's trading around 18 times next year's earnings 16 times if you adjust for cash for an asset like this with 40% margins and 20, 25% revenue growth, i think that's highly

attractive >> brent, you would have seemed that the bar was pretty high for microsoft given how the stock has performed and kind of the love it's been getting from the analyst community and yet the results seem like it's encouraged further by. we'll stretch to new highs at the open here. what are you seeing right now in terms of the business and then the valuation perhaps getting stretched to the upside? >> business is doing phenomenal. the old business, the perpetual on premise business is cycling at the same speed as the cloud business and so what you have are two incredible assets in companies the unique value proposition that microsoft is bringing which is hybrid, both google and amazon can't offer that. they're seeing really great strength they're seeing move to premium workloads which are higher asp products and that's driving in their largest business intelligent cloud. 27% growth rate. this company is on 140 billion run rate growing double digits. it's incredible the numbers. i have covered the company for

close to two decades i don't think we have seen numbers like this. there's a massive acceleration across many of their businesses, even at the run rate they're at, which suggests they're taking market share from oracle, ibm. everyone else in the industry. so i think everyone keeps checking the numbers to see if they're right. and the momentum is there and that goes against the hybrid value prop that they're bringing yes, the stock is stretched. it's had a huge move but again, when you look at the fundamentals that they're delivering, again, their largest business growing 27% is absolutely staggering. >> you mentioned taking market share from the likes of oracle and ibm. in terms of cloud business, is there a re-throw on amazon >> i think it's a two-horse race at the high end. it's really both those companies. if you add google and microsoft combined and just infrastructure, amazon is about $15 billion ahead. so, we're not worried for amazon

everywhere we turn everyone is committing to aws. a lot of the large companies are committing to amazon and microsoft. is it dual cloud provider. and so, there's a seat at the table for both right now the question is can google get in right now again, the market is so big, those three vendors can thrive the others are all losing. >> microsoft has been incredible with the numbers they put out quarter after quarter. mark, let's go back to facebook very quickly julia brought up this point that zuckerberg kind of seemed to indicate last night that this was one company, it's completely intertwined. the back operations are together of all these different apps. it's been difficult to split up. a, do you think that would dissuade regulators and, b, how serious of a threat is there for regulators to break up facebook? i was a little surprised to hear him actually address it last night. >> yeah. i've been saying for a while i think we're at peek rate i don't think facebook will get broken up. that's a very hard pitch to make

those assets, especially instagram has been part of the business for a good solid seven years. i think that would be unprecedented to break that up so i think that's highly unlikely you'll have more regulation, but put it in context. you had material regulation introduced against facebook and google that was gdpr last year, year and a half ago in europe and california consumer protection act has gone into effect this year that's dimming the ad-targeting capabilities for facebook. but by the way, will for every internet platform the advantage at the end of the day and why the roi to advertisers will be in tact for facebook is the scale the reach and the frequency that they offer is only two platforms that offer at that kind of scale, reach and frequency, google and facebook so i think ad dollars will continue to go to those two platforms. i think -- i don't think we're going to see greater regulatory risk than we already see. >> you liked what you saw with microsoft. you were thinking that maybe that stock gets to $175. and sure enough, it's almost there this morning in the trade. you think that could technically

push it higher do you think you have conviction with where it stands right now >> we raised our price target to 195. stock is going higher. >> great thanks to both of you for joining us when we come back -- >> thank you. >> -- what's going on with the lack of deals in 2020? that's a real question just ahead a special interview with morgan stanley's m&a chief fund where things could pick up, what's happening behind the scenes, ipos and next unicorns take a look at shares of coca-cola popping after company beat on the top line for the latest uarter. u'ay tuned yore watching "squawk box" right here on cnbc ♪ key. along with support, chantix is proven to help you quit. with chantix you can keep smoking at first and ease into quitting. chantix reduces the urge so when the day arrives, you'll be more ready to kiss cigarettes goodbye.

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♪ welcome back to "squawk box. the futures right now are under pressure the dow is set to open down about 176 points that's even with the strong showing pre-market by microsoft. the s&p down more than two thirds of 1% right now. >> so, deal making worldwide hit nearly $4 trillion in 2019 that's the good news according to refintive but so far this year it has been

crickets, like nothing out there. being very quiet we have yet to hear about any real major deals that have driven this excitement on wall street joining us right now to talk about what is actually happening here and whether it will pick up, what's going on behind the scenes is the one and only vice chairman, global head of m&a at morgan stanley he was the lead adviser on several of last year's biggest acquisitions so what gives? >> well, it's good to be here. >> good to see you >> yeah. 2019 was a very good year. by historical standards absolutely you also have to remember that when we were sitting here last year, we were the middle of a government shutdown. we had just come off of december, which is a big market break and there was a lot of volatility >> yeah. >> so actually pretty much of a miracle that it ended up being as good as it was just given all

the volatility and uncertainty i actually think this year we're not going to see a lot of large deals. i think there will be plenty of activity because m&a, you really need to do m&a i'm sure you all saw in the conference in davos that ceo confidence is high and all that. >> that's when people usually do deals. usually the worst time usually overconfident, right >> well, certainly the case that there are times when deals are done for the wrong reasons and overconfidence no question about it but if you're a ceo right now and you're looking at what your trajectory is, a lot of things you have been doing the last couple years like increasing margins by cost cutting, that's played out and even stock repurchases, investors really would rather you be investing for growth rather than just returning money. so, i think it's an important tool so why do i think there will be fewer deals. i think a lot is regulatory. i think the scrutiny that large

deals get is just something that ceos, i'm talking about 20 billion dollar plus deals, in fact, for the large tech companies, they're probably shut out of doing anything. >> even small deals. i used to think they struggle to do small deals then you saw facebook, for example, bought a company called control labs i don't know if you know that. half a billion, billion dollar transaction. one of these things that go on your wrists that it's going to be control your mind it was -- a shocking technology. >> wow >> and closed, you know, almost like within a couple weeks nobody said peep. >> that's the thing. it's small deals you look at tlarj companies -- >> i would have thought a big company going after a small company with a unique technology people would say, i don't know do we want that to happen or not? >> it's an issue companies like microsoft, who s obviously doing just fine. they have done large acquisitions like linkedin

it's going to be harder i think for those kind of companies to do deals now, obviously apple hasn't done many deals amazon hasn't done many deals. but facebook and microsoft have. >> so you don't think there's a dynamic where it says, look, we at least know what the regulatory terrain is right now, what the political backdrop is let's try to get something in before the election. maybe there's something new coming >> i actually would have thought that but we ended upwith a very populist administration now. and it's also very unpredictable now. >> yeah. >> so deals are being blocked under sifious. i don't care that you're a donut company. you have a warehouse within a mile of military instillation. we're going to look at that. that makes chinese deals very hard to do >> is it security concerns that rise more large? or is it -- i don't know, the whim of whatever regulator or administrator is there is it populism which of these things?

>> it's all of those things but i think it's populism and it's very unpredictable you end up having the administration challenge the time warner/at&t deal vertical merger and not challenge disney/fox which is horizontal and just came out with vertical merger guide lines i actually think that while i would have predicted that. in fact, people don't think it matters who gets elected because think think this president is unpredictable in certain ways but very populist. >> we just had craig moffett on the program in the last half hour he said, look, at&t over the next his time period was three to five years, i don't know if it comes sooner or not ultimately decide that the time warner transaction was not the right decision and would die vest and mademore provocative idea maybe they try to merge with nbc universal owned by

comcast and comcast would spin this off what do you think is going on with media >> the media -- >> that's where you started your career. >> yeah. it's interesting we go through these waves right? >> time warner spun off time warner cable. >> right. >> because of course it makes no sense to have content together with distribution. and the very next year comcast bought universal because of course you need to have -- what really is the case is that the comcast universal deal made sense because they're both good businesses and run very well there's no synergies between at&t and time warner it just was a better cash flow generative business to support the dividend i think that's entirely possible by the way, in -- no one looks back at media deals, but there's been a lot of difficult media deals. look at sinclair with snr and

discovery with scripps and meredith with time warner and at&t with directv. the list is quite long. >> rob, great to see you. >> thank you. >> nice sees you guys. when we return, the number of morning, our first look at fourth quarter gdp is just minutes away we'll get the data and instant reaction coming up. update for you check out shares of altria, down after a quarter of inline earnings but bloet consensus sales. took a fourth quarter impairment charge of $4.1 billion related to its investment in e-cigarettes maker juul. stock down by 23 cents stock down by 23 cents "squawk box" will be right back. quadrupled their money by 2012? and even now, many experts predict the next gold rush is just beginning. so call u.s. money reserve, the only precious metals organization led by a former director of the united states mint.

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♪ welcome back to "squawk box. rick santelli here live on the floor of the chicago merk. we have big numbers. first look, fourth quarter gdp, up 2.1 up 2.1 we were looking a number of 2%. .1 is better we'll go through a process of revisions. the most fascinating thing of all is the last quarter ended up 2.1. consumption a smidge light of expectations at 1.8. definitely light in comparison to that low bust 3.2 we had in

the third quarter. if we look at the pricing index, of course, moderated 1.8 expected 1.8 last leak. 1.4. this time now if we look at quarter over quarter, core personal consumption expenditure, that's up 1.3 of course that's light as well last look was 2.1. so pricing light the headline numbers strong. consumption on the weaker side if we look at jobless claims, last week we had 211 that was revised up a big revision actually all the way up to 223,000 so they popped that up 12,000. and then from there, go the other direction. 216. 2-1-6 is the current level so of course we're down 7,000 from that revision continuing claims move from 1.747, so whisker under 1.75 million to 1.703 million

we're at 156 on ten-year note yields trimming our yields as prices continue to move higher preopening and global equities weaker coronavirus center stage andrew, back to you. >> hey rick, thank you for that. steve liesman joins us with his laptop squaring mightily on the screen. >> the consumer weakened in the fourth quarter, business did not pick up the slack through investment, housing did andthe numbers were all messed up by trade. >> okay. >> that's the bottom line right there. you had that surge of imports in august that then became a huge decline in imports and inventory draw down in the fourth quarter. so, the tariffs really messed up the data whether or not it messed up growth -- and the real bottom line is we were right about at

trend. our cnbc rapid update yesterday 2.1. the estimate was 2 it was spot on there you look puzzled, becky. >> i feel we're in one of those weird periods where a lot of this economic data will be garbage. it's back ward looking to before the trade talks. it's back ward looking to before the coronavirus. it's almost like right now with the earnings that we're hearing from companies people say, okay, you earned better than expected but you lowered your outlook because you're not sure what's going to happen with the coronavirus. that's what investors will have to try to digest the numbers right here leave probably more questions than they have answers. >> garbage is a strong word to characterize the inputs to my life's work. but other than that -- >> i didn't call it garbage. >> you said -- >> maybe useless but not garbage. >> i will agree with you mostly. the only thingly say is they're going to be important because they will create the base from which we're going to adjust and estimate the kind of costs we're going to have from coronavirus, from trade. >> and maybe just identify the questions that we need to be

asking right now i'll give it that. >> a year ago we were talking about government shutdown and a lot of other noise. >> all of a sudden the numbers just aren't going to be that revealing. >> if i could say one thing that is probably not going -- i don't know what's happening with the consumer here. i don't think those numbers are going to be a lot -- >> although what we heard from companies earnings the consumer looks pretty good. >> the numbers were 4.6 in q2. dropping down to 1.8 in the fourth quarter so we'll see if that constitutes a permanent weakening, but it's been a step, step, step down on the consumer the consumer is responsible for holding growth up as strong as it's been even though it's just 2.1% >> 1.8% based on the fourth quarter, based on the banks and mcdonald's, coca-cola, all sort of consumer products companies i don't see it in the numbers yet. >> it doesn't seem to directly fit. although, steve, you mentioned housing. it has been something that has -- >> housing has come back.

>> pulled the baton a little bit. >> let me just give you a few of those numbers here housing had been mostly negative the last two quarters we call housing investment accounts for up 5.8 on the other hand, business investment, actually better than expected falling only 1.5 points then the intellectual property software numbers have been strong this is one way the tax cuts is maybe working. let's not forget federal spending up 3.6% you have these deficits to worry about. hey, there's the other side of it the way it flows into the gdp. it's something to watch. and becky, i think is 100% right. there's a lot of adjustments to make in part you didn't mention the boeing issue. >> right. >> which is going to lop a half a point apparently off this quarter. so i'll be waiting to see estimates. we have estimates right now, becky, in the 1s right now the mid 1s we'll see what happens today if this changes the bases

housing could be a positive, trade coming off could be positive and trade tensions coming off and boeing and other things like corona would be negative. let's get more reaction to this gdp data with jay bryson, acting chief economist at wells fargo. jay, you were looking for, i guess, a little better growth for the fourth quarter where does this number leave you? and your sense of what the consumer is up to? >> yeah. so we were looking for 2.3, came in at 2.1. you know, very much very, very similar sort of things i guess what i would say in terms of the consumer right now, in general, the consumer is in a pretty good place. yes, consumer spending only grew 1.8% in the fourth quarter, but these numbers can be choppy on a quarter by quarter basis and so rick reported the initial jobless claims for last week i mean, they remain very low so the labor market remains in a very good place. that creates income. and then if you look at the financial health of the consumer sector as well, that's improved dramatically over the last decade or so so, i don't really worry too

much about the consumer at this point unless you were to get a bunch of big shocks that hit the economy. i don't know if coronavirus is that kind of a shock, but certainly keep an eye on that. >> yeah. clearly that was at least mentioned and of course the fed, i guess n a very subtle way did downgrade its assessment of what the consumer is up to. what does this all mean in terms of run rate for this year's gdp and even the first quarter for you? >> well, for the first quarter, steve was talking about this earlier, our estimate here is about 1.2% we know there's going to be a big contraction in production at boeing we'll get an inventory swing in the first quarter. going forward, we look for 2s going forward, but i think our overall annual gdp growth for this year is 1.8 and so, it's going to be a sub par, we think sort of year at this point, maybe things pick up later on in the second half. but just the momentum coming in

to this year is a little bit weak >> and that would seem to be reflected in the treasury market here, steve? >> it is quite remarkable what's happened the kind of volatility we had in the treasury market is really worth noting you were at 1.9 at the beginning of this month on the ten-year. and we were starting to talk about 2 and above 2. and now we're back down. so, one way to think about it, mike, is the market itself has provided the stimulus it believes the economy requires by going down into the 1.5 or 1.56 range. also, i think of note today is the dollar weakening i think it had a little bounce after this gdp number. look at the dxy, those guys in the back are so good it's like mind reading what's going. there it is. couple things -- >> either that or you're predictable. >> couple things happening this morning that are worth noting. the uk and, mike, off camera noted that the pound is a big part of -- look, there comes up the pound.

this is spooky what am i going to think next. >> the pound is much bigger than the u.s. index >> at the same time, just so you know the dollar is strengthening against the juan they didn't know any of this was happening. there we go. >> oh my gosh. i don't know why that didn't come up. whatever the reason is, it was up above 7 just a little bit ago. >> well done. >> that's the coronavirus thing happening right now. >> because of the market being closed. >> it could be. >> it's worth watching a lot of things influx right now on the macro scale in addition to the investors having to factor in the earnings as well >> ask and you shall receive. >> could we name some names. grecco, evans. who did we leave out >> let's also name jay bryson and thank you him because we have to go. coming up, elon musk controlling the analyst community.

investors are cheering his stock. the full story on tesla when we come right back. ♪

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♪ welcome back, everybody. tesla delivered a record number of vehicles in the fourth quarter and it expects to deliver a lot more that news sending the stock to new highs ahead of the open and extending the stocks wild ride this year. since january 1st, and including this morning's move, that stock is now up 50%. you know who is dancing to all that, elon musk. all the way to the bank. phil lebeau has more on this story and what to take out of it phil, good to see you. >> becky the stock is moving higher not only because it beat on the top of the bottom line for the fourth quarter, but the guidance the guidance in terms of vehicle deliveries for 2020, much higher than many on wall street were expecting. just as a point of reference the company delivered just over 360,000 vehicles last year, most on wall street thought they would say, ah, deliver 475,000 huh-uh tesla says it will handily beat the expectation of delivering more than 500,000 vehicles

so again, they're going to deliver more than half million vehicles this year, at least that's the guidance. look at their portfolio. you've got the model y the small crossover utility vehicle already beginning to ramp up production that begins this year. in addition, you've got the semi truck will come out later this year in limited sales but it's coming out then they're also working on the roadster, second generation of that as well as the cyber truck. that's in development right now. look, elon musk says it's all about whether or not they have the batteries to supply the vehicles that they're working on and potentially maybe even a mini van >> will it make sense for us to do sort of a mini van or, you know, sort of van at some point? probably but we have to solve the battery -- we have to scale battery production to crazy levels that people cannot even fathom today that's the real problem. >> battery production is crucial for tesla's growth it's often overlooked but that's the importance of the gig

factory. remember, they have a european gig factory which is also battery production in addition to vehicle production. that's expected to come online next year. and one last thing, guys elon's calls are always interesting. they start with retail investors asking questions, submitting questions and then they go to the analyst from wall street to which elon said, you know what, those retail investors had some pretty good questions. >> i do think that i love the retail investors actually have deeper and more accurate insights than many of the big institutional investors and certainly better insights than many analysts. >> not a surprise that elon musk said that. look, he sparred from time to time with analysts on wall street he believes there's some that don't get it, don't understand tesla to the degree they should and underappreciate the company. so he gave a tip of the hat, guys, to tesla's retail investors saying they sometimes have more insight than those on wall street.

>> okay. phil, very good to see you and as we said, elon will be doing a little jig this morning. meantime, coming up, a market deep dive with one of the most hedge fund voices on wall street right after the break. plus, take a look at futures right now. we are in the red across the board. dow off 142 points after the break, we'll be speaking with chief investment officer ryan tolkin about deploying cash across europe and asia and beating the rest of the pack watch us or listen to us live on the go on the cnbc app stay tuned you're watching "squawk box. there's a bridge. between endangered and protected, there's a bridge. between chaos and wonder, there's a bridge. there from the beginning to where we stand today.

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we're under an hour to the opening bell on wall street. dominic chu has a look at the top stock movers good morning. >> good morning. it's the busiest day of earning seasons and big names on the move so far. start off with share of alt rirks ia is lowered around close to a 1% or 10,000 shares of premarket volume this after it reported quarterly profits that matched and list estimates revenues fell shy of expectations results were hurt in part by a $4.1 billion charge it will take to write down the value of its investment in e-cigarettes maker juul lab now you have shares of coca-cola, the non-alcoholic

beverage giant up 115,000 shares of premarket volume. it meant profit estimates but revenues were actually better here than expectations, helped along by new product launches like the coke plus coffee line also the expansion of the coke zero sugar line of drinks also those shares up nearly1.5% we'll end on shares of biogen up 2.5% premarket, roughly 15,000 shares of premarket value after the company reported profits and revenues that both beat analysts' estimates. results were helped in part by stronger sales of its multiple sclerosis drug franchise they also offered a full-year profit forecast. it did fall short of some forecasts when you look at the midpoint of the range. so one red, two greens, busiest day of earnings. i'll send it back to you. >> appreciate it right now we want to talk about where to put your money to work around the world our next guest is chief investment officer of schonfeld, a hedge fund with a strategic

approach joining us is ryan tolkin. good morning. >> thanks for having me. good morning, andrew. >> we've been talking all morning about the coronavirus and how it's impacting investing. i know you probably have some thoughts about what you're doing about it, given you have investments around the world. >> yeah, absolutely. so the coronavirus is certainly a big thing and something we're very focused on. i don't think we have a macro perspective in terms of exactly what impact it will have long run on the market. that said we run a quantitative strategy and an event strategy so we're very focused understanding at the single stock level who the relative winners and losers will be depending on how each of these scenarios plays out the next several months. >> so what are you thinking? >> it's hard to make a call exactly when the coronavirus will peak out, but it's clear that while there may be some short-term impact from it, we think long run there will be some opportunities that come from it.

>> you're buying >> we're not necessarily buying here today, but we are sitting back and understanding depending upon when we sort of reach the amount of peak -- >> let me ask you a question david tepper had texted joe and said buy everything with both hands until not, and we don't know where he is right this moment on this we should send him a note. >> by the way, that was before coronavirus. >> then we had paul jones from davos and he said actually, guys, i would sit on my hands because this coronavirus will play itself out and i want to understand where that goes i actually wouldn't do much. between tepper's view of the world and we don't know if that's david's view and where paul was, where would you be >> we built our business on not having to have a view on that specifically so we have 10,000 stocks in our portfolio. it's all about identifying the

relative value opportunities without having to make a market call that call is too hard to make. >> although, i would say value calls -- look, if you see a pullback in some of these arenas, does that pop up as value on your screen >> who are the winners and who are the losers and what are the dislocations within certain sectors or world geographies that are created from something like the coronavirus it's clear over time that there will be winners and losers that come out of this episode so whether we're looking at that from are a quantity taative apph or long-term approach the key is understanding. >> where do you see opportunity right now then >> i think certain opportunities are being created in asia itself it's clear, and we continue to deploy more capital in asia across both the long/short space as well as the quantitative space not just because of the coronavirus but a combination of the dislocations that have happened from the trade episode

as well as some of the microstructure changes that are occurring in some of the asia markets today. more and more of our business is focused on investing internationally as compared to where we were five or ten years ago. >> what's the breakdown in terms of how much is domestic versus abroad, and then when you're abro abroad, piece it out for us. >> today 30% of our assets are invested abroad, 50% between europe and 50% in asia >> that's among the 30%? >> among the 30% compared to three or four years ago, it was less than 10%. so we're seeing more and more opportunities to deploy that capital. >> you're still seeing bigger opportunities here the waiting is still a u.s. weighting. >> yes that's because we still rely on volumes and liquidity. we turn over our portfolio basically every three or four days our fundamental portfolio is turning over eight to 12 times a year so liquidity, volume, transparency is still better here in the u.s. than in some of

those markets. that being said, as those markets continue to evolve and open up and especially as mainland china goes through some of the changes it intends to go through the next few years, we see more and more opportunity to do that in asia and in europe. >> ryan, thank you for coming in this morning come on back this was good. >> thank you very much for having me. much appreciate it, guys. let's get down to the new york stock exchange. jim cramer is standing by. i want to talk to you about some of the earnings out this morning. coca-cola, let's start with that pretty good numbers there. what did you think >> yeah. there was an extra day so it's really around 6% if you get some leverage there, which james is saying could happen, then you've got a stock that's been kind of just hanging out that is ready to break out it certainly is the kind of stock you want to buy in this environment because, well, i'm not saying anything is impervious to what's going on around the world but you've got james giving it some growth, diet doing really well i also like what he's saying about plastic bottles.

it looks like sweden has gone closed loop. so i like coke on what i expect to be the weakness in the market >> stock up 1% right now eli lilly also out with numbers that were better than we've been expecting too. >> rick is unbelievable. he introduces a drug he's got this anti-migraine drug that is taking off he's got that diabetes franchise, cancer franchise. remember, this stock has doubled. yet, it is still, when you look at it from the basis of earnings power, you could say it could still go up a turn or two on its multiple congratulations, david is fabulous we talked to him out at the jpmorgan conference. he may be best in show right now in the group. >> jim, before you go, elon, elon is dancing this morning are you? >> oh, he should i mean, geez, it is -- it's like when netflix turned and when amazon turned. yeah

look, he's so real deal. i don't know how any stock can be up this much but that was a magnificent quarter, truly magnificent. april we'll hear on battery day, the biggest day of the year. >> thank you. >> battery day he wouldn't disclose what day. >>e' sou in just a few minutes. stay tuned, everybody, "squawk box" will be right back. hi. this is the man that's going to check your eyes grandma. cognizant ai solutions are helping healthcare companies advance diagnostics and prevent blindness in patients with diabetes. everything looks good. you have beautiful eyes. ♪

final check on the markets this morning we do have red arrows across the board. we're looking at the dow opening off 152 points s&p 500 will open down there 20 points and the nasdaq looking to open down about 50 points. make sure you join us tomorrow "squawk on the street" begins right now. good thursday morning. welcome to "squawk on the street." i'm carl quintanilla -- we'll get to all of it europe is down about a percent 10-year 1.an