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 1.5 and the weakest

annual growth since 2016 the road map begins with virus hitting the street, business closings as the number of cases now surpasses the total number of sars cases in the '03 epidemic we'll talk to the new head of the white house coronavirus task force, alex azar this hour. >> we are capping off the busiest two days of earnings season we've got upbeat reports from tesla and microsoft. both stocks are up but 47 of the s&p 500 companies are reporting today. we'll try to get to them all. >> facebook is one of them last night tumbling ahead of the open stocks under pressure on concerns about margins and a sharp rise in expenses slumping in the premarket despite that quarterly beat investors focus on a rise in expenses and narrowing operating margin mark zuckerberg did talk about his goal for the next decade. >> one critique of our approach for much of the last decade was that because we wanted to be liked, we didn't always communicate our views as clearly

because we were worried about offending people so this led to some positive but shallow sentiment towards us and towards the company. and my goal for this next decade isn't to be liked, but to be understood because in order to be trusted, people need to know what you stand for. >> jim, kind of an evolution of what they have been telling us for several quarters. >> that was the full quote -- actually it's a metaphor for what they're saying. look, we've got to spend money, we've got to do what's right and what's right necessarily is not good for shareholders. there's a lot of people that say it's flat lining i'd love to have a business that's flatlining like this company. as many people downgraded as upgraded there was a firm that put on a strong buy right at the end. a lot of us felt they had to know something, turned out they knew nothing instagram is great, facebook is not that great obviously they talk about parent

facebook political ad spending is good but we have the red-hot button there. regulatory issues are a headwind, okay, and i know that they have to spend more money to police but what i come back to is it's still a great franchise. people are saying it's the slowest growth since the ipo if you remember, the ipo was the hottest ipo pretty much ever i don't want to give up on facebook we did sell some higher but only since 25 i come back and say i think that that quote is somewhat from the people i've heard a little misinterpreted wait a second, you want to be liked. did he ever want to be liked turns out that's what being liked was. >> i half expected him to say i'd rather be feared you know would you rather be liked or feared from that movie. >> i want to be more supported than the market is indicating. >> it's a classic example of an expectation missed given the

fact that tesla almost always overdelivers and they always talk about -- >> facebook or tesla >> excuse me, facebook always overdelivers in terms of expense guidance, for example. >> right. >> they guide you to a number and then come in lower and so that has been the custom and i think the buy side they have gotten so accustomed to it that they have expectations that were higher. >> but the expense structure is not as good. >> no. and there is focus on this deceleration of ad growth. that's the key the feeling that they would beat by a healthy margin and they didn't. >> no, they didn't and it is an expectations issue. i do think buying back stock, they have $50 billion in cash. there's a lot of optionality people are focused on maybe this was a model that was really great when they didn't have to do anything. now they have to do things and it costs them money. >> if revenue comes in sub-20,

is that a demarkcation >> what happens is it just gets a very low multiple. >> but it still trades at 20 times gaap eps and growing its top line faster than that. >> look, i think -- like i said, there are just as many people that loved it as hated it today, but the overall sense was that this is not as good a quarter as they said and that this time it's real. you know, it's kind of like scooby do, david remember that? i do think when he talked about that, it was like, wait a second, trusted principles, how much is that going to cost try to put a dollar amount on trusted principles david? it's a podcast you can't just say nothing. >> sorry i don't know how to put a multiple on it >> there you go. that's exactly where we are. leave it at that.

>> it's hard to think this will be a more trusted platform in the months ahead as we move deeper into the political scene. >> instagram remains the single best way to get your voice out but they don't break out instagram. they did this kind of family -- >> they're the family thing. >> we are family and we're cutting numbers. i didn't like that i just think that they can't -- it seems like they can't play up instagram because it says the real business is a dud, and it's not. but instagram remains -- if you want to sell something, you sell it by advertising on instagram. >> tesla is the other big story of course surging in the premarket. set to open at a record high on better than expected numbers last night they see auto deliveries exceeding a half million this year elon musk did take a turn digging at analysts. >> i love that retail investors actually have deeper and more accurate insights that many of the big institutional investors

and better insight that many analysts. >> all right so where are we now? given margins, deliveries -- >> that was fabulous, a great quarter. it's demand. like they can make more money the more cars they put out i wish ford could say that ford can't say that. this is a great demand issue he's right about the analysts. they're always trying to play catchup. it's the pinata for everything he said it's hard to win a religious war is the name of his piece, which is this basically situation and you have lap dog retail investors i tend to disagree -- i tend to agree with elon. if you love the car, then you end up like netflix loving the stock, which made you money. if you love the car like amazon, you made money so it's in that -- it's in the orb of amazon and it's in the

orb -- >> like the old peter lynch school sort of >> yes yes. beyond meat too. no, it's not victor kayyem. >> well, he bought the company. >> i'm adamant where this is one as he puts out new models, what he says is -- this is incredible i won't mention the name of the game on sunday, copyright. but there's a big game on sunday you're going to see a huge number of auto ads, huge you're going to maybe say -- what he says point blank is, imagine, we don't have to advertise because our cars are the advertisement. so that's just -- doesn't that tell you a lot. >> to use your netflix analog, why do you not believe there will be a disney plus equivalent in the car space >> it's really incredible. you have executives from major car companies saying our ev doesn't sell that's not really an electric vehicle. what that is, is a vehicle that is filled with technology.

you know the actual emphasis was battery and making pbattery life longer by the way, battery day is coming up some day in april. maybe we take off and say we're going to take off for battery day. >> what is battery day, jim? >> a day to celebrate batteries. >> which is where it's all at. that is the golden ticket. >> he's so smart remember california, he actually has real people ask questions. it's kind of like -- it's a really exciting conference call. okay, let's have a real person ask a question well, in california everybody has to have solar in new houses. well, we're going to kill it and make a lot of money. so it's really a great conference call. >> i think your point on the other evs is very interesting. in fact there's just not demand for their competitors because there's a perception that maybe the reality they're making a better product. >> i think it is reality it's terrific. i don't know if you've driven it i love to drive it

you know, when i sat down in it, my daughter pressed the whoopi cushion flatulence button. >> see, you don't have one now >> i don't i have a 2006 lex us 2006 >> that's a long time ago. >> david, my suit is worth more than my car. >> u.p.s., we'll talk to david abney in the next hour who made a large purchase of commercial evs in the uk and the idea that it's going to be the commercial side that will indoctrinate consumers to say this is real. >> in germany they have a plan they found seven u.s. bombs in berlin imagine, he goes to the heart of german engineering all we ever hear about is german

engineering. he's putting a plant there and he'll be able to sell every single one i've been in the beamer ev eh, eh, you know. >> yeah. >> eh. >> solar glass roof. >> don't you love that do you have one? >> no, i don't i'm excited by the prospect of it. >> get a house. >> i have a house. i don't have solar yet, though. >> no? okay >> we barely heat it, though. >> stay tuned. guys, let's touch on coronavirus really quick it is pressuringstocks around the globe. officials say the death toll is now 170. 7900 cases around the world, surpassing sars. the world health organization will hold their emergency committee meeting today and we'll see what they come up with to determine whether or not it's a public health emergency. google closing offices we've heard from starbucks "times" with a piece where the world realizes how much it needs china for growth. >> and also 6,000 passengers on

an italian cruise ship currently blocked because a chinese woman came down with a fever yeah, i think the world will slow jay powell, fed chief, really acknowledged that. look, i think the next news that you're going to get is that we have something on this we have a development, we have some great people on it. but if you go back to ebola, what happened in the chain of stock, the market kept going down, down, down and then someone who did not go to africa died of ebola and then a week later began this remarkable run in the stock market. now, could history repeat itself well, that's what happened with ebola. obviously ebola is much more lethal than this i wish the chinese would tell us more so does everybody else i mean if you take the temperature of a person, it means nothing. >> that's the problem, so to speak, you're not necessarily showing signs. so 250,000 people have apparently arrived in china from the u.s. on airplanes.

we'll ask azar about it. they don't necessarily show symptoms so conceivably you could have it and not know. >> don't you think china should say, well, look, yes, more people are getting it, but the death rate is much lower than in the united states right now from our flu. it is. >> it is >> yes. >> do we know -- based on at least the numbers -- >> people don't know the number because we know 8200 people died of our flu 15 million contract, 140,000 children unfortunately just died of flu in our country. but it doesn't -- if in china, we'd be playing it up big. i don't know i don't want to overdo it. i've spoken to a number of doctors who say, please, be calm keep your hands away from your face it works better than the mask. i have other doctors who say

we're all going to get it, kind of like billy in predator. >> keep yourself in your home? >> i don't want to go there. >> self deport that was what romney said. self deport. >> transpond me off this planet. >> self isolate. >> well, you have no problem i actually am social >> you do like to get out. >> i like to get out >> you always have a tie on, though, so that's good >> touch your face with your tie. >> 2,000 times an average person touches their face. >> in a 24-hour period >> yeah. >> try to cut that in half at least. >> you're making a joke about it, huh? >> when we come back, as david says, the government's response to the coronavirus we'll talk to hhs secretary alex azar we'll get cramer's mad dash and count down to the opening bell

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so many earnings, so little time we've only hit tesla and

facebook so far but microsoft of course reporting after the bell yesterday, jim, so let's hit it in the mad dash given thatit's up this morning. >> satya nadella when i interviewed him said, listen, our shareholders have given us the right to go carbon negative. well, they have the right again. david, azure, which is the driver here, the cloud, up 62% do you know almost every line item in this thing was better than expected except for gaming and that's because they have a transition the margins are terrific it is just a solid call. if it were not for the coronavirus, i think this stock would be on a beeline to 200 it is a great quarter. apple is a great quarter too, but this is just the most consistent growth company that no one talks about no one talks about it because it's not in trouble. now you're going to have to start disliking me there's nothing to dislike between satya and amy hood they are one and two. >> if not for apple the other

day, $11.6 billion in net income would take everyone's breath away apple reporting $22 billion. >> apple was talking about the numbers at the same time that the fed was talking. i was krconscious about the fed numbers are far smaller than what tim cook does. >> those numbers are incredible. the question is going to be, as we wait for amazon's earnings after the bell tonight, is their cloud business giving up any share or is it simply that the market continues to grow at such a pace that you can have microsoft succeed so strongly in cloud and amazon as well >> i'm afraid there's going to be a race to the bottom in order to get some -- >> in terms of pricing >> yes satya talks about national retail federation and he's talked about getting walgreens he talked about getting walmart. you're not going to get these guys just by service although he does point out that to move, to migrate from a microsoft corporate to the

microsoft cloud is one-fifth the cost of amazon so he's got a great story. obviously amazon web services is fantastic. >> it's been the dominant player, but we know microsoft has moved up google, by the way, has become more aggressive as well. >> yeah. but it is the fastest grower listen to lisa su and a wildly misinterpreted conference call, the cloud is the greatest secular story of our time. but yeah, i think if you're amazon, do you need to acknowledge other -- we have competitors nipping. >> let's see what it looks like tonight. meanwhile the stock has underperformed. >> well, it's because of azure. >> you think so. >> yeah. azure is great. >> not because bezos is wearing crazy clothes, dancing all over the place? >> no. azure revenue grew 62% david, don't go there. turns out there's other people at amazon too. >> yes, there are. we'll be here tomorrow discussing it i'm sure.

>> will we >> yes, we are you'll be in tomorrow, right >> i will be you've been sick. >> just a cold, a common cold. >> what do you have, the modelo? >> they still haven't figured out a cure for the rhino virus. coming up, shares of service now reported earnings. they are up. bill mcdermott will tell us about his game plan for growth at the company stick around, a lot resqwk t seet.mo "ua usually i go by the name soso. i am a chief... solutions engineer. the more you push yourself, the more confident you're going to get. and the more confidence you have, the more people are going to listen to you. especially as a woman in the industry. you need to actually just make sure that you push it. ♪ ♪

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you're watching cnbc "squawk on the street" live from the financial capital of the world the opening bell in three minutes. coronavirus concerns around the world continue we'll see what the world health organization says when they convene their emergency committee this afternoon we haven't really touched on what powell did say at large about repo operations receding in q2. >> i thought powell gave the safety net yesterday i think the issue is how -- the newness of this virus makes it that you're listening to him in one ear and then hearing this country is closing border and this plane is this and this many people and this and that so he's kind of a sideshow but we've got him on the right side. the market depogoes down.

i felt like he's on your side, microsoft is on your side, tesla is on your side, apple is on your side. you need every single thing on your side because i think the economy will slow. i think he almost understated -- he didn't want to scare anybody. i think the economy will slow because travel is really going to slow. >> david zervos said it was a somber presser you've got the curve inverted again. 10-year 1.55 high yield spreads really didn't confirm any upside equity action. >> back to a 3% mortgage very good terms. i'm trying to get it at 2.8. >> so inflation trade is dead for now. >> yes. >> you don't want any cyclicals, you're back to yield. >> parker and hannifin great number dupont, anything related to auto, it's a mixed picture. >> ex-tesla -- anything related

to auto ex-tesla >> no. i mean i think that we all -- the world is slowing faster than we thought. >> china is the fastest market for automobiles in the world by far. it's going to have an impact >> has to. >> we don't know what the full impact will be we hope it's as limited as possible. >> when i talked to the ceo of ugeneron some would say they stopped ebola. they are confident we are going to come up with that you don't hear much talk about we're going to come up with something, and maybe that's our bad because they don't have a sequence >> i think it's just more a matter of time. >> yes. >> are we talking weeks, months, right? >> yes, exactly. j & j, conservative companies is talking about a long time. remember, in shanghai, you have one hospital every 500,000 people bad ratio.

500,000. >> let's get to the opening bell here s&p 500. it's the long island center for business and professional women, at the nasdaq it's lincoln rhyme, "hunt for the bone collector" airing on nbc david, we've got to get to this altria juul evaluation. >> i'm ready to do that because that was the key thing that stood out in the report we got from altria. not to mention, though, when you look at altria's actual earnings, they have a smokeable products one and a smokeless products section but the juul writedown is significant. let's get to it. they recorded a fourth quarter noncash pretax impairment charge of $4.1 billion related to its investment in juul and so now for last year, altria

recorded a total of $8.6 billion in noncash pretax impairment charges to the investment. remember that? $8.6 billion has been written down they are now valuing the juul investment at $4.2 billion to give you perspective here, when they announced the deal, it was a $12.8 billion investment for a 35% stake that gave juul, if i recall, a $38 billion overall value. so there you have it $12.8 billion goes to $4.2 and by the way, we are still waiting for antitrust approval to actually seek their board members. >> what kind of month was that december, month of december when they bought stake in kronos right at the time they did juul. would you regard those as ill advised? >> we know the problems that juul has had you've been an outspoken critic. >> because i watch carl's documentary. >> and then this agreement that

for a year they're not going to pursue litigation against each other for conduct prior to the agreement. so it doesn't sound like the partnership is blossoming by any means. >> no, no. well, look, i met with juul several times. they were always very quick to tell you, listen, someone else is going to sell it if we don't. they went with that big thesis that we're going to stop people from smoking you know, i said to myself, what a pack of lies yeah i said to myself. >> don't forget last year also included philip morris international and that got serious and they could not figure it out when it came down to it and part of it may have been the juul difficulties in terms of what they saw here. but that was the key for me, altria release obviously no shortage of other names to get to this morning we hit microsoft, we hit tesla,

we've hit altria i don't know what else -- >> you mentioned dupont briefly, jim. >> yeah, they had a bad first quarter. they're talking about having a resurgence later in the year, but it's a bomb. dupont has been a very tough investment ed breen there is saying basically, look, we've got to get through the first quarter. they have auto auto is just awful >> yeah. look at sherwin-williams today with a miss on the top and bottom line. once a high-flying name. and we know that home building has been strong, but they got exposure elsewhere too. >> yeah, look, it's really incredible i don't think we talk enough about what the heck happened to auto auto was something that you wanted to be in. because you wanted to be lightweight and involved with batteries. the only thing that makes money is musk. >> and those who -- in other words, those who provide to it,

even coatings. >> even coatings but ppg has been handling it better than most ppg is a very good company but i do feel that you're in purgatory if you have auto. >> just purgatory? >> i don't know how you get out of purgatory. >> yeah. guys, here's a name that i don't mention and have not mentioned very often it reported earnings as well and i think it's worthy of a little attention it's blackstone. >> oh. >> the largest alternative asset manager out there, reporting numbers this morning the conference call is going on right now. blackstone stock doubled last year, if you hadn't noticed. take a look at that. >> stephanie called the whole thing on scott's show. >> they're not there yet but the consideration of sea corp brought up they added $134 billion in assets last year percentagewise consider that when they have $571 billion overall, that's where they ended the year, so up 21% in the year.

$134 billion of capital inflows. i said this the other day kiddingly, everybody wants to be in private equity. they're a lot more than just private equity given how important real estate is for this company and it is run by john gray who built the real estate business. remember the hilton deal for a while it wasn't looking great but ended up fine and so many others. but they have had an extraordinarily good run as a stock and overall. by the way, if you are an employee at that company, if you're an employee at blackstone, do you know how many billionaires they have created amongst their employee base? not just owning the stock but from investing in the funds, which i wol alwauld always argud john gray would join us, your funds perform extraordinarily well, your stock doesn't and then suddenly it did. >> i'm very jealous, is that what you want me to say? jonathan gray is one of the most charitable guys i know >> oh, yeah, absolutely.

>> i think it's important to point that out, especially in the year of elizabeth warren where every billionaire is created equally bad. >> yesterday during their presentation goldman sachs tried to point to this idea of we've got a blackstone hidden inside us in asset management take a look at this. one of their charts of so many that they had. but there it is, we're one of the top five alternative asset managers, $320 billion with hedge funds, real estate oh, yeah, we're blackstone and not getting credit for it. >> when i got out of school all you wanted to do was work for goldman. now when you talk to young people, you got an interview at blackstone. >> they still wanting to work add goldman. >> no, they don't. >> yes, they do. after three years they want to leave to go to blackstone. >> so that's just a training ground >> yeah. >> just a weigh station? >> and or apollo or kkr, almost

all of which have had extraordinary runs in the market the last year or so. >> didn't want to go to facebook anymore? >> i hear not as much. that that is the millenials -- >> sales dforce? >> yeah, i think so. >> when you get a resume that says fluent in salesforce. what is that can i do google translation? >> pretty quick upside here from the opening lows down 44 points now on the dow. a lot of the weakness, jim, as you have said is revolving cruise lines, u.p.s. is a drag. >> u.p.s., we should talk about that david abney is spending to grow. he's being penalized for spending to grow in an industry where if you want to keep up with the death star, you have to -- he has relationships with everybody. he's working small and medium-sized businesses. >> death star is amazon, by the way. >> from your interview

it was a great interview united parcel is really being penalized for being forward thinking i think people just say, you know what, there's no end to the spending if you're in this business and i think that he should get more credit but the stock will sell down because people say, oh, come on, it's never ending with fedex, united parcel, it's just a bad business is what people think i think one day it will be a good day >> i want to see if john ledger direct messages me whenever verizon comes out with numbers, i get a direct message from john. >> it's inside information just like he thinks these companies are idiots. >> verizon reported numbers, yesterday at&t was down fairly sharply, in part i guess on the 945,000 subs they lost in video even though it was less than

lost previously. >> weren't you surprised it went down so much >> it's down again today, at&t, by the way but verizon also down about 23 in earnings per share. excluding -- operating revenue growth 1.4% over the fourth quarter of last year they did have 852,000 retail post paid net additions in wireless that's 588,000 in phones of those, that was up 12.6%. just looking through here, nothing that one way or the other really moves things particularly. >> is it time, david, to talk about -- >> we'll hear from ledger saying we did so much better. >> i think everyone has to realize that we're right now -- let's say we're on a rival sports etwork. there are 42 games ending today and we are trying our best to present who was the biggest point scorer and what happened i talk to a lot of companies ahead of time, but by the time i

finish coca-cola then it's time for u.p.s. and then it's dupont. you get up at 3:30 and your wife says are you out of your mind? this is what you have to do. >> you want to cover the lsu score but also the montana state score. >> yes, and the mac. the mac conference, david. >> stop it. >> my nose itches. >> you just touch your face constantly. >> will you stop bothering me about it i'm going to start touch your face. let's mention southwest airlines really quick, moving lower this morning according to a draft government report seen by "the journal" the airline flew 17 million passengers on planes with unconfirmed maintenance records over a two-year period transportation department reportedly calls out the faa, characterizing its oversight of southwest as lax, ineffective and inconsistent a spokeswoman says the draft report includes unsubstantiated references to southwest safety culture.

dwa gary kelly did talk to us about that culture last week. >> we've established a lot of trust with our customers over near 50 years and we're certainly not going to squander that now i just know southwest airlines i know our pilots. we hire very experienced pilots. on average they have 6,000 hours of experience before we even hire them. so they are expert on the 737. it is the only airplane that we fly. we're the gold standard when it comes to hiring, our flight crews, our training, our procedures, all of that. >> i never want to be lax when you talk about safety, but this issue has come up with southwest a couple of times the last year. >> when you hear 6,000 hours, some of the pilots overseas have 1/10 of that. >> the allegations of the faa being a little too cozy with them in terms of -- >> do you think they're being picked on?

>> i have no idea. >> let's get gary back on, right? >> he comes on to address pretty much everything. >> let's get gary back on. gary, i know you watch the show. >> a wing strike i think in rhode island where it wasn't reported as it should have been, a number of different safety issues as well. >> the stock is up for the year. and i don't -- i would fly southwest ahead of pretty much everybody because of the pilots. i don't know, we've got to hear from him >> really quick, jim, chips are enjoying a nice morning. lamb research, we've got western dig tonight. >> lam research, travel trust owns it. ever since timothy archer took over, he was from the novella side he bought a huge amount of stock back and said, listen, this is the low of the cycle everyone laughed at him. but you know what, it was. they have got demand going up for dram

they're an amazing company, fantastic balance sheet. >> so xilinx is the outlier. >> they are the one who was ahead and people thought they were the 5g play i'd rather buy skyworx if you want 5 dg play skyworks has a great reputation with apple stock reported on a day when people didn't like the semis i think it should be back, it should go back up. >> guys, just to recap the very top of our show, tesla is by far the most significant gainer, 10% gain that stock is up 52% this month. first month has not ended. $115 billion market value for tesla. you can bet he's going to get that payday now. >> he deserves it. so does those guys at -- everybody deserves it. i can't wait for the democratic

primary to see how little these guys have. >> iowa is monday. >> it's going to happen. just like lenin. shares of servicenow are on fire, enfuego. an earnings beat offering stronger guide anxious this brand new ceo is so complimentary of previous ceos joining us now is bill mcdermott, took the helm in november we know him because he is a great guy, universally loved so i'm going to go right there, bill how much of -- when you say that the phone is ringing off the hook, i'm going to ask you to be immodest for a second. how much of this new business is your rolodex >> i give the servicenow team all the credit, jim. i mean it is an amazing company with an unreal culture as you know, digital transformation is the opportunity of our time, so the

confluence of the market opportunity, the culture of this company and the passion for our customers all came together at once. >> well, i've got to tell you, you talked a lot about hr and customer service management. >> yeah. >> these are very important silos. you do have, let's not let me say it, you've got an amazing rolodex. i know so far you've got a thousand customers in customer service management you had a million dollar deal. couldn't you turn these into just the new servicenow? >> yeah. i mean, jim, this is amazing the opportunity in front of us is really gigantic the tam i estimate somewhere around $400 billion. today what you have in these enterprises is a hornet's nest of complexity. and what we do is compose work flows that design beautiful experiences. those experiences can include giving your customer an amazing experience, having your employees highly engaged, and of

course, as you talk about often, true step function productivity improvement through digital transformation it's not about doing work a little bit better or a little bit different, it's about rethinking the work itself and these systems of record and the enterprise that have taken 50 years to build have actually created a lot of complexity. so what we do is compose work flows that make work, work better for people. it gives them a consumer great experience and the enterprise, it helps them achieve their mission. a couple of clicks and they're done that's what it's all about simple, speed and dynamite execution. that's how companies win >> there was a great moment in the call where you say 75,000 people in an agency, 75 different systems, they bring you in and you're pretty much loved. can you put in perspective a 97% renewal rate versus where you were at an unbelievably good

firm, s.a.p. >> this company has the leading customer loyalty in the industry our customers love our products. that's what's truly amazing about servicenow the engineering pride in this company, the excellence in delivering products that customers truly love is like no place else i've seen the example that you give, jim, is a 75,000 person organization with 75 different systems essentially designed to do the same thing we take the data, compose it in a servicenow portal where all the work flow can be easily put together for people to do their job simply it's up and running in days. and for a very complex operation, a few months, not years and years and years. and it's very affordable because we're a cloud company. so you get instant time to value, people are happy using it and you drive real business results. that's why we're growing faster than everyone else. >> well, let's talk about how

fast you talked several times -- you're talking about being a $10 billion company. most companies never get to be $10 billion. what's your timetable? >> well, we haven't put an exact year on it, but if you do the math, it won't take too long and what we're seeing now and the way we guided the company, we just got done growing this company more than 35% on a year-over-year basis now we're well over a $4 billion cloud company. if you look at the rpo of the company, meaning the revenues that are there but we haven't really recognized them yet, we're over $6.5 billion. so the company is getting big fast but we're doing it the right way, and that's why i credit it, as you mention, our founder, fred luddy, he invented a great company. our first ceo did a great job and my predecessors and great friend john donohoe did a f fantastic job setting this up for scale and growth

it's been done well. things have been done correctly. most importantly, we've never lost that hungry and humble culture for the customer and maybe even if we keep this up, jim, we can be unstoppable. >> look, i know you and i know you are unstoppable and you're a great leader bristol myers, can you tell me what you've done for that. i was struggling between bristol and the veterans, but i know we all know dr. kaporio i think it would be good to put in perspective exactly what you're doing for bm. >> there's a talent war out there, jim when you onboard employees, you want to take the complete life cycle of the employee, everything about their experience in coming into the company, and making it simple. you know, where should they go to work? what's their office like what kind of devices do they use? how do we line them up for all their benefits how do we teach them their comp plan and give them their 401(k)s and all the facility needs that

they need in the company and how do we do that on a mobile application and do that in 15 minutes instead of a month and a half or three months and what's happening now, and smart companies are seeing this, you can't make young people happy. you can't make young people want to work for your company if for you're not digital this digital transformation is touching people. that is one example. veteran affairs was another example. you now have veterans and contractors using service now's work flow to make their life easier, give them the benefits that they need give them the care that they need but do it instantaneously, digitally, and make it simple. that is the dynamite part of service now. it is the only company i know at mass scale that is truly giving that consumer great experience i went to one airline and i'm talking to the ceo and the conversation was like, look. we have 99% of our employees that are minimum wage workers.

we can't have complex systems that people don't want to use. we're done investing in giant systems with thousands of contractors running around that take us years and years to implement. we need results now. that's why they love service now. >> okay. look, i got to tell you, bill, great to see you again some of us were concerned when you left s.a.p. you faded into the horizon but that obviously is not true. i want to thank bill mcdermott the president and ceo of service now which is up $26 today. good to see you, bill. >> thank you, jim. thanks, everybody. meantime the world health organization holds an emergency meeting today to determine whether to declare a public health emergency regarding the coronavirus. here's what we know so far chinese officials say the death toll has risen to 170. 7900 cases worldwide the number of cases in china surpasses the total cases during the sars epidemic of 2003. meantime, the president apoipts and meets with the koechcoronav

task force yesterday joining us now is the head of that task force, u.s. health and human services secretary, good morning, and good to have you with us. >> glad to be with you all thank you very much. >> you said when you announced the task force that the risk of infection for americans remains low. will that assessment change if world health does declare an emergency? >> no. what the world health organization does in terms of declaring whether there is a public health emergency of international consequence won't change in any way. what we are doing here in the united states to prepare and respond to the novel coronavirus threat as you mentioned the threat to any individual american is really quite low at this time but under president trump's direction, we're proactively preparing in the event of further spread and we're taking necessary steps to prevent and mitigate the potential for future spread. >> we've seen a lot of selective flight restrictions from the airlines, themselves what would it take to mandate

flight restrictions? >> we aren't taking any public health options off the table to protect the american public but we're already seeing less flights going back and forth between china and the united states just as a natural consequence. the state department has put in place what is called a level 4 travel advisory for the epicenter which means don't travel there and a level 3 for all of china, meaning to think very carefully before traveling there we've seen flights come down we're seeing air traffic going down on a passenger basis. so this is naturally occurring as we speak. >> we can understand, mr. secretary, certainly why americans wouldn't be traveling to china but my understanding is as many as 8,000 people from china can arrive here every day on flights given the nature of the virus as we understand it so far where you are not necessarily presenting symptoms for seven to ten days, why aren't we just stopping them from arriving here >> we're going to take all necessary public health

approaches that are appropriate. we have at the airports where chinese travelers come in, we're using our surveillance, quarantine and inspection services surveillance systems to ensure individuals coming in are looked at and if they identify with any type of symptoms as we always do for illness they'll be pulled aside and we'll be able to explore that. in addition, this is most important for any type of infectious disease situation, we're educating people as they come in to be on the lookout for presenting any symptoms. it's important to remember that the five individuals that we have identified in the united states with this novel coronavirus came in not as a result of proactive screening of them but rather because they self-identified as having symptoms and were taken into the public health system as a result >> and you think that's enough because, again, people can certainly leave the airport without having been identified given they may not be showing symptoms you think it is enough to rely on them to self-identify in fact

if they do get sick. >> what we do is a multi layered approach we do border screenings and surveillance but the most important part of what we do, why america has the best public health system in the world is we do the basic walking regarding public health. we alert people to be on the look out for symptoms. we diagnose and treat them and then do the contact tracing of the people they've been in contact with and if necessary the contacts of those contacts and that's what we have. we have teams deployed, state, local, and cdc on each of those five individuals and their contacts >> do you feel you have enough information on the virus at this point to understand what we need to understand about it >> we have a lot of knowledge about it but we've been very transparent that there are some key facts we don't know about this very novel emerging virus that is why we're delighted china has invited the cdc to participate in a world health organization team of experts that will go on the ground in china so that we can work with chinese experts, look at the

data, develop the tests thatwe want to do to ensure we get a better sense of how contagious is this virus? what is the severity of the virus? what do we see in terms of the incubation period on the virus all of those -- the basic information we've got to get a real profile on this and we're there to help the chinese do that >> all right jim cramer i am confused about allowing flights from channel 9 frina, ft city if i live in prc i know my health care system is not nearly as good as the united states i think shanghai has three hospitals. each one handles 500,000 people. i know i got a third rate medical system with not great doctors. don't i want to be on a plane to the united states and get sick here >> so, jim, we're actually not seeing that. in fact, the chinese government has shut down travel out of the province and we don't have any direct flights from wuhan to the united states anymore. we have occasional travelers who

routed through there from other cities and we are identifying them with active surveillance. then the other individuals coming from china we're seeing a fairly radical down turn of travel from china into the united states. we'll take any steps recommended by our teams as public health measures to protect the american people >> i have seen some comparisons to the chinese ability to treat medical instances at scale and how arguably it is much better than it was during sars many years ago. would you agree with that assessment >> i was here for sars i've been here for anthrax i was here for sars, ebola, pandemic flu we have a team with a heck of a lot of experience both in leadership and the world's best career public health people. what i have seen so far is a fairly radical departure in terms of the chinese government's communication, transparency, and cooperation with us and the world community compared to sars could it be better well, we'll see. but i'm really happy we're going

to be part of this world health organization team and that china has invited the cdc to be part of that on the ground in china >> mr. secretary, what is the reason for taking the risk, slight as it may be as you seem to explain, of letting in or continuing to allow people from china to travel here why would we >> so whenever you're dealing with the public health issue like this, notions of shutting one's border down, for instance, borders are very porous all around the world, so individuals can come from different places and you can actually sometimes create hysteria simply by taking various measures we have active advisories in place against travel to various parts of china and in fact a level three state department warning suggesting americans shouldn't travel to any part of china unless they take a very serious precaution and think hard about why they should be traveling there. we're going to take any steps necessary, though, to protect the american public. they need to make sense. they should be justified but we'll take any steps we

need nothing is off the table >> mr. secretary, would you go to wuhan >> of course not we have a level 4 advisory saying americans should not go to the province. >> i want to get to beijing and i want to get on a plane to here >> and we're tracking any individuals who would come from wuhan. >> but you can't tell. that is the whole point of the thing. the two-week gestation period. you can't tell i see people trying to take temperatures and i'm not laughing at that everything matters but isn't the whole thing that is really scary, mr. secretary, that you don't know you have it and nobody knows you have it and you can't monitor all of those people who come here i'm trying to figure out why it is scary i listen to you and i think, well i have a flu shot i'm doing well everybody else is doing well it's what we have in this country is worse than what they have maybe we're all making too much of it. but i don't want a person from china next to me >> well, jim, it is important not to over react and to use evidence and so when individuals travel, they're going to travel in the united states from various ways. they can travel through france

or germany so we need to take steps that are appropriate to protect the public health. nothing is off the table we also just shouldn't take steps that are symbolic to make us feel good we should do what is necessary because at the end of the day, with any infectious diseases, the profile is this is not uncommon diseases have incubation periods. people with respiratory illness shed the virus most commonly when they are symptomatic and when they are most symptom attic. the public health infrastructure, the basic blocking and tackling, educate, identify, isolate, diagnose, treat, contact trace this is what solves public health outbreaks of infectious disease. it has in every instance in the past it's what we did with the latest measles outbreak it's what we're doing now. >> well, the education part is helpful obviously to our viewers everywhere, mr. secretary. appreciate you coming on and please come back with as many updates as you can >> thank you >> jim, what's on "mad" tonight?

>> i have to say mr. secretary did make me -- he's seen it all and obviously some perspective is given i got to point that out. we said all the stuff and i felt better >> yep >> tonight we're going to talk about the greatest technology stock you've ever seen it's -- i'll give you a hint >> 6:00 p.m. "mad money." we will see you tonight, jim back to the coronavirus and out to our eunice yoon live in beijing with the latest today. hey, eunice. >> reporter: hey, carl the number of confirmed cases is now fast approaching double that of sars. the province which is the most affected area in china has just announced another 300 cases for a global total now of 8200 with 170 dead the death rate isn't as high as sars but the grim milestone has prompted several economists in the region to rethink whether or not they need to lower their forecast for china

most expect beijing to still announce later this year that the growth target is, for 2020, around 6%. but, still mizuho sees 5.6% as a possibility. fitch sees 5.4%. the eiu is the most pessimistic predicting a slowdown as weak as 4.4% most cited china's economy is much more dependent on can services as well as consumption. people won't be going out to the movies or shopping also, the export sector won't necessarily save the day not only is the chinese economy a lot larger but also more provinces and cities have been announcing in the past 24 hours their plans to delay the resumption of businesses for at least another week or two. so the memory of sars is vivid out here in hong kong there were long lines where residents were waiting for hours just to get their hands on a box of masks.

some of the retailers there have been rationing the masks masks are in short supply on the mainland as well the authorities just announced they wanted companies to boost production for key medical goods they said and that is protective clothing, face masks, goggles, ambulances, as well as drugs and they said they are going to -- the central government is going to take control of the allocation of those resources. from the local authorities guys >> eunice, thank you for the update it is obviously hugely important to the market these days good thursday morning and welcome back to "squawk on the street." i'm carl quintanilla with sara eisen and david faber at post 9 of the new york stock exchange markets opened down about 150 or so but a nice bounce we've erased about two-thirds of that as the s&p is down to 3261. >> the busiest week of earnings continues with major names on the move this morning. julia boorstin is breaking down facebook's quarter, reporting

its slowest revenue growth since its ipo. phil lebeau has tesla continuing to charge higher this morning and i have coca-cola speaking to ceo james quincy earlier this morning. let's start with julia and the big move on facebook >> reporter: facebook beat expectations on the top and bottom line. investors are now responding to decelerating growth across the board and expenses which increased by more than half last year are putting pressure on margins. you see facebook shares trading down about 5.5%. those operating margins were 42% in the quarter that's down from 46% a year ago and from 57% in the fourth quarter two years ago. and the cfo is warning that 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 related headwinds. while we've experienced some modest impact from the headwinds

to date the majority lies in front of us. >> the ceo focusing on the potential in e-commerce and payments talking about the roll out of what's up payments and tools for small businesses to drive shopping which would in turn drive ad purchases. >> we expanded shopping ads to all advertisers globally before kwoir and began testing out shopping ads and what you'll see from us is very small steps to get more people in and make this deeper across the experience people have. but you are right we are moving very slowly and very, very carefully. >> mark ma hainey saying facebook's move lower is an expectations correction saying the market was looking for a material upside and didn't get it street account tells us 80% of analysts have a buy over weight rating on the stock but six

analysts have lowered their price targets on facebook since those earnings david? >> julia, thank you. want to move on to now one of the other big movers this morning, this time up. in fact, tesla shares now up 54.5%. phil lebeau has a lot more on this blowout quarter and what has been an incredible run for this company over the last number of months >> reporter: one reason why the stock continues to chug higher this morning is because of the guidance from tesla when it comes to deliveries in 2020. now, for a point of reference last year the company delivered just over 360,000 vehicles most on wall street thought they'd have guidance somewhere around 465,000 or 475,000. tesla says it will comfortably deliver at least 500,000 vehicles in 2020 the big concern for tesla and for ceo elon musk, battery production the factory out in sparks, nevada just outside of reno is

cranking as many as possible, cranking out the cells, the battery cells they need as quickly as possible and they'll need this because they soon will have the model y coming online >> we don't have to worry about demand we're worried about production make sure we get the production ramp going and reach volume production as soon as possible with the model y >> and the key to that production ramp? battery production not only do they have the model y, sales beginning later this year, but they'll also have the semi in limited numbers later this year and then will start working toward the berlin giga factory next year. so, guys, the battery production is really a key focus for tesla here and for analysts looking at tesla over the next six months to a year, how they can continue to ramp it up and get even more out of the batteries they are producing. >> phil, you look at what the stock has done now we're talking back in june twa is below $200 a share just to put it in perspective.

>> reporter: yes, i know >> this has been an ongoing battle for so many years we know obviously many who short the stock based on valuation, based on the belief they would not meet deliveries. based on the belief that in fact it doesn't deserve this multiple because of all the other things that are coming. is it over now has elon musk won? >> look, i think he is one from the perspective of if you believe this is an inflection point for electric vehicles talking about 2020-2021, who is best positioned within that market hands down it is tesla right now. doesn't mean they've won doesn't mean you won't see an electric vehicle that comes out maybe from volkswagen or general motors at some point that could rival tesla in a particular category but they've got a portfolio right now that is winning. when you talk to people, both just average joe retailers who are buying vehicles or when you talk to people on wall street they all say the same thing. tesla is basically the leader when it comes to electric vehicles there is nobody else who is

truly threatening them at this point. that could change but as of right now it doesn't >> phil, we have united now extending china interruption of service to march 26th. i guess we should probably get used to this >> yep and you know what else you should probably get used to, carl we will soon hit a point, i bet you we will hit a point where you will start to hear back from pilots and flight attendants and at some point if you're one of these airlines you're going to get some pushback from that. what do you do what do you do if you have pilots who are saying i'm not comfortable flying in or out of there. it is going to be tough. so we may see further schedule reductions from the three major airlines that fly into china >> all right certainly we saw that to some degree on the max and now perhaps with china phil, thanks >> you bet let's hit coca-cola now. shares are up. gratifyingly boring is how james quincy coke ceo describes the performance of the quarter and going forward. what he means, both the quarter

and the full-year outlook reflect a more reliable and steady growth rate, improved execution and branding that is all helping coke weather big issues like a strong dollar and other economic and geopolitical problems around the world. some highlights from the fourth quarter. 7% organic revenue growth. 6% for the year. 5% expected for 2020 so a step down but, still, much higher than where coke has been in recent years. they are projecting 7% earnings growth this year as well what's behind the recent strength well, coke zero sugar for one is still seeing double digit growth every quarter. number two is coke coffee which is also doing quite well they are excited about the experiments they're doing with coke energy which will be featured this weekend at the super bowl as far as the coronavirus impact, coca-cola has kept some employees home and some plants shut with its bottlers the key, though, quincy says, is we're still continuing to run manufacturing operations he says the population still has to be tended to and it is too early to tell how big annish yao

you this will be for coke's bottom line. as far as the u.s., quincy says the u.s. consumer is still pretty robust and actually election years tend to be good for us, he says, because some way or another people tend to have more money in election years. and they spend it. despite what he characterized as a heightened degree of global rumbling out there, geopolitical tensions, brexit, tariffs, which all impact coca-cola the stock is trading at a record high right now up 2% it has under performed its rival pepsico over the last 12 months but both stocks are up and both companies are growing strongly >> given what has happened with e.m. baufs the coronavirus what happens to our dreams of having a somewhat weaker dollar to help some of these multi nationals? >> so the dollar is still a big headwind for these companies it doesn't work sort of tick for tick it was an eight-point headwind on coca-cola's winnings. but the dollar has softened of late and that should actually work in these companies' favors.

what is interesting is the companies like coke, which get hit as hard as any multi national are able to continue to show growth based on organic revenue, which strips out the currency and shows they're executing better and marketing better and branding better and they are able to move past it. i would put nike in that category look at mondelise, they are up but they are weathering the issues like foreign exchange when we come back more on today's market action as the dow is about to erase all of the early morning losses >> reporter: shares of u.p.s. down about 5% after the company reported eps inline but a miss on revenues. coming up with we'll speak with ceo david abney about those results as well as the company's plans to electrify the future. sometimes, the pressures of today's world can make it tough

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u.p.s. shares under pressure after reporting q4 results this morning. missing on some revenue despite growth in u.s. volumes joining us here at post 9 this morning always good to have the u.p.s. ceo and chairman david abney. good to see you. >> glad to be here >> we dealt with a lot of global trade uncertainties under

tariffs. now we're dealing it under coronavirus. how do we answer this puzzle >> first i'll talk about the trade and phase one. we think there is some momentum there. we believe that can build to phase two. we are seeing especially usmca that is going to hit very quickly. the coronavirus is something we are concerned about. mostly for the people of course that are affected, people in the general population, and so we're doing a lot to deliver emergency supplies and stuff like that and giving our people equipment to be safe. we are seeing, we've canceled some flights since it started but it is also chinese new year's and we would have canceled some of those flights anyway as it goes longer then we'll have to take a look. but the great thing about our network is we can adjust it for these kinds of things. >> david, during your earnings you actually announced or yesterday after the bell you announced you are increasing

your super hubs, large capacity sorting centers. where do you get the volume from to justify that investment in three new ones this year >> you know, the volume is really coming from throughout our customer base. we are really focused on e-commerce and focused on the e-commerce ecosystem so the large e-tailers you hear a lot about with the retailers and just as importantly all of those thousands and is of small and mid sized businesses that most of those announcements we made yesterday were focused on >> the small and mid sized businesses are one thing but what about amazon? today you announced amazon is about 12% of your revenues how do you balance them as a rising competitor and also a partner? >> amazon is a big part of our -- big customer for us we have a mutually beneficial relationship it did grow last year and grew mainly to three things one is we had competitive winds

and we were happy to see that. second, the structural change they and other big companies led that moved a lot more into next day. and then of course when it looks at percent of revenue, the fact that our international supply chain was muted a little bit due to macro would have caused some of that to increase. with amazon, as long as it's mutually beneficial, and we watch what they do there, certainly they are a customer but they can be a competitor in certain areas and they monitor that but we think if we focus on all three sectors that we're in the right place. >> just on trade which is an important issue for you guys we talked last week in davos about u.s./china phase one and the fact the tariffs are still on i am wondering what kind of boost if at all you expect from overall trade volumes this year. they actually subtracted from global growth last year.

>> right i think phase one is a big step for two reasons. one is what it kept from happening. the next round of tariffs will be much harder on a lot of our customers and that was our biggest concern. it has stopped second, some of the other tariffs were reduced and there is more positive dialogue going so we see phase one as a good first step we just encourage the governments on both sides let's get to phase two and find a way to increase trade between the two countries. >> are you worried about the dynamic shiflting to europe and uk, trying to talk the administration out of any efforts to antagonize that relationship this year >> we certainly want to see good trade relationships first with brexit we believe the odds of a hard brexit or brexit with no agreement is probably less with the news that has come out but spend a lot of time at the world

economic forum talking to people about the importance of u.s./ek trade and eu/u.s. trade. in those two areas we hope to see good, positive momentum this year >> david, you are one of those ceos who comes on with us rain or shine there are so many of us here rain or shine. today is not a great day for your stock price i'm curious is the market not understanding something? what is your reaction to that almost 6% decline? did you expect it given the forecast you gave? >> we have a positive message. our fourth quarter was very positive we met expectations. we have that momentum. we made a conscious decision we saw the structural changes of next day and also smbs seven days a week. we decided to invest heavier this year in an opex to increase our network so we are to 80% of the population our network is

going to be quicker than it was and we are also really leaning into the weekend and we feel strongly both of these will provide opportunities. additional business, additional revenue, and they will be in 2021 so we see this as seizing the moment, moving it into 2020. it will be acreed in 2021. we think considering the fundamentals are strong and it's like a 4% effect on eps, you consider that. >> right were you surprised the market doesn't agree at least at this point? >> i think we have to continue to tell our story and make sure we talk about the benefits that's what we will continue to do >> wish we had more time, david. hope to talk to you again soon david abney of u.p.s. and our own frank holland. >> thank you after the break we'll get an inside look at the ongoing battle between xerox and hp. i'll speak to one of the independent candidates who has been nominated to replace one of

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now for our etf spotlight today taking a look at the utility select sector spdr hitting a high earlier, currently trading down just barely two of the biggest holdings each up this month. the dow utility index also an all-time high up more than 6%. so far for 2020 handily out performing the s&p 500 clearly a defensive play in a market that's been pretty concerned about this coronavirus in china >> just last week utilities took the top performing sector mantle away from tech right? says a lot about where we are in the hunt for yield let's get a news update. sue herera is back at hq >> good morning, carl. thank you. secretary of state make pompeo is speaking in london with uk foreign secretary dominik robb and says china represents the central threat to western

democracy. >> it is an enormous economy to which the american economy is deeply tied. there is huge opportunity for us to do really great, creative, innovative business work between our two countries. but the chinese communist party under president xi has made clear that they have an agenda that is not always consistent with the very values that we have been speaking about >> israeli prime minister netanyahu meeting with russian president putin to discuss the u.s. mid east peace plan he said he wanted to hear putin's opinions on it netanyahu made the stopover after visiting washington where president trump unveiled his long awaited peace plan. and this is the coolest story of the day. astronomers releasing what they say is the most detailed images ever taken of the sun's surface. it's divided into what are called kernels they are cell like structures each about the size of texas that carry heat from inside the sun to the outside the images were taken through

the brand new solar telescope which is located in hawaii really cool stuff. that is the news update this hour david, i'll send it back downtown to you. >> all right that was great well, we are here keeping a close eye of course and have been reporting on all the ups and downs in that fight and it is one between xerox and hp. xerox of course nominating a full slate of directors to replace hp's board that was last week and joining me now in an exclusive is one of those board candidates the corporate governance expert betsy atkins who is an experienced board member to say the least. having served on 34 separate boards at one time or another. you are only on two public boards right now >> that is correct >> why be part of this why be part of what is right now at least a fight, certainly one in which we can expect there is going to be more back and forth. why did you want to be nominated? >> well, it is an amazing opportunity to put two iconic

companies together the fit is perfect and the chance to be a director and help give voice to the shareholders of hp so they can consider this as an alternative is compelling and exciting >> what about it is perfect? >> you know, the industrialogics are amazing. you have two companies one is ink jet one is laser one serves the consumer. one serves the large enterprise. one does its 3d printing on plastic one on metal the go to market meshes perfectly. you can take those two hardware companies and put a software wrapper around it and do, you know, offices and service. they have amazing ip inside. you have xerox park which is iconic around the world. hp labs. it is just a perfect fit and in a declining market like print about 2% to 3%, the first consolidator wins. you build a powerhouse >> well, clearly if you are elected you believe

that it would be in the best interests of hp shareholders to move ahead with the combination with xerox do you believe john byzantine should be the ceo of that combined company, xerox's current ceo? >> i think if elected my job is, my loyalty is to the hp shareholders to get the best price and deal for them. i think the way you figure out who should lead the company is you pick best from each company. you know, i think john has done a terrific job at xerox. i mean, the results speak for themselves amazing quarter. he beat on every single metric >> although revenues are still down 4.7% decline in year over year constant currency. it is not like they're moving up this way he is doing a great job some would say on containing costs but can you ever expect a combination like this would actually grow? >> you know, i think you can because you can take enough out in costs you have both revenue and cost

synergies and you'd be able to reinvest more in innovation. just a lot of innovation we see companies going public out of israel in this space. you'd have a chance with a nimbler, faster, combined entity that covered all spectrums to do more embedding of software, for example, already you could embed, and they do, mac fee cyber software they embed docu sign functionality. you'd is more of that trend and focus i think in a combined entity >> a lot of this process right now that you're obviously beginning in terms of communicating is communicating with their shareholders. have you done that are you starting to speak to any of the shareholders of hp in terms of trying to make your case as to why they're better off electing you as director as opposed to the current board >> i think it is going to start soon and i look forward to it. i believe xerox is reaching out to hp shareholders and making their case and i'm sure the

slate will have the opportunity to engage with the xerox shareholders and i think there is interest. >> you do. >> i do. >> why >> it is so compelling you look at an industry that is in decline about 2% to 3%. you've got about seven little fragmented companies like canon in japan the history is compelling. the first one to consolidate wins and you build this end-to-end powerhouse and they complement each other just perfectly in every aspect of their businesses there isn't a lot of overlap there aren't a lot of things to spin or take out where there is redundancy it is just a perfect fit >> you believe the 2 billion plus in synergies that xerox has been talking about is something they could realize >> i think it's a conservative number and i think they can together. yes. >> finally, in my reporting on it of course many of the investors who might even be in favor of the combination still believe ultimately it makes more sense for hp to buy xerox. if you are elected as director,

and this is a possibility, would it be your sense that perhaps that's the better way to go? >> you know, i think we have to actually have the opportunity to do the deep evaluation and see i think everything has to be on the table. what's the right thing, if i'm elected i'm representing xerox what is the right thing for their shareholders what is the best long-term enterprise value and strongest competitor and i think everything is up for negotiation. >> all right we'll be following closely hope to have you back as well to talk about other interests of board members such as esg which we talked so often about and i know you've been very involved in but, betsy, thank you for your insights today. >> i really enjoyed it thanks for the chance. >> sure thing. sara, over to you. >> a is we head to break dow is down about 115 the worst performing stocks on the s&p right now. dupont, chemical giant disappointing with its outlook facebook at the bottom of the pack down 6% on that disappointing revenue growth rate

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sara spreading faster than sars sars took 1% out of china growth for one quarter. you know, i think it's still too early to tell, to draw lines between the virus and the impact on the global economy but, clearly, investors were banking on this global recovery and we sort of suffered a one-two punch of increasingly worse news from the virus and of course disappointing q4 results in the u.s. >> how would you advise clients and investors what to do would you buy? take the opportunity on some of these virus dips and the scares or is it just too uncertain? >> well, i think you want to trade through this i think you want to own the stocks that you want to own at the end of the year. i actually have the view and it is very similar to 2003, and i think what will happen is you'll have the volatility short term but there are great buying opportunities and what is very

interesting to me, i think ironically this actually may benefit the u.s. markets in terms of agricultural exports and, you know, once the dollar comes off its high and starts to weaken it could be good. >> hey, jack, we'll enter a bit of a political silly season soon with the caucuses on monday. is the thinking right now that a sanders victory is market negative because of his left policies or market positive because there's a belief out there he would easily lose to trump? >> yeah. i think so far investors are not taking a prospect of a sanders nomination too seriously i think that, you know, the democrats probably recognize that promoting a candidate that is too far to the left will undoubtedly result in, you know, election failure to start. so i think that where the

investors will start to take notice is if you see, you know, growing, you know, growing likelihood of, say, a biden or a bloomberg that could potentially challenge president trump. >> kirk, we just did a little piece on utilities trading at record highs best performing group of stocks so far this year is that where you want to continue to be despite more expensive valuations in this kind of market >> well, that illustrates to me the flight to safe haven that is a very similar trade to buying treasuries and i think the thing you have to worry about is duration. interest rates have come down on the ten-year treasury from 1.9% to a little below 1.6% which is a pretty big move, and obviously reits and utilities and those things will do well in that environment. >> what is the driver right now, jack is it earnings is it the fed? kind of doing no harm yesterday and keeping the balance sheet growing? the coronavirus?

what is the catalyst >> in my view, if you're looking at 2020 in its entirety it has to be absolutely earnings. the fact is90% of the return w enjoyed last year was the result of valuation expansion we can't account on pe expansion this year unless we see an appreciable drop in yields, which doesn't likely can be in the cards where we could have, you know, earnings positive and yields dropping. so that means that the price appreciation in the market has to likely at best match earnings growth right now expected to be about 9% year over year through 2020 maybe at, you know, 2% for dividend yield best case 11% to the upside. of course if now investors decide collectively scratch their head and look at valuation or if yields somehow rise for some reason, we could see potentially 15% down side. you know, what that suggests to

me is, you know, continue to hold your positions. continue to monitor earnings and it's all about fundamentals this year in my view >> well, some argue, kirk, it remains about the debate whether or not the fed is engaged in qe or not we tried or liesman tried to get powell yesterday to talk about whether or not a reduction in repo operations in q2 could amount to a taper tantrum. he didn't want to go there why would you want to be long through april if the fed was going to take that liquidity out? >> i think that the fed has made it clear that they are going to continue to support the market and to your earlier guest's comments it's all about earnings i mean, the s&p was up 25% the last three years and earnings were up 25%. all things being equal if earnings are up 9% to 10% at the end of the ethe s&p is going to be up 9% to 10%. the fed is, whatever their short-term comments are they've

continued to indicate they're going to be accommodative. >> it's not necessarily been the case though, kirk. stocks have outrun earnings and vice versa for the last few years because it's all been about the fed. >> yes, but there's a lot of liquidity in the system. any time the money supply is growing faster than gdp. >> we just said it was all about earnings >> well, it is but also the money supply and my earlier comment that the fed has been accommodative and put more money in the system is contributing to share buybacks and dividends which helps earnings >> all right, guys thanks very much >> thank you as we go to break take a look at shares of altria, talked about it earlier today sliding after reporting a quarter of in line numbers but below consensus salewhat's important to you.s a charge of $4 billion related to its investment in juul ava's co. being able to retire on our terms.

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defensive plays are surging this year and could be telling a very different story on this bull market run find out more on trading nations.cnbc.com more "squawk on the street" coming up. - at southern new hampshire university, we believe in education built for all people. - [woman] snhu was the best experience of my life. - [man] without snhu, i wouldn't be the leader i am today. - [woman] i graduated high school 19 years ago. i still finished. - [man] in the military, you feel that sense of accomplishment.

that's what snhu is. - you will march from this arena and say to the world.. i did it. - [woman] you did it. i love you. - [graduate] i love you too. concerns impacting today's trade taking stocks into the red with the major averages down about 0.5% where are the ultra wealthy looking for portfolio protection amid all the global uncertainty? michael sonnenfeld joins us now to talk about the firm's annual investing conference down in arizona. welcome. just for those that don't know what tiger 21 is, explain what your group does. >> sure. tiger 21 is 770 of the top entrepreneurs in five countries. we have built businesses from scratch. think of it as the all stars and generally we meet every month around the world in 60

groups helping one another to invest and think about the broader issues of what their wealth has created and then we have an annual conference and that's where we're at today. >> i think it's what, $30,000 a year to be a member? so it is really the ultra wealthy. >> it's the people who have been able to -- obviously, the coronavirus is on people's minds. it hasn't hit the united states but the numbers are off the charts in china. it is hard to know exactly where it's going i don't think people are trading into an assumption that it's bigger or smaller. members are generally -- they fight to have protection with large amounts of cash so there is a downturn, they can weather through it rather than having to liquidate at the wrong time. >> do you have a sense of how high those cash allocations are right now from your members? >> yes yes, i do. our members are holding about

12% cash and what that means is that given they live on about 2% a year, through one lens they can weather through a six-year storm, which is longer than any financial storm in our lifetime, and on the other hand this large amount of cash gives them -- makes them ready to be able to pounce on an opportunity if there is a big down turn and they see a buying opportunity. >> how do we square that with surveys from the likes of b of a that argue cash balances are near record lows >> yeah, so the main difference is that our community is some of the top entrepreneurs who have built -- been building businesses from scratch. if all you are is an investor, however you acquired your wealth, you're going to look at cash very differently. but when your entire history has been building businesses and buying into opportunities, cash takes on a very different role and the level of our members'

success over 20 and 30-year periods puts them in a unique position to deploy cash quite productively when the opportunity affords. >> kind of reminds me of what, who was it the other day on our air said cash is trash i wonder what you guys think when you hear things like that >> we think ray is one of the great investors, but our community is about entrepreneurs. i wouldn't go toe to toe with ray investing large sums of capital, billions, but with small sums of capital our members create magic and they do that by having the cash ready to deploy when the opportunity affords itself >> what sort of opportunities are they talking about is it in the public market or is it elsewhere like private equity >> no. no actually, so our members have created their wealth primarily in private equity, small companies, and in the real estate area. if you look at our asset

allocation across the $77 billion that our members invest, public equity is only 21% whereas private equity is 24% and real estate is 29% so they're focusing on the areas, and these aren't the big funds. these are where members are rolling up their shirt sleeves and actually working the assets and they've been able to achieve much higher returns than the market and they do it in part because they're working together through our groups this is kind of a self-help group. members are learning from one another in our monthly meetings and looking at opportunities and sharing deals and also at an annual conference like where we are now. >> so, michael, yonld tbeyond te obvious concerns about the coronavirus what else is high on the agenda in the public market these days we talk about esg and sustainability as part of that is that something these people care about, too? >> very much so. sustainability is one of the

growing factors, in fact, at the conference we have a couple sustainability panels and actually one of our groups, we have groups throughout europe as well, has taken on the challenge of helping their community become carbon free we have some of the largest solar investors developers within our group so sustainability is very much on our mind. but energy is critical you want to have the lights go on when you turn the switch on so having a smooth transition to a sustainable energy economy is something we talk a lot about. >> what are you hearing about the election is there any candidate that your members are supporting and/or are particularly worried about >> so because we have such a diverse group, we have people on both sides of the political aisle. on the democratic side, probably we don't have a lot of suppo supporters of a socialist rearrangement of our economy our members sort of built their

success the old-fashioned way, and it's not so much they're against paying more taxes. they just want to make sure that taxes aren't just a redistribution of wealth but they actually go to help stimulate the economy. so the infrastructure spending, maybe education, things that build the long-term strength of an economy is something that our members are much more interested in but they're aware of a trillion-dollar deficit. it's just not sustainable and it makes members really nervous as does a lot of the confusion and activities going on in washington so they hope wherever we come out of the election, some of that goes away one of the things is our members have huge immigration. we have lots of immigrants who come to america and really made good and being able to attract some of the best and brightest people from around the world to keep our economy going is something that comes up quite often. >> interesting color michael, thanks for joining us

>> thanks so much. >> let's send it over to jon fortt so we can get a look at what is coming up on "squawk alley. >> major indices at or near session lows we'll keepian iaan eye on that microsoft, tesla, all making significant moves. vestment firm that has a truly long-term view? it begins by being privately owned. with more than 85 years of experience over multiple market cycles. with portfolio managers who are encouraged to do what's right over what's popular. focused on helping me achieve my investors' unique goals. can i find an investment firm that gets long term the way i do? with capital group, i can. talk to your advisor or consultant for investment risks and information. talk to your advisor or consultant car vending machines and buying a car 100% online.vented now we've created a brand new way for you to sell your car.

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welcome back to thestreet.com/nbstree"squawk on the street." i'm dominic chu. one sector leading us lower is health care, driven to the downside with a slate of firms out with quarterly results among the worst performers in health care you've got the lex i don't know, thermofisher scientific, but as we see the that a maa joe torre of health care in the negative territory realm, we want to highlight the outperformers. am amerisource, and e eli lily beating profits and revenues keep an eye on those shares.

david, back to you >> i will take those things. thank you, dom now i will turn to sara to ask her what is coming up on "closing bell. >> we have a great lineup. dirk van de put. and we'll talk all about the consumer and the markets, today's closer is famed activist investor nelson peltz from trian partners. >> are you kidding me? and peltz coming on? >> i'm back, david >> why wasn't i informed >> i'm telling you now we're all about the consumer and we're going to get names too from amazon after the bell this is a must-watch program >> why is peltz coming on? >> we're going to talk about his portfolio, procter & gamble. >> ge another one. i'm aware of the portfolio >> if you want i'll ask him a question for you >>ly not give you any questionses to ask

>> you can write them down like the senators >> i'll have our chief justice read them. >> sara, see you at 3:00 after the break, facebook, tesla, microsoft, we'll break down the major tech earnings we've gotten in the last few hours. dow is down 218. i'm really into this car, but how do i know if i'm getting a good deal? i tell truecar my zip and which car i want and truecar shows the range of prices

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good morning it is 8:00 a.m. at facebook headquarters in california it's 11 a 1:00 a.m. on wall strt and "squawk alley" is live ♪ good thursday morning. i'm carl quintanil