from regional banks to spend more on technology. >> courtney gibson >> holding what i've got in c-a-s-h cash. >> cash is king. >> the exchange begins now. >> scott, thank you very much to the exchange i'm tyler mathison here is what's ahead for a thursday breaking news in the last half hour that the first human-to-human transmission of the coronavirus has occurred now in the united states we've got all the latest of the sectors being impacted and whether investors like you should worry and tesla firing on all cylinders as the street cheers its earnings, is euphoria based on or is it the last of the fomo trades why athletes are turning to venture capital as their next

playbook we begin with dom chu and the numbers. dom? >> mr. mathison, worried about that coronavirus outbreak in china and spreading across the world. not terrible he so dow is down. so call it roughly flat. 244 points at the low. right in the middle that have range so far today, tilted toward the downside. s&p off .75%, nasdaq off about that same percentage amount. yields does perhaps signal that safety trade happening right now. the ten-year note yields all the way down to 1.54% for some kind of context that's the lowest levels all the way back to october. people are buying up the safety of government bonds, pushing those yields lower and we'll end on some of the stocks of the day. facebook we know what happened to them on earnings they shed $15 billion of market value, the perspective of losing

a john deere, taking down social media complex as well, pinterest, twitter, snap, down 2.5 to 3.5%. keep an eye, tyler, on facebook and all the other names on social media back over to you. >> dom, thank you very much. breaking in the last hour on the corona virus here in the u.s., meg tirrell is in terry town, new york eunice yoon is in beijing, where the numbers continue to climb. meg, let's start with the latest on this human-to-human transmission in the united states. >> reporter: that's right, tyler. cdc confirmed the first human-to-human transmission, the spouse of the confirmed patient in chicago the original patient had traveled from wuhan, china, back to the united states january 13th and lived with her spouse and he has now been confirmed with the novel coronavirus cdc and health officials in illinois saying they were very close contacts living together and do not believe there's a

risk to the broader american public they're not making a recommendation that people in chicago change their behavior, cancel their activities in the community. the cdc said more broadly that they don't make recommendations that people wear face masks. they don't generally recommend people do that in cold and flu season even though we are in cold and flu season right now. this brings the total number of confirmed cases in the united states to six. two of those being in chicago and linked to one another. they're currently tracing the contacts of those folks to make sure they contact them to isolate any further spread, g guys we could see more cases here but emphasize they believe the immediate risk to the general public is low. tyler? >> meg tirrell reporting thank you very much. there are now over 8200 confirmed cases worldwide with 171 deaths all of those have taken place in china. let's get to eunice yoon live in beijing with the latest there. hi, eunice. >> hi, tyler wuhan virus has far more

confirmed cases than the sars outbreak of 2003 and that grim milestone is worrying economists. beijing is expected to announce later this year that its annual growth target is around 6% however, research has now 5.6 prs as a possibility fitch sees a low and eu is most pessimistic, saying a slowdown could be as weak as 4.4% most cited that china is much more heavily dependent on consumption than it was back during the sars era. also they point out that the chinese economy is much larger so, exports might not be able to save the day also, more provinces and cities have been announcing that they're ordering their companies not to come back to work, at least for another week, possibly two. the imf, though, says it's still very difficult to assess what

the full impact would be of the coronavirus on the chinese economy. they say china still has the fiscal space to be able to support economic growth during this virus crisis. tyler? >> all right eunice yoon reporting from beijing tonight. thank you very much, eunice. impact of the virus will hurt not only the chinese economy but could have a ripple effect in the u.s. jerome powell addressing this in his news conference yesterday. >> there is likely to be some disruption to activity in china and perhaps globally based on travel restrictions and business closures that have already been imposed. >> multiple sectors are already feeling the sector here in the united states. starbucks, apple, mcdonald's all have said that the virus will impact them. in fact, starbucks and mondoleze. then there's the cruise line and

casino casinos, royal caribbean saying it will take a ten-cent hit to earnings tesla is closing its factory in china while ford and gm are restricting travel slue of airlines canceling flights to the affected areas. could all of this eventually bring fear to the market or has it lready? let's talk about that with jason pride, chief investment officer of private clients at glenn meade and paul christopher head of global market strategy at wells fargo investment institute. let me start with you, if i might, jason i mean, the market has been wobbly here. we had some nice days earlier in the week, but wobbly for the past five, six, seven, ten days. is this potentially the beginning of that 10% correction that a lot of people have been on the lookout for >> sure, tyler now, let's put a couple of pieces into context here number one is that 5 to 10% market corrections toned occur

about once a year on average so, to see a 5 to 10% market correction, particularly after what we saw last year is not necessarily out of characteristic and could be something that happens second thing is after a 30% run in equities last year, there's a likelihood that there are some investors that are over their skis at that point in time, having overallocated equities on that run and maybe even used short-term money that they need now invested in equities right now, now worried people who have longer-term perspectives will probably be able to look through that. so far the markets have been able to do that. there's a suspicion in our minds that there are some more marginal investors out there that will end up, you know, exiting equities on near-term basis and that could cause that move downward. longer term impact, again, historically from pandemics is far more muted once contagion is stopped and

containment is in place but we do have to worry about the bigger, bigger outbreaks, right? if this ends up being anything like spanish flu in the early 1900s that impacted way more people than we're talking about with even sar. >> right. >> then we have something economically we really need to talk about. >> how big of a risk is this to underlying stock values? >> we don't think it's a large risk at least not yet there's no real evidence to say that it should be. the virus, this new virus does tend to spread more quickly than the sars virus, the nearest comparison we have to make but it doesn't seem to be as fatal. we are expecting some disruption to consumption and maybe the first couple of quarters of this year and then possibly a reinvig ration or v-shape kind of recovery and consumption in third quarter. so again, you might get some weakness in equities as jason is pointing out we think this is probably a buying opportunity fundamentals still look solid to

us. >> buying opportunity here i note, paul, that you are favorably disposed toward consumer discretionary and financials unfavorably so toward materials. but most favorable on tech. >> contrast that with jason who has a modest underweight, he says, on technology, and a modest overweight in the defensive sectors like health care, staples. you go first and make the case why you think tech deserves more money. >> well, look, we like tech for reasons having to do with quality and growth quality stemming really from cash good cash flows, good cash to debt ratios. and we think what will continue to be quality earnings going forward. if this market will continue to advance, you've got to have the tech sector leading the way. they are most favorable at this point. even if it were late in the cycle. even if this virus turns out to have a longer lasting impact than what we think, we would

rather be in a quality sector with good cash than others. >> i don't think, jason, you disagree with paul there, that it's a quality sector. your concern is that it has gotten maybe -- that money has gotten too concentrated in it. >> exactly i think it's fairly -- we all kind of look for quality or sustainability of earnings growth and trying to get that in our investments and tech definitely seems to have that, to some degree there's some great, fantastic businesses there but there's been an overconcentration of investors into those areas, particularly like the largest, biggest growthiest of the tech players, they've commanded significant premiums they've attained significant market share profitwise and also market cap wise and basically put targets on their backs from both the government and competitors that will eventually be their undoing some point down the road at premium valuations, we prefer to find maybe a slightly slower

growing but still decent growing higher -- high profitability, sustainable businesses that don't have that over valuation. >> okay. gentlemen, we'll leave it there. jason, appreciate yore time. >> thank you. >> christopher, thank you very much always good to see both of you here is what else is ahead on "the exchange. >> announcer: coming up, tesla delivers big in its earnings, saying they'll deliver 500,000 cars in 2020 that was the number it was supposed to build in 2018. should investors be cautious plus, stock hit hard as its juul investment goes south. plus proathletes are turning to venture capital more and more for their next playbook. with td ameritrade you've got courses, tools, and help from pros. it's almost like you're training me to become an even smarter, stronger investor. exactly.

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welcome back to "the exchange." tesla shares up 11%, hitting an all-time high following a blow-out quarter phil lebeau is live in chicago with the details phil >> let's talk about that delivery forecast. most analysts were expecting tesla to say we'll probably deliver 400,000 vehicle this is year they came in saying it will

easily exceed 500,000 vehicles being delivered this year. elon musk said the key to that growth, to achieving not only 500,000 vehicles but growing from there, it will be battery production you're looking at video from when we were out at the giga factory out there in sparks, nevada the key to their battery plan, higher volume, obviously, but also batteries that have greater power, greater energy that really can make a difference for tesla vehicles. >> we've got to improve the capacity otherwise we have complexity but do not improve the number of vehicles on the road. >> as you take a look at shares of tesla, keep in mind it's not just delivering vehicles but the giga factory in sparks, continuing to ramp up battery production and also the one in shanghai, as it brings up its battery production remember, next year, they plan to have a giga factory coming online just outside of berlin. that is really going to be the focus, not only for analysts but

investors the next two to three years. >> phil, thank you very much stay there while investors are cheering those production numbers, we should remember we've seen this story before, at loest a little bit, with elon musk. he has promised big and failed to deliver big sometimes is this time different if so, why let's bring in tim higgins, a reporter at "the wall street journal. the company now says it can deliver 500,000 vehicles in 2020, an ambitious goal. can they do that what is their history in meeting or exceeding, or disappointing on those goals >> well, elon musk has never lacked in vision, ambition or hope tesla has struggle with execution. those results phil just went through are giving investors hope that he is able to excuse going forward here that is the key to 2020, execution. bringing china up. bringing out the model y those are the things that will be key to making that vision

occur. >> there's pressure to execute i would like to get both of your thoughts on this part of that pressure to execute is to execute and sell in china, which is ground zero of this corona virus outbreak. how might that affect the total production numbers and the company's numbers more broadly tim, you first, then phil. >> the cfo yesterday, through some caution, a, it's always a challenge for tesla because of seasonality of sales that affects the entire industry in north america but they are trying to bring up production there and will face challenges with the coronavirus effort to stop that spread because of issues in shanghai where the workers won't be on the factory. >> right. >> it's also unclear how it will affect their suppliers it's not just a tesla issue. it's an all-business issue that's going on there. >> yeah. >> phil? >> i agree estimates for china's gdp, if you believe the numbers they put out, whatever they are, it's

going to come down in some fashion. how much it comes down will certainly have a further impact in demand for new vehicles remember, we're already seeing slower auto vehicle sales over in china, and that is likely to continue this year and then you have this outbreak on top of it. it's going to add further pressure. >> tim, one of the things that was very interesting in the report was that revenue growth was okay, 2% year over year, but it didn't really align with the unit volume sales growth, which was something in the low 20% neighborhood, which suggests they're selling more cars but cheaper cars have i got that right, number one? number two, what does that imply about profitability? >> yeah, absolutely. that's the challenge of tesla right now, going from really a luxury niche player that sold cars typically for $100,000 per vehicle, in low volumes, to one that aims to be sshlly the general motors of its

generation, if it can carry out this edition the model three goes for much less than $100,000 on average about $47,000 in the last quarter so, that's the challenge, as they try to grow that volume one of the keys is to bring down costs. that's why elon musk is talking about doing cheaper batteries or putting new technology into that battery pack that's so important of the and factories in china and berlin, they can bring down their production cost. that's been the challenge for the last 16iers for teacher esla. >> mass versus class, what does it imply about profitability what kind of company, five, ten years from now, is tesla, in your view, lookly to be? more of a mass market manufacturer or a class market manufacturer >> i think they'll be more of a mass market manufacturer i mean, they're already putting down -- you can see it the plant in china they'll have one come online in berlin, you have the one out in

freemt he has talked about potentially building another one in the eastern half of the united states now whether or not all of that comes to fruition remains to be seen but i think elon musk has designs on continuing to grow the volume of tesla. he has already said, you know, the model y, the more affordable vehicle is the key if they were going to stay a niche automaker on the luxury side, they didn't need to do the expansion they're doing. he has already made it clear that their future is as a mass auto maccer. >> tim you said the ambition there may be to be the general motors of the 21st century do you think they can do it? >> that's the challenge. it might sound hokey but elon musk really believes in this idea of shifting the auto industry to electric vehicles, to electric power change because of the effects on the environment. that's his goal, where a lot of companies, their primary goal is return on investment and making money, right so this is the vision that he has been talking about from

really early days. and that is why you see him focusing on the model 3 and model y. >> gentlemen, thank you very much tim higgins, phil lebeau, thank you. shares of altria down following a $400 billion hit from its investment in juul things could get worse why, ahead. plus reading the tea leaves and leaving the tea business what prompted the world's largest tea maker to make a drastic move. reminder, you can watch us or listen to us live on the go on the cnbc app. "the exchange" returns in two minutes.

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oh, and happy birthday... or retirement... in advance. welcome back to "the exchange." here are some of the movers this hour shares of carnival corporation down more than 4%. th this, on news that a passenger on one of its subsidiary ships in italy is being evaluated for possible coronavirus all 7,000 passengers on board are being blocked from disembarking shares of coca cola up nearly 3% after beating on the top and bottom lines the company says it had its largest market share gain as measured by value in nearly a decade dupont, worst performer on s&p, beating on eps, but giving weaker than expected guidance saying nylon pricing will hit full-year results. let's go over to sue herera for a cnbc news update

hi, sue. >> hello, ty. the white house is touting its efforts to curb the opioid epidemic officials say treating the epidemic as a public health crisis is the key. >> addiction over opioid abuse disorder is a chronic brain disease. unprecedented numbers of individuals who are now receiving treatment. our estimates are over 1.3 million individuals are now on medication assisted treatment and getting the psychobehavioral support and wrap-around services that they need. >> lincoln davies, dating dawn dunning in 2004, testifying at the harvey weinstein trial that she came home shocked, upset and angry after a hotel meeting with the movie mogul. that's where weinstein allegedly offered her movie roles in exchange for three-way sex, according to dunning's testimony on wednesday. the u.s. postal service

honoring journalist gwen ifill with a forever stamp it features a photo of her taken in 2008. gwen ifill died at the age of 61 after battling cancer. a fitting tribute to a great journalist that is the news update at this hour ty, back to you. >> absolutely, sue thank you very much. here is what else is coming up on the exchange. >> ahead, u.p.s. wants to go electric and autonomous. > tea leaves could be predicting trouble its fate is up in the cloud. > d fit dierce>>andeciinffen (upbeat music)

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let's catch up on a few stories that should be on your radar. it is time for rapid fire. here to break down the headlines, frank holland, contessa brewer, dom chu altria reporting a fourth quarter loss cigarette company taking a $4.1 billion impairment charge in its stake in juul, due to the

impending legal cases against the cigarette maker. how much did altria put into juul in the first place and how much is the stake worth now. >> $13 billion they've written down the investment two-thirds of that original $13 billion investment. >> ouch. >> this may be good business for altria the value of their investment falls below 10%, their noncompete with juul breaks and there are other e-cigarette makers out there it's a comparable product, not to mention juul brand has been damaged because of possible illnesses. on top of that, sales have slowed down dramatically the brand itself isn't worth the same and the products themselves are not the same. >> what's their stake in juul now? it was 30 some% at one point. >> originally it was over a third, about 35% you have to do the math on 8.6

billion, the amount they've written down the last few quarters would be. they've written down by about two-thirds. >> high question, though, is who would they go to doesn't juul have the vast majority of market share in these products who are you going to go to that's better than juul? that doesn't mean over the long term this won't be a valuable partnership. >> isn't better subjective depends on who you are and what you want in this case, juul became po plar because it had more nicotine that could very welcome to an end because e-cigarette makers have to submit an application to the fda to stay on the market. i want to make sure i say this right. they have to prove e-cigarette protects public health with the things we've seen in the news that's a hard case to make juul may be taken off the market, as well as some of these other companies. >> part that fascinates me about this whole idea is that there's a public relations backlash

about vaping and president trump himself weighed in on this whole process. what's curious about this is philip morris international and, to an extension, altria, are developing this product called icos, their heated tobacco product, an alternative to cigarettes as well it didn't burn the cigarette but heats up the nicotine. you wonder if they move to a very controlled substance in to be alcoholo, which is being licensed for use by altria in the united states. >> another laeeafy substance, t. after years of declining consumption, the brands include fan favorites like lipton, the biggest of them all and pg tips. i don't know that one. unilever is the world's largest

tea maker. i thought it was on the comeback. >> for years the production of tea and the consumption of tea has been neck and neck if you look from 2007 to 2016, it was roughly keeping pace. what's happening is in the most mature tea markets, you're seeing consumption falling off in favor of coffee and bottled water and other beverages. what the tea makers are deciding is that in order to get them hooked on tea again, they have to make it very health focused it has to be something that you'll be proud of as part of your lifestyle for instance you have unilever investing in t2, made tea based on vegetables. you can get a broccoli tea if you want to brag about how health conscious you are. >> that would be real green tea, wouldn't it? >> young consumers and upper middle class consumers. >> the interesting dynamic in the market is what point does tea fall in your overall

structure and how does it contribute to your returns it's mature. it's not growing that much at all. you look at a company like coca cola, they have gold peak products and that's a growing segment for them pure leaf, the pepsico side of thi things these are growing segments for certain people out there it's a matter of whether you find those return rates acceptable. >> look at this picture of them pouring. that's lipton soup. >> sure looks like a boullion cube in there. >> when we think of tea, the usage of that has declined there was a warning sign out there in 2018. starbucks closed all their teavana stores people don't want to seem to buy bulk tea for whatever reason it tends to an older demographic. >> u.p.s. is updating its delivery fleet, leaning into driverless and electric vehicles platform first u.p.s. will buy 10,000

electric vehicles from the start of arrival and u.p.s. will take a minority stake in the company. second, u.p.s. will test self-driving minivans with wemo in the phoenix, arizona, area. you spoke, frank, with u.p.s.' ceo about this. >> they're very excited about this this is a savings and sustainability play. more than two dozen different delivery model vehicles in their fleet. this would be one vehicle that's modul modular, which means the right taillight can be used on the right or left side taillight can be used right or left side. repairs can be done in 15 minutes. it's a long-term cost savings play they took a stake in this company so they could fast track more vehicles if they find out it works it is a little bit of a wait and see. >> how would they do a driverless vehicle you have to have somebody on the truck to deliver the thing to your door? >> i want to clarify one driverless vehicle they're testing. >> just one? >> from a u.p.s. store to their sorting facilities

that's what they're testing right now. >> it's not the door-to-door guy. >> it won't be residential delivery the thing they're hoping to test is autonomous private property on one of their sites, a lot more reasonable and more likely thing to come sooner because it's a controlled area. >> loading docks and warehouses are already doing that with, you know, autonomous forklifts through the warehouse. >> that's the point. if you have a predictable route that happens the same time, the same place, covers the same things every day, that's the perfect example to having an algorithmic thing to drive your vehicle every day. >> sustainable thing, it may make u.p.s. much more desirable as the shipper of choice because so many companies now are placing a premium on sustainability. >> good point. very good point. larry fink coming out, saying he was going to evaluate all the investments in their portfolios on the basis of sustainability and other social measures. go ahead.

>> one other thing tesla has an order in for 25 -- sorry, u.p.s. has an order for 25 tesla tractor trailers. they're leaning into this. the idea is to save not only on the vehicles themselves but long term on maintenance repairs. you have the fleet the size of u.p.s., that's a substantial savings. >> you bet professional athletes moving off the fields and into venture capitals as they look for a new kind of play book. kate rooney joins us live from san francisco with the details hi, kate. >> that's right, tyler athletes and venture capitalists telling me it's a win for both parties, having more money to invest in salary caps. venture capitalists want athletes on the deal because they bring millions offe followers. they can get in a lower minimum investment and in return they can spread the word about the company, lowering marketing costs. bay area athletes have a leg up on getting in on these deals

with silicon valley right in their back wrard and some are looking to investing as a full-time career after sports. guys >> it is interesting, to your point on bay area athletes having an edge steph curry has been in the forefront of this. andre iguodala has you meet a lot of people. >> i spoke to andre igudala's partner and it's about getting in early on these deals and investing at the right time. you don't want to get late in a company like air bnb that's seen a lot of that growth already andre is getting in on software deals and things like zoom early that might not be sort of those high-profile and direct to consumer names but end up being great wins and he seems to be a little bit more involved than another example of an athlete that might say, hey, here is an investment, go and i'm just worried about the return in diversifying he is on the board of an african

company that just went public. he is a little more invested there is this focus on life after sports, especially as some of these careers become shorter and shorter. >> i guess vc firms as a group do okay. but in their portfolios, their hit rates are not all that high. >> no, they're not the reason you want to bring these brand names in there -- the first person i think about from my professional generation, not my childhood, was curtis, 50 cent jackson, who made a small investment in glaso taken over by coca cola more recent examples of steve young, former quarterback of 49ers. a lot of athletes look for that financial aspect to their lives after they're done and bring a certain brand cache and value. >> yeah, because then other investors want to invest with that fund just so they have a

chance to sit down with steph curry at some meet and greet if you have money to invest, why not invest it -- >> not just about the cache but the cash. >> oh, yeah. >> when i was growing up, and to a degree still, athletes are notorious for bad investments. >> yes. >> a lot of them go out -- >> especially restaurants. >> and they go into restaurants, put their name on restaurants. right, kate? go ahead. >> and it's interesting. i spoke to one investor who runs a fund specifically for athletes not everybody is steph curry not everybody has that brand name there are others that are middle of the road, maybe some female athletes that don't necessarily have that brand name but still want to put money to work. so that's important, too if they want that diversification, they have enough money but don't have that brand name they also mentioned social media. that has been the big differentiator in the past decade you have folks like joe montana. it's not like these guys haven't had a huge brand name.

muhammad ali is one of the biggest celebrities in history but now that they have this direct relationship with people on social media, they're able to leverage that. and that is lowering the cost for some of these companies to advertise in marketing. >> kate, thank you very much from san francisco, kate rooney. folks, thank you so much i'll see you in half hour. >> let's get to it. >> get started early. >> 20 minutes! >> till power lunch. thank you so much. amazon web services will be a key number to watch how the tech giant is faring against the competition. that is next le to retire on our terms. taking care of dad. why ameriprise financial? my advisor cares about my personal goals. he gives us comprehensive advice. i feel prepared for what's expected in life and even what's not. she helps us feel confident. we know our financial future is secure. with the right financial advice, life can be brilliant.

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>> amazon reporting earnings after the bell cloud business very closely as competition there heats up josh lipton joins us now with a look ahead hi, josh. >> tyler, historically, analysts are quick to note that aws often has the biggest impact on amazon

share price because it generates the fastest sales growth of those three operating segments and is accounting for 72% today when the company reports, a with ws will deliver 9.9 billion in sales rising 33% that would be a slowdown he note s in part because competition is heating up from rivals pentagon affording microsoft. >> josh lipton in san francisco. deficit is set to breach $1 trillion but investors don't

seem to care should they? one political strategist says yes. now no that's next on "the exchange." when it comes to your customers' expectations, there's one thing you can be sure of. they're changing by the nanosecond. that's why cognizant created a unique engineering approach to design and build new digital products. learn how cognizant softvision designs experiences and engineers outcomes. ♪ cool. ♪

cool. looking to get your business off to a fast start in the new year?

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welcome back to "the exchange." we are, as you probably know, days away from the iowa ca caucuses, the first domino in the race for the white house bernie sanders is now ahead of joe biden and elizabeth in a potential sanders win in iowa has some strategists saying that the election will finally start to play a role in the markets. that and more now with cnbc political finance reporter brian schwartz welcome to both of you gdp number came in at, what, 2.1% yeah, 2.1% in the forget quarter, closing out a year in which the gdp grew at its slowest place in three years the simple question is, does anybody care that the economy is at 2.1, 2.2, 2.3% and that it

has never exceeded the 3% bogey that the administration set for itself and the president said it can be higher than that. does anybody care that that promise hasn't been met? >> anybody voters, anybody wall street anybody voters, not really democrats will be able to use that as a talking point. look what this guy said he would do with the 2017 new tax laws and look what he didn't do is it would make democrats who already don't like him continue to not like him. most people won't notice these types of things. >> i'm with that they're looking at their tax cut, wages, jobs, market. >> my 401(k) is better than it was. unemployment is lower than it's ever been. who cares if it's 2% and not 3%? >> that's what strategists would say. we would agree that's where the economy is, and

that will be a talking point preside president trump's economy is doing well now what >> speaking of things that voters and general folks don't seem to care about, that would be predicted to be north of a trillion dollars for the first time since 2012 when we were coming out of the financial crisis and spend iing a lot of money. this is a trillion dollar deficit. it's going stay that way in a healthy economy. >> that's right. the good old days when republicans cared about deficits that was the talk of the town. tea party. not too much deficits. that was the goal of the republican party and now a lot of people are shrugging that off. it doesn't seem to be talked about in the 2020 election i think voters are kind of saying okay, let's look at what we've got in the kitchen table now. >> yeah i was in the gallery at the impeachment trial this week and watching mark meadows, the head of the tea party, not have access to his phone.

so he can't be communicating with the outside world he's stuck in impeachment. most people don't care about the deficit. so why should we care. >> just did a story about how lipton and selling tea tea must be out. >> tea party is out. we're coffee, people >> don't worry about this deficit! one of those groups, tea party, when obama was in the white house, they did have more power in washington now. that has changed you just don't see them have as much influence anymore in the trump era as much people thought they would have. >> but i mean the quick response to that is that the divide now is among the democratic caucus so the progressive democrats are playing the role here that the tea party was playing about five years ago so the progressives are not going to care about that >> you know coming back to the deficit, there was a argument that secretary mnuchin and others in the administration made was that the tax cut would quote pay for itself

>> it hasn't >> it cost $1.5 trillion so they did admit it was going to cost and they did argue over a certain amount of time that it would not cost anymore people care about the deficit because it spooks people and it worries people about the long-term health of the economy but as we were saying, everything seems like it's going okay >> let's talk about bernie sanders, who's got apparently some real traction in iowa, certainly in new hampshire next to his home state of vermont if he wins in iowa on is it monday night >> monday. >> do you expect that to reverberate through the markets? >> absolutely. i think the markets are terrified of bernie. they were terrified of warren and around september of 2019 i think if he quote unquote wins, it's not a winner take all race, right, but people are take delegates based off how much of the vote they win, but someone will be named number one if he's named a winner, i think markets are going to freak out

z . >> the people i spoke to on wall street, it's a little of that. but in terms of the long game, there's two scenarios being played out one like you said, he goes on to win or get in the top two or three in iowa which he's on track to at least get that and they go on to win new hampshire, that could be a track to winning the nomination guys on wall street are freaking out then there's the other side where they don't really see a path beyond these states really maybe he he wins these, but is he going to go on >> joe went back and did some vernal lest one get too freaked out if bernie wins. only 55% of the time has the iowa caucus nominee gone on to become the party's nominee and 16.6% of the time has the iowa caucus winner gone on to win the presidency so it is not a very good pred t predictor. of much of anything. >> love it >> thank you >> good to have you here

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citigroup entering the race to zero. the group unveiling a robo option for customers with at least 50,000 at the bank our bank reporter joins me now to discuss so this is what, if i have an account there with a certain amount of money, they will give me a little test and i'll check boxes. >> you can put in your age a, how aggressive you want to be, your timeline. what is it for retirement for a boat then they'll put you u in one of six portfolios they'll be premade and sort of geared toward different risk appetites. >> if i put a predetermined amount in or have that amount in the bank among all account, then i will qualify nfor this zero fee. >> five basis points and you can see where we're headed for this. this is the play for the banking bundle so if you bring in 50k in

investments or deposits or retirement accounts or you've already got that, then they're saying kind of like amazon when they throw in music or free or throw in some other -- >> portfolio service for free. >> they're going to add. >> how does this compare price wise with the other big come t competitors, the other big banks? >> there are dozens of advisers across the bank, tech and investing brokerage space. if you look at the banks specifically, it's 35 to 45 to 50 basis points. this is dirt cheap in comparison to the other banks and if you look at schwab, they have a free adviser but they actually put their investors a bit more into cash so there's a bit more of an apples and oranges. >> now, to be clear, i'd be put into a portfolio made up of i'd presume, etfs and mutual funds

i'd still pay the underlying fees >> it's going to be etfs they're pretty cheap but 18 to 24 basis points and you're still paying for the cost of etfs for sure even the cost of etfs are coming down >> they're in their own race to zero >> they are, absolutely. so you would imagine that comes down over time as well >> would you expect the other competitors this thin this fiely and match citi or not? >> the others have 35, 40, 50 basis points and huge armies of human financial advisers that you would think -- they're walking that tight rope. >> b of a does >> wells, boa, even jpmorgan now citi sold that business to morgan stanley about ten years ago. smith barney there's less to cannibalize on their part i don't know if the others will chase them i would imagine other fin techs going to the space much closer to zero. >> and it may well be there's a

personal relationship at the bank that causes you to stay thank you very much. great to be with you fantastic. that does it for the exchange. i'm going to board my golf cart now and ride over and join contessa on "power lunch" which i'm going to hand over to her five seconds early >> appreciate it i'm contessa brewer. here's what's new at 2:00 on "power lunch." the coronavirus outbreak is picking up steam with the first person transmission of the virus confirmed in the united states just minutes ago stocks took a hit as the fear ramps up plus, shares of facebook getting crushed after earnings the fallout and what it could mean for amazon after the bell later, we're just three days away from super bowl sunday and you will not believe how many people are betting on this game. the ceo of fan duel ijoins us t break town the numbers "power lunch" starts right now