>> 2013, sorry >> ravens/49ers. quick final check on markets, before we say good-bye and tell you have to a great weekend. a quick look at futures, the dow off about 155 points, nasdaq up about 43 points. s&p 500 looking to open off six points enjoy the super bowl, folks. we'll see who the winner is and have a great weekend and don't call in sick on monday "squawk on the street" begins right now. ♪ ♪ and i want to say all right, and i want to say all right ♪ good friday morning, welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber at the new york stock exchange. final day of january, futures are weak, the number of coronavirus cases nears 10,000 and the state department warns americans not to travel to china. europe is red, brexit is official today, ten-year 1.55. our road map begins with the

next trillion company, amazon shares surging ahead of the open after a big earnings beat set to rejoin alphabet, apple and microsoft. a shakeup at the top of ibm. ceo roamtti will step down this spring virus fears keep investors on edge. goldman says the outlook will weigh on growth. amazon is the story of the morning up in the premarket once again above $1 trillion. quarterly results beat the street, a robust holiday season along with strength in advertising and the cloud and at 34%, jim, minimal deceleration from prior 35. >> perfect it's perfect i know these analysts have to put out these bull case, bear case there was none the one thing that really shocked me was that if you saw satya nadella how azure is doing, 60% growth for cloud these guys crushed it in cloud plus they talk about the love

they have for same-day, $150 million prime, how that happened overnight. there's a page, not a page, they put out a five-page thing that's more important in many ways than what the numbers are of all the things they do, invented and what they're doing with alexa and it's just so impressive. they are not at all promotional in the conference call, but there was a moment when someone just said geez, how about the web service? is that doing okay the cfo said i don't know, if you do 30 billion last year and 40 billion this year, i think that's pretty good that was the most understated overdelivered number there's no slowdown. there is an acceleration, and i'm trying to figure out whether it's because the consumer is more robust than we thought, the international business is more robust than we thought or just crushing everyone in the retail business it's hard to tell. >> listen, don't forget ads, too. >> ads was good.

it was an afterthought in the old days >> absolutely. now it's become a real business. talking about 5 billion. >> it's crazy. >> that's why google makes so much money amazon retail has a low margin >> google has a lot of businesses that aren't businesses >> so balance out the fact they make so much money >> google has business where it's a furnace and they shovel money into it not unlike a tv show i used to like. what i think is different really is that this is one of the most focused companies i have ever seen it would not allow the shield to go on there. you look at the movies they're doing, what series they're doing, al pacino series the nazi hunters 1977 in manhattan. sounds like a further stretch of the golden book marathon man

david, is it safe to short amazon >> no, not safe. >> is it safe? >> it's not safe >> it's dangerous. goldman goes to 2600 whole foods, nice acceleration there, that seems to be coming together >> they're waving the $14.95 fee and it's two hours i have a whole goods that's about 25 minutes from me and i told lisa, my wife, we're done we're never going out again. we're going to get the toilet paper from one part amazon, we're going to get the food from another part we're done, our life is over >> given the disappearance of retail stores in the area i live in, in new york and others around the country, we're going to need to rely more on it delivered to your home soon. places you go for yourfresh fruit. >> united parcel, one of the reasons why they had to step up the spend? >> maybe

it's where u.p.s. seems focused. updates on prime 150 million we get updates every 50 million additional members last time they said it was 100 million. >> 2017. >> there was a story bezos was distracted because of personal reasons? if he's distracted, what would it be like >> guardian has a piece he did meet with fbi investigators in the wake of that hack. citing sources there clearly that's had a minimal impact on his ability to focus >> the rigor of this man is rather strong. i urge everyone to go through the actual letter about what they accomplished and you will be so proud of america, and we used to be, people used to think we're clowns read amazon and think about what's going on in wuhan and you tell me who has a better set,

better qualifications. who is going to lead the world is it a country that doesn't seem to have any ability to control anything involving public health or country inventing things beyond your imagination. alexa, even as you can ask why'd you say that, is that artificial intelligence or what she'll explain why i may get it when i'm alone. how are you doing, alexa i'm doing fine, jim. why is that? well, you're in the room >> maybe you should sit and be quiet for a little while >> alexa there >> no, in general, having a quiet moment of reflection as opposed to talking to someone or something. >> they could make it look like people i could have a cocktail party where we discuss political events >> jim, back to the performance of amazon stock price which had

been lagging >> yes because people felt microsoft was killing them >> lagging enormous cap, mega cap tech over the last few months is this a resurgence for amazon for a period of time where the doubters go away in terms of how much they're spending to get everything to you? >> to me, i know when i spoke to satya that i had felt that azure was a superior web service this puts that theory into doubt. in terms of what they're doing for shopping, it's even stronger than i thought david's right about the advertising business i think the stock was misplaced -- mispriced, because the company says nothing there's total lockdown this is the largest company where you can't get a single sense of how it's doing. >> that's been one of the complaints among some constituencies but your argument is the stock went in cold, whereas facebook went in hot. >> that's right. and goosed by a raymond james

piece that came out that day which made you feel like he got the call and it's going to be remarkable quarter i defend facebook, a 19 multiple on earnings. >> right >> colgate is on fire with a fraction of the growth on fire. enfuego. >> well, maybe that's not deserved >> which one >> colgate >> maybe facebook is not deserved maybe facebook is undervalued. people hate facebook >> a lot of maybes >> i use sensodyne i think there's a wholesale change going on in the market, we're deciding the younger manager is saying fossil fuels or tobacco by the way, juul, nice buy by your friends at altria >> i don't know when they became my friends >> they're not his friends he did the great documentary that made everybody realize what

they were selling. >> true. >> exxon and chevron -- you know for the first time in my life, i did not sit there and devour line by line chevron exxon i said they're oil companies, forget about that, jake. >> worst profit for exxon in three years to date. >> it's 5% yield so a 5% yield from a fossil fuel derived -- fossil fuels, david, are on the run around the world. >> they're still used, though, i believe. >> it doesn't matter >> filling up their gas tanks with oil-derived fuel. yes. >> in 1982 i met with the president of -- i met during a period where there was a lot of investment in south africa, i met with the president of harvard and i said this is a disaster you got to get out of the stocks he said the companies are doing well huh. harvard sold them all. this is what's going to happen >> we have talked about the fact that we have a shrinking investor base from which to get

interest >> and it ain't going to be taken over look how occidental did after it made that acquisition. notice i didn't say your friends at occidental. >> appreciate that it's been a poor performer, the commodity has come down of late. >> that's understated. >> drop below 40 yesterday >> 2,000 gas stations in this country with sub $2 gas and that number of stations 2,000 could double this weekend with gas cheaper than two bucks >> there's a guy named elon musk, he has a vision and that vision is he can put up all the cars you want and that's what people want. he could take berlin by storm. >> that energy is going to be largely natural gas that's coming, powering the thing that you're plugging in >> he wants to do solar. david, april is national battery month. >> we have a lot of personnel moves after the close day,

roamtti stepping down april 6th. i want to share an announcement from viacom, not unexpected if you listen to anything i've said, most people choose not to. >> stop it, self-efacing jerk. you're a really good guy and you have to say nobody's listening people are listening they're taking action on you >> joe ianello would depart the company long before the contract called for >> what is that shirt/jacket combo? i can't take you straight. >> you want to look at my hush puppies again, too there they are ey ianello replaced leslie moonvez at cbs, replaced by george cheeks cheeks joins from nbc universal, where he recently served as vice chairman of nbc universal's content studios. he'll lead the assets,

television network, cbs news, sports, television stations, first month syndication, cbs all access reporting in to bob backish, the ceo of the overall company. again, eianniello was expected t stay on for a brief amount of time he could have stayed on longer, paid an enormous amount of money. >> as opposed to the shareholder. >> for his services. he is chairman and ceo of cbs. they're not going to have a chairman anymore cheeks will be the president and ceo of cbs entertainment group is what they're calling it the stock is down 20% this year, jim, 20% this year >> it's about cord cut and cbs all access they have some good programming coming, nobody cares they don't >> yes it has taken it the hardest of

all of the cable network-related companies. >> right >> 18.5%, came back a bit yesterday. >> now it's back down. >> it has been a poor performer. >> we didn't mention injenny >> stepping down as the cbs of ibm. take another look at the premarket, still got to get to caterpillar and their guidance in honeywell, amgen, visa and a lot more don't go away. ♪ ♪ ♪ ♪ don't get mad. get e*trade, dawg.

♪ ♪ i've been a caregiver for 20 years. no two patients are the same. predicting the next step for them can be challenging. today we're using the ibm cloud to run new analytics tools that help us better predict and plan a patient's recovery. ♪ ♪ ultimately, it's helping thousands of patients return home. and who doesn't love going home.

changes at the top of ibm. ginni rometty is stepping down april 6th after eight years. she'll be succeeded by arvind krishna. jim white hurst will become president. rometty will continue as executive chair and retire at the end of the year. during her tenure shares have fallen more than 10% krishna one of the architects of the red hat deal >> she had to reinvent the company on the fly, came in at a challenged point in the history of the company she had to get rid of the semiconductor business, change the way the financial road map was doing, had to do $8 billion to $10 billion in revenues a lot of stuff that wasn't working. at the same time she was trying to pivot toward the cloud, where obviously we know the big money

is in terms of azure microsoft and amazon web services. the stock hasn't done as well but to me, she brought in whitehurst, the acquisition will be good. mr. krishna built up the best part of the business and i think the other thing, frankly, i've had a lot of the people, she had this initiative to be able to make it so there's a gap between the underprivileged and the rest of the country i think her legacy may be she has done more, including the government, to be able to make it so there is a level playing field for young people with ptech and i know that sounds a little soft. i don't care i host some of the great kids at my restaurants, really she has done it. nice legacy. >> she took over, i remember doing the first interview with her she had ever done, where they were laying the groundwork

for abandoning the road map. remember >> yes, that was key, david. >> that was really important for ibm because they had commitments in place, financial commitments that they could no longer really meet and it was the beginning of this attempted transformation from moving away from the slow growth, no growth book of legacy business now, entire growth. >> buy-back dividend keep warren buffett happy turned out to be a mistake. >> mr. buffett did not stay as a shareholder after some time. >> no. >> they have a lot of divisions that underperform. i always thought they could have been more accenture, more s.a.p. like when you listen to what microsoft said and amazon said, there is enough businessand i do by the way alphabet thomas

curryian >> you talk about him once a week >> because he's brilliant. he's brilliant >> we'll start talking about the leaders of cloud business by their first names and jim whitehurst and ginny talked to you by this topic about the red hat deal take a listen. >> this is being multicloud. you mentioned vmware ibm has done more reporting of vmware to the cloud than anyone else there is more running in production on the i about, m cloud. >> we got a nice four-way race >> that is going to be her business legacy. her legacy in terms of trying to get young people to be equivalent in this country, something like i said they did better in the government, tens of thousands of kids is one side and the other side is jim is sensational. jim whitehurst from red hat had a fantastic number i know it's still small in terms

of the book of business but this is a company that could be the fourth horse >> whitehurst 52 >> whitehurst looks 38 >> having moved up to president, he could succeed krishna >> people were worried jim might leave. i was worried. he gave a lecture not that long ago and called himself the ceo of red hat and i wanted him to say, now can he say president of ibm. i know that sounds like semantics but i was upset. is jim proud or not proud to be at ibm and jim is proud and he's staying and going to be meaningful >> how do they pay off debt from the deal, keep investors confidence in continued buybacks, two big fires. >> that's right. i was shocked at the cash flow the cash flow was much better than i expected which was really terrific didn't get enough credit for

fixing the balance sheet in the last two quarters. the other companies in this business are just so strong. >> satya nadella took microsoft not in a completely similar position but without a real huge strategy and created a behemoth. >> yes >> is it like the eagles, where you lead your division but once you get to the post season, the talent outside of your division is unbeatable. >> i thought you were going to say it's like the hotel california right now absolutely the elusive 5g will increase cloud use tremendously so a rising tide and ibm is still a great company. i wish she had that period where she wanted to please -- well, the company was trying to please what buffett wanted, when other companies were spending to the cloud. >> remove ties immediately instead of waiting three, two years.

>> that's like an aircraft carrier. it's great to have a legacy where you changed thousands of people, tens of thousands of people >> absolutely. cramer's mad dash and the opening bell, when we come back after a break. we made usaa insurance for members like martin. an air force veteran made of doing what's right, not what's easy. so when a hailstorm hit, usaa reached out

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>> all right, welcome back we've got a few minutes before the opening bell let's squeeze in a "mad dash." wwe. >> david, i usually don't give you an enigma but this happens rarely two co-presidents of wwe remember, vince mcmahon runs as the ceo. george berryos and nelson. >> they were early subscriber based streaming product. took a while to get traction when it did, it took off >> so we just learned that they're both leaving effective immediately, and mcmahon says the change was necessary as we have different views on how best to achieve our strategic priorities barrios was the face of the company. the analysts are freaking out. no one knows what to say ordo and so this is what happens when you say nothing and just get rid

of people. we don't know. no one's coming in, no one is supporting this stock. we just got a downgrade, logical downgrade by morgan stanley saying listen, there's a vacuum in senior management they can't figure out sudden and fairly unexplained, no one can figure out what's happening. i haven't seen this happen in a long time. we don't know. so if you want to weigh in, fine, but to me it sounds like something's very wrong very wrong with the company that was doing quite well >> well, it's losing a quarter of its value right now >> i have no explanation for it. i put it out there and love to say this is an opportunity but this is about as opaque as it gets. >> as far as futures go, jim, is this about the reports we've gotten today or not wanting to go long into the weekend >> i think it's w.h.o. said some calm things and we say don't

travel my friend and doctor, dr. lapook, at cbs, used to be our doctor at cnbc had interesting things to say. [ bell ringing ] [ cheers and applause he talked about infectious diseases, national institute, he says the mortality rate seems high, but it's very possible that ten times the number of people who have declared that they have it are asymptomatic basically and basically what you have to do is start saying it is entirely possible. i know the people want me to say like billy in the predator we're all going to die enlike arnold says get to the chopper, no. what fasuci is saying it may be a really bad flu and that is, i'm not saying -- look, you never want to give anybody false assurance. w.h.o. is saying countries are

woefully lacking in any way to handle it. united states is reputation to handle this. it was the first reassuring thing i've heard no vaccine on the horizon. he was talking about the information about the germ and transmission to someone who was not in china but he was saying the number of people who have contracted it, it may be versus the number of people who haven't a good sign. so i know that people want very much for some of us to say that it's all over. >> i don't think anyone wants to hear that. although china, two-thirds of their gdp will be closed an additional week. >> it's an economic disaster >> copper is down and soybean eight straight days. cat 10.55, talking about inventories. >> cautious. they did do a good job with margins. it's a new caterpillar

they buy back stock. they're not sink or swim, not as episodic anymore but at the same time world gdp, energy business was much better than i thought in terms of gross margins. so not a disaster. >> i think for the first time we have four companies that are surpassed $1 trillion in market cap. >> they spell maga >> my favorite store >> you call google google and not alphabet it's microsoft, apple, google, amazon >> maga i have in my town in mexico, better than anything walmart has. >> yes >> maga is king. >> trillion-dollar market with more than 10% move after the better than expected numbers >> look at that. people short it, david >> growth and margins there, it's funny, yes, and it's up over 10% now for the year and alphabet we'll hear from early next week, i think it's monday

after the close. >> they're going to be conservative as always but sometimes you can't hide how well you're doing, although facebook sure did a good job ba-dum-bum >> got it. it was a ba-dum-bum job. >> there is an aspect of facebook with the quote about how i'm no longer going to be a nice guy, kind of that was a gripping moment in the conference call, mark zuckerberg said the nice guy phase of my life is over >> yes i don't know what that means >> i didn't really know either the most quizzical thing said when it comes to the stock market i think since i don't know i can't even -- i don't even know how the ceo saying that >> i'm not going to be a nice guy anymore. what are they going to be, more transparent? >> understood. >> better understood >> he should not have said that. that was the dumbest thing he's

said it was >> you could say i'm going to stay being a nice guy. >> all we to she had to say -- t care whether he's nice or not. it's not relevant. is it relevant to you whether he's nice? >> he really can't say, it was about we, more about the company. >> i'd rather say i've got some nice pants at t.j.m.a. expectax. >> slacks? >> slacks. we mentioned visa, the big drag on the dow this morning payment volume up 8, they raised the outlook for client incentives, that's going to weigh on the year. >> i urge people to read ellis' piece, talk about visa direct. spree is a buy if you're panicked out of visa, wait until monday to buy it. it's not bad >> take a look at a five or ten-year chart of visa and it's just -- there have been brief, brief moments.

>> and everyone you had to buy >> right, where it went down look at that >> that's one year >> that's one year look at ten, the same. doesn't do much but go up. >> they buy back stock, they have an amazele model, double digit growth you buy visa monday. no one is going to downgrade this stock >> something wrong there that's not right if bernie sanders becomes president, he's going after that >> it's a macro indicator. also a reflection of how cash is dead you ever go to the starbucks and used your visa for a $2 cup of coffee >> i know. my stand takes here with a buck 50 and everybody gives them their credit card. >> remember when charlie scharf ran visa other than when elon musk called me a simulation and told me i did not not what i was talking about, aren't they going to

digital? he says how hard is it to pull a piece of plastic out of your wallet i said well, i don't know. he goes it's easy. don't you understand i always thouglove it when they "don't you understand. >> it's easy for you, you have a costanza wallet. >> what is this i have oh >> oh my god >> transport your booze? >> no, he has masks. >> nice. >> i'm going to super bowl >> can't be too careful. >> are you going to share? >> i have ten masks because you got to throw the mask away at the end of the day what is the mask for really? the mask is if you have the disease and i don't want to get it from you. >> a couple other earnings highlights or not. ea reported after the bell yesterday, electronic arts is down over 5% >> not a great call. not a great call >> not a great conference call either >> not at all. >> why >> think of transition

they're doing the worst of the three. remember, this is a situation it's always the horse race, take two. >> there's a lot of people waiting for the new consoles from xbox and sony >> yes and the transition. go back to what lisa su was saying the weakness was the gigantic transition go back to what satya was saying, the weakness, everyone listen to satya and said we got a transition, no problem and everyone decided lisa su would get crushed by the transition no no >> no. >> no. >> okay. people are saying yes to charter, one of the companies i cover. they lost video subs but that's not where the thoughts are the wireless business for charter and comcast becoming a real thing but broadband is the key you can see the stock up again it has had an amazing move over the last let's take a look at the last year or so. by the way, ceo tom rutledge is starting to leg in to some of the options grants he got some

time back. when you looked at them, wow, really he's becoming an incredibly wealthy man as a result of that. >> you're into that this week. you did the blackstone do you have some sort of -- >> yes no, i like to point it out blackstone, first of all, is a bit different. there a lot of the partners have become billionaires as a result of their investments in the funds that blackstone has. not the stock. >> i thought it might be about iowa >> no, here it's interesting because i remember specifically when they didn't sell the company and rutledge was sort of the main person saying no, whether it was softbank or verizon, and other shareholders thought look he's got numbers, 560 in a are way out there and here we are getting closer and closer in terms of him becoming practically a billionaire as a result so that's why i point it out as for the fundamentals of the company, they've been looking for 10% growth in cable ebitda, some in wireless

they delivered in terms of ebitda estimates overall, broadband with revenue growth there almost 12% lower costs. share repurchase beat consensus as well, $8 billion for the year, some analysts expect as much as 10 to 12 i think the call is ongoing. you got price targets of 600 bucks now. >> it's incredible i will point out that rutledge, since you're going there, is one of the nicest people i've ever met. >> very nice guy no, listen, in this case, by the way, trying to read through the compensation language when you read the proxy is always difficult but they try to align it and here he's becoming wealthy but so are shareholders. >> that's what people want people don't care'ceo gets wealthy as long as they get wealthy. contrast that with yes, cbs. >> right, cbs is a good example. >> zero sum game if i were bernie, which i'm not,

by the way, bernie sanders, listen, what i'm against is the self-enrichment. >> when you watch some of the guys get paid 40 mill year in, year out and/or benefit from buying back stock to increase eps, sacrificing the investment that might have actually brought some growth. will you do a documentary with me about that? >> okay. i don't know where we'll air it, but sure >> because you're obviously so enthused by the way you answered that question. >> i show up every day to do a show with you. >> why don't you just go buy some juul. >> is that the bar now, showing up >> yes >> he's enthusiastic >> how was the juul acquisition? >> 95% >> was that good >> no. no 35% they bought. >> i'm trying to get a rise. maybe it's friday and he's got too much money bet on the chiefs >> we should mention -- >> you don't bet, i know

>> up 55%, navistar. >> carl icahn. >> owns 16%, icahn's average cost is 33 for the first time in a long time. he's actually in the green this may look a little hostile, it was an offer of 35 bucks a share from traton, owns 16% plus of navistar offering 35 for what they don't own they had to change their 13 d so they made the offer before they to do that, hence they haven't had any discussions, they're the only buyer and said we're not going to sell our 16% to anybody else, but we'll see what icahn says the expectation is you see reflected in the share prices it's going to go for a higher price. this probably gets done. >> okay. best news of the night, other than amazon. worst news is again these -- i look over the oil companies, their numbers are fine >> exxon is at almost a ten-year

low this morning honeywell we didn't touch on they guide weak organic growth largely on the max street is at 3.5 >> they also have a safety division and it's a division that has this incredible intelligent warehousing and they've lost a lot of contracts. if you want to know who does the warehousing for amazon, zebra is one of the contracts they also bought cymbal. they said the max is part of the problem. >> levi's beats by a nickel revenues light buy back 100 million, 14% div hike they talked about china, they'll close a bunch of stores. >> i thought it was a push they're in the wrong places and also in the malls. chip did a good job. chip has a lot of things cooking. >> chip is the lead director on the hp board >> yes and he's spending --

>> probably taking up some of his time >> i asked him about it, he said it's a matter of course. he's a dedicated executive but doesn't matter, if you're selling into the mall, it's just not working. there's definitive areas you have to avoid if you're a performing money manager you can't own stores that are based in the mall and you can't own oil companies. oil used to be about 8% of the s&p but it goes down all the time >> you think wexner is an admission to that fact >> i think les waited a little too long, but the bath & body works division is very good and worth the price of the company some of the other divisions are just bad >> yes sick sycamore is talking, victoria's secret >> they have an interesting record some good, some bad. victoria's secret is the one that has been hurt it's very out of style >> we'll get chicago pmi in a few moments.

having gotten gdp numbers out of the eurozone today let's get to the bond pits and rick santelli. good morning, rick >> reporter: good morning, carl. what an exciting week it's been, first the coronavirus isn't exciting, it's depressing but if you're a market watcher, there's been lots of movement, the issue is it's mostly been one direction. look at yields, since july of 2017 for two-year notes we continue to be trading at levels should we close under 139 that would represent a close going back to mid 2017 if you look at what's going on with regard to tens, october 1st chart gives you everything you need october 1st chart shows you the low on the far left is 153 close. we've been toyi ining with it f couple of sessions lately especially with coronavirus, they build momentum on the buy side in treasuries and globally for sovereign in general. today's the big brexit day, and of course, i can't help but think back to the summer of

2016, so let's go there and look at ten-year guilds 166, a far cry from today at 52 basis points but keep in mind there's a huge influence outside of brexit pushing all global sovereigns lower the pound versus the dollar you can see how much lower it is, even though he's firmed up as we have the week leading into brexit and our january read on chicago pmi comes out at 42.9, and this isn't a great number. as a matter of fact, this takes us back quite a ways i only have a year and a half worth here of data points and that is below it, so a big setback here on chicago pmi, expecting the number close to 49, highly disappointing carl, david, jim, back to you. >> all right, we're going to see how the market takes that, rick, thank you. seema modi has a look at what is moving >> good morning. if it wasn't for ibm's move in

early trade the dow would be down more, currently down 243 points s&p 500 and nasdaq down on the day. negative reaction to caterpillar and honeywell. 2019 challenging for the industrials and caterpillar's ceo lowering expectations for 2020 saying global economic uncertainty, he expects dealers to reduce inventories within construction stable spending in north america he sees but china sales flat to down turning to the oil producers, chevron slightly higher but exxonmobil at its lowest level since 2010, down 3% responding to earnings that did not meet street expectations. it's worth noting energy worst performing sector for the past two years and so far 2020 not looking any different. the sector is down about 7% or 8% in january. lower weights continuing to feel the utility stocks this year and earnings providing a lift to

technology, up 6.8% in january guys, back to you. >> it is super bowl weekend, of course the first super bowl since 2012, without a brady or a manning playing in the big game, but for kansas city quarterback patrick mahomes it could come with a big payout, colikely become the nfl's highest paid player on his next contract. jim is going to miami. >> sure. >> there's a lot of chatter there's no defense that can contain him or andy reid's offense. >> but they do have a great rush san francisco team is so young i think that head to head, they're maybe the better team and obviously i'm cheering andy reid because he's had a great run. i think the sentiment frankly even in the betting line is hey, the bookees set it up, they want people to take andy and get it balanced i don't know, it's going to be a fun game

>> i agree the traditional narrative you need a big market team to play i think it's a lot of interest even with the kansas city team >> the quarterback and the chiefs, the fastest man in the league, tyreek and obviously the defense wins games w wow. >> possible san francisco running game, if they have the same success, keep mahomes off the field is probably the best answer >> mostert out of nowhere. >> brady's tweet last night. >> oh my god >> what does it mean, do we know >> he's enigmatic. i've never met him i've never met him you don't want to meet him >> no. >> ever meet payton? >> yes >> fabulous. >> i think he was here once. >> i walked around with him. he loves the show. >> we're going to miss you on monday, right? >> no, are you kidding me? >> you're flying back sunday >> i don't play it that way! of course i'm flying back sunday you don't miss me on monday.

you think i'm one of the 13 million who calls in sick? >> david, that's what it's about, that enthusiasm right there. >> that's true >> thanks, carl, i'll try to remember that. >> take that 3m, throw some powder on, get right in here >> get right in there, man huddle up. >> david, it's called johnson & johnson, i'm not afraid of talc by the way >> it's going to be a great weekend. check out our podcast, listening to the opening bell, "squawk on the street," the chicago pmi number is the worst since december of 2015, and the dow is down 234 woman: what does the word "partner" really mean? someone i can trust. (impact, click) who is with me for the long-term. who understands i'm dealing with lives,

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the gains for the year, down to 19 basis points although here are some of the top performers on the index so far this final day of january ckeanghe's and intel ldi t pa at fidelity, online u.s. stocks and etfs are commission-free.

and when you open a new brokerage account, your cash is automatically invested at a great rate. that's why fidelity leads the industry in value while our competition continues to talk. ♪ talk, talk looking to get your business off to a fast start in the new year? it's go time! switch to comcast business and get fast internet on the nation's largest gig-speed network. plus, complete reliability with 4g lte backup. and, cloud-based security to help protect the devices on your network. greenlight your business in 2020 with fast internet and voice for $64.90 per month.

switch now and get a $100 prepaid card when you add comcast business securityedge. call today. comcast business. beyond fast. looking to get your business off to a fast start in the new year? it's go time! switch to comcast business and get fast internet on the nation's largest gig-speed network. plus, complete reliability with 4g lte backup. and, cloud-based security to help protect the devices on your network. greenlight your business in 2020 with fast internet and voice for $64.90 per month. switch now and get a $100 prepaid card when you add comcast business securityedge. call today. comcast business. beyond fast. time for jim and stock trading. >> for years the fastest growing most exciting margin improvement emerging long-term play was colgate. then it lost its way it's found its way the organic growth here is

rather amazing global unifying plus 5.5 i know it sounds absurd to buy a stock up five but you're going to want to do it because this is going to be back the way it used to be, extraordinary term for the company. congratulations, guys. you hung in and you did it >> wow how about tonight, jim >> we got a game plan tonight obviously. we're doing the last of our big game comparisons some of the executives when we write about them are kind of -- i want the viewers to understand we do it so you can understand what companies do. mostert by the way was tesla the day before tesla you can still take action. mostert, david, what do you think? >> what do i think about his chances for gaining a lot of yards? >> yes >> they've got that fullback paving the way for him >> i think mostert is the key. that's who could beat us us >> us? >> andy reid is us >> still us. >> going to be an exciting game. i'm looking forward to it.

>> we have to go now >> you go and you have a safe trip see you on monday morning. >> the tie, let me just get the tie off. >> jim, we'll see you tonight. dow is down 250 here we're back to s&p 3,264.

good friday morning. welcome back to "squawk on the street." i'm carl quintanilla with sara eisen and david faber at the new york stock exchange. more data on deck. let's get to rick. >> reporter: yes, our january final read for university of michigan pops higher 99.1 was the mid month 99.8 is the real read. the 99.1 gets dropped. 99.8 is the best level going back a ways. actually back to may of last year back to may of last year so very, very solid numbers especially after following a chicago pmi that was the weakest in five years and a month. let's go through some other issues here. current conditions, degraded a bit from 115.8 to 114.4. if you're looking at

expectations, they improve from 88.3 to 90.5 now let's get to what i find interesting, the one-year inflation lookout is 2.5, same as last, mid month read. and 2.5 on the five to ten-year inflation outlook. of course those have stabilized after slipping over the last ten or 12 months and of course it brings to mind chairman jay powell of course and how inflation is getting revamped. we'll learn more details throughout 2020. sara, back to you. >> rick, thank you our road map for the hour begins with amazon and its blowout quarter rejoining the $1 trillion club after a big earnings beat. we'll go inside those results next >> stocks are sliding this last day of the month as coronavirus concerns weigh down the major averages the value plays to watch at this hour >> finally a big shakeup at the top of big blue. the ceo steps down as the ceo of ibm. more on her successor and the company's future in just a few minutes. we'll start with stocks

moving lower this morning as the coronavirus concerns keep investors on edge. the u.s. warning americans against traveling to china joining us now to discuss what to do with all this information, jpmorgan asset management and charles schwab investment management, good morning to you both gentlemen what are you telling your clients to do amid the headlines on coronavirus >> good morning. it is good to be here. what a pristine type of run we had into the new year and then earlier in the new year, iran and now the coronavirus. at the onset 70% of china is basically going to be shut down until february 10th. in the near term impacts, they're in the emerging equity world. i think that is where we're telling clients to maybe pull back a little bit. we have to wait and see what is going on here. china's economy is about 14 trillion the u.s. economy is about 21 trillion u.s. consumer, we were an economy, we would be bigger than china. that means the u.s. stock market

for us led by this three-headed monster of growth and earnings stabilizing, the fed on the sideline, and trade deescalation still looks like a good bet for us here. >> so again, it's on the u.s. consumer's back. income and spending numbers weren't that hot this morning. >> but rates are low so debt payments as a percent of disposable income. so not every consumer has a stock portfolio but every consumer has debt and those debt payments as a percent of disposable income are at the lowest level since 1980. nobody is really talking about that what would be scarier for us would be a sharp rise in rates going from 2 to 3. i don't want to discount this drop in rates. it's something that ultimately won't be good for the economy and equities if it continues to happen >> then why is spending as a percentage moving and why are consumers so nervous they have the money, right they're just not spending it as much it's the difference between 2.3

and 3 gdp. >> they're not spending it because they don't have the ability to say i need to do more i think more of the consumer, carl, is around the mortgage rate side. so the mortgage rate side has been very compelling for consumer confidence throughout last year. i don't want to say the consumer is going to continue to carry us into 2020. all i'm saying is financial conditions are so accommodative for the consumer here, which is very different from where we've been even back in 2003 when people worried about sars the average ten-year rate was 4% we're about 1.6% right now so much different >> omar, what do you make of the idea to stay in the u.s. as sort of a safe haven and bright spot in an increasingly turbulent global economy and especially what's going on with china >> i certainly think that when you look at the prospects of the macro economic environment globally, deceleration of all economies, the u.s. continues to lead you know, we're just debating whether or not we'll be around 2 or above 2% or gdp growth for

the year where the rest of the world is still trying to figure out how they'll come out of the potential recession. when you put that into perspective, it is not very surprising, you know, with the size of our economy, with the strength of our consumer and now even the positive news on housing that we couldsee even better prospects for our gdp going forward. again, it is not going to be gang buster growth but, still, going to be on trend or a little bit love trend overall that continues to favor the u.s. over the rest of the world. i would probably say that i agree the biggest difference to date was january 1st is the fact that consumer sentiment and investor sentiment seems to be a little more jittery and the so-called bias in finance seems to be driving a lot of decisions on the day-to-day basis. people are really focusing on what happens on any given day or any new news we're telling our clients, continue to focus on the long

term continue to focus above the macro environment and risk that should actually drive the decision making not the day-to-day activity because that may prove to be temporary. >> one of the still hot issues is of course trade after the phase one trade deal, still tariffs, phase two we actually talked to investor knelton peltz yesterday on "closing bell" and here is what he said >> this was a monumental effort. i agree with trump i don't care if you are a republican or democrat he has done an amazing thing on trade. >> i think the market investors agree with that view even with the tariffs still in place, bill >> e.m. went up by 12% in the fourth quarter of last year so i think the market got a little ahead of that. i think it was significant trade de-escalating. could you imagine if we're still fighting about trade right now with this virus going on so i don't think it's been fully

priced into e.m. just yet but again, for me it goes back to financial conditions if the fed is off the table, if people are worried about them easing or tightening, that should support multiples up at these levels of 17 or 18 times in the u.s >> people are talking about going to 20. >> so you could support that view but that was priced perfection that was before kind of geopolitical concerns. that's not what we're looking at right here, carl, because we have to deal with the new uncertainties. but at the end of the day if the fed is on the sideline and if rates stay around this 2% level, that is important. i'll say it again. rates moving to 150 or 1% would not be a good sign for equity but if rates stayed around the 2% level, completion stays at 2 and gdp stays at 2 that is a nice setup >> you talk about staying on the sideline what if repo really does matter and they bring that back in april? i mean, even from a reception standpoint people believe they are not as supportive as they were late last year. >> yeah.

so any piece of information is going to be politicized. if that comes off as tight -- >> i don't mean politics i just mean perception that the fed is accommodative >> yeah. so the accommodative perception, if that were to get shaken, and the stock market reacted, that would be a bad sign. >> omar, just want to introduce another wild card into this and that is iowa caucuses next week. the latest nbc/"wall street journal" poll shows sanders and biden sort of tied among democratic party members could this be a wakeup call for the markets? >> well, i think the market wants certainty and is actually going to be looking for who's going to be the candidate and that is obviously going to provide some sort of relief of any uncertainty that goes into that i got to say, though, given that everything we have seen on the hard data and everything we see globally to today, i think politics is still not even well priced into the market i don't think volatility has picked up related to what may happen in the u.s. elections down the road. the market doesn't seem to even pay attention to impeachment or any other political news

directly clearly, their focus continues to be more on coronavirus. what other things are going to happen to gdp and earnings that seems to be driving day-to-day activity in the market so far. >> right so do you think volatility is mispriced here given the fact that bernie sanders, who is considered not market friendly is in the lead or at least tied for the lead in the iowa polls >> absolutely. we should expect more volatility going into the remaining of the year i think, you know, we are pricing right now levels of volatility that we seem to be going into like nothing is really happening, which is completely, you know, more related to what the fed and what central banks are doing. plenty of liquidity, plenty of financial conditions that will provide that low level of volatility and very tight credit market i think, you know, going in through the second part of the year we should expect more of a normal or close to normal

volatility level so, yes. it is definitely under priced. >> thank you very much good to see you both still ahead, a breakdown of a blowout quarter. we'll go inside amazon's results after the break. and then later containing the coronavirus. we'll get a live report from beijing. nc25isheor wk ee sie august 23rd. at fidelity, online u.s. stocks and etfs are commission-free. and when you open a new brokerage account, your cash is automatically invested at a great rate. that's why fidelity leads the industry in value while our competition continues to talk. ♪ talk, talk man: can i find an investment firm that has a truly long-term view? it begins by being privately owned.

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it was a blowout quart wer amazon up. profits are climbing margins look pretty good revenue rising 20% year on year. we'll talk about the quarter, guys happy friday good to see you. >> hey, carl >> john, what is there to nit pick about when you're looking at the level of deceleration on aws and then the margin story as well >> yeah. i mean, aws really came through, right? i mean, investorswe were talking to, leading into earnings, were concerned about top line growth amidst rising competition mainly from, you know, kind of microsoft's azure and google crowd it eases investor concerns and sets it up for 9.5%. on the margin beat it was a huge maryannin beat a margin beat. prime one day costs were a

little lower also the 1 q guide was great, better than expectations amazon for us firing off on all cylinders right now. remains our top pick for 2020. we boosted other semiautomatics, our price target now 26.50 a share from 2400. >> interesting how that year targets and i wonder how you think of amazon guidance now given that some believe that, i mean, any guidance they're just bound to blow past in the coming quarters >> so, yes i like all that john said. also taking our price up, raised our estimate we think 2020 is going to be a very, very impressive year for them particularly because of the move to one day shipping, which in fact caused an acceleration in growth last quarter to about 22% from 14% last year so that is really one key metric you need to focus on in terms of other things that a lot of investors keep worrying about to a certain degree with amazon aws did really well this quarter. didn't do as well the prior

quarter and that is why the stock saw a lot of variability and i think going forward it is still going to be an area people are going to pay a lot of attention to just because it is so profitable. outside of that i think margins overall, i think the street margins may be a little too high for 2020 at least relative to where we are. we still think they're going to spend somewhere between $4 billion and $6 billion on this one day shipping that is an additional $2 billion on top of what they've already spent this year. i think there are some issues potentially on the margin but overall, you know, amazon is firing on all cylinders. it is our top large cap pick it is hard to argue with the numbers last night >> both in agreement there do you guys feel like it's tough as analysts to forecast this company? it feels like when everyone is down and everyone is thinking oh, this is an investment year amazon comes out andalmost proves it has this kind of earnings leverage and takes

everyone by surprise >> it's a great question one thing i would point out, on aws with aws and their advertising business, they account for about 20% of revenue in 2020 but on our math they account for about 95% of amazon's operating income. so these two really high margin businesses afford the company great optionality, meaning they can invest and do prime one day, which improves the prime value prop consumers love it. it also extends amazon's moat in e-commerce without really disrupting margins we had two quarters where margins were light and then with the scaling high margin businesses they crush margin this quarter so they just have a lot of optionality and that's why it's our top pick >> yeah. it is interesting to think it's not the retail business that powers profitability here even though that is how we all think

of it and what we grew up so to speak watching at least amazon grow up thinking about is there anything else in addition to advertising now as a key profitability source and of course aws which again didn't even exist what, less than a decade ago is there anything else on the horizon we're going to look at and say, oh, look, there is another profitable business opportunity we didn't expect amazon to come up with >> so remember, five years ago, six years ago amazon wasn't even in the advertising business. today, you know, if you take what they did last quarter and run rate it for four quarters that is about $14 billion in revenues, which i think has very, very high margins. and i think honestly they're just scratching the surface. they're the distant third largest player within advertising. we think that business could triple over the next five years for them, at least and, you know, connected tv is just starting. there is about a hundred billion

dollars of ad dollars i think ultimately will move into some form of connectivity and we think amazon is a very natural, you know, forum for that clearly, google is going to benefit with youtube facebook is going to benefit but amazon is definitely going to be one of the top three players. i don't think that's really in anybody's numbers. so i think, you know, the sky is not the limit but the -- their runway for amazon is still pretty long. >> on the call they talked about being more efficient, perhaps, than had been anticipated. any sense as to whether they can extend those efficiencies so the increases in costs are actually not as great as we perhaps had thought originally >> yeah. remember, they called out a billion and a half in prime one day costs and for q4 and came in below it remember they couldn't do prime one day five years ago

they have built out their fulfillment network in the u.s. to a degree where they have hundreds of facilities outside of major metro areas they've gotten closer to the customer and, yeah so that is another positive potentially for margins this year as they -- because the one day will be a multi-year investment for the company >> finally, 150 prime. up 50% since 2017. where does that number top out at least in north america, u.s.? >> we think it's about a hundred million of the 150 if you look at the update, it was back in 2018 when they were at about 100 so, you know, you compounded that it's about 25% so they're growing really fast what is beautiful about that is once you become a prime member amazon becomes the first place you go shopping and the first place you're going to go search for something even more so than

google so the lifetime value of those prime customers are multiple what the average value of a normal customer is one area just going back to david's question, that we think amazon is ultimately going to expand into and it is ginormous is really just the grocery category, just scratching the surface. nobody has cracked the code on it alibaba is doing a pretty good job with china, and i think amazon is going to be going that route as well and that is just something that, you know, nobody is writing about yet >> they call them fly wheels for a reason as this quarter proves. thanks, guys talk to you soon >> thank you >> thank you have a good weekend. we're getting breaking news on delta airlines. let's get to phil lebeau with more >> reporter: delta is suspending all of its flights between the u.s. and china starting next week, february 6th that would be next thursday.

between now and thursday, they're going to be winding down their service between the u.s. and china because of the coronavirus concerns the last flight to china will happen on monday the last flight back will happen on the 5th which will be next wednesday. the reason they're continuing to operate flights between now and next thursday is to allow those americans, those passengers who are scheduled or want to get out of china to get on one of those delta flights and then get out of china but again, delta suspending all flights between the u.s. and china, starting next thursday, february 6th, and that runs all the way through april 30th guys, back to you. >> all right april is a ways out there, phil. of the majors in the u.s. that have suspended service, who has the largest exposure to china over all >> well, delta is up there along with united. those are probably the two airlines that have the most exposure american also has some exposure and i know you'll be talking with an american pilot here in a little bit who wants them to

suspend their flights and their service immediately. don't be surprised with the state department do not travel warning if we hear something similar from american and united at some point here there's just great pressure. remember, this is primarily driven by the fact that the plane loads between the u.s. and china, i mean, i've heard reports from people who work for the airlines that they're 40% full you just can't operate and make any money and it doesn't make any sense to continue those flights if you've got a plane maybe 35% or 40% of the seats are filled i mean, the rest is empty. this is why the airlines are taking this step you've got so many corporations that have said, you know what? we're not sending anybody over there. there's just no business travel happening right now to china >> so, do you expect the other airlines to follow this sounds like the most aggressive, shutting all china flights until april. >> well, in the u.s. it is the most aggressive. don't be surprised if we see both american and united follow

and do something similar but remember, you've already got bridge airways they've already canceled all their flights into china a number of other foreign carriers have done the same thing. you will get to a point here, guys, i wouldn't be surprised, that you see virtually no flights from foreign carriers going into china and what flights are going in there is primarily to make sure that those people who are in there who want to get out can get out. >> phil lebeau, thank you. all the airlines are trading lower in today's session and all sharply lower for the week our phil lebeau. as we go to break, take a look at the worst performing stocks on the dowfor month of january on this final day of the month dow i think down 14% wall greens down 12.5. you can always watch us live on the go on the cnbc app new york state is building for the future of your business. with a nation-leading $150 billion commitment to infrastructure,

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let's turn to ibm. ginni rometty is stepping down as ceo effective april 6th and will be followed by arvind krishna, senior vice president and red hat ceo will become ibm's president. she will continue as executive chairman and retire at the end of the year. i spoke with remetty several times during her tenure including toward the start of it this interview was back in october of 2014. >> our third quarter is a disappointment i should circle back make no mistake. i don't minimize that. although it is a point in time, it is a disappointment to us we're going to take bold action about the quarter and then bold actions as we continue to move to the future. >> it would seem to me that given the transformation that is taking place and will take place over time, you still may have disappointments in the future. i mean, do you have confidence that you won't have a repeat of this quarter in the sense of given the causes of it aren't

necessarily going to be offset by many of the things that you're doing in terms of higher value businesses that are going to take time >> look, i keep going back i have great confidence not just in the strategy but it is a strategy that already has results and a set of actions if i go back from the beginning of the year that have been bold we'll continue to make those >> that was an important time there of course early on again, i think maybe the first interview she had done if i recall she inherited the financial road map, certain commitments made in terms of returns to shareholders by her predecessor, and she stuck with it for a while. i think it was that interview than day when they missed when they finally abandoned it. some said they should have moved more forcefully to move away from those commitments and therefore free up more investment capital and simply free themselves more to invest in those growth opportunities perhaps that became such an important part of her tenure but have yet to fully pay dividends some would say >> as far as the share price reaction, i mean, undeniable it was positive we saw that right when the

announcement came yesterday up 4% i wonder if investors are just seeing this as a reset, you know, time for a fresh slate for ibm, or the one-two power team in terms of cloud and where this company needs to go into the future and there is some optimism about that. >> yeah. i mean cloud, security, hybrid cloud, security, ai. remember watson we used to talk a lot about. those are the important initiatives that are under way here the question is can you finally out run the legacy business so to speak that is still a very important part of the companies, all the things they have, the embedded contracts they have but that doesn't really grow >> wonder what's next for her. >> yeah. some of us do as well. >> i mean, i'm thinking to wean the shareholder base off the notion of continued buybacks and shift it to investment would mean a wholesale change in the nature of ibm ownership. don't you think? >> yeah. that was one of the key challenges she's faced sort of over time. remember warren buffet was there for quite sometime as a significant investor, meeting

what his needs were. he finally exited the shares there have been no shortage of challenges during her tenure as she has of course embraced cloud but they are a distant player in that evolving market that we talk so often about, today with amazon's incredible numbers. i think ibm is about 2% of the market place it is growing quickly. red hat of course the key investment they've made. paying a very high multiple there for that company getting whitehurst, getting the company, which is growing very quickly. >> that would help her legacy if they do see sustained growth as a result of this business from red hat. she made that deal she made a number of deals >> that was the key one. krishna was obviously very much involved in that as well >> leading the dow today but that only gets you back to levels of about a week ago let's get a news update this morning. >> hi, carl. good morning here is your news update at the hour so republican senator lamar alexander of tennessee says he will oppose calling more witnesses in president trump's

impeachment trial. this allbut thwarting democratic efforts to hear more testimony. senators romney and collins say they will vote to call witnesses. secretary of state mike pompeo meeting with ukraine's president this morning he is the highest ranking american official to visit ukraine since the impeachment process began last year. pompeo says president zelensky will be able to meet with president trump at the white house at the right time. >> we'll find the right time we'll find the appropriate opportunity. we want to make sure that it happens at a time when there are substantial progress -- things we can deliver between the two of us and there's a lot of work our teams discussed today, all the opportunities. >> well, around 3 million coins commemorating the uk's withdrawal from the european union went into circulation today. the 50 pence coins features the words, quote, peace, prosperity, and friendship with all nations, with the brexit date, january 31st, 2020

those are your cnbc news updates for this hour. back over to you, sara >> thank you when we come back the union representing american airlines pilots is suing the carrier to halt service to china amid the virus outbreak we'll talk to one t pofheilots next when "squawk on the street" comes right back your cash is automatically invested at a great rate. that's why fidelity leads the industry in value while our competition continues to talk. ♪ talk, talk

getting new numbers on the ongoing coronavirus crisis in china right now. eunice yoon is live in beijing with the latest. >> reporter: thanks so much, sara i'm at the beijing train station, and people are starting to come back to the chinese capital, but travel during the lunar new year holiday is way down the transport ministry put out some numbers saying that overall trips are lower by 16.5% during the holiday period from a year ago and then for the date january 30th that number was down by 84%. now, that's because today was supposed to be the first day

after the lunar new year holiday break. the government had extended that holiday because of the virus outbreak and wanting people to make sure they don't travel a whole lot. but that has just caused many shops and restaurants to stay shut it's been really difficult to get fresh produce as well as eggs and, in fact, just more and more buildings, office buildings, housing complexes, shopping malls, public places have been setting up temperature checks as well as barricades to try to make sure that they do whatever they can to try to stop this virus now, the -- tonight beijing city also issued a new directive saying that people who do come back to the chinese capital should work from home at least until february 10th. the concern of course is that there are still so many unknowns about this virus and it really gives you a sense as to why so many economists have been revising downwards or at least considering revising

downwards their forecasts for gdp here for the year 2020 in fact, goldman sachs revised downwards its outlook from 5.9% to 5.4%. now, there was some positive news tonight the state broadcaster was quoting the wuhan mayor as saying that the two prefabricated hospitals featured very heavily on state tv will be ready by next week as early as monday for the first one in order to try to ease the bed shortage in wuhan, the epicenter of the outbreak. sara >> as you have outlined so much of the economy remains shut down the market is set to open on monday what are you hearing about how much selling people are bracing for? >> reporter: well, people are bracing for selling. there's a lot of concern about what is going to happen. they are very closely watching what happens in the u.s. markets

just to get a sense as to how worried people are about the economy. but i think, i mean, just as you are suggesting, monday is going to be a day to watch for traders. >> absolutely. eunice, thank you very much. joining us from beijing. delta announcing moments ago it would suspend all u.s./china flights between february 6th and april 30th due to the outbreak of the coronavirus this comes after american airlines announced wednesday that it would only suspend some flights from los angeles to china in early february. the allied pilots association which represents about 15,000 of american airlines pilots says the move isn't enough and they filed a lawsuit to follow in delta's foot steps and halt all of american flights between the u.s. and china for more, let's bring in our guest, pilot and communications committee chairman for the pilots association, first on cnbc interview thank you for joining us, dennis tell us more about why you brought this lawsuit >> i think the most important

part, you mentioned the lawsuit, but the most important part is our president with leadership of our union behind him, directed our pilots to cease and decyst in flying to china we weren't making any progress with our company and it rapidly changed, expanded, and we had to take a leadership role in this not only for our pilots' safety and fellow crew members, but most importantly our ultimate goal and that is to protect our passengers so that's where we are now we did go to american a few days ago on tuesday and we gave them this concern and asked for a pause. they listened and they were professional but we saw no results, so ultimately pilots are responsible for the safety of our passengers and fellow crew members and sometimes we have to take a leadership role it's not the way we like to do things, but here we are. >> so what exactly did you hear back from american airlines as

to why they were not going to pull flights >> they said they thought they had a plan in place. they basically their plan was for commercial interests because the load factor, the bookings had dropped off. we're just pulling in the flights out of l.a. and going to run everything through dallas/ft. worth and make dallas/ft. worth kind of the epicenter for the viral potential. so we were not satisfied with that answer. we were addressing it from a safety position. now today we're looking for american airlines to join us and take the most prudent course delta has made that decision we're willing to look at -- our pilots have immediately cease and desist on this but we are ready to engage in taking care of this in a humane and responsible way. right now our company has been looking at it as a commercial venture and it's unfortunate pilots had to take the lead but we're one of the stakeholders

and we did that with venezuela and we're doing it now >> dennis, our phil lebeau has reported that the flights that are still operating from the u.s. to china are mostly empty or maybe as much as 40% empty he says what can you tell us about that? >> that's the reports we're getting as well. obviously the load factor has dropped and for the commercial decision american made and i think other carriers have made the same it is important to note that even with these load factors, we're not sure why they cling to these flights. we haven't had a full engagement not to the commercial interest but to the human component and these short-term decisions, commercial interests, short-term decisions, if we're going to talk that world you are putting at risk the long-term commercial interest of our enterprise, our company which we depend on so we look at it holistically but our number one concern is for our passengers and the containment of this very uncertain virus and how quickly it spreads

we travel at the speed of sound so that's -- this is real. this is the perfect scenario for a virus to spread. we want to make sure we contain it and do all that we can. >> dennis, the control room is telling us that american, our phil lebeau is reporting that american will in fact cut all flights to mainland china. we are expecting details soon. probably comes in the wake of delta's move a few moments ago i wonder, how does that move forward your efforts and also have you heard from alpa or the afa? how much coordination is there between unions >> i know all of the other unions are equally as committed to protecting passengers and their brother and sister crew members. so they're looking at -- our flight attendants at american airlines have given us their support. they look at it the same way so news to me that american has made it public that is great news

they're joining us in this leadership role. i'll look for the details and we'll see if they're paralleling delta or not bottom line is we'll do this humanely, responsibly, and make sure we get our people back. that's what this is about right now. other airlines across the globe by the way, we're not the first ones we're first in the u.s. but across the globe even our partner carrier british airways ceased operations. so, you know, we're coming in behind that energy but the bottom line is we get it done right. >> so assuming flights are no longer going to be going between china and the u.s. by these major u.s. carriers, what is your sense as to when it's going to be okay to fly again, that you're going to feel comfortable, your crew members are going to feel comfortable piloting these planes once again? >> well, i think we're looking for a leadership role from our government as well as you know, the state department put the red flag on, or the do not travel item on after we had announced our cease

and desist so we'd like to change those roles and have the regulators and all those responsible for the interests of our country take some aggressive steps like this we're all on the same page now it sounds. and just like the max situation, unrelated because that was technical. the pilots are not going to be at the cockpit door until we are confident that that aircraft or that travel proposition is safe. our ceo doug parker said that about the max. it's true in this situation and we had to prove it yesterday but now we're all pointing in the same direction, it sounds, so we'll look for that engagement and take care of our people that's what this is about. >> yeah, we'll go to phil with more on that american airlines announcement in a moment but first, dennis, wanted to ask you. american said that crew members are free to wear masks if they would like to do so while operating flights. just curious have you heard that they're actually doing that?

>> i've not heard that at american airlines. certainly that is a proper precaution just thinking of this now if you are in the process of winding it down. to have it as a day-to-day event, that in itself is certainly a sign that things are not well so we'll see what the -- we want to keep our people safe but if you're having to offer a ticket with a masked crew member, that's not the way i want to see business done on my aircraft >> dennis tajer, thank you for joining us >> thank you >> we appreciate it. from the allied pilots association, suing american airlines i want to squeeze in a market flash here. shares of roku are cratering let's figure out why >> reporter: david, what we're watching right now, roku shares are down almost 6% right now down with the rest of the market but also because roku's current distribution agreement to carry

fox and fox sports related apps on its platforms is set to expire on january 31st, today. the reason why it is big is obviously because we have a situation where fox is broadcasting the super bowl on sunday, thereby some roku users may not be able to access the fox sports apps to watch those particular pieces of content if they do not get an agreement in place. on a company blog roku does say that if an agreement is not reached we will be forced to remove fox channels from the roku platform because we cannot distribute content without an agreement. every content provider has a distribution agreement on every platform it gives the legal right to distribute. meanwhile customers can still view fox programming including the big game in many other ways on the roku program including through sling tv, hulu, plus live tv, and then youtube tv as well so they're pointing folks in the direction where they can actually watch the games but, still, that is the reason those roku shares are on the down side

today. we'll give you more details as we know more back to you guys >> thank you for that. s&p 3250 here. let's get to phil lebeau on the breaking american news we mentioned a few moments ago. hey, phil. >> we're still waiting for an exact date when american will suspend all flights between the u.s. and mainland china. i wouldn't be surprised if it is perhaps a week, maybe seven or eight days out it's a similar situation to delta. not only do you have to, you know, wind down the operations, but for the people in china, who are your customers, who want to get out, you have to provide some way of doing that we are waiting for the final announcement from american i've been reaching out to united we haven't heard from them don't be surprised once the state department issued the do not travel warning you combine that with the fact that these planes may be only 35% or 40% full, it makes no sense for the airlines to continue these flights. so that is why we've already seen delta make this announcement this morning. now you have american announcing it is suspending operations between the u.s. and china

and i wouldn't be surprised if we hear something from united fairly soon as it is the only carrier right now that has not made a decision to completely stop flights between the u.s. and china. but again, we're still waiting on that date from american >> it does, phil, feel like we're heading that way where there's going to be no flights it is funny because we had hss secretary azar yesterday asking him repeatedly why the u.s. wouldn't just shut it down but i guess the carriers are making the decision for them. >> they are. and it is primarily economically driven it's not that they don't care about the health concerns, etcetera but at the end of the day you're operating a business and if you only have 40% of your seats full or 30%, whatever it is, it makes no sense to continue those flights. what is interesting, david, is the question that i saw you ask the head of health and human services, well, what happens if one of these people then go to a third country? say somewhere in europe. and then come from europe over here that's why i think you're going to see carriers around the world just shut it down.

they will shut it down for a period of time and we just won't see flights coming in or out of china or not on a large scale. we've already seen it with british airways. and i think we'll see it with other international carriers >> phil, all that capacity, where is it going to go? and does it mean we might see a reduction in fares, trans atlantic to other areas in asia? >> no. i don't think so, carl while there are what, 42 daily flights, take delta, 42 daily flights between the u.s. and china or weekly flights i should say. between the u.s. and china for delta. i mean, while that sounds like a lot, in the grand scheme of the whole fleet that delta operates, it is a small, small percentage. it's growing it's important but it's not as though it is going to be a case where, well, these planes are just going to be parked. they're not doing anything they'll put those planes to use with other routes. so is it a slight, slight bump,

perhaps, to capacity for other routes here whether here in the u.s. or to europe? maybe. but nothing that is going to be major. >> phil lebeau, thank you very much keep us posted as the airlines come out this morning. time for our etf spotlight on the final trading day of january. we'll take a look at the spdr s&p oil and gas production ticker xop on pace for its worst month since september, 2011. amid concerns about the economic impact of the coronavirus. this on a day in which exxon mobile and chevron are both out with mixed quarterly results and both stocks under heavy selling pressure this morning. chevron down 3.5%. energy is the worst performing s&p sector so far this year, guys and not having a good day today. it is the fundamentals of the oil business clearly with those earnings but also the economic concerns about the fallout from the virus. >> yeah. as sara says the coronavirus contagion is accelerating some

of the sell-off. we're below 3250 on the s&p. mike santelli is here to talk about the chicago pmi set this off. we were hoping january would bring some fresh, soft data. >> yes >> this isn't it >> not at all. it is not happening on time. this global upturn for on time the global upturn the way the prices were in position were not able to get that baton handoff to the growth story. that's the main thing. in terms of the way our markets are kind of gyrating here, you could argue, i had argued that we're just set up for some kind of an excuse to pull back, no matter what. something was going to come along. coronavirus came along and now it's very difficult to handicap, obviously. the bond market is doing what the bond market is doing it feels as if it's a relapse back to late summer, what does the flat yield curve mean, does it mean anything, and the rest of it. to me that's where we are. we're at the week's lows, within a few points on the s&p right

now, down 3% from a record high. it doesn't change the whole story yet, but you really are seeing the winnowing of this market into anything that was exposed to the cyclical reacceleration story is just getting dumped the secular growth and defensive names are up there in tech and utilities, up more than 5% this month. it's happened a handful of times. sometimes near market tops and sometimes when the bull market was accelerating it's difficult to say what it means. >> you've been a natural skeptic on viva xeshgx, on repo activit. on monday, how important will that be? >> it's absolutely in investors' heads. there's no doubt that the market is trading on the unknown possibilities for november that are going to be hinted at monday and then super tuesday so i won't deny that, that it's an influence i also think that the buyback story, the fed accommodation story, everything is part of the mix. but it's mostly a psychological

part of the mix. this week we have nothing but the fed saying we're here and we're going to stay here and you're pricing in a rate cut even though we're at 2% growth the market should otherwise like that it has to reprice to a level where that's a relief as opposed to a risk. >> when you say the election is out there and part of the uncertainty mix. should we look at volatilities, health care names? >> i think it's all of that. volatility is very interesting because you're seeing these kind of nodes of concern along the calendar timed to iowa on monday and timed to super tuesday there is already a prehedged, you know, situation in this market where people have said i think there's a really good chance for a volatility spike there. whether it comes or not, we don't know i do think it's one of those things where it's maybe going to obscure what was going to be a decent earnings story orat least it's going to make the winners, you know, fewer and far between. i don't know if that's really

the case here. i think we have to say 3% down from a record high, it's not as if the credit markets are under tremendous stress. it's not telling us that much systematically right now, but i think -- i don't think we're positioned for another low and slow type phase in this bull market >> all right, mike thanks mark santoli we'll watch it closely,down 374. david? >> let's go to jon fortt for a look at what's coming up on "squawk alley. >> ipos rental consumer products opened not long ago. up around 6% sd, atndorl coming from the naaqth a me coming up on "squawk alley." ♪ ♪

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>> as we look ahead to monday when the chinese market opens and people are braced for a barrage of selling, both in bonds and equities and how that could spill over to the rest of the world. >> see you then. after the break, we are all over the sell thauf morni-off this m. amazon on the best pace for the year "squawk alley" is next ♪ their medicare options...ere people go to learn about before they're on medicare. come on in. you're turning 65 soon? yep. and you're retiring at 67? that's the plan! well, you've come to the right place. it's also a great time to learn about an aarp medicare supplement insurance plan, insured by

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