literally. we'll dig through earnings of disney, chipotle, ford and tesla. wednesday, february 5, 2020. "squawk box" begins right now. ♪ >> good morning. we are live from the nasdaq marketsite joe and becky are off. michelle caruso-cabrera is with us day three. >> power breakfast >> exactly we have a lot to talk about. we'll get to that speech by the president and pelosi ripping up the speech but we want to start with the markets right now.

the dow briefly gaining 500 points before ending the day take a look at u.s. equity futures. if we opened up now, the dow would be up by 280 points. nasdaq looking to open 100 points higher. looking at the 10-year note standing at 1.65 >> big time fire works last night. the president did layout his 2020 agenda one day before his likely impeachment acquittal and day after the iowa caucus. it was nancy pelosi's reaction going viral. we'll go now to washington we have to hashtag everything now. it is #rip it up what is trending >> in the old days, you used to

try to get the sound bite. now you try to get that meme that will go viral the president giving a starkly partisan speech, met by a starkly partisan reaction. the political divisions were on display as the president gave his third state of the union address. the opening of the speech was all about the economy. the president making the case ultimately for his reelection. he talked about his favorite metric, which is the stock market >> since my election, u.s. stock markets have soared 70% adding more than $12 trillion to our nation's wealth transcending anything anyone believed was possible this is a record this is something every country in the world is looking up to, they admire. >> but brian, i think a lot of

what will be remembered is the president's "the greatest showman"ship and partisan on display. inviting a number of guests to the first lady's box he surprised a military family, u reuniting them he surprised a young girl with a scholarship in a reality show moment awarding rush limbaugh the medal of freedom presented there he is a talk show host very conservative. recently announced he is suffering from cancer. that moment at the end that you talked about

nancy pelosi frustrated throughout the speech, ripping up her copy of the speech and casually discarding it to the side there very frustrated. she was asked about it afterward and said it was the most appropriate response the implication being that she could have done something more dramatic and that was the polite way to show her displeasure. >> do you think she planned to do that? >> that's a really good question she was holding those notes throughout the night holding them up and checking against them hard to say. there was a moment at the beginning where she reached out to give a handshake to the president. not clear whether he intentionally snubbed her or didn't see it because he was

focused on giving her the speech maybe she was frustrated. >> right you couldn't tell was he purposely ignoring her or didn't just look at her and realize she was extending a hand she was clearly miffed she looked like she felt snubbed. she did not introduce the president. she immy said, ladies and gentlemen, the president of the united states. this was a nancy pelosi who went in there in a way dealing with an impeached president i think trump was primed for

there. they were on a collision course and this is what happened. >> a number of democratics that didn't show up sure aoc being one of them. going through policy after policy which she starkly disagrees with and the honoring of rush limbaugh that was a provocative measure >> has this ever been this partisan i didn't like her ripping it up or that aoc. is this the way of the world >> you really have to go back to the 19th century to see this kind of partisanship where you are heading about duels and

fights on the floor. >> when people say it has never been this bad, there were times when people were duelling. >> there is a saying that there is a stair case and a stain there. it is said that that is the blood stain of a reporter beaten nearly to death by a congressma for asking a rude question those years were brutally part season and physically brutal we haven't seen actual fist to cuffs. you can think maybe we are not far from it. america's political division on stark display. >> always good to see you. thank you for helping us through this we have an update on the delayed iowa caucus returns.

showing pete buttigieg a and bernie sanders leading the pack. blaming a coding issue on the app. the company that made that app, shadow ink, apologized i think this is an interesting turn >> would you have put those numbers out? >> companies don't come out with 62% of their earnings and come out. >> i think you have to maybe you let it go. i guess the question is, do you think the numbers will change materially >> the horse left the barn in

all the victory speeches it is importantless. >> so much wasted money and time >> how do you not test the app we have some high schoolers out there that could test the app for $1,000 >> can we talk about changing the system i'm always talking about getting money out of politics. people are running around in the states trying to best each other in this crazy order. >> i think it is unfair. you have to put aside a huge part of your day and night to go participate in this thing. did you see the guy flipping a coin >> there was a guy flipping a coin to see which way it went. literally flipping a coin.

was part of this rally a good thing for trump? >> i think winners were trump and bloomberg. both of which would be market positive, if you will. >> let's get to something else hopefully positive for the world and the coronavirus outbreak number of confirmed cases rose to over 24,000 people on the diamond princess cruise ship have tested positive a passenger tested positive after disembarking in hong kong. the cruises says 3,700 passenger and crew are under quarantine for two weeks. >> the list of companies predicting impact continuing to

grow nike says it will have a material impact. saying, quote, this situation was not contemplated at the time we provided q3 guidance. we'll continue to provide an update on our q3 earnings call shares of nike lower on the news that half of its stores in china remain closed. those stores open have seen reduced traffic. and their new ceo will sit down today for an interview on "the closing bell." tune in tonight for a special report on the coronavirus and the latest on where things stand and where it is headed at 7:00 p.m. i am surprised given the number of ceos who come out with guidance or suggesting that this is going to material hit numbers

that the markets have ripped the way they have. >> there is some word coming out of london that they are perhaps working on a vaccine >> and even if that happens, how quickly can it happen? >> wellit is better than it is not happening. the counter is that we have longer delays. i have no doubt that it will get wrapped up but how long will it take >> coming up, what tesla is saying about the coronavirus that stock has had an incredible couple of weeks, year, more than doubling in the last three months down this morning. disney's comments on the impact. we'll be back with more on disney, tesla and everything else stick around

>> announcer: today's big number, $13.5 billion. that's how much elon musk's net worth has increased this year. a gain of yearly 50% according to the bloomberg biz index

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welcome back the earnings parade marches on all out with their numbers last night. the real buzz smells a bit like musk >> elon. >> tesla getting all the attention yesterday. another monster session. it closed at a record $887 a share. that move yesterday added about $20 billion in market value. it added a fiat chrysler in value yesterday. tesla's market cap is now equal to or greater than nike, nvidia or bristol meyers. the market cap could surpass citigroup next this morning,down graded the stock to a hold also new today,

the company will deliver rare model 3s that were scheduled for february because of the coronavirus outbreak the plant will restart production on february 10. bringing in a cnbc contributor i don't know fur waking up or staying up calling tesla a maniac do you think this is a real move or a move that will burch investors. >> you think about how long it will take.

not just about delivering 500,000 units. it is about delivering millions of units people have saying this could be the next amazon. but still on 13% of the electric car market still a lot of room to figure out if the story is going to hit or not you have other carmakers figuring it out. tesla is doing a lot of discovery they are managing to get their cost down the question is can a newcomer come in the market >> one question we asked, you have $1.6 million shares

moved 80% since january 1. do you lighten up even a little bit? if you are disciplined, do you take some off the table? he said absolutely not he admitted the portfolio manager at his company said, should we trim a little and he just stuck with it i found it so surprising if you've been with it so long. the biggest tesla bulls have taken a lot off the table. a pretty big bet you'll have to sit with for decades to make that back.

>> now he's crossed the second threshold. every $50 billion of market cap, he collects a new 1% of the company. it has to stay above these 60 to 90 days. even if it goes down after that, it automatically vests if you can keep the stock over a number number, he has over numbers as well. >> his wealth is being elongated? >> that's early in the morning to come up with that >> i didn't sleep. i just stayed here he's got a nice little kicker, doesn't he >> i hear a question in there.

is that right? if the price goes down later, should he have held. he's more incentivized to go higher doing what he's doing. >> huge owner of the company already. >> you are saying the marginal difference isn't enough? >> there are ways to track there is a lot of retail people buying who is the buyer of tesla? there is a whole wave of investors that are playing >> what are they doing the fomo >> this may be, let's ride the wave here. >> we had a bear on yesterday.

a tesla bear he said what are you talking about. this has always been a retail stock. new buyers are hedge funds i'm getting calls now from guys from hedge funds because they have fomo. fear of missing out. >> it was a short covering rally. not anymore. >> it is not just retail anymore. >> it is easy and cheap. nobody dares short this stock. >> right but brian, if you look at the top holders right under musk it is gifford and capital group. those are real funds there is ownership out there

their positions are going up and not dune it is just an interesting story. people who believe in tesla believe in it in a fanatical, cultish way. >> we've heard it said he would like to have more but he has hit a limit. >> he's laying the groundwork for electric car ownership before this, they were a tiny segment that were kind of uncool but now it is cool and he's making it profitable that remains to be scene >> gina, thank you so much see you in a bit coming up, new data on the rise of financial education in america's classrooms later, we'll take you live to

china for an update on the coronavirus. that and more after the break. how well does your financial advisor know you? if they saw you on the street would your advisor recognize you?

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when yowhat do you see?itical issues facing our world,

we see breakthrough medicines getting to patients in record time. we see harnessing natural gas unleashing the promise of clean energy. we see engineers simulating the future to improve today. at emerson, when issues become inspiration, focusing core strengths to create a better world isn't just a result, it's a responsibility. emerson. consider it solved. welcome back after years of little growth, personal finance education in america's classroom is on the

rise the latest survey is out today with us, president and ceo of council of education this is good news. we need financial literacy in america more than ever it has been long time coming tell us about the results. >> this is the story for survey of the states. five new states have passed requirements in personal finance and three in economics >> what does that manifest itself in terms of what that looks like is that a class in high school middleschool >> we objectively measure from what states are doing whether they have standards or a full required class 21 out of 50 states require a course in finance to graduate. 25 require a course in

economics. another part is who is getting access >> what do you learn in a personal finance class balance a checkbook? buy versus rent? >> i think nobody is teaching about checkbooks anymore most kids today won't have to worry about a checkbook. we are teaching good decision making skills. credit, debt, interest, compound interest, risk, insurance, investments so all of our young people can grow up and watch cnbc and know what you you are talking about. >> what do we have to do to get the rest of the country to do this it is not just about your own personal finances. it is your understanding about the news, policy and everything else if. if you don't know the basics,

you can't be part of the conversation >> that is right education in this country is local. one thing every one can do every parent, teacher say with he want to put this in our school even if the state doesn't require that, you can get it into the classroom at your school higher levels, we are seeing the states pick up on this rally with those people to get them to move forward we are doing four or five convenings this year in different states gathering to help them move the ball forward on this. >> thank you we appreciate it >> thanks for all your help. >> for more details. visit cnbc.com/invest in you on deck, disney numbers and

what bob iger said that is getting a lot of attention and looking at yesterday's winners and losers a lot of winners yesterday we'll be back right after this ♪ our retirement plan with voya gives us confidence. they help us with achievable steps along the way... so we can spend a bit today, knowing we're prepared for tomorrow. wow dad, do you think you overdid it maybe? i don't think so... what do you think, peanut? nope! honey, do you think we overdid it? overdid what? see? we don't think so, son. technically, grandparents can't overdo it. it's impossible. well planned, well invested, well protected. voya. be confident to and through retirement.

good morning welcome back, we are live at nasdaq might in time square. we are again in the green. dow looking like it could open up higher. s&p looking like it could open up 30 points hire. nasdaq look like it will open over 100 points higher it seems to be on the back of some as we are running across

the screen here after the initial stages is of testing people excited about that news >> a tough day macys plans to close 125 stores over the next three years,/2,000 corporate jobs and technically close the cincinnati headquarters it will plan to exit weaker shopping malls and focus on smaller format stores and strip centers. 125, close roughly 20 to 25% of their stores think about what it means for those malls.

a lot of times, there are ok pansy limits suddenly having a half empty mall >> they've likely been an anchor tenant clearly the retail dynamics have changed. >> i'm not sure what i think of this shares of ebay surging following a report that the owner of the new york stock exchange made a bid for ebay in a statement, he approached to discuss a range of potential opportunities that might create

value for share holders of both companies. ebay has not engaged in a meaningful way i get the idea that ebay is an exchange of sorts, a marketplace. >> market maker. i just can't faith um why if you were i.c.e. that is the business you want to be >> do you want to be in that business maybe you close that down business >> and do what >> it is a theory. do you remember andrew clooikle. tried to build his own stock exchange build a new marketplace and go after squaub and become a new asset group. they have to create a new brand.

i don't know >> is money coming from the financial transaction business as well? >> i don't know. pay pal is off separate. i don't know i don't know >> it is interesting >> it is it is fas 2345i9ing. >> you can buy a stock and use skis in the same place >> if you are just going to be an acquirer of market makers, you could start buying others. coming up, the latest on the coronavirus and how it could be impacting supply chains around the world. good morning we are back after this through the at&t network, edge-to-edge intelligence

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welcome back an update on the coronavirus outbreak confirmed cases rising to 24,000 and death toll reaching 494. new reports say there is progress on a vaccine. that is good news and may be moving markets higher.

going to eunice yoon on the ground >> the national health commission was cautioning that there so far is no confirmed effective treatment. the focus was really on this race to find a cure. state tv said two drugs that treat flu and hiv could be effective guess the coronavirus. the lead scientist is asking that these be included in the official protocol. by less focused on the anti-viral drug being tested on patients in wuhan, the epicenter of the outbreak. the insurance ttitute there hasd for a patent on the use of the drug suppliers have seen shares move

to within double digits. there are uk researchers that told sky news that they have made a breakthrough of development time from two to three years to two to four days. the research has only been conducted in the lab, so so far it is unclear how effective the drugs will be when used on human beings >> thank you many companies rely on manufacturing in china here to talk about how the coronavirus might impact things. thank you for joining us >> you make the n 95 mask which can is, i think, the only one

proven to prevent pers person-to-person -- but right now, you are out of these masks? >> first of all, good to see you, brian we are producers of these products yes, there is a worldwide shortage today of masks. >> is that because the factories are shut down or because the demand is so high? >> primarily because of the demand being so high the spreading of these diseases cannot be spread bypass ports. they have spread an you can't stop them from going from one country to another there is tremendous collaboration between

countries. >> when will the masks be available again? >> they've been working through the chinese new year they are not the only source of these we need to identify where these markets are and bring them to market. we have the pandemic board developed in 2015 by a group of companies involved in infection control area we've been convening, discussing with the world health organization, world food program and making a lot of progress >> you mentioned worldwide collaboration to work on preventing the spread of the diseases >> it involves more than masks they are important because you don't want to inhale any potential virus. but it is cleaning solutions,

gloves should be available and all of these have spiked some what but i believe the supply will increase and by collaboration across the world and by the public and private sector, we'll have more methodology for providing these than ever before >> are you working on where you are going to get supply of these? >> the good news is that the group has been working actively e for the past four years. we know where products are and where we can seek more supply. it is different to say a spanish flu breakout a century ago and they didn't know what to do. >> do you view this as worse

than sars? >> i think it could be >> how about right now >> well, yes proporti proportionately. we could work together to prevent this should we prevent this from spreading. there is a high possibility that we can we need to be prepared for the next one and the next one. we need to work together when it is on the headlines, the newspaper and tv shows, women work together and forget about it front and center on the mindset of many. >> we appreciate your views. we have a new as letter for you as we speak. dow component company merck will

spin off assets including women's health and alcohol -- cholesterol treatments looking at that stock up marginally on that news right now. we have more on squawk this morning. we'll talk disney. they expect a $200 billion hit to the theme parks being cselod. investors tl investors struggling off those fears. more after this.

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well, after the original episodes of mandalorian were all made available we didn't see significant churn from that. we continue to see subscriber growth from the end of the year, september 28th through yesterday and i think this is very important, that bundle of hulu and espn and disney plus is not only a great value to consumers but it's one of the factors that basically enabled us to see rates better than we expected they would be.

and a cnbc contributor and the man that put so much of this together. >> great to be here. >> what do we make of these numbers? the good news is the subscriber numbers are high the bad news is they're losing money doing it but that was always going to be the case. >> we heard the state of the union last night you have to say the state of disney to put a little larry david on it. sorry to mix in hbo in a disney discussion pretty, pretty good. >> pretty, pretty good. >> you can see this working. >> look. kevin mayor and the streaming team there, unbelievable you can't take anything away from a launch like that. that is just stupendous numbers well beyond anything i would have thought you could come out of the box first quarter on. i think more than the numbers, the quality of the numbers everybody thought that these were overwhelmingly free subs and the rev knew per sub was going to be minuscule. very strong. >> average revenue per unit.

>> average revenue per unit. >> does it surprise you that there's not more take up through verizon and elsewhere. >> yes it does only 20% of the subs coming from verizon and over to 50% of them coming directly from disney meaning no tax when you sign up through apple or somewhere else. and that's pretty impressive i have to say, you have to question how much of the demand they pulled forward meaning we thought this would grow overtime to these kind of numbers did they get all of it up front and it's going to be a slower build but the fact that they had another 2 million after mandalorian ran where a lot of people thought great start of a new series people will watch it and disconnect but they grew beyond that the quality of the sub numbers are really strong. the one that i have a question about is hulu. >> okay. >> think of this hulu has been around for 12 years and now it has about a million and a half or 2 million

more subs than disney plus does. i'm not so surprised about the management change there recently with moving out the ceo. >> you're saying they should have had a lot more. they have been around a lot longer they should have had around a lot more subs. >> for a few reasons one they didn't seem to get the full impact of the bundling with disney plus and espn plus that espn plus got with doubling it's numbers. >> so what does that mean, though what do you expect >> i think there's probably something going on there in terms of the perception of hulu. today the perception is that it's a place to catch up on network television. >> that's kind of what you have, right? is the odd man out here tom, cbs? >> yes i think the cbs all access looks

like streaming also ran you might get a couple of originals but mostly a place to get cbs television, showtime doesn't look like it's beginning to spend the kind of money that the other services are in terms of what originals mean to a paid service and a streaming environment and they're more hedged than anybody else not a small matter for disney either. >> thank you it's always good to see you. you'll have to come on back. >> thank you for having me. >> all right coming up, could be another good day for stocks futures they're up nearly 300 points optimism to investors this morning and a bit later on, mckenzie global managing partner and he'll talk to us about why businesses around the world are dealing with an outbreak and why he wants to come out of the

shadows and be your friend we'll talk about that coming up on squawk box. stick around ♪ ♪ ♪ everything your trip needs for everyone you love. expedia.

>> futures jumping this morning on reports of coronavirus treatments we're going to bring you the

latest >> tesla shares giving back some gains this morning after surging to start the week. one wall street firm is downgrading tesla this morning. >> the state of our union is stronger than ever before. >> plus the state of the union state of the economy >> you're both guilty of this and you're both rejecting virtually everything. >> the second hour of squawk box begins right now >> welcome to squawk box here on cnbc and andrew ross sorkin along with brian sullivan.

>> oh my goodness. watch every second people. they're making their way to pebble beach. >> what does that mean walking? >> trekking. >> how long is the journey out west >> i think they made their way they're enjoying a really good night's sleep. >> hopefully both of them are doing that. >> joe will probably wake up early. >> meantime, we have our top story. traders are pointing to reports about progress on drugs to fight the coronavirus. we'll have more on all of this going to talk about what's turning out to be a huge market rally if you can believe that

and little mini down trends. you have seen the typical stock, the run of the mill name and yes they bounce yesterday. also the industrials and the banks. so what you're seeing basically is still a growth obsessed market a big gap right here does that make an unstable market or leave a lot of ground for the cyclicals to come back if we get past this idea that we're in for a more profound slow down.

>> the market has a case at the moment. >> well. >> hasn't that been true for a long time. >> it's some what true it's not so much that it's only a few stocks working it's just that the very, very large nasdaq stocks are working so much better and adding so much more market value that it left the average stock out there. it's funny because you can turn that real quick. it went down at least 10% from a high there's a lot of bargains out there. it's really eye of the beholder when you get to these. >> you do wonder what happens. why don't we talk about that, the coronavirus and the markets. president and chief investment officer of asset management and also cio of smart trust uit. dow futures are up nicely here i want you to follow what mike

was talking about. is there any fear that you have and i pointed this out that apple and some of these others are so big they're such a part of the market that if they start to go down ever is there anyway the overall market can go higher everybody owns etf apple and microsoft are the few. >> yeah. >> if they go down can the rest of the market go up

literally 500 people on a cruise ship. >> what that speaks to is the biggest opportunities in the markets this year. the need for innovative health care solutions this is one small example of th that and in terms of growth and the spread of disease itself that shows you a little bit to say we know how this play book works. not saying that's how it plays but the muscle memory of the market moves in that direction. >> how much of this then is the

fed. >> don't call it qe. >> it really isn't but it's the background music and the message of what they're doing is we are going to prevent dislocations in the market that come from somewhere. >> the fed has our back. >> and not in a very direct way. but yes. the bond market went to a point of saying we're going to price in another fed funds rate cut this year it ended up being positive with mike bloomberg and some interpretations for president trump and less positive for bernie sanders

is that playing into the positive >> i think it is if there's a continuation of this pro economic growth. and what i think also has the back of the market with the fed and u.s. consumer we saw that and we saw that in ralph lauren's earnings reports. we saw that in chipotle and disney's earnings reports. >> i hear you but those are all looking back >> it's not much no. >> crossing the tape for those fascinated or focused on the ipo market right now we're just getting news from casper the company now expecting to price that ipo between 12 and $13 a share. it's down from the previous range of 17 to $19 and this is

sort of just another example of the whole po market. >> even people are not happy about it we're going to keep our eyes on this there's been speculation about whether this gets across the finish line and this is an effort. >> we can see what the market for rectangular foam is. >> it's a tech company delivering it. >> it's a tech company. >> it's a tech company.

the challenge is casper created this new market for mattresses and now there's so much. >> entry. >> lower than i would have thought. >> would you buy casper shares if they're public? would you buy it >> i need to look at the underlying fundamentals a little bit more. >> what's the last stock you bought >> what's the last stock i bought >> we bought a portfolio of innovative companies the other day and amazon was at the front of that. >> amazon. even at the prices. >> that shows how much they have and how much more they have to grow.

>> don't forget you can subscribe to our podcast get interviews behind the scenes access it's so much more than just squawk box and i genuinely encourage you to download it. stay tuned squawk box returns right after this

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we got stocks on the move to tell you about this morning. earnings beating the street by a penny but shares rose less than expected shares down on that news other big news at that company it's going to spin off $6.5 billion in slow growth assets into a new company. women's health products and cholesterol treatments that lost protection they're trading higher this morning. the music streaming company reporting better than expected 29% jump in premium subscribers. so some good news in audio land.

>> all right coming up, it is the stock of the day. stock of the week, stock of the year, stock of the decade. it is tesla but could the coronavirus cause trouble for the company and it's investors we'll explain, next. >> time now for today's aflac trivia question. tesla's recent stock surge makes it the second most valuable car company in the world which car company is currently number one thaner we swhen cnbc squawk box returns. because health insurance doesn't always pay it all. aflac! after surgery we had extra bills followed up visits, deductibles. we thought health insurance had us covered up for everything, but it didn't. aflac gives you money directly to help you with those things. i want to thank my wife, my mom, the duck. get help with expenses health insurance doesn't cover. get to know us at aflac.com

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tesla's recent stock surge makes it the second most valuable car company in the world. which car company is currently number one the answer, toyota >> all right welcome back when you don't often see a stock move like this tesla shares, they're up more than 50% in a week and more than doubling so far this year. for only a few days into february but two stories this morning that investors should know about, number one, a tesla senior executive said the company will temporarily delay delivery of some made in china

model threes that were scheduled for early february delivery because of the coronavirus they plan to restart production on february 10th also earlier this morning, canaccord downgrades to a hold with a $750 million price target you're probably out of superlatives at this point. >> yeah. it seems like every day i say it can't continue to go like this and later in the day i'm looking at a stock up 80, $100, $120 yesterday got up to $960 a share and when you take a look at tesla and we're just showing you the last couple of days, this chart is remarkable. one thing to keep in mind is the strong volume in terms of shares being traded it's almost three times the average daily volume so clearly this is more than just retail investors here there's a number of institutional forms that made a

decision that they have to have tesla shares in their portfolio in some fashion. they're seeing strong volume when you take a look at shares of the tesla >> in terms of the decision to delay deliveries because of the coronavirus keep in mind we have seen a number of firms in china that have said we are going to extend our shutdown from the chinese new year all the way through let's say february 7th or 8th in this case for tesla it's february 10th. that's when you'll see deliveries start back up i'm not sure that that's going to have a whole lot of impact in terms of how analysts look at the stock. what they're all focused on now is whether or not tesla can achieve the guidance it gave in terms of full year deliveries. last year they delivered 360,000 vehicles and it expects to deliver at least 500,000 most on wall street. we're expecting them to say at

475,000. and finally take a look at shares of tesla versus general motors we're showing you this because they'll be reporting q-4 earnings that will happen after or later on this morning a little after 8:00 a.m. and you do not want to miss our first on cnbc interview coming up later on with g gm ceo dhivya suryadevara. a number of analysts after the call last night are wondering are the ford issues ford specific in terms of the softness that ford is looking at right now or is this a case where north america is soft for the auto industry? we'll talk about that as well. >> is there a moment that we can look back on with tesla?

because a year ago we were talking about can tesla make cash flow. why are so many leaving? can tesla survive? now we're talking about a company at $160 billion market cap divided by 5,000,000 cars sold is trading and they sell their cars for $50,000 does anybody out there have an explanation about what has happened >> you have a number of people looking at tesla shares and they're saying we have to have a presence in terms of where we believe the future of the automobile is oing

>> that's when i noticed a shift in the tenor and tone of commentary on tesla from maybe they'll get there. some day they'll get there, elon says they're going to get there to whoa, this was ahead of schedule and now that they have opened this in china, look at the opportunity. >> thank you for that. >> we're going to continue this conversation ron barron saying he's not just investing in the company but also elon musks vision for the planet take a look at what he had to say. >> i am glad that i have invested in this company because i'm helping this guy saving the earth. this guy is an unbelievable guy. brilliant guy. great business man and saving the planet

so is tesla the ultimate play? do you think that's what is happening here matthew >> certainly the interest has grown dramatically and there's a lot of players looking at the impact that it's having on environmental. i would say that values based investing does not mean ignoring valuation. so i am -- we certainly are deeply concerned about the valuation stretch that's occurred here on tesla and therefore have looked for other ways to play what is indeed a major move of the market toward electric vehicles. >> but how much of this do you think is the investor class pension funds and others who got in saying there's not a lot of options. and this is clearly one of them.

they obviously have some access but i think that you're seeing more the recent move and a significant short squeeze referenced earlier and people that are not fully exposed to who might have been light on tesla it feels like at least part of this move has to have come from institutional money. >> yes absolutely and of course you know the numbers i mean, it seems the estimates are that the shorts lost over 8 billion in their short positions over the year to date which when you think about the magnitude of that in slightly over a month it's obviously a substantial

amount of pressure upward on the stock. and then i would call them the benchmark hugging that goes on. >> a lot of carbon goes into mining lithium and nickel for the batteries by the way. >> yeah. >> my friend in england calls them coalers because they get most of their power from coal, you're probably just burning more coal to power the car the point is matthew, if you want to be really esg you have to look at the entire supply chain for everybody just because you may not be burning gas doesn't mean that something wasn't dug into the ground somewhere in the world to produce it if you really want to be esg you have to look at the entire spectrum, right? >> that is exactly right we expect people to go from

literally looking from cradle to grave of impacts that they're having with the productsand estimate it. >> there's people long the stock that still say it makes no sense. let's just say it's ahead of itself or come up with whatever phrase you want. >> right right. >> the issue is that most folks have never been successful shorting this stock. this has been a very -- >> the understatement of the morning. >> a very scary stock to short so even -- look, we had an analyst on yesterday that had a $350 price target on this company but if you said will you short the stock he said i don't know. >> by the way, it's cheap and easy to short if you want to do it. >> right.

>> so what do you do >> well, you know, for those that are looking at it as i want to play to the electric vehicle market i would just simply suggest that there are plenty of component players that are playing into this marketplace who are selling to all the manufacturers of electric vehicles that are much better plays for just simply a stable, you know, reasonable valuation way of playing the growth in this market. you do not need to do it like this company and like tesla and, you know, in addition to just simply the valuation issues, there's competitive pressures coming in and when you look over the next 18 months a lot of players are coming out with additional electric vehicles. >> we'll continue this conversation we appreciate you coming on this morning. >> no problem, thank you very much. >> thank you. >> all right still to come on squawk box, futures they are popping dow futures up 264 points right now. reports about progress on drugs

to fight the coronavirus what companies and investors need to know with the top executive. stay tuned and watching squawk box here on cnbc we're back right after this. (janine) ghostbusters!... of course i'd love to take an informal poll. i used to be a little cranky. dealing with our finances really haunted me. thankfully, i got quickbooks, and a live bookkeeper's helping customize it for our business. (live bookkeeper) you're all set up! (janine) great! hey! you got the burnt marshmallow out! (delivery man) he slimed me. (janine) tissue? (vo) get set up right with a live bookkeeper with intuit quickbooks. the easy way to a happier business.

let's get an update on the coronavirus outbreak the number has risen to more than 24,000. the majority still in china. the death toll is now up to 494. a new report this morning says there's progress on a vaccine. eunice is joining us now with more on the on going threat to china as well as i think it's fair to say a little bit of hope this morning about a vaccine >> a little bit of hope about a vaccine but the national health commission cautioned there's still no confirmed treatment or any kind of cure so that said, state media had been appointing to some research by a team at the university which suggests that two drugs,

arbidol could be effective they have been saying they should be included in the protocol of the national health commission it's much more focused on an anti-viral drug. it's currently being used on wuhan patients at the epicenter of the outbreak. also an institute has applied for a patent to be able to use the technology and the drug to treat coronavirus patients separately u.k. researchers told sky news they made a break through themselves reducing the type of development from 2 to 3 years to 14 days one word of caution on the research, that research has been pointed out a lot over here and has only been conducted in the lab so no human trials as of

yet. >> thank you so much you have done such a remarkable job. >> we'll be speaking a lot more to you we want to talk more about the impact on business around the world. i want to become the global managing partner his home base i should say is hong kong and much of your time is on the road, meeting with clients around the world all sorts of major ceos but you live on an airplane so i'm curious what this experience has been for you. >> well, the reality is there's a very personal experience you know, on a personal level. it's trivial compared to the hardship and experience of those but not of living in hong kong my daughter has been out of school for quite sometime. she goes back on march 2nd theoretically but there's a lot of speculation that that could change there in lies the challenge. this is a situation which is rapidly taking on in terps of

how people are reacting to it. >> right. >> 10,000 people have a very difficult situation. >> what is it like in hong kong? for example, your daughter, your family, without school, with some people not going to work, what is a day in the life. >> civil unrest at the same time. >> it's not exactly a straightforward situation and my daughter on the one hand is going to school in the sense of virtually going to school. schools are doing many of them conducting online classes. so massive experiment in working from home. that's what we have got in terms of our people. so i think that you have a situation now where people are making the best of a very tough reality. >> what though in terms of -- are people not going shopping? are people not going out on the streets? >> you can certainly see retail has been very hard. >> but in terms of the very personal xperience. >> yes. >> it's a ghost town in that sense. people are off the street. >> are the escalators packed >> no. >> if you need to go to the super market, can you get things delivered?

>> you can but increasingly people are focused on contact and delivery that's one of the things that we can be working on. how do you deliver food without any contact. you're seeing that take off. >> and then in terms of the business itself for mckenzie and then also for your clients, what's the impact then >> it's very different by geography and i think it's very important to remember that i was in paris and one of the most notable things was in the week after chinese new year there were no chinese tourists so the stores were deserted. that's a mayor impact overseas but that's the retail sector i was chatting with the hotel manager and he told me that the occupancy rates were significantly off what they would experience. >> today we have the market. right now you look at where the futures are and it's almost as if the coronavirus didn't happen

in terms of how the market is treating this. given what you know about the material impact this may or may not have on multinational companies does this make sense to you >> well, what makes sense to me is having a very different view of what will impact different sectors. if you're a sector in the retail and hospitality, clearly the sheer number of chinese tourists has an impact. one statistic. people keep drawing comparison to sars. there were 7 million chinese tourists in hong kong in 2003 and there's 150 now. it's frankly the questions i tend to get is -- i'm trying to put it in the models and you are here by the way. i should mention a year after

having a contentious conversation it's clearly caused some controversy and tell us what happened since then. what happened since then you're going to listen and learn and act and the reason i wrote it was to communicate that we have done all three and there's always more that we can do but what we have done is we thought very hard. we developed policies and approaches that really do help us govern it. >> what clients were on your client list a year agatha are not on your client list now? >> one of the things that i said is took the geography on democracy.

and that's quite the different status well, the reason i ask is this wasn't perspective work that you're turning down these are long standing clients. >> several sectors that we're not going to do that one of the things that's hard about it is that in countries that lack democrats in government you have to take a different stance. >> for example. >> for example, much of the middle east, china, much of the world is not democratic and we can't and i don't think we should exit from every sector but we can be thoughtful. >> what does that mean which sectors won't you play in

relative to china? >> it's about 100 that score less than six. those are the countries that we're talking about. >> there's also countries and if you don't have an office you don't have the understanding of how the place works. in those countries we'll also step back from working in a way that we don't feel. and having work and what do you think about that >> my frustration is that it's different. we're talking about a very small number of clients. we are one of the things that happened

since we last spoke is served 1,500 clients around the world i think that we have done that with a hard focus in helping them improve their performance and make a difference so i'm very frustrated. >> coming up, a big day for juul investors. we'll explain when squawk box comes right back you should be mad your neighbor always wants to hang out. and you should be mad your smart fridge is unnecessarily complicated. make ice. making ice. but you're not mad because you have e*trade which isn't complicated. their tools make trading quicker and simpler so you can take on the markets with confidence. don't get mad get e*trade and start trading commission free today.

frank holland is joining us with more from washington. >> well, the ceo and others representing 97% of the us. market is expected to face tough questions about e-cigarettes underoath during the hearing that starts today. the house energy and commerce oversight and investigations subcommittee will hold this hearing. it has oversight over the fda. the agency these companies must submit applications to by mayi order to stay on the market. they must make a case that their e-cigarette offering in some way protects the public health in recent months due in large part to the vaping epidemic the

market for vaping has changed very dramatically. you see it right here. juul is still the leader but in the last month of data, seeing 800% sales growth and capturing 15% of the u.s. market meanwhile, juul has seen shares in market share both drop by 15%. some context for today, in the 90s when big tobacco appeared before congress under oath there was a house energy subcommittee. cigarettes are not addictive four years later we saw the settlement where the four largest paid billions and agreed to change their marketing practices. >> she is expected to focus on two areas. >> when we come back, a lot more on squawk this morning fireworks at last night's state of the union we'll bring you some behind the scenes look at a focus groups reaction as the speech happened and what it means to the election in november

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adding more about it this is a record it's something that every country in the world is looking up to they admire. consumer confidence just reached amazing new highs. >> and joining us now, frank,

it's good to see you i have to imagine. we showed a little clip going into the break that the fevers were running hot during this speech last night. >> well, it's very frustrating if you're a trump person everything, every word that donald trump said was brilliant the president is the strongest and the numbers back him up. his own people feel better off than years ago those that don't support him struggle to show weakness in the economy and i think that's where they're going to take this election campaign. >> his supporters would agree he

could say 2 plus 2 is 4 and his detractors would say he's lying. >> exactly. >> what does that say about us where we are in this moment. are we going to look back in 150 years when the aliens come they're going to look back at a history book and say man that was a weird time. >> i don't know if they're going to say it's a weird time they're going to say we have reached the breaking point it doesn't help the situation where the democrats have still, have still not reported the iowa results from 36 hours ago. it does not help that in the state of the union you have the speaker of the house tearing up the speech she knew what she was doing. she was looking at her numbers as she did it. she knew she was on camera she was trying to make a statement about donald trump that's the problem everybody is trying to make a statement and nobody is trying to make a difference. >> but what about the president not shaking hands with her do you think that was on purpose? >> i do not know do you know what, i don't think

things happen by mistake i think things happen for a reason and we're all going too far. we're all doing too much and i want to say this this morning, the public is itself at a breaking point, in our focus group and you can see the entire thing on the l.a. times app. it took 30 seconds for them to start yelling at each other. it took 60 seconds for the whole group to devolve that's the problem. >> another key moment of the speech was trump's attack on socialism. watch this >> 132 lawmakers in this room have endorsed legislation to impose a socialist take over of our health care system wiping out the private health insurance plans of 180 million very happy americans. to those watching at home tonight i want you to know we will never let socialism destroy

american health care [ applause ] >> all right i mean, again, frank, you're saying one thing and half the people in the country are cheering and the other half are throwing stuff at their television in your travels have you found people to be more accepting than a couple of years ago or are we just entrenching even more and nobody is ever going to change their mind about anything. even the coverage is overhyped. if you're a left leaning newspaper donald trump this morning, everybody hated this speech if you're a right leaning newspaper, it's a brilliant speech our group thought that donald trump was not inappropriate. they did not think he was overly partisan they thought it was a campaign speech for 2020 which obviously it was but i'm afraid that the people who report the news are actually missing what the voters

themselves are saying. we had two undecided voters. they moved toward trump after the speech was done. we are -- >> frank, for the viewer that's listening -- >> so at this time of the morning a lot of people are getting ready and looking at the tv, if you're hearing the parts of the trump speech that we're playing, we're showing these results if they're red, they're republicans responding to the speech and they're rising most of the time and the greens are the democrats and they're declining most of the time reflecting what you were describing as the reaction and tell us about the fight that we teased that we played. that was astounding to watch they started screaming at each other. >> it lost control i know that you can see it on the screen and it's easily triggered. all you have to do is talk about health care, talk about the economy, talk about tax cuts up until now, up until this election, people could disagree without being disagreeable

in this election everything is a fight. everything is a brawl. nobody is listening. everybody is speaking. everyone is shouting and the problem is i don't see this getting any better over the coming months. >> well, on that happy note we're going to bring this up as well we're not done yet there's a lot here great content as always. president trump also talking about what i guess everybody should like which is low unemployment rates but even that is politicized >> if we hadn't reversed the failed economic policies of the previous administration the world would not now be witnessing this great economic success. [ applause ] the unemployment rate for african americans, hispanic americans, and asian americans has reached the lowest levels in

history. >> i'm just going to guess frank that the people that grumble at that and we heard some audible grumbling, what the people will say is yeah unemployment is low that's good but it's because of obama and trump just inherited an already improving economy i'm just going to take a wild stab. >> i think you were there at the l.a. times focus group it was immediate and those who voted for barrack obama do not want to hear of donald trump's successes. they do not want to give him credit for it even on unemployment they feel that this was obama's policies and not trump's policies. >> frank we have to run but do you have any view of what's going to happen next week? >> well, hopefully new hampshire can count their ballots better than iowa can. this was a stunning -- >> do you think the results we have now are going to carry over next week or it's a different

audience >> it's a different audience i think bernie sanders will do better in new hampshire. he and buttigieg are dead even in iowa right now. joe biden has to win an early state. if he loses iowa and new hampshire. i do not believe he wins new hampshire no. >> thank you appreciate it. coming up when we return another big hour ahead futures are popping on reports about progress on drugs to fight the coronavirus. the dow up not everybody is so optimistic the former commissioner is going to throw cold water on claims of brk tha earough. you have to hear what he is about to say you're watching squawk on cnbc

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good morning, we're live at the nasdaq market site at times square and joe and becky are off today. our guest host cnbc contributor michelle is in the house on a

day and the dow is up 245 points higher so a lot going on. we begin this hour with team coverage of the latest results from two industry giants disney's better than expected first quarter and before that we want to go to phil on fourth quarter results and crossing the wires as we speak. >> phil. >> andrew, better than expected fourth quarter earnings for general motors it earned 5 cents a share in the fourth quarter the estimate was for the company to earn just a penny so it beats on the bottom line revenue coming in a little light of expectations but not by much. 30.8 billion the expectation was for just over $31 billion in terms of the impact you had the strike for the first couple of weeks of october it hurt the company

$3.6 billion that was the impact of the strike wholesale reduction in terms of wholesale sales of vehicles to dealers down 190,000 that was the impact of the strike there and in terms of guidance this is going to be of most interest right now. not only for analysts but investors. this year the company expects to earn between 575 and 625 a share. the estimate this morning before this was for earnings of 623 this year. so that's a little light of what most on wall street are expecting with free cash flow between 6 and $7.5 billion we're going to talk about these results and also the 2020 guidance with gm ceo or cf cfo dhivya suryadevara that's coming up later. >> thank you very much now let's get to julia in l.a. for more on disney's first quarter and also your excellent interview with bob iger. >> thanks so much. that's right disney beating expectations but

the key surprise here from disney is that disney plus grew faster than expected more than 2 million subscribers signed on this year after the conclusion of the mandalorian and announcing that hulu will launchinternationally next year here's what i said if he was threatened by the coming launch of peacock and hbo max. >> these companies that are launching all recognize what we recognized some years back and that is that the multichannel ecosystem is being disrupted and people are turning to more direct to consumer over the top services more program driven than anything else which is why we have done what we have done. i think as we view it, more competition, yes i use the word threat. i wouldn't say that we're threatened by it we feel with disney plus in particular we have an extremely unique product >> as for coronavirus it could

impact operating income by $175 million. shanghai disney and hong kong disney remain closed for two months but iger says it's not having a negative impact outside of the parks. >> we're not seeing any change in terms of advanced bookings or travel to the united states. obviously some is impacted from that part of the world but that's relatively small in terms of visitation to the united states i don't want to say never or that it couldn't happen but right now we're not seeing it. the company's strategic pivot is also raising it's price target on the over the top streaming strength it's lowering it's full year 2020 earnings estimates based on the company's guidance due to corona virus back over to you. >> thank you for that and that great interview.

and for waking up very early this morning and by the way, disney wars. >> that's why he's here. >> help us. >> these earnings were better than expected in so many ways the question that i have long-term is what you think these numbers -- what the disney plus numbers are going to mean and we were talking with tom rogers in the 6:00 hour about hulu. >> right well, i think what it means is

that they're building a business and it's going to get through the other side of this disruption, right? it's going to scale. they'll have 8 to $9 million that will be big enough to offset the decline in cord cutting and no one else has done this. >> you have no worries that any of this was pulled forward meaning that the subs that knew this 25 or $26 million number that is going to be harder to capture that -- to double that number. >> yes that's -- yes, because -- >> it's not bad. >> it's a good problem to have. >> it's like saying that you're younger than i thought when i met you. it's a good problem to have because you'll be able to scale the business in terms of growing revenues overtime more quickly so no. they pull forward a ton of customers. 30 million probably in the first five months of life. >> what you're saying is incredibly csignificant because we were very worried about

disney for a long time what are they going to do hand ringing. could they achieve this? does this quarter cement yes they have achieved that? >> yes i have been here for many years when it was look at espn, look at the declines. they're too late their assets are not good enough in one quarter they proved people wrong no one has done what they have done and i thought with jim here just putting in perspective what this means for disney because he wrote the book about the bob iger transition and this is much better than anyone probably thought. >> i think that's right. i mean, there's no question in my mind that the big, big question about disney which was essentially could it survive the streaming revolution has bp answered and the answer is yes and to move an aircraft carrier the size of disney from a digital model that was working really well to a completely new untested technology -- >> to be unafraid to self-disrupt is incredibly hard when you're a juggernaut like

that. >> we have seen so many failures at that. >> he got the timing right that's the thing if he had done it a year or two earlier. he might have been applauded >> people joke that it's impossible to cancel your cable subscription you have to call 65 people and it never happens people are now churning. they'll subscribe to something and then when game of thrones is over they'll cut it. is the bigger risk here that people just move around easy to sign up. it's easy to cancel and your cash flow is very hard to predict? >> yes one of my worries about this whole revolution and this starts by looking at netflix is that these businesses are not as good as the businesses that we came from. >> they're not sticky. >> they're not they require more investment in doesn't but if they did not do this, they had basically kept to their plan they would be in much worse shape than they are today obviously. >> but in terms of what they're going to get per customer from this service versus what they

get off of the bundle, there's going to be compression. >> that's his point. >> there's compression we know this but the opposite of doing nothing -- look at the rest of the sectors. look at where the stocks trade nbcu is a freebie. there's no value the market is putting on media assets in comcast. >> i think you have to take the long view on the revenue side. they're not even getting $6 a subscriber right now and that's just not enough. netflix is expected to spend 14 billion on original content this year and, you know, again, this is not a model that was like the old cable model at all the profit margins are going to be compressed but overtime you're going to see a shrinkage of the number of players here and disney will be a survivor no doubt about it. >> are you still with us >> i am. i don't know if you're still

hooked up to me but i'm here. >> you're hooked up to us. i know the question was positive to iger yesterday about whether he thinks prices will go up. he said it's too early to answer the question but given what you are our disney watcher and whisperer, how quickly do you think prices will go up there? >> i would disagree. i think that this is a very different business than netflix and i don't think that they necessarily have to raise their prices that much and 50% of their subscribers came directly to the disney website and indicates that they're getting a much higher percentage from subscriptions than other companies would be so they don't have to share with the apple store and the kbooggoogle play and they don't have to pay a 30% fee. so they're doing quite well in terms of the percentage of those themselves. >> were you surprised? and i have asked everyone at the able this about what i thought

was actually a lower uptake from the verizon customer than i was expecting. >> positively and negatively. >> i would say it's probably a positive thing a lot of those people are probably verizon subscribers that decided to opt in and get a three year subscription or sign up for a full year subscription on their own maybe not realizing they could get it for free through verizon. so i had heard, i had talked to verizon about this and he said it was possible that maybe verizon would renew their deal with disney. that's certainly on the table. but i'd say that the fact that they're getting so many direct subscriptions means there's an intent to subscribe. people aren't doing it by accident and the fact that the churn was so low after the mandalorian was notable. >> can disney expand their core customer beyond families there's like about 35 million families with children age 18 and younger in the united states if they have 28 million they're

getting close to having every company in the country can you now get adults. >> that's going to be a programming challenge. >> do you bundle -- how do you bundle hulu, disney and hbo plus that's an opportunity too. >> thank you julie, thank you for waking up early. thank you. >> thanks. >> coming up, january's adp private sector payroll number is out in a couple of minutes how is the economy doing we're going to bring you that number when squawk box returns dow futures up 258 right now a lot of green on the screen we're back after this. this is the age of expression. everyone has something to say. but in a world full of talking, shouldn't somebody be listening? so. let's talk. we are edward jones. with one financial advisor per office, we're built for hearing what's important to you.

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go beyond the expected. to do the extraordinary. take your business beyond. welcome back breaking news on jobs. time for the january adp private sector report and adp reporting that january private sector payrolls are up 291,000. that's a much stronger gain than most economists expected and this is the job market that

seemingly just won't stop. >> though i would caution that weather played a big role in january. it was mild acrossthe country. so that really juiced things up. particularly in leisure hospitality. construction those are very weather sensitive and they got jacked up in january so there will be some pay back and it's also just a technical point but an important one for friday they are going to release their benchmark revisions. they do this once a year and the bls, the keepers of the data already told us that they're going to downwardly revise it significantly by half million jobs by march of 2019. so january was a solid number. but my view is underlying job growth is probably about half of that about 150. >> okay. but even if you -- let's assume that that's ight

so we have a lot of labor force growth we can't do that forever that's what is happening right now. i'd say break even job growth is probably around that 150 case. so that's consistent with stable unemployment which is, you know, pretty good in the context of the 3.5% unemployment rate. >> we can debate we can talk about it but the reality is the ultimate arbiter is the equity markets and they're up 287 in the premarket. dow futures were higher. they're adding gains on this the bond market is not going to like this. how much do you think of this is the federal reserve? sort of the continued easing policies of the fed.

is that juicing the economy at all and is it juicing it in an unhealthy way or is the fed not a problem. >> the real window on what markets think about the economy is not the stock market. it's the bond market it was up yesterday but i hadn't looked at it 1.6% and that's influenced by things like quantitative easing and other factors but as consistent with an economy that is okay maybe, certainly not what the equity market was saying now the equity market is really juiced and i'd say valuations are a real significant issue primarily because of the low rates and because of fed policy. so the fed has really because of the three rate cuts last year expectations for further rate cuts going in through the remainder of this year has jacked things up in the equity markets. >> all right thank you very much. if you missed it folks, adp

numbers, 291,000 andrew. stock futures already up up nearly 300 right now. >> coming up, when we return, an update on the spreading coronavirus, take a look at the futures. on reports of progress meant to fight the illness. open up almost 300 points higher but not everyone is so optimistic you want to hear this view and give perspective on it scott gottlieb is going to throw some cold water on it when he joins us he's pushing back on plans of a breakthrough stay tuned you're watching squawk on cnbc ♪ ♪ ♪ ♪

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welcome back to squawk box take a look at futures now we have green arrows across the board. almost as if the coronavirus never happened dow jones would open up about 300 points higher now. s&p 500 up about 30 points nasdaq open up about 116 points higher >> sky news is reporting that a british scientist made a break through in the race for a vaccine. scott gottlieb is joining us now with his reaction. also a cnbc contributor and pfizer board member. also with us on set to talk about the impact on business in china is the chairman of the

greater china region we're going to start off with you here obviously, these reports are just reports are you finding some optimism in them >> well, i think that a vaccine strategy here could be helpful but probably what we might refer to as the second wave. the virus itself does become -- the outbreak going into the spring and the summer. hopefully it won't become an epidemic in the united states. you might see the virus resurface and at that point a v vaccine could be helpful and ready. hopefully small outbreaks. the vaccine isn't going to be ready in time.

>> anybody that has what looks to be pneumonia even if they have not been around china and start testing them for the coronavirus. is there a risk that that could set off a certain panic. >> not anyone with pneumonia if you're negative for bacterial infection and you're negative on what we call this whole panel is virus causes of pneumonia and you still have a suspicious pneumonia, i think those individuals should be tested we now see multiple modes of community transition outside of china in other countries where the virus itself is propagating in the community without any connection to travel to china and it's likely that there's cases here in the u.s. right now where people are spreading this at a low level we haven't yet we travel to china testing people from china who present with significant symptoms like high fever or pneumonia but only probably about 20% of people actually

develop pneumonia. and so for every one person that we had we might be missing 8 or 9 mild symptoms. >> jim, you're normally in shanghai. >> yeah. >> when did you get here >> i left the middle of january. don't worry. >> you're here if you're trying to avoid the virus. >> so i'm staying and i don't know when i'll go back and that's the case with a lot of the business people. they left china and they're stick offshore and watching and waiting to see what happened. >> what are your clients seeing as you. >> i'm in touch with a lot of people in china. they're checking on their employees every day. people are not leaving their homes. i don't know when businesses start.

>> and, you know, business but is its a highly leveraged one. it's a very serious ripple effect among the immediate shutdown >> remember the four big chinese banks and the finance ministry they can handle anything for awhile i wouldn't go gloom and doom but this is going to hit the world because china is still the manufacturing center of the world. most supply chains are shutdown and the lead doctor in china who is monitoring the virus, he just came on yesterday and he said businesses starting back at work on the tenth and i don't think that's going to happen i think this is going to keep rolling along and even customs

doesn't have people. everybody is wearing masks and sending pictures >> how long does this go on for? >> this could go on for many weeks a couple of months >> a couple of months? >> yeah. >> 5 million people left wuhan. >> where are they? >> they're all over china. >> that's my point. >> and so people -- actually -- >> do you think it gets worse before it gets better? >> well, you know, because of the measures that china implemented you would think that you would start to see a break in the transmission of the virus in china i think it's going to get worse globally we now see multiple ones outside of china and there's community transmission and so we're potentially seeing epidemics spread in those regions. those regions still have travel from in the united states so we will see more cases here and a lot of them will be undetected

so i think we'll have to grapple with that. i think we need to prepare the public for that. that does not mean that it's going to become an epidemic in the united states. we can still prevent that. >> i'm hearing two things in this segment one, hopes about a vaccine or, you know, way too hopeful and there's no way that they would be in time to deal with the immediate situation right now. and then you telling us that this is going on way longer than people expected when back in china they're saying we thought it would be now and now we have to push it back. those are two very different things then i was just thinking a few hours ago. >> businesses scrambling right now basically, the business right now in china is focused on getting supplies mayors are calling up foreign business saying please help us which for the bold communist party that can control everything they're showing all of these vulnerabilities

the follow on for business later is going to be very interesting to see because there's been tension in the trade war between business and the government and now the government is reaching out asking foreign business for help so what is it -- what is that going to lead to i don't know this is really a changing dynamic. >> does it impact china longer term we had sars. now it's 15 years ago. the chinese economy was tiny then a trillion dollars in gdp. if you're a business, you look at sars. you look up the avian flu. they're very good. >> businesses are in china for china. where do you have several decades ahead of growth? big growth where do you have another half

billion? and who is going to lead in the internet of things, self-driving vehicles, robotics china. >> thank you >> thank you >> yeah and by the way, tonight, do not miss another cnbc special report we continue our coverage, outbreak, coronavirus at 7:00 eastern time tonight we'll give you the latest and our angles, the continued impact. >> rick santelli has the numbers in chicago, rick. >> yes, the trade balance which of course is a deficit expected around $48 billion minus 48.9 billion this follows a very slightly upward revise. 43.7 that's a minus sign as well. that started out originally released at minus 43.1 now 48.9 obviously is the smallest since last month and last month was indeed the

smallest going back quite a ways going back to october of 2016. so 48.9 isn't terrific i take that back, that goes to october which was at 46 but that's not a bad number. at this point, many traders take a very generic look at the trade deficit minus 50 billion seems to be their kind of quasi bem g benchmark. that adp number was hot, hot, hot at 291,000 so we're going to see if they continue building on the base that they set on friday the intraday lows at 141 and two year -- excuse me, 131 in a two year and 151 in a ten year we have built a cushion on top of those intraday low levels back to you. >> coming up when we return, a first on cnbc interview with gms chief financial officer straight off the results we got a few minutes ago. we bring you that in a moment.

as we head to a break, take a look at shares of macy's the company will maintain it's dividend despite the plan to cut jobs looking at that stock up about 2% now on that ns.ew stay tuned you're watching squawk here on cnbc high protein low sugar tastes great! high protein low sugar so good! high protein low sugar mmmm, birthday cake! and try pure protein delicious protein shakes

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the company reported mixed fourth quarter results just at this hour. we want to get to phil at the new york stock exchange and he has a very special guest to help break the numbers down for us phil. >> i am here with the cfo of general motors you guys just posted fourth quarter earnings where you beat the street on the bottom line. revenue a tad light of what expectations were but when you look at the fourth kwartquarters was a challenging one.

we had $4.83 but when you adjusted for the strike the underlying performance was close to $6.71 which is the higher end of the range in terms of what we guided to as well. cash flow was very strong. we generated about 6.5 billion when you cut through the impact of the strike. so overall strong despite the volatility we're seeing around the globe and exceptionally strong as well on the back of the strong launches particularly on the pick ups. good calendar year and it sets us up well going into 2020. >> 2020 for you guys should be a clean year you don't have the uaw contact to come up you look like you have right sized your capacity in north america with the plant closings in the last year and a half and relatively fairly strong market still in north america. >> it's 2020 we expect to be another strong year and clean year as you put it we're expecting about flat eps

for nonoperating items and we're doing that despite a softer u.s. industry we're expecting about half a million units down in the u.s. we're expecting china to continue to be down as well as markets in south america and we're able to maintain earnings and we have that today. >> and we talked to steve carlyle. the president yesterday, china is critical to cadillac. it's critical for general motors it's your largest market the coronavirus appears to be a jump ball. you already shut dwrourn plant f -- down your plant for the holiday. and that's extended out. what type of long-term q-1 impact do you expect from china? >> as you said it's a fluid situation and what we have done now is the safety for employees and we're concerned for everyone that's impacted and as you think

about the business impact, it's the impact on demand that we're looking at as well as the global supply chain. >> how much is that. >> it's too early to say and we're obviously closely monitoring the situation we have contingency plans and we are looking at mitigating the best way possible the impact of this but it's just too early to say. >> if you look back over the last three to four years these are perhaps the three or four most profitable years ever for general motors and when you look at your stock it's done nothing. it's lower compared to where it was four years ago this at a time when shares of tesla have taken off i'm not going to ask you to comment on another company's stock price but is there frustration for the gm leadership team that you're posting the numbers that you're posting and yet investors basically said we can care less? >> well, we believe we're a compelling investment opportunity and we look at our businesses in multiple ways. we have highly successful cash businesses that are growing and

we're also very uniquely positioned in the growth areas. >> let's talk about the growth area. >> and our future and -- >> do you have to become more aggressive in terms of electric vehicles >> and models. people talk about electric vehicles i rarely hear them say that. >> if you look at the progress we're making whether it's starting to be that and all the vehicles that we're going to roll out the next several years we're excited about it we have one architecture that's highly scalable and when you look at our presence around the globe it puts us in a unique position to have every segment and every brand represented. look at the investments that we

made so this shows our commitment we are going to talk more about it. >> we sell it accelerating as we roll out our new products. >> do you expect to see strong growth starting next year when you come out with the hummer and the other electric vehicles? >> we'll see growth in volume. >> the cfo of general motors joining us first on cnbc just a few minutes after the company posted better than expected earnings for the fourth quarter. guys back to you. >> all right phil, thank you very much. the next set of potential catalyst from the market we'll investigate what is fuelling the rise of tesla we just downgraded the stock this morning you can always watch or listen to us live on the go now dow futures up 284 points

right now. we're back after this. >> don't forget to subscribe to our podcast. you'll get interviews, original content and behind the scenes access look for us on apple podcast or on your favorite podcast app and subscribe to squawk pod today.

>> welcome back to squawk box. take a look at futures right now. we have so many green arrows across the board we'll explain why.

they could very well be an expectation or at least this news that there could be a potential vaccine for the cor a coronavirus. moving things this morning dow up 280 points. it could open up and the s&p 500 looking to open up about 31 points higher. tesla followed it's spike on monday with a gain of 14% yesterday. i can't even get over it the company's market cap passing that now, nike hit a high of over 960. >> $960. i almost wanted to say million dollars. here's what he said about where he sees the stock going. >> he's going to do around

revenues and so basically what is going to happen with tesla this could be one of the largest companies in the world whole >> joining us on the squawk newsline is the analyst and he just downgraded tesla this morning to hold while maintaining a $750 price target. help us with this decision and what are you really telling investors to do because it's wanting to say there's a value to the stock and it's another to say short it. >> yeah, no, we're not saying short the stock. you know, when we came into the year, actually i came on cnbc with, you know, we had all indicators that were very bullish. and the stock has been more than we anticipated

and we think fundamentals need to be with the stock >> but i do think that we need to be prudent and it would be irresponsible to not acknowledge that a large component of this story which relies on domestic demand in china is, you know, at risk right now. >> and tim, one of the things that we have been trying to figure out is how much of this is retail. and chasing a fomo situation or at least a momentum trade? >> it's trading there from retailers. this is a definite situation and

a lot of froth in the market it's everybody and it's everything one thing is the long and short side so you have those that aren't going to sell and their stock has not been traded. it's been forcibly taken out at this point. >> they're gone. >> they're in the process of being gone but forcibly meaning that the brokers are getting them out. >> forcibly by bankruptcy. >> i mean, if you're short the last two weeks you're going. >> i guarantee you that we're not going down to no short interest when we get the next report. >> they're offering rebates on tesla stock. they're paying you to short the stock right now. >> exactly. >> my point is -- >> we have never been here there's never been a company like this with this kind of revenue, i found one there's a company with a market cap larger than tesla. salesforce.com.

>> it's right near it. >> i'm not knocking sales force. we have been here before. >> a software business. >> it's a totally different situation. >> people call tesla a software company. >> nobody said it's unique it took 17 years to go higher. there's a retail frothe. people have obviously launched into it. are you telling people to sell it and not short it? what are you suggesting here >> if i had a core position in the name and i like this from a disruptive -- i kind of go back and harken to is revs going to be disruptive to the auto sector we believe definitely.

and so this should be a core position for people that want exposure to that but to not look at locking in some profits at these levels and just saying hey we don't have a great data in terms of what chinese demand is going to be. is it going to be delayed by a month or two months or three months or six months how is that component of the story which is really important in terms of overall numbers going to play out? we're just saying let's take our foot off the pedal right now. >> i was so surprised when ron b b baron yesterday when we said your shares you owned since 2014 just take 2020 and it's up 80% take a little bit off of the table. one of his portfolio managers wanted him to and he said no way. it was incredible to me his willingness to stick by it and not even just a little bit of insurance. >> there's a ton of house money in the stock right now and

that's both ways. >> a convertible bond now way in the money. >> are other electric cars selling? i don't see a lot on the road. >> well, that's what magic here of tesla is. they make -- they have created a market for electric electric vehicles. people are buying because of the brand, not necessarily because it's an electric vehicle that's the frustration, traditional automajornlg makers hasn't taken off in the same way as tesla >> the chevy volt. gone >> big picture enthusiasm for a post-petroleum world >> sure. >> it's all running through tesla, just like internet tv ran through netflix for a little while when it was $400 a share and when somebody else comes along and you can credibly say we are going to participate in this market. >> the model s is a good looking car. the chevy volt was like an -- >> making that point exactly,

people not buying an ev but a tesla. absolutely >> by the way, guys, if i could chime in for a second, one of the things we often say is one of the positive data points for tesla doesn't come from tesla at all. it actually came from porsche. the fact that tesla gets two times the range is porsche's leading take-in, shows the lead in the market which would be akin to an auto tra traditional auto guy that gets two times the gas mileage. >> thank you very much, jed for calling in this morning. tim for waking up early on the wes coast. mike, sticking around. we'll wideen this conversation right now to include the broader markets, even though it's almost like tesla has taken over the markets for right now. barbara reinhardt is here, head of asset allocation investment management things are rocking and rolling

today, almost like the krn did not the coronavirus didn't exist. >> there's significant and ample liquidity conditions provided over the course of all of last year, and it's not just the federal reserve reducing interest rates it was the lion's share of global central banks that eased policy global short rates fell 50 to 70 75 basis points which unfolded in september of last year, the rest of the world, europe, china, the emerging markets, making a bottom and starting to at least come out of some of the misery that they had been in for the past 18 months >> there's a view in the past week of don't buy the dip. we had some -- >> mohammad el erian said the central banks cannot solve the coronavirus. they don't have the tools. >> somebody is buying the dip. >> we should not be talking about central banks solving the

coronavirus. central banks have a different goal than solving world issues >> that was his point, they can't solve the problem and the problem from the coronavirus is widespread, they don't have the tools. people are in condition to pie the dip because of liquidity coming in. >> there's a central investment decision you have to make. do you believe what has happened over the past couple of weeks cannot dislodge the five to six months reacceleration or bottoming process you see outside of the rest of the world. >> what is your answer >> the answer is i don't think you have enough data you have to find out february 9th if the china factories reopen right now you are going to see demand shock it's a matter if a demand shock goes through a broader supply shock. you don't have enough to make that decision. >> i agree but the market is basically saying that the coronavirus did its job, which was to provide an excuse to get a frothy market to back off a little bit, put a little fear in the markets, shake things out.

get bond yields lower, refinancings are rocking if we don't have it gallop around the world and accelerate in terms of viral infections and economic impact, then you basically got your gut check i'm not saying it's correct but that's the way the market is treating it. >> step out for one moment, though stem back from today and the past six weeks, from 2018 to mid year of 2019 >> yes >> in real terms, adjusted for inflation, the equity market went nowhere it went sideways for the better part of 18 straight months >> as it did to late 2016. >> yes >> when you broke above that, the market won the benefit of the doubt for a while. that's psychologically where we are. >> exactly the point is you had earnings better than expected you have very attractive liquidity conditions >> right >> the rest of the world is feeling' little bit better you have to wait and see how the coronavirus unfolds. this thank is enough in terms of our positioning to say you

cannot make a decision on something that is completely unknown. >> the market doesn't wait thank you for helping us through this, mike their for being here. let's get back to new york stock exchange, joined by jim. i guess i'll talk a little bit here how much of this tesla interest is just people dumping every oil and gas stock they can exxonmobil, multiyear lows, you've said it, nobody gives a you know what about oil and gas. you've got to get out. are they parking their money in tesla while they look for another green play >> look, i think tesla went from a company that was going to lose money to a company that makes a lot of money ford last night announced gleefully they'll close six plants in europe tesla is building a plant in europe there's demand for one car, not a lot of demand for the other. ford can't make all the cars at once and hurt their earnings tesla makes all cars at once and makes their earnings as far as the oil, oil is up today, saudi is trying to make a stand. you know you've reported more

than anyone the united states is a swing producer a lot of the companies don't cut back capex is going down but they're discovering a lot of oil last night the president took numbers up big for the country >> you think there's any value in oil and gas at all, jim >> the president raised numbers, went to a strong buy listen to that speech. honest to god, he's like a major research house on wall street. he says $12 trillion created taking numbers up from jobs. he's like a big macro economist from morgan stanley, jpmorgan. you take it and say wow, that guy is taking numbers up big and maybe using 401(k) money but he makes it so you want to buy stocks i don't think people are talking about that enough this morning you know at 3:30 a.m. the chinese announced stimulus and talking about once again they may have something but last night the president, yeah, he's,

i think he went to usa one list. >> upgraded and the markets's upgraded >> he had as a buy and went to super strong buy, saying everyone's got to put their money to work now. they think they can go from 12 trillion to 15 trillion. wow is he bullish. the guy is really bull irish. >> super strong buy. >> swap out tesla to u.s >> "squawk box" will be right back

thanks to brian and michelle for being here tomorrow. join us tomorrow "squawk on the street" begins right now. ♪ life doesn't discriminate between the sinners and the saints ♪ ♪ we can do it anyway, regardless if we fall, if we break ♪ good wednesday morning welcome to "squawk on the street." i'm carl quintanilla, jim cramer, and david faber. record highs in sight at the open despite a round of q1 earnings somewhat underwhelming. investors focusing on signs of renewed economic strength and the president's ability to leverage that in november. will the bond market confirm ten-year around 1.64 road map begins with easing virus fees, stocks set