taking steps to shore up its economy. we have private deal this morning with a valuation right down to $6 billion it is thursday, february 20, 2020 "squawk box" begins right now. let's take a look the u.s. equities this morning. there are some red arrows. the nasdaq and s&p both setting new records again. the dow is indicated down 47 points after gaining 115 points.

s&p indicated down about 4.5 looks like the 10-year is yielding below 1.6%. 1.549% we'll talk about what china did. loan rates there dropping as the company tries to take on the impact of the coronavirus. let's get an update now on the coronavirus. the people on the ship, a couple of people did die from the coronavirus. china as we heard cutting its benchmark lending rate that was expected. authorities looking to boost the market unfortunately, two passengers from the diamond princess cruise have died. the first reported deaths in

connection with the ship which was quarantined off the coast of japan nearly two weeks china is again, changing the criteria of confirmed cases adding confusion to tracking going up or down and whether we've seen a peak or close to a peak l brands reportedly selling shares of victoria's sek receipt valuing that brand just over $1 billion. this had been expected that they'd pay for it. l brands chairman and ceo will step down as part of the deal but remain on the board. it is a huge shift in a retail

landscape you covered forever. didn't you cover l brands. >> it was still limited, victoria's secret and bath and body works >> he doubled down at a time when mall space was declining. buying a bra at a $60 price point, tough to up that. >> as the w0rorld has completel moved away in the meantime, there are things that happen that render certain businesses obsolete. shift in culture no denying, it is a different world. a shake-up at ubs. stepping down effective november

1. his departure has been expected more than a year the company a pointsippointing s ralph hamers you can take a look at shares of ubs and how they are reacting as we speak a little bit of green there. democratic presidential candidates facing off. this was the first debate performance for michael bloomberg. the other candidates came out swinging >> i'd like to talk about who we are running against. a billionaire who calls women fat broads and force-faced lesbians no, i'm not talking donald trump. i'm talking mayor bloomberg. >> his first chance to face criticism on the world stage

here is an exchange when elizabeth warren pressed for a release of nondisclosure agreements of harassment in the work place >> i hope you heard his defense. i've been nice to some women that just doesn't cut it the mayor has to stand on his record what we need to know is exactly what is lushirking out there. he has gotten some number of women, dozens, who knows to sign nondisclosure agreements for sexual harassment and sexual discrimination are you willing to release those women so we can hear their side of the story [ applause ] >> we have a very few nondisclosure agreements

>> how many is that? >> let me finish none of them accused me of nothing more than they didn't like a joke i told there has been agreements between two parties who want to keep it quiet. it is up to them >> he drew negative reaction from the audience on comments for releasing tax returns. >> mayor bloomberg, your campaign said you would eventually release tax returns people are already voting now. why should democratic voters have to wait >> it just takes us a long time. fortunately or unfortunately, i make a lot of money, we do business around the world. we are preparing it. the number of pages are in the thousands. i can't go to turbo tax. i put out my tax return every year for 12 years in city hall we'll put out this one

it tells everybody everything they need to know about every investment i make and many the money goes the biggest item is all the money i give away. we list that every donation i make, you can get that from our foundation any time you want. >> bloomberg's response as to whether he supported the proposal that requires all large companies to turnover 20% of their ownership to employees over time. >> absolutely not. i can't think of ways to make it easier to get donald trump elected than listening to this conversation it is ridiculous with err not going to throw out capitalism it was called communeism it doesn't work. >> i actually agreed with that that was the with unthat really

resonated with me. okay honest answer on that part >> ari tweeting that he couldn't fathom that nobody in the party when asked about capitalism, i believe amy klobuchar said she believed in capitalism that had everyone gone mad. bernie sanders calls himself a socialist, whether it is a democratic socialist >> a little bit of a circular firing squad feel for me >> with bloomberg in the middle. >> a gun fight in a life boat. i'm coming to realize is that bernie is at the center of the stage, he's got grassroots support. if he just keeps winning and winning, what do you do?

there is a difference between the democratic establishment and millions of democrats voting for him. you can't just say, no, we don't like the way this looks or the prospects. some people think he might have won four years ago i've always been a bernie bro. >> you are a beernie bro now >> who else to pick. is that the six? >> i want bernie because you think that makes it better for -- >> don't ascribe any kind of weird motives. but seriously, that's the six? you got anybody else is howard schultz is he done >> bloomberg's campaign acknowledged the difficulty.

that answer at the end was fairly strong. his campaign said he's just warming up >> tweet of the night, by the way. writing that bloomberg's performance. the gap between influrns marketing campaign and putting an call product in front of viewers. that was perfect >> in his own line, if you had $60 billion, you really do start thinking you are just midas. you are the man or the woman when the rubber meets the road, you have to debate and be fast and strong i started feeling sorry for him. >> he did have everybody come after him. >> he did. >> i started feeling sorry there is an old adage, never

feel sorry for someone who has a gull stream jet. >> i felt sorry for him. i did. as you know. maybe he's not a great debater he isn't clearly. if you look at what he did in the city in the public and the private. >> we are different in what we think is competent a nannie state, i don't think is competent. >> i think it was well-run under him. >> it was well run under giuliani now >> america's mayor >> i didn't like him during the milken years but now you do like him. >> great american. got the country's best interest.

look, let's leave it at. i'm a bernie bro i'll stick with that he's in the center he's at 58%. >> it was said, b he thinks bernie sanders is a bigger threat to the virus than the coronavirus. >> the market and the numbers go up the stronger he gets i'm not saying what i really think. >> put the markets aside bernie can't win, i don't think. >> if bernie wins, i think every seal in america. >> if monkeys fly out of my rear end, i'm going to have to leave

the set. >> people thought the same thing of trump even two months before he won. people were talking about monkeys flying out -- >> you don't really think that's the same thing give me your honest opinion, if you had to bet all of your money, what is his chance of winning? 25%? >> winning in the general? >> a third no more than a third >> i don't think it is a third >> i don't think it is overwhelming at all. >> unbelievable. it looked like a triple x slope. is it a die black diamond. >> triple x. i don't know what i'm thinking

nothing. i'm trying to think of the extreme slope on a mountain. actually headed back to the slopes it is been a while do you think my knees -- >> can only hope >> i'm hoping. >> now you are giving me ideas >> you went. how was yogreat. >> then the debate put ad party? you had a ball you were the bell of the ball. >> more doughnuts or what? >> cake. cake from milk >> you missed his birthday i got him early. it was 6:11. >> 19. >> coming up, stocks to watch. we'll dig through some of today's biggest movers after

earnings report. seriously, that's it those are the six? that's what i got. are you sure >> i thought you were a bernie bro now. if you have questions for warren buffett. why not just go for aoc? i could think about that tweet them to us with the hashtag #askwarren are you going out? awesome. 6:00 to 9:00 tweet us [sfx: doorbell] hello, i saw you move in, and i wanted to welcome you to the neighborhood with some homemade biscuits! >>oh, that's so nice! and a little tip, geico could help you save on homeowners insurance. >>hmm! >>cookies! uhh, biscuits.

>>mmmm, is there a little nutmeg in there? oh it's my mum's secret recipe. >>you can tell me. it's a secret. >>is it cinnamon? it's my mum's secret recipe. call geico and see how easy saving on homeowners and condo insurance can be. i'll come back for the plate.

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welcome back some stocks to watch this morning. bringing in our cnbc contributor. we'll look at some stocks. starting with amd getting a downgrade from wells fargo saying shares are approaching levels that present a more balanced risk reward

show us what is going on here. >> thank you if we look at the long-term chart, things are similar to intel. this is a six-month chart here the stock broke out over the last few months. this downgrade will knock the stock down a couple of points. i really think from this knockdown on the price, it gives a good opportunity especially if you believe in the longer term picture space with bitcoin and other targets. this is a good target for amd. >> not so much room to move here >> correct >> let's talk about shares of boston beer. >> this is interesting

similar to amd this was actually a beat on revenue but a miss on earnings this got knocked down to the 380 level. this earnings announcement puts us back to the 380 level i really like the stock to record revenues. this is a good opportunity for us to get long the line in the sand here is around 350 >> you said 400 to go long so you are going to wait for this to get back to 400? >> i actually think now is the time to get long >> you think it is going to break over 400 >> correct i think it will get back to the 450 level. the line in the sign is the 350 we got the reversal back in thi range. the beer segment is fairly competitive. sam is diversified into hard

seltzer. they are pretty well grafted into that market looking at imax. all theaters in china remain closed that is a short-term challenge they'll surpass. watch that stock >> forget the coronavirus. this chart tells a different story. it is a disaster at this $18 level, it has been a strong level cracked before this coronavirus thing. we had a bit of a bounce on earnings yesterday i think this is headed lower considering this stock has had zero revenue growth. >> so you are shorting the stock? >> correct >> thank you when we return, elon musk showing some love for his own company buying millions of

shares of tesla. he did it on valentines day. we'll bring you the details of mr. musk after the break we can't calculate our total taxes? do you realize how many otal different taxes we pay? sales tax, different p-o-s systems in all seven countries. and online sales? that's a whole other system... and different regulations. therere'realal eate e crits,s, . and we have no way to integrate all that? no... but bdo does. peopopleho k kno knonow o.

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watching shares of tesla

elon musk bought more than $13,000 shares of the company. saying the tesla ceo acquired those at an average of $760 each upping his stake to 18.5%. zillow reporting smaller than expected fourth quarter loss the company generated nearly $1.4 billion from its home flipping business last year. when we come back, we'll show you what boeing ceo said yesterday after taking a test flight on a 737 max plane. more debate fire works we'll dig into bloomberg's debut and issues that matter for your money. let's look at yesterday's s&p 500 winners and losers ♪

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good morning welcome back to "squawk box. we are live from times square. watching equity futures, you'll see a slight pull back after yesterday's gains. s&p and nasdaq setting new highs yesterday. dow was up about 115 yesterday you see this morning, indicated down by about 40 points. s&p futures down by about four

points and the nasdaq down about eight points the boeing ceo speaking out about the safety of the 737 max discussing new problems about debris being found in fuel tanks. confidence of getting that plane fixed. >> very high as high as it can be this airplane is going to be incredibly safe. it is incredibly safe. i believe the pilots will love it and eventually the flying public will regain their confidence as well coming after calhoun took a test flight himself on the max. >> here is what he said. >> flew it today you routine test flight. testing envelop and typical maneuvers a pilot would encounter in a flight envelop.

it went beautifully. i couldn't have been happier i always love talking to the pilots they love this plane >> one thing i don't understand, 737s are flying around the country as we speak ever day being moved around the country without passengers all approved by the faa. gentleman people on board. >> pilots. >> people have this idea that they are grounded and they are in terms of passenger traffic. i would say, virtually ever day, there is a 737 max in the air and pilots are doing it willingly. >> did the implications of this story -- so ge is sucking up to airbus they don't wear whether it is here or europe where they sell

their engines. it is business, sonny. >> don't look at me. >> just saying calhoun but be saying, any of my friends, if there is any left. and they should but kind of ironic if calhoun gets it going again and ge is getting in bed with airbus in a bigger way. >> i'm surprised it didn't happen earlier they'll do what they have to do burning through that because of the grounding of the max they got to do what they've got to do. any other things to chat about >> not really. >> what did do you yesterday family >> we were in cincinnati your home town >> what?

why? were you doing a chili thing >> no. we went to ohio state. spent time in town >> you with enter to a basketball game? >> yeah. at ohio state. they beat purdue >> you have relatives in cincinnati >> yes long story right by dayton. >> it is great in the top 10. >> the kids had a lot of fun >> they did good salt of the earth country. >> saw a lot of signs. they were flags. you better wear a mustache trench coat. ohio didn't vote for romney.

no, no i would never. more highlights. >> did you have any chili? >> no. but i had greater's ice cream. more highlights from a firy night. this is unbelievable in vegas >> we shouldn't have to choose between one candidate who wants to burn this party down and another who wants to buy this party out. we can do better >> the biggest take aways from the debate and grading mike bloomberg's night on the curve, i don't know you can watch or listen to us live on the go on the cnbc app we'll be right back. h medicines getting to patients in record time. at emerson, when issues become inspiration, creating a better world isn't just a result, it's a responsibility.

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welcome back the democratic presidential hopefuls did not hold back mike bloomberg taking the debate stage for the first time days before the caucus. kayla joins us from sin city what sins were done last night >> reporter: depends on if you consider watching two hours of the debate and a little sleep a

sin. it was riviting more like watching pay per view. elizabeth warren zeroed in on him early and often with this line, 60 seconds in that drew audible gasps and applauds from the audience >> i'd like to talk about who we are running against, a billionaire who calls women fat broads and force-faced lesbians. no i'm not talking about president trump. i'm talking about mayor bloomberg. >> after that, warren's campaign said it had the best hour the fundraising. vowing he'll do better on stage next week in south carolina. then there was a fight in the moderate lane.

pete buttigieg and amy klobuchar at each other's throats over her voting record. she seemed to take it personally >> you are staking your candidacy on your washington experience you are on the committee that overseesborder security, trade you are literally part of the committee overseeing these things and we are not able to speak literally to the first thing of the politics. >> are you trying to say that i'm dumb or are you mocking me here, pete >> bernie sanders emerged relatively unscathed he discussed his three houses, socialist label. he wore all of those things proudly. we'll see this saturday whether nevada voters agree. >> thank you for that report we'll continue the conversation

now. joining us now, president of institute of strategy and policy and foundation of institute of economic freedom not knowing how you feel about everything you may take issue with what i'm saying i feel like it presents like a catch 22 for democrats i just think bernie is the bone a ti -- leader in this race. everybody was taking shots at bloomberg and missing the elephant in the room and bernie was unscathed. there are a lot of grassroots americans that will come out he might be the nominee. is that okay with you?

>> i think every single candidate there has adopted more progressive data points showing you that the data is really on the side of those like sanders and elizabeth warren but that their message is resonating with the average american when you have bloomberg talking about these things that is a i sign it is resonating with the american people >> are you okay that bernie is carrying the mantle now? are you okay with that if he gets a majority, you are okay with a sander's delegate? >> i'm okay with that. >> what i thought i was reading was bernie, we hear so often

bernie got the conversation started for progressive ideas. maybe people don't go that far but that is a good thing because you think the economy is not working for everybody, et cetera, et cetera. i didn't feel like so many establishment democrats mean you don't want to go all the way and actually marry bernie. >> i think this is going to be an ideas election. i'm going to go back to the point that if every candidate on that stage cares about economic unequality i do think we have a good message that will resonate i'm not an electoral strategist and no one should hire me to be one. there on the ideals and the american people support it >> joel, you might have an

different opinion? >> i'm not sure what data she's referring to we have record high household income and record long stretch of growth following tax reform and regulatory reform. i think mayor bloomberg summed up some is of the friction in the party when he said, this is ridiculous we are not going to toss out capitalism we've tried that before, it's calle called communism it didn't work forcing big companies to divest their equity stake, a the least 20% to its employees this is a revolutionary idea they are right i'll go further to say communis comparing to looking at democratic

sociali socialisocialism. look at germany. sure, people are generally happier there. we have a nation far freer than those in germany and others across europe. >> i'll stick with you for a second joel. in your view, if bernie does get the nomination, would you ever see bernie becoming more moderate once he doesn't need to try to win the nomination or he is what he is? do you think he could win the electoral college? >> i think he's been consistent. if you go back to time as mayor, this is a man who has flat out called for nationalization not just of health care or education

but of energy, of banking. he has called for public control of private capital he has not really changed his tune at all. >> we don't have a lot of time left do you think enough americans are disenfranchised with this economy that you think he could win -- for all of these things, to governor, you have to win you have to win to do any of this do you really think bernie -- that you can ride that horse to victory. >> to hear that this is the best possible economy we can do i think every single person on that stage -- >> you think bernie can win and bring in this new economy you are talking about? >> i do. i think there is a vision of

american rather than supporting coal companies, we are building the new industries of the future rather than taking health care away, we don't have to be communist but can be like every other industrialized country and give them health care. >> one question for you. if bernie sanders wins, if you are a ceo in america, what do you think you do the next day? i'll tell what i think i generally think they put their hands like this, put their pens down and say for the next year or two, we are doing nothing we are not hiring, not spending more money not to snub their nose to say i have no idea what is about to happen. i believe this man is going to come kill me if humanly possible if i'm a tech company, i might

get broken up, if i'm a bank, i might get sent to jail >> i'm not incrediblt ceos are t now. it might be an improvement i think we would do well sious w we govern corporate america. >> how would we do this transition period to this other place? do you think unemployment gets better >> i think we stay on the path we are on. >> with all due respect, we are in the middle of booming economy, record high household growth, look at western europe look at their disposable income and the fact that middle class taxpayer paying $6,000 more. >> i think americans would be

pretty happy to know that they could just go to the doctor and not go into household debt >> andrew, it's like amazon day here like when aoc got rid of amazon. you got woke to the woke you got woke up again. >> it is not whether the stock market goes up or down. it's not about if the stock market goes up or todown it's what happens in real life >> it's a real problem if bernie becomes president. >> it's a transition to you. it's not about an age issue. >> another birthday comes along. >> thank you so much w-opngday's big number, a jadrpi 223%. that's how much shares of virgin galactic are up so far in the year 2020.

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welcome back, everybody. retail investors have been fueling the rise of a couple of high profile stocks. tesla shares up about 120% so far this year and remember, it's still february take a look at virgin galactic soaring more than 200% joining us to talk about what could be driving retail investors to take on this risk is j.j. kinon, chief market strategist at td ameritrade. great to see you >> always a pleasure >> what do you think what's happening here? >> let's start with virgin, been in the news more primarily here the last couple of weeks and with that one in particular, you know, our clients have been buyers of it there's no doubt about it, both millenial clients and more traditional clients, if you will >> what's traditional clients,

older clients? >> elder clients, yes, and so with that, i think there's two things about it. number one, a little bit of it could be the richard branson effect, not quite the elon musk effect, an interesting guy, very successful before this, so people are attracted to that, and number two, there's no other way to play the space game so to speak. spacex is out there and has a valuation right now somewhere above $30 billion as of last night, you know, virgin galactic is jink people see a disparity there, and are perhaps hoping that one catches the other, if you will >> i like what you just said about this being the only way to play space that's kind of what might be happening with tesla mike santoli posited this, all electric vehicles gets funneled through tesla shares looking to buy into any of the trends that's where you go >> absolutely. also speaking about tesla, that one has been if we go back six

months it's been a favorite of our particularly millenial clients for the last six months of last year now it's become a little bit of a different game that the price has gotten so high in that it seems as though our clients both our millenial clients and traditional clients are playing it more based on price, becky. that stock gets between 700 and 750. our clients turn to buyers the stock goes above 850 our clients have turned to sellers that stock gets above 900, they really turn to sellers so looking at yesterday's action, our clients were heavy sellers of that stock from the longs they already had so it's really interesting how that one has been a function of price. the other thing is, in the options space, our clients have really played tesla heavily also, and i think that's also if you will a function of price, because it's such a high-priced stock, people who want to be involved are going to the options market because in pure dollars it's just less dollars

up front in order to play tesla. so that's been an interesting phenomenon >> what do you think of both millenial and as you called them your more traditional clients or older clients. what about their risk threshold in terms of what they see right now? you watch a stock like that run, are they more in the fomo camp afraid to minimum out, or this has one too hot too fast for me? >> two things. i was at an event with our clients in phoenix and i don't think there's as much fomo if you will as there were with tesla when it was below 500. on pure price people were like i want to be involved. i think that might also explain a little bit of spacex, i mean sorry, to virgin to your point, because that's still a pretty affordable stock in terms of just dollars so with tesla, it's become as i said, a matter of the price being that high.

>> j.j., it's great to see you thank you for your time this morning. >> thanks, becky >> don't miss our special guest next wednesday, the social capital founder and virgin galactic chairman will be with us for the entire 8:00 a.m. hour "squawk box" will be right back. yes. when we do we launch? unfortunately, in 2 or 3, hours. why the delay? cognizant is helping banks use digital technologies at scale to advance speed to market.

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bloomberg takes the stage and warren comes out swinging. >> a billionaire who calls women "fat broads" and "horse-faced lesbians." i'm not talking about donald trump. i'm talking about mayor bloomberg. hasbro's toy story the ceo joins us to discuss the impact of coronavirus on the supply chain, the acquisition of entertainment one and the state of the consumer. and the white house highlighting the president's handling of the economy. we'll hear from cbo director philip sweigel in a news-making interview as the second hour of "squawk box" begins right now. good morning welcome back to "squawk box" here on cnbc i'm andrew ross sorkin

i'm here with becky quick and joe kernen we're here the day after the debates. red arrows across the screen, the dow would open off 62 points and the s&p 500 off about 6 points and the nasdaq off about 17 points. here's what's making headlines at this hour elle brands is near a deal to sell victoria secret to sycamore partners sycamore would buy up 55% stake with elle brands keeping the remainder. les wexer in would step down as ceo as part of the deal. the stock down now 13% warnings of the economic impact of the coronavirus are increasing goldman sachs told clients the effect of the virus on corporate earnings is likely underestimated in current stock prices steven roche told cnbc the virus may weaken a global economy

already in a precarious position mgm resorts has hit by a data breach last year. it discovered unauthorized access to guest data, although it adds no financial or password data was compromised it did not say how many people were affected but earlier reports say the number was more than 10.6 million former guests. in washington the an um economic report to congress outlines president trump's priorities and growth targets. ilan mui joins us. >> good morning. the white house is releasing the annual economic report to congress today and in it the trump administration takes credit for changing the trajectory of the recovery and that's how the white house reaches the forecast of 3% gdp growth over the next decade. it assumes all policy proposals are enacted another round of tax cuts, deregulation, an infrastructure plan, energ deals

tax cuts and deregulation are expected a jump in labor to 2.6% combine that with the slowing but growing increase in population and the white house says it can hit 3% of course that forecast has been criticized by democrats and some independent economists and trump would need congress on his side to push through proposals without new fiscal or trade policy the white house estimates long-term growth would hover at below 2.5% and if nothing were to change gdp would level off around 2% but joe, even that number is higher than what the cbo is forecasting over the long-term. philip sweigel, president of the congressional budget office, the cbo. thanks for coming in this morning. >> thanks very much. >> i guess the administration or

supporters of the administration would say look deficits are something we need to deal with eventually but we need to grow the economy first. people like new highs in the stock market, the wealth effect, helps consumer confidence. a lot of things it does. isn't this a time when you should start looking at the deficit and looking at entitlements there are some smart people that think this is the next major thing we have to deal with that is public debt, not in 2007, private debt, but public debt will come back to haunt us isn't this now when we should be addressing this? >> that is the challenge we have a good economy and strong labor market and you have the deficit wide and we project it to get wider, $1 trillion a year basically into the future the sun is shining, now is the time to look at our roof and start to fix it. >> yet we know how much discretionary and how much is

nondiskrigsary and doesn't seem to be any on tight with the president for dealing with the entitlement issue or nondiscretionary spending. >> fortunately we have time and we see the -- >> so begwe get four years to gloat. if he's reelected he'll suddenly tack and look at social security, look at medicare he's promising he won't. >> we need all of our society today, the entire political system and everyone together to take over entitlement. we have to give people to adjust, changes to social security, medicare or other programs and it's something that has to be done over time but with interest rates throw suggests we have time. >> we're not talking about tackling it any time soon. the republican party we heard

this from not being led by that, how does this come about how do we do this early enough so the changes won't be that draconian. >> we wait longer it's less fair, the people today are excused from their share of the burden and more burden on people in the future. it's a social problem. it's a political problem >> why are you convinced rates will stay where they are and therefore we have time my great worry you lived through the financial crisis of 2008 right in the midst of it, is that confidence doesn't evaporate over years or months it happens in, you know, days and hours and minutes, and if it actually were to really happen, you would have a real problem. >> yes, so we have a benign outlook, growth goes down a little bit but stays pretty good but that's the risk as you highlight, confidence can change and if it does, debt level is

higher, when interest rates spike we're more vulnerable. >> i saw something in the notes that just caught my eye, i mentioned this to andrew earlier. some of the corporate receipts were lower than projected by the cbo after the cut in corporate taxation if we had known what we knew about corporate profits over the past year, we wouldn't have thought that the receipts would be a cut the cut in corporate taxes was supposed to boost profits so you're saying profits are lower so we didn't get as much in receipts, that was the whole point of the corporate tax cut in the first place why didn't you hit -- why didn't corporations aftertax make more money based on the corporate tax cut? >> so we saw province go up after the tax cut and the economy was strengthened in the first half of the year before the increases in tariffs set in around the middle of 2018. >> this is a tariff story. >> a little bit of what's going on in 2018 the tariff story, the change in our estimate related

to changes in data, the corporate profits were lower before the tax cut >> it goes up ten years, and it's going to be significantly lower. we cut corporate taxes and people go oh my god, now corporations are paying less in taxes. it's like we cut corporate taxes. that's why we are paying less that's what it was about so i understand that but then again, you did make a certain assumption and i hear rumblings the white house is maybe responding to some of the optics saying there might be a minimum tax, even jeff bezos' company might have to pay $1 or $2 in taxes on their hundred gazillion they make. is that true is that being considered a minimum tax, like an alternative minimum tax for corporations >> we've seen reports of that, cbo will analyze whatever congress -- >> this is coming from congress? >> the reports i've seen have come from the white house. we look at what congress does

and the joint xcommittee on taxation analyzes the tax proposals along with us. >> the real money is not with corporations it's with individuals and if we're not dealing with nondiscretion we need to raise the revenue side, through something. do you think growth in the economy is going to generate enough individual tax receipts growth where you don't have to raise taxes somewhere? >> that's the challenge. we have a benign outlook and depth remains wide policy has to change spending or tax side >> you need to be here you did my work and it's really weird, isn't it? >> fair trade. i don't know about that, but >> exactly we talked about it off camera. so in the second trump -- if

there were a second trump administration, i don't know if you saw the debate, maybe there will be one, if there were a second trump administration, would there be increase in revenues somehow, somewhere, carried interest is there anything the president would consider looking at there? >> after 2025 all the personal tax rates go up. that was in the 2017 tax law is that those rates are only -- >> if he would let that happen >> we'll wait until congress acts but there is a tax increase programmed into current law. >> but i would think that one of the proposals that maybe trump and congress to extend them. they could make a choice not to do that? >> the current law is tax rates on the individual side >> you made up, i can't imagine. he would preside over the

individual rate going up i can't imagine. >> there's business taxes on the r&e credit, other things could go away. tax policy will stillen on the agenda >> you're not making me feel that much better >> we have time. it's not something has to happen this year. we saw earlier this year as the coronavirus got worse and the concerns got worse, our interest rates went down, treasury yields went down so the rest of the world sees us as the place to be it's just over time. >> over time when nobody on either side is ever suggesting we ever address this >> we are here to support the congress when and if they turn to fiscal adjustment >> philip, thank you good to have you on the set today. coming up, democrats facing off in las vegas last night in the most fiery debate of the election thus far and michael bloomberg took a beating >> i'd like to talk about who we're running against, a

billionaire who calls women "fat broads" and "horse-faced less beans" and no, i'm not talking about donald trump p i'm talking about mayor bloomberg. >> we'll have reaction to that attack and a lot more from last night's election datebe. in the meantime a quick look at futures. we are in the red right now. "squawk" returns after this. 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.

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a lot of companies use a specific metric to measure earnings, something charlie monger is not a fan of, of berkshire hathaway >> bankers talk about ebitda, which i translate as [ bleep ] earnings >> ebitda actually stands for earnings before interest, taxes, depreciation and amortization, and some, including munger say it is not a true reflection of the company's performance. david trainer is the ceo at new constructs thanks for being here >> thanks for having me. >> let's talk about how you look at earnings and pull some of these things out to come one a ratings system >> absolutely, we developed technology over the last 17 years that scans through footnotes, the management discussion and analysis to find unusual items that professors at harvard business school and mit sloan have proven shows that

managers take advantage of burying certain key items in these fine print areas to manage their earnings, and so mr. munger is right, ebitda say bad number most people don't realize the consensus earnings estimates aren't as good as you think either there's a lot of noise in there. when you strip them out you can get a better, cleaner number >> the argue for ebitda or one-time charges and looking at a consensus number that doesn't take some of the charges and gains into account is that you want to know the ongoing performance of a company is there a time that it's okay to have charges or write-ups that are treated separately? >> that's a great question there's always the recurring does the nonrecurring charge become recurring it's a hard question you're right, becky, at the end of the day, what we want to understand is the core profitability of the business and that's what we've designed

our technology to focus on, core earnings, so that people can understand exactly what they can expect the profitability of the business to be i think the big take-away from this research paper is that when you strip out the non-recurring retransitory items you get a number more representative of what future earnings will be and you can generate alpha with that data something the markets are inefficient at assessing you probably won't be surprised to learn a lot of people aren't reading the footnotes these days because the filings are 250 pages long that's exactly what technology or especially our technology is for, to relieve people of the burden required to do their diligence while still doing the diligence for them in a way that makes it easy for them to continue to do business the way they're used to doing business >> the earnings distortion scores you've seen most recently what are the companies that rank highly on the distortion being a bad thing? >> one of the companies that

rates highly this week in our earnings distortion scorecard in terms of a strong miss earnings distortion score is apache they have some unusual gains from the sale of some assets, and other things, and the thing is, becky, there's not any one little item that you can identify as unusual, that occurs all the time there's a wide variety of things, which is precisely why this problem has been so difficult to tackle, because the amount of disclosure variety for how companies can hide unusual gains and losses is almost infinite >> when you say generate alpha, what's a trade that would have been a good trade based on the distortion scores that you saw how long ago do you have to follow it? what time frame do you generally see gains in a stock or i guess declines in a stock based on a distortion score >> there's two approaches. harvard business school and mit

sloan designed a long portfolio long the companies with the most understated earnings or the adjustments on unusual items were causing earnings understated. they went short with the most overstated earnings unusual gains propping up their unadjusted earnings. that was the portfolio they would have turned over around once a year based on the 10k data how they were able to show that markets were inefficient and analysts inefficient in impounding this information in that portfolio on a shorter term basis we created this earnings distortion score based on the same methodology in terms of the math that the harvard businessschoo and mit sloan professors use to develop their long short portfolio. the earnings distortion score predicts companies most likely to beat or miss based on how understated or overstated their consensus earnings estimates are, relative to core earnings

you mentioned looking to identify companies with high levels of earnings distortion as most likely to miss, low levels of earnings distortion as most likely to beat >> okay. david, thanks for your time. we appreciate it >> thanks for having me. >> join us monday for a special edition of "squawk box." if you have any questions for legendary investor warren buffett, now is your chance to ask. tweet them to us with #askwarren and the oracle of omaha will answer some of them monday from 6:00 to 9:00, after the annual shareholder letter comes out from buffett on saturday coming up, michael bloomberg's fielding attacks from all sides on the democratic debate stage wednesday night next we'll talk to political strategist frank lunds and the toy industry is hearing the impact from the coronavirus. we'll hear from hasbro about the supply chain from china and much more "squawk box" will be right back.

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box," fireworks in las vegas last night we'll get reaction to last night's debate and then stocks on the move this morning, boston beer company, maker of sam adams. and one of the first things that may come to mind when you hear "made in china" is toys we'll speak to the ceo of hasbro about the impact of the coronavirus, latest deal went tainment one and a lot more. "squawk box" return with all of that in just a moment. apps are used everywhere...

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welcome back to "squawk box. breaking news, morgan stanley apparently close to buying etrade this morning, according to the "wall street journal. it would be a big transaction in the financial space, this comes after the td ameritrade deal

last month with schwab looking at shares of etrade which had been waiting in the wings. a lot of people were worried they would be the last man standing without a chair in this game of sort of merry go round, but the stock up 20% we'll keep our eyes on this transaction this morning etrade shares have been halted for news if you look at this right now, that was the activity that took place before the shares were halted this deal would be a $13 billion deal morgan stanley is expected it's going to be paying $58.74 a share in stock for etrade, important it's in stock as well and worth ki morgan stanley shares, which are down by 4.8% it's set to be announced thursday according to "the journal" but obviously this is the next step after you mentioned back in november when etrade got left behind by charles schwab and t.d.

ameritrade swooping in >> musical chairs more than a merry-go-round >> yes one thing is interesting to me, joe, this lifts what morgan stanley is trying to do, to get much more into this space of retail, much more into the robo advisers and all of this, right, that's where they're going goldman sachs for example you would have thought could have bought something in etrade, given their -- >> very retail >> i know this is where goldman sachs wants to be, they want to be retail. >> morgan stanley already has 15,500 human advisers. it doesn't say how many pet or dog advisers >> woof, woof! bark, bark >> 15,500 human adviser. >> versus robo advisers. >> ai. >> ai. >> who handleles the animal accounts gorman always official they're saying how savvy is he, proving to be one of the savvier

deal-makers, pried smithbarney from citi agroup in the weak part of the crisis morgan stanley have gotten much more they used to be you couldn't go to work as a retail broker at morgan stanley you wanted to because they had this great rep. and they slowly have gotten into where, and now they go all the way to etrade, i guess it really is, that is notable. okay, human advisers i like them. we're going to move on and come back to this transaction in just a minute. in the meantime senator elizabeth warren slamming michael bloomberg in last night's debate is it enough to keep her in the race, that's the question of the morning. joining us with reaction to last night' debate is pollster and political strategist frank luntz. it was michael bloomberg's first debate he fueled attacks from all sides. want to show an exchange between bernie sanders and michael bloomberg. >> i believe a democratic

socialism for working people, not billionaires, health care for all, educational opportunities for all. >> senator, mayor bloomberg the question was about socialism >> what a wonderful country we have the best-known socialist in the country happens to be a millionaire with three houses. what'd i miss here >> you missed that i work in washington, house one. >> that's the first problem. >> live in burlington, house two. >> that's good >> and like thousands of other vermonters i have a southern camp forgive me for that? where is your home which tax haven is your home >> new york city, thank you very much and i pay all my taxes and i'm happy to do it because i get something for it >> mike bloomberg facing wipterring attacks from elizabeth warren >> i hope you heard what his defense was "i've been nice to some women." that just doesn't cut it the mayor has to stand on his record, and what we need to know

is exactly what's working out there. he has gotten some number of women, dozens, who knows, to sign non-disclosure agreements both for sexual harassment and for gender discrimination in the workplace. so mr. mayor, are you willing to release all of those women from those non-disclosure agreements, so we can hear their side of the story? [ cheers and applause >> we have a very few nondisclosure agreements >> how many is that? >> none of them accuse me of doing anything other than -- >> frank, want to get your reaction to all of this. i thought that was a particularly vulnerable and challenging moment for mayor bloomberg. >> i think the whole night was a challenging moment i want to take you back to 2012, when rick perry was moving three or four points a week in their

race against mitt romney he participates in the first debate and he's destroyed, and it ends his candidacy. i think mike bloomberg, we will look back at this debate potentially at the beginning of the end, because he did not come across as prepared, and more importantly i don't think he captured the tone of the audience, that he doesn't understand that there are more women than men who are democrats, that they don't like this aggressive behavior, and i don't think in bloomberg's defense of capitalism against socialism he doesn't realize that so many democrats prioritize socialism over capitalism >> i want to ask you about the preparedness issue, because he, i know will say he only got into this campaign ten weeks ago but he's been preparing for this for a very, very long time how could he not have been more prepared and what were the right answers to some of these questions >> well, so i want the viewers to know i did work for bloomberg in 2001, and back then, he

doesn't like language. he doesn't like debates. he doesn't like that kind of give-and-take. that's not what he's about the problem s it's wh is, it's e democrats are about and he should have known the candidates were going to take him on. frankly, i don't know what the response is for the challenge about the nondisclosure agreements in terms of capitalism versus socialism, he's got to remember, he should know that the average democrat is working class. the average democrat is middle income, and having a capitalism versus socialism debate among the average democrat, bloomberg is going to lose that and bernie sanders, the reason why he's leeflg rig leaving right now is going to win that contest >> frank, do you believe bloomberg will follow through on his promise to spend another half a billion dollars defeating donald trump on one of these people that just, you know, completely eviscerated him last night? do you think once he realizes --

you said maybe it's the beginning of the end of his candidacy. if he sees he's not the candidate, will he follow through and spend another $400 million, $500 million on somebody else? >> he's not done we have a south carolina debate coming up and super tuesday if you look at the state by state polling bloomberg has taken the lead inment so of the stat some. >> if you say it's probably the beginning of the end, do you believe he will follow through and spend his money to defeat donald trump by backing bernie sanders or whomever the eventual nominee is do you believe he'll do that >> i think mike bloomberg will have a problem backing bernie sanders or elizabeth warren because he simply disagrees with them ideologically on their economic -- >> do you think last night's performance by elizabeth warren puts her back in the game in a way she might not have been just 24 hours ago >> i'm going to surprise you but my answer is no because democrats don't like democrats attacking democrats. they want you to focus on donald trump. >> that's what bernie sanders

has been doing so successfully and he seems to be the front-runner >> and that's exactly why he's the front-runner, and elizabeth warren attacking buttigieg as well as bloomberg, i don't think that sits well with the average democrat i will tell you -- >> bernie sanders has been attacking his competitors in this race, no? >> he's been speaking clearly and loudly and in a pronounced way in a position that for the center of the democratic party, and they like what he's saying, and he is going after trump more than the rest of them. i think last night was a good debate night for sanders, because he clearly articulated a point of view that none of you may agree with, but for the center of the democratic party, remember, this is not the center of america the center of the democratic party bernie sanders speaks to them he's emotional he's passionate and it's the reason why he's now the front-runner >> and we have to run but what

happens if he is the nominee against trump? given what you know? >> given what i -- okay. >> what are your odds? >> for the first time ever, ever on a tv program, i will say that trump will have the narrowest of advantages >> narrowest of advantages >> yes, that's all that's all this is going to be a brawl. it's going to be ugliest election ever and even though sanders is outside the mainstream the press will protect him, the media does not want trump reelected and it will come down to election day. >> frank luntz, always with an interesting perspective. great to see you this morning. thank you. >> thank you >> when we come back, breaking news this morning, we'll talk about it, morgan stanley buying etrade, the price tag $13 billion just crossed the tape. we'll talk to a wall street analyst after the break and also a reminder, you can watch us live on the go, of course on the cnbc app we're back right after this. legendary terrain in telluride,

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welcome back, everybody. let's look at this morning's big movers for that we join dom chu what's going on? good morning >> we have a lot of leisure and hospitality themes going on this

morning for movers on earnings headlines. start with the price action in norwegian cruise line holdings, shares up 1.5% on a thousand shares of premarket volume the cruise operator posted better than expected profits and revenues as many travel operators are doing, guys. norwegian is saying it expects the effects of the coronavirus to shave around 75 cents per share from the full-year earnings but it cannot say what the lingering effects of the outbreak on travel sentiment will do above and beyond that, so maybe a little bit of pass activity, shares up. in the other direction shares of six flags down 19%, roughly 80,000 shares of premarket volume the theme park operator posted an unexpected loss, even though revenues came in slightly better than consensus forecast, six flags is also slashing its quarterly dividend to 25 cents from 83 cents. its full-year outlook disappointing. they cited things like softer organic revenue trends and rising employment costs,

separately it said cfo marshall barber will retire later on this summer shares down 19%, and then there's the newly combined viacom cbs, the class b shares are currently down around 4%, now 7% over 35,000 shares of premarket volume it missed analyst estimates on earnings and profits and remember, profits and advertising revenues also did fall on the quarter as well so we're watching those shares. andrew, there is a question about some of the comparability given the merger and estimates there but still shares down 7% right now. back over to you >> thanks, dom the other stock on the move this morning is etrade, and a very big way coming after morgan stanley announcing moments ago that it is acquiring etrade for $13 billion. it's moving wall street around once again >> etrade shares are still halted, 20% before >> let's get to richard petto on

the squawk u.s. in line. are you there? >> you got rich greenfield >> awesome >> rich, it's great to hear from you. we could talk about, you were predicting this etrade, rich oh yeah, maybe not >> i don't think i could do etrade but certainly viacom cbs. >> you want to talk viacom cbs, we were just looking at that with dom is this a situation where it is apples to apples or not? >> this is tough for investors the numbers aren't great loss in cable subscribers. the big question that has investors concerned is talking about the family of brands product, basically some type of larger cbs all access that brings in paramount, brings in the viacom cable networks and

nobody's sure what this is going to cost, what it's going to look like it's sort of just teased in the press release and everyone's trying to figure out what does this mean and what is it going to cost. >> rich, we really wanted to -- if we knew it was you, we probably would have begun with the 70% increase in the cord cutting or whatever you want to call it. it's up 70% but it went down 8%, right. did you see that story >> are you there, greenfield >> i'm listening to everything you say. >> all right, so you've been talking about cord cutting and it's going to get worse. is this, i mean this is what you were forecasting more or less. this is bad at 70% increase in pay tv people leaving? >> look, i think the fundamental problem that the industry faces is that you lost over, with dish

having reported yesterday we know that the industry lost over 1 million subscribers. you're down into the low $80 million range of people with pay tv in this country remember, that number used to be upwards of 100 million subscribers. now you're down to 80. the big question for bob and sherri redstone on the call this morning as they get on at 8:30, what is the plan as subscribers keep dropping? can awe ford to invest in the nfl if subscribers are going from 80 million plus to 60 million or 50 million, can you afford to invest in the nfl, the cost of the nfl programming is the only thing on tv that's growing. the cost is going up a lot so i think investors are going to be really focused on how do they financially justify big step-ups in nfl programming as their revenue sources are declining. >> they're getting it from streaming. for the year, it was 5.5 million traditional pay tv customers, an 8% decline but 70% increase in

the decline, but as people are moving to more affordable streaming options but with so many streaming options, i don't know, is that always going to be a net positive for streamers or do eventually those -- i think you see a shake out there, too and i guess you need companies that do both if you're going to make investment decisions, right? >> well, look, i think in our world, the way to make the most money over the last few years has been to buy the ones fully focused on the future versus being weighed down by the past you look at the performance of netflix stock versus i don't know whether you look to viacom or cbs disney mass dramatically underperformed netflix the last two or three years when you're building the future it's hard figuring out what do you do with the past or the legacy businesses and there's no easy answer. most of the exciting programming, take your parent company nbc, the most exciting content that nbc is coming out with is going on to peacock. it isn't going to the broadcast

network. shows like "dr. death" will be on peacock and not on nbc. a show like "picard" which is cbs's new big show goes to c cbsacbs all-access not cbs you're telling viewers then't n unless they're die-hard sports fans because the best content is available on streaming and not linear tv, cnbc excluded obviously. >> nice to see you, rich or hear from you >> we can hear you >> i will just say -- >> sorry to surprise you guys. >> you know what we have lots of nice riches and good riches and i feel rich for having talk to rich just now so thank you. >> you have no comment on morgan stanley? >> no morgan stanley >> no comment on e*trade, none. no e*trade commentary >> we all make comments. yours is as good as ours you got a stock account. i don't know, you work with a human or do you work with an animal when you are placing

trades that's a different subject, actually >> okay, meantime we'll come on back we have the ceo of hasbro and entertainment one, the future of the company, the impact of the coronavirus on the highly competitive toy market, and later, federal reserve vice chair is o guruest will discuss the virus impact on the economy and monetary policy coming up right after the break.

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welcome back the toy industry is feeling the impact of the coronavirus in its most recent earnings report hasbro touched on the possibility of a disrumgs to the supply chain and its business noting there is a disruption to the company's supply han and operations in china and could be a significant impact on its businesses pry brian goldner joins us and darren, great to see both of you. we'll talk about the coronavirus in a moment. what we heard from walmart and target recently both talked about how toy sales weren't as stellar, weren't any hot products out there what is happening, brian >> we grew in the united states high single digits, grew overall last year by 5% nfx. we've seen great growth in our

product lines and gaming business with magic the gathering and dungeons and dragons. at retail we've had great success in the fourth quarter with the disney properties including "frozen" and "star wars." marvel had an amazing year, monopoly grew last year. we can grow, growing beyond the industry the industry was down a little bit last year, 4% in the u.s., about 3% overall but we believe growth comes back this year in the industry because of the new initiatives and the innovation we're bringing to our product. >> what type of new initiatives? that was something both ceos commented on, wasn't a hot toy like the year before >> bringing back a lot of new innovation if you look at our nerf business we had new innovation, just not enough around the world. we were short of product as we roll that out around the world and ultraas well as new innovations in nerf, play-doh with new compounds and that business has grown and in our gaming business outside of traditional retail, magic the

gathering and dungeons and dragons with magic arena the business grew more than 30% for us last year again, great success, great momentum we have in our business >> let's talk about the deal wienith entertainment one. part of this is licensing and new ways to expand the business. what are some of the biggest things you're working on >> we had tremendous success with pepa pig, some of the biggest global brands in the world. we launched new brands in the last 12 months ricky zoom is doing well on a global basis our new partnership with hasbro will super charge that brand and many preschool brands in development and in production. on top of that we have a big film and tv business where we're producing scripted dramas, unscripted tv shows and of course the music business. we hd

solution where we can get it in front of more consumers and build on the franchise blueprint with brian and his team. >> how much of it is taking ip and turning it into entertainment product and taking the entertainment product and turning it into the toy business >> the deal cross pollenates we give it to the hasbro team to super charge the ip and cuts both ways. take dungeons and dragons and make scripted tv shows, make feature films, unscripted properties, so many different things we can do but just that brand and hasbro owns 1,500 brands so quite an opportunity >> a great opportunity to bring together the best of what we do. we do more of the toys and games once pepa pig and p.j. mask and they've already taken on board

my little pony, you can imagine a new storyline and our teams will develop the consumer products and toys and games. >> talking about coronavirus, what the impact right now? what could the people impact be? >> we're seeing impact up and down the supply chain. we care about our colleagues and our thoughts are with them we have hundreds of people in hong kong and china that work for our company. those are third parties, we don't own factories but a lot of people creating our product, working with the factories, looking at quality control, so first and foremost we want to look at how they are doing and luckily so far we haven't had any issues there as you go forward some of the factory partners have reopened and yet not all the employees are back in place. so it will be an impact and the question becomes how it evolves over the next quarter or two >> brian, darren, thank you for being here >> thank you >> good luck >> thank you coming up, breaking deal news morgan stanley buying

e*trade for about $13 billion in stock. we'll talk to the "wall street journal" reporter who broke the news and later the fed is closely monitoring the spread of the coronavirus, and the impact on the economy we'll speak to vice chair of the fed,ic rh clarida about that and the state of the economy steve leashmiesman, i think that means. we'll be right back. ♪ everything your trip needs for everyone you love. expedia.

another big deal in the retail brokerage industry. morgan stanley is buying online giant e*trade. a democratic duo on the las vegas strip. >> this is ridiculous. we're not going to throw out capitalism we tried that, other countries tried that, it was called communism and it just didn't work >> the biggest investor take-aways from last night's debate the first featuring former new york mayor michael bloomberg the fed in focus markets put more moves together by the central bank. richard clarida joins "squawk box" exclusively as the final hour of "squawk box" begins right now.

good morning and welcome to "squawk box" here on cnbc, live from the nasdaq market site in times square u.s. equity futures at this hour are, i mean andrew says i call that unch. i basiccally call that unch from new highs. 43 on the dow, five and change on the s&p nasdaq weaker down about 15 points treasuries i think treasuries are important to watch with coronavirus as the yield can't get above 1.6 and i think oil has done okay the last couple of sessions and that is kind of a proxy for global demand and whether there is really going to be a slowdown based on what could be a pandemic. there's oil. oil is almost back to 54 and i'd have to take some solace in the way oil has been acting at least trying to figure >> global economy.

as a proxy for the economy is about six degrees of separation but kevin bacon get him in on this we have a deal you're beside yourself with excitement are you going to stay the rest of the day and report on this? >> you know i like deals >> hopefully the other shows will call on you for your expertise and you'll be here the entire day >> thank you for offering my services let's talk about the breaking deal on wall street. morgan stanley buying e*trade for about $13 billion. we get own to wilfred frost joins us on the newsline with some of the details. >> good morning andrew, good morning, guys. clearly buying e*trade at a relatively depressed price following the price wars last year e*trade shares peaked at 65 bucks in 2018, closed last night at 20 bucks or so, lower than that it's a $13 billion transaction, so it's not enormous for morgan

stanley, whose market cap is about $90 billion. it's an all stock transaction, but the fact that this is all stock is interesting, when you consider the size of it, because morgan stanley own stock has been depressed the last couple of years, despite e*trade cheap relative to its own history, the two companies have similar and e*trade has a better price-to-book multiple the great run we've seen in morgan stanley shares since october, up about 40% or so, i'm sure made a difference as to the timing of when morgan stanley decided to pull the trigger for this what about the strategic decision, wealth management is a key part for morgan stanley, it's half of their business. it is the part of the business that dlorove impressive share price performance since their recent earnings when they upgraded targets in that part of the business within that, what does this give morgan stanley they didn't have before in part it gives them retail

brokerage. they already had that but it will increase the percentages that they have that for the individual trades of retail investors but most importantly, it's exposure to the corporate stock management business that e*trade has brought up it's profitable. everyone is trying to increase exposure to it morgan stanley did so with a small acquisition of a company called solium about 18 months ago. this is a bigger move into that direction again and they'll discuss it with james gore mon at 10:00 a.m. on "squawk on the street," an interesting $13 billion acquisition that got morgan stanley down 3% this morning but as i said up about 40% since october. >> wilf thank you very much. the "wall street journal" reporter who broke the story this morning, liz hoffman, let's talk about what this does mean we heard from wilf, this is about the retail customers coming in, 5 million retail

customers and your article talks about how this is making a move for managing money for regular people what does this mean for morgan stanley? >> it will make morgan stanley the biggest wealth manager in the world with $3 trillion worth of assets. it is the last act you could think of it in james gorman's ten-year transformation of that place from a basket case on wall street bouncing around from one trading crisis to another and a steadier firm. all of wall street is looking for these durable, steady fee-based businesses that investors like that regulators like and this is a pretty high wire act, moving in that direction. >> liz, question for you is goldman the odd man out is somebody else the odd man out? with morgan stanley picking this off is it the last major institution like this? up for grabs >> certainly you have to think it raises the pressure on david solomon and company to think seriously about their business, certainly be the smallest of the

big players after this, and look, e*trade was that asset out there. it's had an uncertain future for the last four or five months, based on a lot of consolidation. something wilf did say the corporate stock trend is not sexy, no one talks about it but you can't mr. t you can't really buy it there isn't another one out there and it's a great entryway to the sort of corporate -- >> was there an auction? do we know if others either bid for it during this process was there a process? >> it doesn't sound to me it was an edited process. e*trade needs to get comfortable they've checked the market james gorman enjoys playing bidding wars, so i think you can assume that he tried to preempt us with a pretty full price. the stock has been down, e*trade, but it really has bounced back from the schwab

offenses in the fall and the commission cuts. this is not north of the highest they've ever traded. 'a 33%, 34% premium before this kicked off in the fall >> why the all stock purchase, do you think >> that's a lot of cash to come up with. look, morgan stanley stock all-time highs were 10, 12 years ago but it's been on a tear since the fall and gives them a good currency. it is dilutive and the stock will trade off today almost certainly for that they have a currency more valuable than it used to be and at this point what they wanted to use >> liz thank you for your time this morning >> thanks for having me. a potential deal we've been telling you about this morning is official. elle brands is selling a controlling stake to sycamore partners sycamore will pay $525 million for a 55% stake.

leslie b leslie wexner steps down as elle brands chairman and ceo. coming up the fireworks at the democratic debate in las vegas and what investors need to know about the candidates' plans. all the highlights from last night, are straight ahead. also ahead, an exclusive interview with fed vice chairman rich crilada live from the federal reserve, in washington stay tuned you're watching "squawk box" on cnbc w much weight i've lost and how much better i look. myww join today with the ww triple play! apps except work.rywhere... why is that? is it because people love filling out forms? maybe they like checking with their supervisor to see how much vacation time they have. or sending corporate their expense reports. i'll let you in on a little secret. they don't. by empowering employees to manage their own tasks, paycom frees you to focus on the business of business. to learn more, visit paycom.com

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welcome bax to "squawk box." the dow futures down by about 42 points s&p futures off by 4.5 the nasdaq down by 11.5. the s&p and 500 closed at new highs yesterday. the democratic presidential candidates came out swinging last night in las vegas, the ninth debate of 20920 race for the white house featured some tense exchanges over health care, income and equality, the attacks trained on the newcomer in his first debate, mike bloomberg. kayla tausche joins us with details. >> reporter: in a fiery two hours with multiple flare-ups between candidates former new york mayor mike bloomberg fielded the taxes and former

party affiliation and slew of nondisclosure agreements with women allegations mistreatment at his company as the lone billionaire bloomberg presented himself as something of a foil to bernie sanders who is the front-runner in national polls with bloomberg in some cases in second place to sanders. he called sanders out for owning three homes and refused to apologize for the wealth he created. that was a line that understand is aers did n sanders didn't miss an opportunity to respond to. >> mike bloomberg owns more wealth than the bottom 125 million americans. that's wrong that's immoral >> i can't speak for all billionaires all i know is i've been very lucky, made a lot of money and i'm giving it all away to make this country better and a good chunk of it goes to the democratic party as well >> reporter: sanders said bloomberg's workers played a large role in creating that wealth and some of it should go to them, too with that fight between

bloomberg and sanders and the vast differences in their policy approaches between those two candidates, former south bend mayor pete buttigieg sensed an opening and said that neither of those candidates is the direction the party wants. >> most americans don't see where they fit, if they've got to choose between a socialist who thinks that capitalism is the root of all evil and a billionaire who thinks that money ought to be the root of all power. we shouldn't have to choose between one candidate who wants to burn this party down and another candidate who wants to buy this party out >> reporter: despite those initial attacks, buttigieg trained most of his fire on minnesota senator amy klobuchar, who has been chipping away at his support among undecided moderates. he chastised her for forgetting the name of mexico's president, for supporting trump nominees. klobuchar dismissed those as memorized talking points there was a palpable sense for many candidates this would be the last time for them on stage, going into super tuesday, with

the debate in south carolina we will see who makes the cut, and exactly who makes it through super tuesday, but for a lot of them, you can see over the next few weeks they are not going to go down without a fight. becky? >> kayla, thank you very much. earlier this morning, mike bloomberg picked up a new endorsement closer to home joining us to talk about the endorsement and the man behind it is new jersey congressman josh gottheimer. you are throwing your support behind mike bloomberg. >> first, talk about experience, being mayor or running a business or helping lead on gun safety and on the environment, he's a proven leader he's obviously electable can he win, which is key and who can win in november, to win the white house and i think the biggest issue is he's a uniter and problem solver can he bring democrats, republicans and independents together he's got a proven track record of getting things done

i think right now our country needs somebody who can bring us together in the >> he brought thecandidates on the debate stage last night together all of them in terms of attacking him. >> i think it was five on one attack the new front-runner. i think the biggest loser was bernie sanders and socialism, and on issue after issue, whether it was failed policies that he's put forward on medicare for all which labor is clearly against and one of the stages against, obviously when it comes to taxing everything that bernie sanders wants to do and class warfare, that's clearly not an accepted position on that stage. i think in the party, this idea that we need to unite instead of attacking each other, people brought that up as bernie sanders trying to divide people up in the party, i think that's not what the country wants the mayor had a great line when he pointed out america's socialist owns three homes and is a millionaire >> josh, you see the same debate we saw if you look at predicted

earnings numbers today, bernie sanders picked up an even bigger lead after the debate performance. >> well it's not about one debate as you know, becky, it's about the long run i think overall this is going to be about who can win, who has got the best ideas, who is electable. >> congressman, let me ask you a very basic question. >> yes >> mayor bloomberg did not appear to be prepared last night >> i think it's tough five people on one. again it's not about as you know who can win one debate 'who can win the election over the run. >> the questions asked of him were relatively obvious. the nda question was going to come to him. the answer was not i think satisfying to just about anybody, and there were other questions throughout where he just seemed he was stumbling >> i still think the big take-away is going to be whether or not people want a socialist and i think the answer was no,

and you know, i think it was overall loser. >> i think the right answer is to the nda question, what do you think is the right answer to the nda question the reason i ask, i think it's a genuine vulnerability that's going to come up again and again, not only throughout the debate, from the press it's one thing to say -- hard to be for the me too movement and at the same time effectively be silencing these women. how do you sway those? >> he should have said when congress releases the hundreds of ndas signed for all the congressmen. >> good answer >>i i'll take that >> hurry up, i want to ask another. >> ultimately he'll have to release that >> do you think he will? >> i think that's ultimately where this is going to go. >> josh, i love you. god, you keep a stiff upper lip, you were with cory for a while and you really like acted like you really were backing him when you knew that was, you know a pipe dream >> i did support him

>> you did, i know that. >> i know but he's left the race >> but we knew he wasn't probably going to go anywhere, and now bloomberg, he plunged last night, bernie went higher will you back bernie sanders he has a lot of grassroots support. bloomberg is not the leader right now. bernie sanders is the leader by all measures he's won two primaries already, may win nevada way ahead on all the predicted sites. if he becomes the nominee, will you support him? >> bloomberg will be the nominee and that's who the winner will be i'm not playing the hypotheticals. >> you sound like baghdad bob. doesn't help when politicians don't face reality >> i'm facing reality. >> never mind. you go >> that's not where my district is they don't want socialism. >> i was going to say your district may not want that if you heard earlier this week lee cooperman on the network said he thinks bernie sanders is a bigger threat to the stock

market right now than the coronavirus. do you think that? >> what i think is ultimately since i believe bloomberg is going to be the nominee, we're going to be fine i think that the key is, and becky what i think is important is that in the end, at the end of the day we need somebody who can unite us, who doesn't play class warfare, who brings not just the party together but the country together and who can work with democrats, republicans and independents >> bernie bros will come out and sister, whatever they are, bernie supporter also cos will , not sit on election day. the billionaire is the nominee of the democratic party. >> i don't buy that. i think everyone will come out >> for bloomberg >> i think people will come together for the democratic nominee. >> let me flip it around, congressman. congressman, if, in fact bernie sanders is the nominee, do you think that mayor bloomberg will continue to fund the democratic party at the levels that he has suggested, $500 million more will he and should he?

>> i think he's made it pretty clear that he's building an infrastructure that whether or not he's a nominee and ultimately which i believe he will be that he's going to support the democratic party >> even if it's bernie sanders who may not -- i don't think he agrees with bernie sanders on just about anything. >> i think he's the right answer to that question right? he already said he's building this infrastructure to win in november, and he's going to be the noment knoinee, whether it'o someone else he'll support the democratic party he has a record now of actually investing tens of millions of dollars in supporting democratic candidates and ideas that we believe in, right, whether it's infrastructure, or clean air and clean water or gun safety, he's been there with the democratic party and with ideas, and he's a uniter look at what he did in new york, not only did he build a business with 20,000 employees but in new york hecreated half a million new jobs, helped get health insurance costs down and cover more people. he helped teachers and improve education. he has a clear, proven track record and that's what this is

about, why it's the experience and the electability and problem solver who can get, who is and will be the democratic nominee that's mike bloomberg. >> congressman i look at your party and see if bernie doesn't get it this time around his supporters are going to go wild. they were still angry last time around it went to hillary instead of them. do you think he can unite the bernie supporters if he turns out and wins the nomination, if it goes to a contested, do you think he'll bring that >> i believe he'll bring everyone together. at the end of the day the democrats want to win. 'not just winning the white house as you know, it's also winning all the way down the ballot and we are, we've got, only a 17-seat majority in the house and the democrats won 30-plus trump districts, districts like mine president trump won, we have to make sure we cannot just win the white house but also keep the congress, a very important point and bloomberg is the one who could do it. >> congressman gottheimer thank you for your time. when we come back an exclusive interview with fed

vice chairman rich clarida right now as we head to a break look at shares of viacom cbs and first earnings report since the merger was completed in december. the company reported a miss on the top and bottom line but viacom cbs said the quarter was transitional and the combination will cut expenses by more than expected the stock is down by about 8.2%. a programming note if you've got any questions for legendary investor warren buffett, now is your chance to ask he'll be putting out his letter to shareholders on saturday. look at it and see if you've got questions from it and tweet us with #askwarren, pick some of the questions on "squawk box" this coming monday from 6:00 to 9:00 a.m. eastern time we'll be right back. i consulted with your grandmother's doctor.

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welcome back to "squawk. we're following two big deals, we'll call it merger thursday. morgan stanley buying e*trade, discount brokerage, financial price tag is $58.74 per share, roughly 31% premium. the all stock deal is worth about $13 billion. we'll talk to andy newell list in just the next half hour but big questions about what it means for morgan stanley, also frankly what it means for goldman sachs sort of left at the altar without a big partner now and morgan stanley ceo james

gorman is going to join the gang on "squawk on the street" in a first on cnbc interview a little bit later this morning you don't want to miss that. the other big deal, elle brands is selling a controlling stake to private equity firm sycamore partners, paying $525 million for a 55% stake. leslie wexner will step down as elle brands ceo the stock is down 9.6% the price on it may be below what people had anticipated, this is a brand brought in $7 billion last year and seems to have fallen out of favor, too. coming up, the latest look at jobless claims and key manufacturing read plus another newsmaker for today, the one for this hour, a live interview with fed vice chair richard clarida steve liesman. watch or listen to us live on the go on the cnbc app stay tuned "squawk box" will be right back.

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welcome back to "squawk box" on cnbc, live from the nasdaq market site in times square. seconds away from the latest jobless claims and manufacturing data from the fil fphiladelphia the dow down 6 and change for the s&p and the nasdaq indicated down about 19 and change the ten-year note still below 1.6, you can see 1.56. rick santelli standing by at the cme in chicago rick, the numbers, please. >> reporter: jobless claims for the current week were revised from last week 205,000 to 206 and from there, add 4,000 more to 210,000, continuing claims moved from just over 1.7 million to 1.726 million

the barn burner, philly fed 36.7, almost 3.5 times the number we were looking for, and 36.7, i have to go in the way back machine to find a higher number than that, we have to go back, this is really interesting, 39.7, 39.7 is like a 20-year high established in february of 2017, and it certainly looks to me like we now established a second in command to that, so this is really a blow-out number for philly fed, and of course, considering that we are now past trade issues with the signing of phase one at least, one would think that philly fed business should pick up, but of course we all know coronavirus is kind of pulling the rug out from underneath that, but we continue to monitor those numbers interest rates haven't moved much the dollar has been king in 2020, that's for sure, and we

still have some more economic data to go in the form of leading economic indicators. andrew, back to you. >> rick, thank you very much we'll talk a lot more about the economy right now, potentially hurdles ahead, in yesterday's latest release of minutes from the federal reserve, officials expressed some alarm about the possible economic impact of the coronavirus and steve liesman joins us with a special guest on this and so much more. steve? >> andrew, thank you very much good morning from the federal reserve. here with federal vice chairman richard clarida, vice chairman clarida, thank you for joining us >> thank you, steve. >> i want to jump off this philly fed number and say what you said during the break "that's a beat." the estimate was 8 36.7, rick says it's a 20-year high what do you make of that >> i think the fundamentals of the u.s. economy were solid in 2019 and continuing into 2020. obviously that's one number i haven't seen in advance.

the fundamentals in the u.s. are strong, sustained growth, strongest labor market in 50 years, price stability with inflation close to our goals, so yes it's a good picture. >> when you see a jobless claims number which seems to be permanently below this if i said 220, i know i'd be accurate but i could be accurate if i went skinnier at 210, what does that tell you about the job market? >> historically jobless claims are an important indicator of the state of the labor market and reaffirms what i just said the labor market is very strong and robust and a huge positive for the economy, and of course, as you know and your viewers know, steve, we have a dual mandate, maximum employment and price stability. it's good news that we're operating here >> i want to pick up on the philly fed number. you didn't see the details, i didn't see them. one of the things in the minutes yesterday did say their trade tensions had come down and rick talked about this idea that, is it possible we could be seeing the early stages of a

turn-around in business investment after the uncertainty from the trade deal? >> there are two pieces to that, steve. let me address both. i think there's no doubt there's been a decline in trade policy uncertainty. we have usmca. we have phase one of u.s./china and obviously brexit has occurred and we've seen that there's less trade policy uncertainty and to the extent that was a factor holding back investment, that should be a positive this year, obviously financial conditions are certainly accommodative, policies acome dapolicy s accommodative. beginning of the year i was open to the view of rebound in investment and housing sector has been strong and we'll continue to support growth >> another issue in the minutes yesterday the coronavirus. i want to ask you about your sort of daily routine. do you watch data about the coronavirus every day now and what are you watching? >> well, steve, obviously we have a very capable staff here, who is doing that and i'm

getting either verbal or email briefings on that, and -- >> on a daily basis? >> certainly i'm getting daily emails on it what i would say about that is obviously let's begin with this human tragedy for all those afflicted with the coronavirus in china it's obviously something that is probably going to have a noticeable impact on chinese growth, at least in the first quarter of this year, and we won't know that really until april when we get their gdp statistic. what chairman powell and we have said vis-a-vis the u.s. what we would be looking for is some body of evidence that suggests we need to make a material reassessment of our outlook and certainly we have not done that yet. but we are monitoring it because china is a huge part of the global economy >> i'm interested in how you think about this >> yes >> how what's happening in china, with the shutdown of factories, the cut-off of tourism, how do you expect that will affect the u.s. where will you be looking for

how it will affect the united states >> i think there are several different pieces, steve. first of all, there is exports to china, and obviously part of the commitments in the phase one deal was for u.s. exports to china to ramp up, so obviously we'll be looking at that supply chains are very important, so to the extent the supply chains are disrupted by the coronavirus, that could show up in terms of inputs to the u.s. economy and obviously you have the effect overall in global economic activity. we're looking at multiple indicators right now but i think the fair point is sitting here in february, it is too soon to tell you about a we're monitoring closely >> is it something that how do you make a distinction between something that you write off, in other words it's just a one quarter or two quarter phenomenon and something more inherent or important to development to the u.s. economy? >> that's a judgment call. we're looking at a broad range of data on that and i think the fair thing is it is just too

soon to tell we are tuned to it, and this obviously is something that we should be and we are monitoring closely. >> we turn to what's been going on with the market right now i note you were at pimco for a dozen years. >> yes >> you have a keen cesense of what's going on. they're pricing a rate cut in july, 60% probability, somewhere along the lines. how do you react to that >> steve, first of all, and you and i discussed over the years, market pricing on rate cuts is a little tricky, because there's the market expectation for rates, there can also be terminal liquidity premiums. i prefer to look at surveys of market participants what they think we'll do i checked my stream this morning on bloomberg and they survey about 70 wall street economists and asking them where they think the federal fund rates will be at year end. of the 70 they reach out to, 50 do not think there will be a rate cut there's obviously a probability

of outcomes. i don't think when you ask folks they're pricing in that rate cut even though market pricing might suggest that >> when you look at the level of the stock market, there are a lot of comments in the minutes yesterday about asset valuations being high do you worry about the level of the stock market here? >> let me talk more broadly about financial conditions, steve. what we do here at the fed is we will look at four aspects. we look at valuation we also look at leverage we look at capital in the financial system and liquidity if you look at all four of the metrics together, i would judge that right now, financial stability risk to the u.s. are moderate obviously we can point to different measures of equity valuati valuations those tend to be sensitive what you use in terms of the level of interest rates so we have a world where equity valuations are what they are and in a world of structural low equilibrium interest rates, negative rates in europe. corporate borrowing costs for example are low but so are the

underlying listless rates. corporate spreads are certainly not unusual right now. so i think the overall picture, steve, is that financial stability risks are moderate but we are closely monitoring the financial system as we should. >> do you worry that what the fed has done in terms of inserting a lot of liquidity into the market through the purchases of treasuries and the repo operations you've done have created the recent boom in the stock market >> let's talk a little bit about these operations we've had them in place really since september to deal with the very specific issue, which was the disruption in the repo market as you know, the market for secu securitized treasury the intending is to get liquid levels to levels consistent with our ample reserves goal. we announced we'll be planning to scale back the t-bill

purchases in june and the reliance on repurchase operations as well will recede certainly this is really a technical adjustment to a technical problem. >> the connection between the stock market and the repo operations >> i'll leave that for others to judge but certainly the intent of the program is really focused on that repo issue right now and we think that the program that we put in place in october has been successful, and we are planning to wind that down as we indicated at our january meeting. >> vice chairman thank you for joining us this morning. >> thank you, steve. >> back to you guys at the nasdaq from the federal reserve >> steve, thank you. when we come back, key stocks on the move ahead of the opening bell, plus much more on the deal of the day. morgan stanley's purchase of e*trade for $13 billion. right now as we head to a break a reminder, don't forget to subscribe to our podcast, squawk pod. you'll get the day's top interviews, analysis and so much more, growing in listeners every y. subscribe to squawk pod whenever

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welcome back looking at the future this is morning they've been around the same level through the course of the show this morning. actually a little bit weaker, dow futures down to about 69 points, 70 points below fair value. s&p futures down at this point by about eight points and the nasdaq indicated lower by about 27 breaking news deal this

morning, morgan stanley buying e*trade for about $13 billion back in december wilfred frost asked gorman about their acquisition strat sxwree >> we always look at strategic stuff, that's what you're supposed to do we don't do it based upon a point in time pricing transaction. we make our strategic choices based on where we want the company to be 10, 20 years ago we bought smith barney, we wanted scale and moved quickly >> you admire the e*trade corporate stock plan business? >> they have a good stock plan business and done a nice job with that. >> james gorman will join the gang on "squawk on the street" later this morning we bring in steven biggar from august research. what is your immediate immediate reaction to the news of this transaction? >> i think this is a good deal for morgan stanley clearly they've been pushing towards the wealth management

segment, moved that up to about 50% of revenues and this is another feather in the cap basically. >> what do you make of the fact they did it with all stock >> well, all stock makes ense. clearly they'll have, take a bit of an initial hit on this but save the cash for something else i look at the valuation multi e multiples on these two, e*trade trading over 12 times, morgan stanley over ten times, that's a 20% premium, buying a business that the street has given a higher valuation multiple to and that will help morgan stanley over time. >> one of the things we've been talking about all morning is what this means to goldman sachs. we used to talk about goldman sachs and morgan stanley in the same sentence. they now seem to be very differen somewhat. you remember that goldman of course is going heavy into retail as well with the marcus deposit gathering and apple credit card deal it will be curious to see was goldman outbid or weren't

interested in this franchise but both of these bankssee the benefit to the franchises of bank of america, jpmorgan, the street gives our multiples for the more stable businesses >> anything left for goldman to pick off now maybe interactive brokers? >> interactive is probably the one that has obviously a sizeable retail base, some private companies maybe a robin hood or something that has made inroads into that free trading franchise, but no, with e*trade out of the mix now there's really nobody of size. >> in terms of the price, do you think it's a fair price? do you think it's a high price too low a price? >> well, again, at about a 20% premium to morgan stanley's at the close of yesterday, i think this is reasonable remember, e*trade is trading at depressed levels from where they've been, based on the change in the landscape and the zero trading commissions

so no, i think this is a fair price that will take some time to recoup it they'll get synergies but this is good long-term. >> we don't know if there was a process that was run, don't know what the breakup fee looks like. could you see coming in and trying to top this bid >> well, i think that, so that's the magic thing, was there any breakup in here? you know, i suppose that's possible i wouldn't -- couldn't rule it out entirely but i think these two, the boards are looking at some pretty good synergies here, seem to like each other. in this case you have the ceo of e*trade agreeing to stay on and actually managing the franchise for an indefinite period of time so i think this is a pretty friendly merger. >> stephen, good to speak with you this morning appreciate it >> thank you >> as we said earlier, tune to "squawk on the street," james gorman from morgan stanley will join the gang later this morning. goldman sachs sounding the alarm to its clients about the potential market fallout from

the coronavirus. goldman strategist peter oppenheimer "we believe the greater risk is that the impact of the coronavirus on earnings may be underestimated in current stock prices suggesting that the risk of the correction are high." for a further look at how the virus could disrupt the rally, stephen whiting, chief investment strategist at citigroup private bank i guess you wouldn't just reject that out of hand, that announcement, in your view, though, you see the coronavirus, first shock to the world economy in 2020, however, unlikely it will be a lasting turning point for what happens with global growth >> right, i think we were optimistic coming into the year that we were going to rebound on industrial activity, trade activity manufacturing you could see this in the philly fed numbers, the initial conditions coming in china's really calling in sick for the quarter. we're going to contract china's economy in the first quarter of

the year sequentially, trade activity disruption, these sorts of things will be big and what you saw out of apple, hundreds of other companies impacted over the course of the first quarter. where the virus goes from here is to be seen but this is like a natural disaster, getting people back to work, normalize will get a rebound. these cases in the past none led to lasting points in the world economy previously and you'll see a sharp rebound from it but are markets smart enough to completely look through that >> who knows >> so far so good, but disruptions. >> citi looked at five previous world health threats and there was an average 8.2% drop in global equities followed by a 9:00% gain over the next six months this may not be your garden variety. it may or may not be at this point. >> when we have owe only fallen at most 3.5% on global equities, recouped it all, and then moved

on our merry way as if there's no interruption here you've got to wonder whether we discounted not just recovery but uninterrupted recovery we're not changing medium term views over this but i think be aware that we're going to have definitely problems with first quarter earnings >> you're a nervous bull to start with you got overweight in treasuries and gold to offset positions that you have in equity. because the other areas, growth and others will be more volatile and maybe the already there? >> yeah. take a look at u.s. markets across the board, the dollar is surging. we're getting safe haven inflows into u.s. bonds, credit, equities, all at once. utility stocks are surging high growth stocks are surging you are getting that the one thing is the more generally stable cyclical companies that grow dividends have generally fallen behind in this and probably on the way out of this, right, i think that they can do better.

>> were you a nervous bull for most of last year would you say or were you just buying with both hands >> not buying with both hands. i think the middle of the year period, the trade war -- >> from there on >> yeah. >> you had to be surprised at the series of new highs. >> we had overweight in u.s. equities ending the year, coming into the year we are still overweight. >> were you watching with one eyebrow raised like, wow >> there were a couple of periods here of worry and this is another one but, you know, again our base case view here is this is a temporary shock, a natural daiser if we find that infections fall, not a global issue, we get activity back in line, look back to sars, for example i know that there are many, many differences, the rate at which people -- we have had fatalities, the rate of infection is different, china's economy smaller, but the economy in china went from 12% growth

down to 3.5% then up to 16%. this pattern and the chance of this d disrupting important things. jet fuel demand probably plunged demand by 5% here and now. i think it can come back but must be temporary. >> you know it's an election year will that ever become something that you need to factor into what citi does >> i think investors have worried a little bit too much about the election generally they can't be absolutely certain. you know our base case view here is 77% of the first term incumbent presidents won re-election the economy is good in the united states. unemployment is low. inflation is low and why should we assume any change on this >> okay. thank you. >> my pleasure. >> all right. all right. let's get down to the new york stock exchange jim cramer is ready for his show coming up in a minute. jim, while we have here you

though what do you think about the deal citi just cut >> robin cut 10 million accounts so quickly, look out etrade. how can you compete? etrade is a static franchise basically a fen you're morgan stanley maybe pick it off and move into that part of the, you know, let's just say that -- >> retail investor. >> incredible seeing schwab and ameritrade robin hood and speaking to the robin hood guys they're crushing it adding accounts at a pace i have never seen. >> does it make sense for morgan stanley? >> i guess so. morgan stanley when i, you know, when i was offered a job there, it was among the most press teen firms and etrade without a doubt

the kind of swarmy upstart and i felt that's been the way the two cultures are very, very different. i can't imagine wtwo places tha are less alike robin hood is making everybody do things that i never thought would happen. >> zero commissions. what did you think of the debate last night and just watching bernie sanders now kind of strengthened his lead. >> look. i'm not a political guy. i watched it i cringed when mayor bloomberg didn't have the tax returns and cringed at the audience. the aud yience didn't like it it was painful if you know mayor bloomberg because you're i think wealth under fire last night and i came back like joe and just said, how did this get to be if you're wealthy and democrat it is bad news? i think that's a shame because, you know, this is the party now

of roevolution and distribution seems to be what people want in the democratic party i don't recall this ever joe, do you recall it like this? >> no. but crazy how much people enjoyed this debate, jim trying to figure it out. i guess it's a commentary on our times but remember when you weren't able to applaud? >> yeah. >> so hard so boring when you can't -- last night what made the whole thing were the boos. >> yes >> i felt like i was in the roman coliseum and i felt bad i felt like i was a voyeur. >> enjoying it. >> we are in the same boat exactly what i said. wow. that one was bad the audience said it was bad. >> right. >> turbotax. >> from now on, jim, hand it to msnbc. can we not tell them not to applaud?

i need - >> that would be better. >> i feel guilty. >> hate wealth so much, joe. i just cringe because like mayor -- i worked really hard and did okay and supposed to be for another party. >> jim, do you think -- we have been talking about it all morning, if bernie sanders nomination that mayor bloomberg spends the money to support him? >> no. >> he doesn't? >> no. >> support congress, right congressional races. >> yeah. support congress to try to get people who like minded on some of the key issues but joe's right. the applause thing -- oh my. instant that mayor bloomberg was trashed and the -- the money he made, the worse it was for him we used to have rich candidates in the democratic party and never felt they were bad. >> made the globe theater. not the highbrow people up in the pricey seats and that's all the the hissing and -- that's

what made it last night. you know who -- bernie is genuine. is he not? >> genuine is he really a socialist or a communist? what is socialist about what he wants? joe, is he more of a communist >> he is well -- i'm not saying that. i don't -- but -- it's a fine line it's authoritarianism either way. you can't enforce it unless -- >> we have to run. we have to get you on dime. >> i'm poorer than what. i'm incredibly poor. i don't need turbotax. i can do wit a pencil. this is a party where whoever is the poorest is the person we celebrate. if that's e sethca - >> we have to run so we get back to you in just a minute when it comes to your customers' expectations,

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mr. president: it. won't. work. newspapers report bloomberg is the democrat trump fears most. as president, universal healthcare that lets people keep their coverage if they like it. a record on job creation. a doable plan to combat climate change. i led a complex, diverse city through 9-11 and i have common sense plans to move america away from chaos to progress! i'm mike bloomberg and i approve this message. ♪ good thursday morning. welcome to "squawk on the street." i'm carl with jim and david. premarket takes a breather after wednesday's record highs morgan stanley buying etrade for 13 billion and clarida said the market is strong

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