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 philly fed with the best beat ever the road map with a massive

deal reshaping the storied investment bank, morgan stanley ceo james gorman will join us in the next hour. >> a mega merger, increases the projection of expenses saved and the guidance which we'll get into, as well. >> giving up control of victoria's secret selling a 55% stake to siycamore and stepping down. we'll start with the deal of the day. morgan stanley agreeing to acquire etrade valued at $13 billion. $58.74 a share three months after schwab and td ameritrade announced a merger deal a lot of discussion of why not robin hood an enwhat it means for the sort of the framing of their wealth management business, jim. >> it is kind of amazing

about 5 million accounts, maybe more robin hood with 10 million accounts in no time they were land speed record for accounts their success is driving everything they have the millennials. they have a different orientation. they have the easiest site to use. all hand held. they're racking up customers i have had robin on a couple times. they're the biggest threat to an industry i have ever seen. we talk about disrupters on our network. they turned out to be the biggest disrupter. the idea of morgan stanley, etrade started and it was like they have commercials -- >> been around a long time, etrade. >> saying don't affiliate with an outfit like -- and it would be without naming morgan stanley. these are strange bedfellows. >> it is seeming on the face of it an interesting and not

unexpected because, frankly, since schwab and ameritrade, people talking about the possibility of this very deal. >> right. >> certainly there were those talking about morgan stanley having been there and they were. in fact, people tell me they were talking as early as early january beginning the discussions ending in the announcement this morning of the transaction. all stock as well as we should point out. ugh see it is going to be impacted a bit by the decline in morgan stanley shares but not dramatic at this point they like a number of things here, though almost everybody has a morgan stanley account they tell me and then an away account, often times an etrade account or ameritrade it's the assets that are away sort to speak from the firm that are held away that they want to try to consolidate we know how much these companies can make on the float on just the money that is sitting there on deposit sort to speak that can be used, certainly partially goldman's strategy with a high

return on the product they offer people, as well. but here they like the stock plan business, also, at etrade which is a very strong generator of profits over time and fairly steady in terms of running, administering the stock plans for various corporations and the merger of those two businesses, as well, guys. all stock. as we noted. >> right. >> they can't give in c-car given the regulations they are under and from the fed go to big cash deals because that would hinder their ability to return cash in the form of share buybacks and etrade wanted an all-stock deal. >> go back to when schwab bought ameritrade people expected that the next thing to happen is etrade an then a narrative of etrade is not doing well enough for anybody to buy, not growing. i think that if you're gorman

you can consolidate. i guess people say fire a great number of people but it is incredible to see etrade people didn't think was worth that much after a second look and why does gorman come and do that? i think the answer is that robin hood made it so that etrade had no choice. >> robin hood or the move to zero commissions period? >> robin hood being the -- >> catalyst? >> yes >> you jump ahead sometimes. explain why. robin hood is this -- unicorn. >> i use turbotax? >> you don't >> i like it >> my god just the properties alone on international borders, having to do -- different tax returns. >> i don't have to take this i'm not running for president. i don't have to take this. >> the olives. >> why does he hurt me okay the thing that sticks out about robin hood is that they wrecked

how you make money i mean, you just -- they wrecked it. >> changed the profile of morgan stanley to a certain extent. pretax profit by segment 57% combined wealth management and investment management opposed to currently roughly equal split of those and institutional security weighs more towards welalth management and the smith barney deal was the most important deal until this one. >> mentions that i think gorman doesn't want to be left behind in the asset grab who else is there? that's a chunk of assets. >> big chunk. >> how about the fact that they had so little growth in etrade >> added to what they have got. >> to that point, a lot of people talking about the legacy as a dealmaker after smith barney we talked to him at this desk in

december. >> we look at strategic stuff but not a point in time pricing transaction. we make our strategic choices based on what we want the company to be ten, 20 years from now and why we bought smith barney in 2009 we believe that wealth management space is compelling, we wanted scale and moved quickly. >> are you an admirer of etrade's corporate stock plan business >> they have a very good stock plan business, yeah, they do did a nice job with that. >> that's the business that i was referencing which they seem to be very excited to discuss in the benefits of the deal. >> put ourselves in gorman's shoes. why couldn't we set up a second operation that gets those? i say that because isn't that what goldman's done? >> not there yet. >> no. >> not at all. >> this is in -- >> people who have an adviser

after morgan stanley dealing with them on the bigger or/and full service places dealing with your estate and all that -- taxes and how you approach that. but on the side, well, this is where i can sort of do some trading. i know i don't have to pay for it i don't have to deal with anybody and talk to anybody and explain what i'm thinking and -- just do it. >> how about the fact that the consolidation going to the point where there aren't that many brokers? not that much choice. >> in financial services at large bb&t suntrust. this week -- >> yes. >> some stuff in italy this is what we have been waiting for. >> yes, it is. i think that the group, someone will say the margins going up and time to buy the group because the group still has an incredibly low multiple. i would point out if i'm gorman i would be frustrated. they reported the best quarter in the brokerage segment and what did the stock do?

nothing. >> right. >> so why not buy this company if you all right -- i speak to a lot of people there. we're trying to make a bet of how high the stock would go. no one thought it would do nothing. up a dollar. >> yeah. >> isn't that incredible to have the best number. >> good quarter. gorman's not going anywhere and his to deal with and his to focus on for years to come most likely. >> okay. >> you know? that's - >> look. >> not legacy. not the last thing to happengor. >> are you surprised it is knocked down more? >> little bit. >> good deal. >> little bit. >> the stock is back to where it was -- still a dollar above -- where it was when it reported. what an incredible industry that the multiple just keeps shrinking no matter what you do. goldman has tried -- >> viacom? oh no. sorry. that's later. >> you know what you didn't eviscerate enough

you held back. and that was a shame >> no. >> the ceo. >> both calls going on viacom at 8:30 and this call at 8:30, the morgan stanley one and share what we hear about that. >> full disclosure on viacom and you should take my head and put it on a pike. >> yeah. who? >> you should have me take part in a democratic primary. >> yeah. have fun with that. >> freaked you out last night, didn't it? >> yeah. >> yeah. yeah. >> didn't you? >> a lot of people. >> are we playing a bias there showing our bias >> yeah. >> wow. >> you are a dollar sign masquerading as a human being. >> most insincere man in north america. what's the point we have to talk about viacom. >> we will. >> it is a disaster. >> ten minutes in, not mentioned the coronavirus. we are on track to open lower with more headlines regarding the virus. lowest number of new cases since january 25th in hubei.

warnings from -- canceling asia voyages. >> chinese changed the way they compute the viruses every day. it's -- i have been looking at -- there's a great cdc paper from june of last year which talks about as you get older there's a really great chance to -- much more chance to die from not novel virus but regular virus. this is any time that you conflate them you get heat and this is easier to catch. okay it's spreading like wildfire in some places. there's also a cdc site of cruises and how easy to catch something on a cruise so i think norwegian is doing the right thing but if you're 75 to 85, there's a good chance to -- higher chance to die with no matter what flu you have i think people have to start respecting the fact that if you go out you could catch it and if

you're older you shouldn't go out. >> age is a variable and ability to access quality health care. >> yes. >> that is the -- maybe thmoina. >> exactly public health systems. outside >> you shouldn't do these -- where anybody congregates. novak seen and no anti-viral what should you do hey! let's just -- like - >> rule out half the people on the stage last night >> so you're not going to school, not going to work, not going to imax theaters i assume. >> if you're 85 -- look. i once -- if you have more than a 5% chance of dying from something in the medical community, that's it they say, no, you shouldn't do it here's a 14% chance. so why are you taking a cruise when we know from the cdc that cruises are incubators

why would you take a cruise? >> i wouldn't. >> why would you fly >> because i need to go somewhere. >> if you're 85 you have to go somewhere until this is over good chance to get the flu. >> sitting home doing nothing very depressed about - >> have a domino's pizza. >> just live large and not worry about it i'm 85 and want to live my life, what little is left of it. >> you have a death wish what the hell is he talking about? >> meantime, as far as the market goes, the macro desks trying to qualify. i saw charts on coal consumption, travel, air quality. all these different metrics. goldman has a quote as you know by now equity markets are increasingly exposed. a near term correction is looking much more probable do we agree with this? >> after i didn't do's craziness of the virgin galapl power and d

the solar plays, i think that's typically late stage late stage move. those moves were amazing, breath taking i don't know if you caught the very gin galactic move. >> i saw what morgan stanley saw today. deserves a bit of a breather. >> amd someone a breather. >> equal weight. >> i have a lot of breathers people taking breathers! they're breathering. stopping the breathing selling at a level, using 2030 revenue numbers. i don't know is that the way you should look at - >> no. >> do you like that? >> no. >> you don't, right? >> another one reminiscent of the late '90s. >> that's what i felt. >> not that large of a market cap. >> no. just saying let's have a breather >> that guy -- will be really happy. >> take a breather. >> selling stock yet

>> taking a breather. >> a reminder, do not miss the ongoing special report on the coronavirus outbreak every night at 7:00 p.m. eastern here on cnbc still to come, as we said, morgan stanley's gorman on the $13 billion deal to buy itrade mad dash and movers in the premarket. six flags down mi'sp. "squawk on the street" is back in a moment. ( ♪ )

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we have 12 minutes before of the open here at the new york stock exchange domino's why? >> the stay at home economy. this is my new thing i love this. these guys reported a number -- look 3.4% increase same store sales but people looking at 2.1. why? because the aggregators, delivery people. there was this notion that the wompum that the door dash play is wiping out the traditional delivery system.

au contraire domino's underestimated. this stock is breaking out they are really going to be able to tell a good story tonight on "mad money." what >> you are not kidding >> well, david, they weren't destroyed by door dash they weren't destroyed by grubhub. no way remember, people are staying at home >> they are? >> yeah. >> well, apparently over 85 what you do. >> cut the cord. >> we know that. >> we know this. >> didn't get to the numbers from yesterday but yes. >> the assassination of viacom cut the cord they order in. they have a dynamite time. now we know that they drink truilly but costing boston beer too much to make it because of the demand. >> how did this -- >> because they kept missing because they complain on "mad money" right here at thinge aggregators are hurting them.

>> what did they do differently? >> doing what they didand the other guys - >> advertising campaign where they showed their people very upset about getting a delivery wrong. wright >> yeah. but now -- that's on you if you use the app. have the banana peppers when you order the pizza. have you ever ordered? >> never not once. >> oh. you are so frustrating. >> great pizza places all over the police. >> david, i can order no cheese and have a tomato pie like from philly. >> sorry, domino's. >> you, you, you domino's outlasted thing e aggregators. delivery people. >> got it. all right. rich allison tonight right here, morgan stanley ceo, james gorman been doing the job a long time and a lot longer and talking about the biggest deal he's done $13 billion in stock r etrade

"squawk on the street" coming right back

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there's a look at futures. many silos of news to look at. democratic debate last night financial space. coronavirus cases continues to moderate the opening bell's coming up in seven minutes and you can always watch us live on the go on the cnbc app now, we know the trump strategy-

try to win by attacking, distorting, dividing. 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.

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you are watching cnbc "squawk on the street" live from the financial capital of the world. opening bell in 3:30 on a very busy thursday morning watching the coronavirus headlines come in clarida with steve liesman says the markets may be

overestimating the possibility of a rate cut this year. future contracts point to a cut as soon as june or july. 60% chance he said economist survey by bloomberg shows the majority don't see the fed easing this year interesting. he did say economy's in a good place. fundamentals strong. we could see business investment rebound. >> right i think nobody has a -- i'd rather hear from dr. faushey than richard why? if people stop going out to the movies and planes, they stop going to hotels, then really doesn't matter what he says and they have to stop this virus i'm not trying to panic people like i said earlier, the novel virus is just like the actual virus but so easy to contract. they don't know. if this thing breaks out like they're afraid of in south korea then it doesn't matter what he says i say why wouldn't i have said we have to see if this is -- run

the course. >> the minutes pointed to, right? >> very logical. but this thing hasn't run the course the big debate is are factories opening away from the epicenter? epicenter is a some sort of bomb went off theory and causing a conspiracy it was a bio terrorism facility and not the live market. >> which world health organization tried to bury yesterday. >> another new paper from chinese doctors last night saying it is i don't know all i can tell you is that if you have a crystal ball i would like to have faushey speak to the fed and a good chance the world changes radically if they can't contain this. >> how long until you can rest on that point? >> may. >> may >> i don't think april's a good enough he doesn't give me the comfort that i wanted that the warm weather will end this thing. it is too novel sort to speak. so look. when you wake up and two deaths

from a ship that supposed to be no deaths. you come back and you say, maybe i shouldn't travel i think that the fed can say what it wants but if they don't like this thing, the fed will have to have firepower. >> as you say that, p&g on the tape seeing the quarter materially impacted by the virus so add that to norwegian. >> wow. >> mersk is the big one overnight. >> norwegian cruise, what an outfit bookings up year over year proctor. materially impacted by the virus. that could be -- they have a big chinese business. >> they did. >> the stock up large. so i mean -- >> -- for sales and profit is china. >> kimberly? >> not that they're not talking about this people cannot leave the home tend not to buy things the delivery guy can't get it from alibaba. >> this is not one off

there's a lot of companies that have really made tremendous strides. i keep coming back to look at the unreal nature of nike. nike is so close to its all-time high and there -- they did analysis >> opening bell and the s&p 500 at the cnbc realtime exchange. and the nasdaq, option care health, provider of infusion services guys, the telestrator. >> tremendous. big short squeeze there, too betting that they would fail again. i think allison's a very smart operator doing a good job but 67 indicates some people thought he was going to miss big. sorry. >> they haven't had negative comps since 2011 by the way.

meanwhile, six flags swings to a surprise loss. guides below cuts the dividend. cfo leaves what's left? >> a lot of people felt it was going to be bad. not this bad cfo retired. 55 years old so -- there's a guy who obviously wants to spend more time with his family >> 30 years to wait until he has to stay inside according to you. >> please. i'm saying what the odds are but i do think that six flags have been down, down, down. six flags had a deal that was supposed to happen with china. and when that didn't happen, that was the beginning of the end six flags. si cedar fair is better what's the matter? >> viacom stock price. we should get to it. we need to try to explain what's going on to people. >> do you know who jake tatum was? >> defensive back? of course. >> one of the best books ever. they call me an assassin

viacom. >> he hit daryl sting. >> don't talk about that incredibly sad i regard you as the jack tatum of viacom. >> talk about viacom take a look at the stock this morning. down 12% right now after the company -- let's start with the reported quarter because that's where the story -- >> oh my god >> total revenues 7.092. that was a miss in terms of at least the analysts that follow the company consensus. fourth quarter numbers for 19. adjusted operating income below. mar yin below. eps well below and free cash flow did all right. let's move on 69 let's move on to the guidance where investors look it is interesting to note as i talk about the guidance, how many value investors are in this stock. that's in a minute 1.2 billion in adjusted free cash flow for 2019 excludes a number of restructuring things and things having to do with the merger with cbs

1.8 to 2 billion guidance is below what they were looking for. analysts up and around that. depends certainly watching the stock cratering right now. that does include the 2 billion, does include 500 million in additional costs for direct to consumer that they're starting to build out remember they told us about the strategy in terms of cbs and pluto, number of other things to be doing so that's an additional cost now you also do have content spend is going to flatten in 2020 in this year. they did have some rate reset last year, as well that additional cost in there so they're seeing and talking about saying they have absolute line of sight to significant increase to cash flow in 2021 they're talking about getting to as high as 2.5 billion in that year that is a significant percentage

increase that's where a lot of value investors focused right now and having a horrible day and talking about the -- you're talking about glenview capital management this is becoming a value - >> cramer charitable trust i believed in the stock that sells at five times earnings that two p five. all of the mumbo jumbo that -- i believed in value. >> well, listen. we all know that the available number of homes is going down. right? we talk about cord cutting all the time here. we look at the numbers that is a simple fact that all the -- all the businesses in terms of the cable ecosystem dealing with including our own that's part of it. up front is strong advertising front seem to be strong for the company, as well. and they are talking about sort of in terms of trying to --

positive advertising up 2%. >> full year wasn't the -- fourth quarter is bad for advertising. >> and then you get to football and the nfl which is going to be so vitally important for the company in terms of keeping it the contracts until 2022 but if you talk to people at viacom, cbs, talk to people at fox, they want to get it over with as quickly as possible. erase doubts about the possibility to have the nfl as a key centerpiece of thestrategy what they have to pay is a concern of some investors but, man, the value investors in there. you have talked about that for sometime how cheap it is. >> i was wrong. >> the free cash flow guidance is scaring people right now. as much as they say they see a line of sight from 2020 until 2021. >> can cherry redstone be satisfied with this chaos, this mockery? >> it's something interesting which is that investors will

have an opportunity to ask that very question because ms. redstone and mr. bachus receiving investors today at headquarters and going to be sitting down with them meeting with investors today. >> this is serious business. >> together i'm told by a number of people so they will face a potentially hostile audience at viacom cbs market cap level at bite sized it's truly bite size. >> they're not an oil company. >> no. they rank okay on esg. >> very high in their statement was -- you know, david, this come -- this is all about a style of investing that's kaput right now. travel trust owns 29 stocks that are a growth why not take one very low valued stock and bet that that valuation is incorrect >> okay. >> turned out not the valuation

correct but two equaled three. how's that possible? >> by the way, they are delivering on the synergy and did increase -- remember so much criticism and the stock started to suffer immediately after the announcement of the deal because it came in lower. $500 million you do typically want to underpromise and overdeliver and they say that here, as well. they're saying 750 million is the number that they'll have 250 million of that will be realized in terms of synergies this year. >> they told us over and over again no problem making numbers. they can say we never put out numbers -- wall street but look at the valuation of this thing look what the it's worth as an entity. >> right. >> i think sherri redstone has to say i'm mad as hell and can't take it anymore. it was from tv.

>> one quote on the call got attention, our content strategy is not about spending more right? that's definitely zigging while others are zagging. >> flat on content spend this year the dtc part not including with half a billion to spend there to build that out. >> is this about alphabet? waking up today saying i'm going to own the nfl and i have had it >> when you are the nfl and i'm not sure you want to -- i'm not sure that's the platform to go with broadcast still works. in a lot of ways >> tony romo does a great job. 18 cameras that's what the nfl wants. the market doesn't believe that! >> no. investors are concerned that the guidance that they're talking about is not going to be realized, not be able to realize the synergies at this point, the overall universe declines and wonder about the real sven sy of

the content and whether it will resonate cbs all access is somewhat successful pluto free ad supported. >> somewhat successful paramount, somewhat successful. >> yes, yes. >> 3% yield. add them all up. >> 100% focused on shareholder value creation creating transparency. >> do you think that's right >> before i sign off, i thank the employees of viacom who brought it together in three months and will power our exciting future. >> taking the other side for a second, name me three things he is doing right two things one thing. >> that's not fair come on. i'm not going to name things there are plenty of things that may be going right there absolutely. >> okay. i feel better already. >> we may sit at the mad dash and be like, whoa, look that the. >> like domino's it's possible. >> do i think it's overdone?

i think it is overdone but the anger, the wall of shameness of this - >> oh boy. >> wall of shame but it just hurt so many people's feelings and i became much more jimmy chill. you know what? i'm thawed. >> really? >> for whom the bell tolls it's for bachus! >> wow let's use that bell as a segue here last night's democratic presidential debate in las vegas was a slugfest most contentious yet with one clear target, former new york city mayor michael bloomberg and the debate debut on defense all night and why he hasn't released the tax returns. take a listen. >> very briefly on the transparency your campaign has said that you would eventually release your tax records. >> yes. >> coming to transparency. people are voting now. why should democratic voters have to sfwhat. >> it just takes us a long time.

unfortunately, or fortunately -- >> may i comment on that >> i make a lot of money and do business all around the world and preparing it the number of pages will probably be in the thousands of pages. i can't go to turbotax i put out the tax return every year for 12 years in city hall we will put out this one it tells everybody everything they need to know about every investment and where the money goes and the biggest item is all the money i give away and we list that every single donation i make and you can get that from the foundation any time you want. >> here's the cover of "the new york post. black and bloom. jim, you were talking before the top of the hour about the democrats celebrating people with less money rather than more. >> having been many charities, he doesn't talk about it, he really is the reason why the charity exists it is painful. he's never been willing to take the credit that i think heshld

i gave a speech about what he's done for the brooklyn -- really, just for the brooklyn historical society. i think he was mortified i felt someone should say this is a man that opens the checkbook for charity. >> that's framed as politically calculating. >> it is unfair! it is unfair for someone who tries do as much charity at least time i could never equal him in money it's just -- wow i mean, he's done so much good and it just seems unfair to me. >> does the market happy to have sanders? right now on predicted markets as the front-runner for the nomination. >> i think that the market's saying that it could be like george mcgovern. don't blame me i'm from vermont i think that that's kind of in play i do >> where it is a republican sweep? >> yeah. >> i think that's what people feel and never nominated someone who -- a socialist who has many communist views, never been the

way. we had in -- >> i know he's a socialist communist? what do you mean >> okay. so he doesn't believe that the state should own i think to some state believes that the workers should own. trot ski okay form of socialist is certainly where he could be. that is not bad. i was a union leader one time and felt that trotsky had game and i prosecuted that and was fired. a suboptimal conclusion. but david, i think that you have to read through what marx says there's a -- certainly to the right of them. but he may be to the left of trotsky. >> really? okay. >> well, i mean, he is -- he wants to redistribute wealth and feels the wealth is outrageous in the hands of the few. trotsky believed that and lennen he was a mass murderer these are the things that

lenin's track of what's wrong, it's about redistributing. >> right. >> what is to be done is a great little handbook to figure out the game plan. >> trotsky wrote it first? >> to the finland station is another book. >> i never read to the finland station. >> this is very good i wish i were joking i took seven courses in communism because when i was at harvard the communists made a coup of the faculty. this is the stuff we learned it's just stuff we learned. >> bloomberg was unprepared for what was coming his way. >> the strategy has always been about super tuesday which is still a little less than two weeks away we'll see if that works out. dow down 28. lit's get to bob pisani. >> good morning, carl. mixed overseas hong kong basically flat china recorded the lowest number of new coronavirus cases in a long time but there's plenty of warnings out there including p&g which is up here

all of the companies essentially saying coronavirus impacts the first quarter results. big shipping company saying the same thing norwegian cruise lines you see a lot of impact here from many of the companies but very modest responses from the overall stock market take a look here you think semiconductors down a little bit here. a downgrade from amd on wells fargo on valuation and semis weak industrials are flat banks despite the low yields are fine energy is better recently. oil around $54 a big help energy stabilize one of the few pieces of good news here. so the overall markets are holding up very well and yet even the safe haven plays doing well the dollar at a three-year high. gold at a seven-year high. utilities essentially record highs. very strange and also really doing well elsewhere, take a look at china, it's important to note the

lenders there, cut the benchmark lending rate there's obviously concerns of the impact on china's economy and the bank loan losses, big state owned banks. remember a while ago, little over a week ago as i recall, s&p said china's growth could drop to 4% to 5% range if this goes on for several months. we don't know what the impact is but you can see what's happening. impact on chinese banks. all the big banks here industrial commercial. a big one. all down in the last month close to double digits overall today and i know david is talking a lot about morgan stanley and etrade very close to that number they were getting there, 58 i think the offer. for that morgan stanley down a little bit. watch interactive brockers gain capital, as well. they do online traded services and other firms out there like lp holdings.

services for independent financial advisers a firm people have been watching overall i think the important thing, david's mentioned this a couple times but the big firms, they're losing financial consul tanlts registered independent advisers are hot. buying all the etfs. this is an attempt that morgan stanley of a new platform for wealth managers and retail banking because they're losing people an enthat's corporate stock buyback program. the people that do ipos every day, they're concerned about the stock that they've been getting as employees and how do they manage that stock? that's what they do. they manage that money for those newly enriched people from ipos hoping long term to be big clients and a growing business that corporate stock plan business that morgan stanley has and a big help owning etrade we are down 52 points in the dow. back to you. >> thank you, bob.

let's get to the bond pit tons heels of the barn burner of a philly fed number. hey, rick. >> hi, carl. glad you mentioned that because i thought we'd throw out a chart. i normally keep a 20-year database of the major economic data points and you will notice today's 36.7 only second to february of 2017's 39.7. other than that, you are not going to find higher levels on that chart it was indeed a barn burner. look at a three-day chart of 10s. new intraday lows of the week. lowest level since early february no bounce to the ounce hot ppi yesterday or strong philly fed today or housing starts and permits really they seem impervious to raising higher the globe is enamored with the dollar because they have to pay off debt in dividends in dollars

and the positive interest rates. if you look at a three-day of the dollar, i have a lot of cool statistics but maybe the 12th to 14 session higher. a nice bid to it now although drifting a little bit and also remember we're getting very close to 100 we haven't closed above 100 since basically tax day 2017 and it isn't only against the euro it is like 58% of the dollar index. look at a three-day of the dollar/yen dollar at a ten-month high a three-day of the pound verse dollar the pound is basically a the a three-month low. the dollar is on fire. carl, david, jim, back to you. >> all right, rick thank you very much. when we come back, the deal of the day. we'll talk to jameis gorman about buying e hf trade for $13 billion in stock listen to "squawk on the street" podcast. dow down 51. don't go anywhere.

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take a look at s&p lag erds this morning viacom now down 17% and change got hormel in there on news as well morgan stanley on that deal of the y.da we'll get to stock trading with jim in a moment. dow is now down 11 no more lugging your clubs through the airport or risk having your clubs lost or damaged by the airlines. sending your own clubs ahead with shipsticks.com makes it fast & easy to get to your golf destination. with just a few clicks or a phone call, we'll pick up and deliver your clubs on-time, guaranteed, for as low as $39.99. shipsticks.com saves you time and money. make it simple. make it ship sticks.

time for cramer and stock trading. >> truly has a problem it's the demand for truly. they have to lean in they have to try to get as much business as they have particularly right now because bud light seltzer has been launched on the super bowl so they're getting hurt because they have too much demand. high quality problem i would bid with them not against them i think they'll figure this out. a good opportunity >> seltzer up 226% last year >> truly, younger people love truly and white claw lost a lot of share to bud but truly hasn't really interesting people, young people distinguish between the two. they're inheriting the earth a lot more quickly than we thought, james gorman, and, well, what can i say this is a great company that's done right and they just want to own the category and it is going to be hard remember, corona is coming out with seltzer any day now

and david will actually have a seltzer and dominos pizza. >> really. >> you call dominos or you can use it pc. i'll stop by and get some seltzer. kind of -- >> i don't like bubbles and i don't want dominos >> i have ritch allison tonight. congratulations to him a lot of people doubted him and i think the doubters are in pain today. there is only one short that worked today >> six flags was in there, too >> that's true >> we'll see you tonight, jim, 6:00 p.m as jim says morgan stanley's james gorman will join us on the other side of the break as the s&p has a race to some losses. back in a mint

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it's a responsibility. emerson. consider it solved. welcome back to "squawk on the street." rick santelli here live on the floor of the cme group awaiting our january read on leading economic indicators and, do remember, last year we had four negative reads last year to have four negative reads was 2012 it is very unusual to have negative reads on leading economic indicators. to that end we have another whopper number here up 0.8 of 1% like philly multiples of what we were expecting in this case

exactly twice. we were looking for a number up 0.4. the minus 0.3 in the rear view mirror the fourth negative read of 2019 remains. this is the highest read going all the way back to october of 2017 when it was up 1.1. carl, two big numbers today. of course l.e.i. doesn't carry the bang in traders' minds but still a strong number. back you to the. >> welcome back to "squawk on the street." i'm carl quintanilla with sara eisen and david faber at the new york stock exchange. we opened with initial losses but s&p erased most of them and they were pretty much contained to unh and intel on the dow side >> our road map for the hour starts with the deal of the day. morgan stanley buying discount broker e trade for $13 billion the ceo of morgan stanley james gorman will be joining us first on cnbc in just a few moments. >> plus the state of the consumer the ceo of l' oreal will join us on post 9 as the company deals with ongoing coronavirus

concerns >> viacom shares are plunging, down as much as 18% after numbers that did not meet expectations for the fourth quarter and guidance that is also quite disappointing we'll talk a lot about it. >> first let's get right to the megadeal of the day. morgan stanley agreeing to acquire e trade and an all stock transaction valued at $13 billion. this comes three months after charles schwab and t.j. amer trade announced their own merger deal as we mentioned morgan stanley's ceo james gorman will be joining us first on cnbc in just a few moments, guys. let's unpack a little bit the strategic rationale, david, which the market, though morgan stanley is down, appears to be pretty good with >> i think they're happy with that down less than 4% in fact, i know they are i have spoken to people involved in putting the deal together they anticipated it would be down at least that much. it is an all stock transaction of course. that in part i'm told and e trade wanted it but also morgan stanley remember, they get reviewed by the fed, they can

only use so much cash, and so they want to keep it for buybacks as opposed to using it in a deal. it is an all stock deal, obviously a significant premium there. they are talking a lot about the stock plan business. you wouldn't necessarily expect that would be one of the first things they want to highlight in terms of the administration of these plans that e trade does for so many corporations but it clearly is an area that they're excited about actually getting the two businesses together. interestingly, one that wilfred asked gorman about the last time they talked. but even more so, it's about held away money. you know, people have morgan stanley accounts they deal with their financial adviser there. but they also have on the side an ameri trade account you bring them together and become top three in self-directed and number one in terms of overall financial advisers what they're saying is over 3 million client relationships, 2.7 trillion in client assets. 47% of those are fee based assets >> i think the interesting part of this is it further points to

schwab did that. a convergence between wall street and main street it put pressure on everybody right? we've seen goldman sachs get >> consolidation quickly became the key thing. and of course schwab and ameri into -- trying to get to clients other than what you think of for some of these elite investment trade got together these two companies, morgan banks, right not just the high income but stanley, gorman referenced on the call they first approached income them in 2002 and again in 2007 and i think the other big theme they've been talking on and off that it talks to, guo zero, and for years but this time around i'm told early january is when the talks really became serious. you're right listen, you get in what you could consider the next generation or -- and/or people who are going to become wealthier and you move them to the different platform at morgan stanley, generate more fees from them this does change the revenue competition of the company or its profit composition overall about 57% now will be coming from investment management and wealth management as opposed to the current roughly 50/50 split between that and institutional securities at morgan stanley >> although this new batch of customers, you are not buying necessarily to pay you fees as much as you are using their assets to loan against, right? >> that's right.

and the deposit balances so many people keep are a key for these companies. free money in a sense. >> just such a shift from the hay day of wall street, the big day of the high risk goes back to the financial crisis and how the banks have been remaking -- >> he is taking them on a different road, gorman of course the smith barney acquisition being the key one in deciding he was going in a different direction. goldman now coming to it, moving to the consumer, but not in a significant way certainly that morgan stanley already is positioned >> let's get right to them wilfred frost alongside a very special guest. wilfred, over to you >> thanks so much. a very good morning to you and very good morning to james gorman the chairman and ceo of morgan stanley thanks so much for joining us and for having me. >> thanks for coming >> great deal. big smile on your face talk us through the rationale and the timing >> first, excuse my voice. i think i've been talking so much for the last few days i nearly lost it last night which would have been a challenge with investors today. you know, the rationale is this is sort of the next step in our

journey. i mean, it's got implications for the wealth management business, first and foremost there's been a convergence of technology across all platforms. and this gives us, you know, access to both the work place, the direct as well as our core financial advisory, which is unchanged, just added to for morgan stanley, a capital light business, part of the journey. >> we're going to dive into all of those different factors strategically. i want to start on the timing though if i may. i asked you specifically about potential acquisitions for e trade in december. you were sitting on the fence a bit now that i look back at it david faber saying he thought the conversations only started this month when did they start? >> well, in truth they started in 2002. >> reporter: wow >> before you were born. >> reporter: just about. >> just about. i called them back then when i was at merrill because i was very intrigued by the fact there

were always going to be segments, dealing with electronically and digitally and people also wanted digital access it was also a buy versus build then i called them again and we had pretty extensive negotiations in 2007 in the end we couldn't get past there. these discussions reinitiated in december so about the time we were talking i might have had a little twinkle in my eye >> reporter: there we go i think you did. i should have pushed harder back then anyway, in terms of getting over the line, it's an all stock deal your stock is up sharply since then did that give you the currency to get the deal done >> not really. we had the confidence. our stock was beaten down in the summer people joke for me defending our stock but i kind of think it's my job and i am a large individual shareholder we were trading below book value in the summer. we had just produced $8 billion

of revenue and so the stock was being beaten down for reasons that were wrong, i felt. no, this was a longer term thing but certainly gives you more confidence when your currency is strong >> in terms of the share price move today, down about 4%, it was very dilutive stock issuance do you expect it to be down more are you pleased with only down 4% >> you know, i totally expected it to be down at the open. i don't know where it'll finish today. a week, a month. you know, it'll bounce back from that we're still trading above what we were before we started the earnings call. in january and we own e trade so it's kind of like, this is not a bad outcome at all we're up as you said 40% from the summer it was dilutive on a tangible book, creative on ritc and creative earnings within two or three years though i am very comfortable where the numbers are and i think the stock will trade just fine over the next several weeks. >> was one of the factors about timing also to make sure

somebody else didn't buy this asset, goldman sachs, in fact, trading down 0.2 a win for you? is it a direct blow for them >> i'm not going to comment on goldman. but i think, you know, when i think about strategy and big strategic moves, you've got to have a clear, strategic vision i never worry about strategy, i never try to copy what somebody else is doing. we have to do what's right for morgan stanley you have to be very opportunistic. you have to move and move quickly. we put in obviously a very full, i think, appropriately, bid for a great, great company with an iconic brand if we had messed around and tried to do this on the cheap it would have created all sorts of turmoil. when you make your mind up, be aggressive to get the job done that's what we did >> reporter: was the primary driver you were most attracted to the corporate stock program >> it's a great program and we're in that business, so, you know, they've done frankly a really gad job converting clients who come through that business that is one. the secondary was just the sheer

technology i mean we bring in a group of technologists that i think will drive the technology platform even further than we've been able to do they have online banking we can roll out to 3 million clients now at a level we haven't been able to do they have $60 billion in deposits, $40 billion on balance sheet. we're able to do things with that with our funding. they have tremendous number of clients who leave their organization over time as they want a financial adviser now we can be that financial adviser. we can put research on their platform, alternatives on their platform the beauty about this deal is there are so many positives and there's going to be no dislocation to clients it's just adding to what they've already got. >> you mentioned on the analyst call that e trade tends to serve a younger and more mass market client so is this planning for the future therefore for immediately profitable >> they have a mix like we do. we also have a lot of young clients, clients who don't have

a lot of money most of our business is in the 1 to $10 million households. the demographic is different it is certainly an option play on that. you know, it gives us access to a different demographic. they also have a heavy trading demographic which we respect and will support and nothing will change for those folks so, and then, finally, this platform could take internationally. i've been very interested in having a digital platform outside the u.s. rather than trying to rebuild massive financial adviser networks we have a boutique sort of private wealth business in asia and latin america. this would be very supportive of the coming years >> reporter: there was a joke on the call that mike the e trade ceo is more of a jeans and t-shirt man. are you going to adopt to his dress code or is he going to have to suit up? >> do i look like i'm a wearing jeans man? no, believe it or not i do wear

jeans. mike is a great guy. they have a more casual culture. you go to our trading floors and a lot of our offices it is no different. it is the old ones like me on the 44th floor that have to get with the program >> and the youngish ones like me seriously, what about internal lay-offs, late last year, some people suggested for what was a record year of earnings that comp wasn't as high as it could have been and morgan stanley is seen as elite, top rung investment bank and you are buying something a bit more mass market are people disappointed with the brand diluting >> i doubt very much i just did a call with the managing directors on very short notice we had 750 managing directors, about half, dialed in to it globally which is pretty incredible given some of them are asleep right now no, i think, listen. we've got, you know, everything from electronic trading and equities to the prime brokerage business to m & a to financial advisers in every town in

america. we have a digital platform already. this is not culturally far from where we are this is not -- i don't think of this as a -- i think this is a very savvy, tech driven, digital company. and that's what excites me about it the commonality is we are all in the markets business when mike is joining our committee, sitting at the table and talking about prime brokerage, mike understands prime brokerage. so this is not going to be a heavy lift from that perspective. >> what about some of the high paid financial advisers brokers whose job is basically to give advice, high paid advice to clients to try and then encourage them to trade. does this acquisition make them somewhat redundant >> oh, god, no no there's always been direct access, right? and many clients, you know, have direct accounts away from us they have them with other institutions we'd rather now have them with e-trade. the advisory platform remains incredibly robust.

it exists for a reason you have complex financial needs. you need a partner to help you with those needs this will be additive to those financial advisers because we'll now be giving them online banking to provide to clients. online trading for children or friends or family if they want to open another account, and we'll be giving them referrals out of the system. it is clearly positive for financial advisers >> i want to switch focus a little bit and just ask about the coronavirus. what is your latest advice for your employees in china and the region are they back to work yet? >> no, a lot of people are still working remotely in the region i think that's smart i saw the numbers this morning from wuhan where the lowt, but they've changed the reporting methodology. it appears to have peaked. that is no solace for those who are affected by it or might be affected by it we're still, like i think all major corporations, very cautious about folks we have a new managing director conference which we've canceled and are moving later in the year we don't want to put any more

pressure on folks who are dealing with their families. >> do you think the chinese gdp impact has been under stated at the moment potentially >> you know, i think they'll provide stimulus and bounce back out of this. they did out of sars obviously it was a very different time the chinese economy is much bigger now it is also much more coordinated. no they'll have a hit to gdp but they'll bounce back. if they get the serums and get in control of this it'll pass through. >> a quick question, another democratic debate last night bernie sanders very much the lead lloyd blankfein recently tweeted he would, quote, ruin our economy if he became president do you agree >> unfortunately i don't have a twitter account so i can't enter that debate. i have to leave that to lloyd and bernie to sort it out. >> i mean, clearly, he is retired so it allows him to speak more freely. what is your take? would a more admittedly socialist candidate hurt the u.s. economy

>> you know, wilfred, i don't know that i want to get into the politics this is a great country. we have separation, three legs of government. we have the two houses any president has to deal with that things don't happen as quickly as some people in their campaigns suggest they might let's see how the election plays out. >> reporter: james, as always thank you for your candor and congrats on a great deal >> appreciate it >> reporter: chairman and ceo of morgan stanley back you to. wilfred frost with gorman. thanks to you. interesting comments out of gorman not the least of which was the coronavirus in which he says it appeared to have peaked but referring to e trade as a savvy, tech driven, digital company and in his words, david, not going to be a heavy lift >> yeah. just sort of having it come into the company but operating it as it is. and then being able to as he said and we talked about prior to the interview bring some of that client money over to morgan stanley advisers over time bring some of their research to e trade, to the platform,

itself but not an insignificant deal for them at all. $13 billion of course in stock and you can see the morgan stanley shares are down a bit but they're not unhappy with that >> he was talking about the cultural fit saying not a heavy lift it was an interesting question, wilfred said, you know, morgan stanley still noticed the elite wall street firm, how are the money -- how is everyone going to feel about bringing in an e trade and gorman said they speak the same language we do basically. >> i remember when they owned dean whittier. it wasn't exactly -- it was kind of main street then, too they've been dealing with that stuff for a long time. >> joining us is roger altman the senior chairman and founder of evercorps waiting and watching here. thanks for your time today how many fits are there like this out there >> first of all, i have a lot of respect for ceos who have a really clear and coherent strategic vision and i think james really does. and i think he enunciated it to a degree there but he really

does and i respect that a lot. this is entirely consistent with his vision morgan stanley has been leading the transformation from the wholesale side to the retail side and this takes them further in that regard obviously he has a particular focus as you've been saying on wealth management and as david said, proforma for this, 57% of their profits are going to be in wealth and investment management and morgan stanley from a shareholder value point of view, has been really quite successful and it trades at a higher multiple and book value for example than goldman sachs, which is a great firm, too so i take my hat off to james. i think this is a smart move and i think it is entirely consistent with his vision >> so if you're interactive brokers or a robin hood gets mentioned can you be an independent broker now with this fee war and as, you know, the other two have teamed up and now

morgan stanley buys etrade are they just going to get bought as well >> i don't know the answer to that, sara but i think if you think about why etrade did this and i'm not privy to their thinking, you do say to yourself as people are reporting this morning, they took a look at the schwab, td ameri trade combination and the giant that created and probably concluded the competitive landscape had changed. it was going to be more challenging. and that scale and reach was more important after that other combination than it had been in their view therefore, for them, morgan stanley makes a lot of sense and a stock for stock transaction makes particular sense from their point of view of you believe in gorman's vision >> and you do believe in it. obviously you run or started a firm that is focused on a very different part of things >> yes, but we're much smaller >> much smaller. you give advice. you do have capital markets operation. >> though just on an agency basis not a principal basis.

but morgan stanley is a much bigger firm. >> i understand that but the vision itself, the idea of being able to continue to grow as a result of wealth management, investment management, becoming a more and more important part of your overall company, as opposed to focusing on the securities and giving advice and doing deals. >> well, morgan stanley may feel, goldman sachs may feel that they're now of a size and the pressure on them to grow is such that relying just on what you might call the older businesses just isn't going to generate enough growth for them, given their size for us, it works beautifully, frankly. but they're just different animals and, you know, i think goldman sachs has off the top of my head, i might be wrong on this, about 25,000 employees we have 1900 so obviously the equations are really very different. >> still wide open field i'm curious, roger, we always like to talk about m & a overall. today this deal for a particular reason at a particular time, yesterday or the other day,

mason asset management deal, overall what is your sense the coronavirus getting in the way of anybody making decisions right now, the looming election? or are we going to continue to see announcements? >> so far so good. there have been five announcements in the past 72 or 96 hours mason is one of them this is another one. i think global deal flow not just ours is really quite healthy because the fundamentals are healthy. now as we get closer to the election, will there be some i'm not aware of any transactions being canceled or delayed because of the coronavirus but that may be the case i'm just not aware of it i would say the environment right now is really very healthy. and when you think about the continued monetary ease that's going on around the world, now china obviously for obvious reasons is doing that, it's keeping equity valuations high and there's no greater incentive

to think externally than very high equity valuations maybe theoretically thinking of warren buffet it should be the opposite but it isn't. >> you mentioned the election of course as a long-time democrat i'm curious as to what your thoughts were last night as you watched some pretty nasty sparring amongst the candidates and certainly our former mayor mr. bloomberg took it pretty tough >> well, it was the first really feisty and, you know, rock 'em sock 'em debate. the others have been tame and really not all that interesting. so i thought it was fascinating. sara and i were talking before, you know, coming on, about, she said she couldn't take her eyes off it i agree. i couldn't either. i think the -- on the other hand, it's ironic to me that nobody laid a glove on bernie. i just don't quite understand that because the task of laying a glove on bernie is pretty easy >> how would you do it

>> well, you simply say, number one, if you have employer provided health insurance which 149 million americans do, you will lose it if you want to decriminalize the southern border, if you're crossing illegally you get a traffic ticket, he's your man. and he thinks that everyone who is currently in prison in the united states should have the right to vote. and, ladies and gentlemen, something like 10% of americans agree with those three positions. so if you think bernie sanders is going to defeat donald trump, you better think again nobody does that i'm sure there are better ways i'm not a political insider. james carville for example is great at it. >> the carville/sanders thing last week was crazy. you think the market narrative they are rooting for his nomination so he can get creamed in the general is the right take >> well, we've all seen strange things in politics and to be

honest my background of predictions is unblemished by much success you have to say to yourself, bernie would have a very difficult time beating trump let me give you a small example, neither here nor there but i happen to have a lot of involvement in a big voter registration project in florida. bernie could no more win florida than i could win florida because the socialist label in florida given all of the immigrants and so many, you know, from puerto ricoans to venezuelans to cubans and so forth is death let alone in so many other parts of the battleground states. so maybe magic will happen and bernie will defeat donald trump and be the next president but i think you'd have to say it's illogical. and so the biggest winner last night was donald trump by far and i think he's radiating that. you watch any of his rally in arizona, i think he is radiating that he's reflecting a lot of confidence and whatever you think of donald

trump, he's good at the art of campaigning. he really is so he's tough to beat no matter who the nominee is but if you think bernie is going to be the person to beat him, hum, i think you have to be skeptical about that it is not clear bernie is going to be the nominee. in fact, one of the most interesting things you can take away from last night is that no one is likely to get an outright majority of the delegates before the -- when the primaries end. no one part of that is the crowded field. part of that is the apportionment system in terms of delegate awarding, no winner take all states and so forth and so that sets up a fascinating and very difficult dynamic. bernie probably has a plurality when the priorities end but not a majority does that mean that the other moderates and there's a whole bunch of them. biden, klobuchar >> not warren. >> the bernie -- they will not be happy if he goes into the convention >> there was a question last night do you think a person with

a plurality even if it is not a majority at the end of the primary should be the nominee? everybody said no and bernie said yes for obvious reasons because he is an elite >> you have any thoughts on -- so you think it goes to a broker convention >> i think no candidate, let's be very careful about our terms. no candidate if you had to project it now looks as though they will have an outright majority which is 1990 delegates i believe by the time the primaries end. now, there's a whole bunch of time between the end of the primaries and the convention a couple of months so whether you actually get to the convention without a nominee or whether there is a brokered agreement well before the convention, i don't know i think it's a little hard to imagine that you go into a free for all convention but maybe so the period between the end of the primaries and the opening of the convention is going to be fascinating. there could be a lot of efforts at deal making i don't know what'll happen.

but, you know, the question will be, what did the moderates do? do they all get behind one candidate and urge their delegates to support that one candidate or how does that work? so i don't know about the convention, itself, but we're headed for a period or an outcome where no candidate, unlike the last 20 or 30 years, has a majority at the end of the primary. >> two months ago we thought warren was going to have it in the bag. so things change quickly >> she had a good night last night. give her credit. she was ready, loaded for bear >> from the get-go >> from the get-go, right. i thought she was going to punch bloomberg right in the face. >> roger, thanks >> my pleasure >> roger altman. still to come don't miss the ceo of l' oreal joining us on set talking virus concerns, the state of the consumer, and his business

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welcome back here is your cnbc news update this hour. roger stone arriving at court for sentencing on his convictions for witness tampering and lying to congress. it comes amidst a political firestorm set off by president trump calling for a light sentence for his former campaign adviser. police investigatin the city in

that left nine people dead the alleged gunman and his ome.ear-old mother were found the german chancellor angela merkel says multiple clues indicate the attacks were driven by right wing extremism and racist motives secretary of state mike pompeo meeting with the saudi king salman. topping the agenda regional security concerns especial with iran and pompeo also saying he'll bring up human rights in the cases of dual saudi/american citizens imprisoned or barred from traveling abroad. a bus collided with a truck killing at least 19 and injuring 23 others in southern india. the local official says the truck entered the wrong lane, causing the head on collision. that is our cnbc news update back to you. >> thank you want to take a look at shares of viacomcbs, off the lows, stock had been down as much as 18.5%, i think very close to 29 overall. you can still see of course a toll being taken on the market

value of this company. a significant one of course. this is set for reported fourth quarter 2019 earnings, below the estimates on virtually every line in terms of revenues, operating income, earnings per share, and the like. it's also the guidance that has got the attention of investors and by the way those investors i discussed earlier, number a lot of the bigger, value names we think about. glenview, capital management as well amongst the largest holders here it has become a value player over time as the share price has fallen and of course the multiple along with it but those share holders who moved in not being rewarded at all and the guidance also has some people fleeing investors at least the stock today. looking at 1.8 and 2 billion for free cash flow for20 they did $1.2 billion in actual free cash flow that does not include some of the restructuring charges and the like as well

that number on the right is below what a lot of analysts anticipated would be the precash flow number for the company this year a lot of investors like to measure the company by the precash flow and the multiple thereof at an $18 billion value you can see things trading roughly nine times if they come in at that number but there is doubt about that as well now, they are talking about a significant ramp in free cash flow into 2021 of an additional $500 million and also more synergies from the union of viacom and cbs. originally targeted $500 million now saying it is up to $750 million so an additional 250 million in expected synergies. the ad business not bad. up fronts look okay. the overall number of available homes continues to shrink for all cable networks and of course that's been a continued concern of viacom shareholders for sometime the nfl contract looms that is yet another concern in terms of what it will cost and whether they will keep it.

so important it would seem for viewers of cbs, sara overall, they are actually having a lot of investors over today to viacom's headquarters on broadway later this morning are going to have a lot to answer for >> they also talked about the streaming plans which i find a little confusing they have three streaming services at different price points how does that work >> yeah. they haven't given us absolute details but they are saying what a differentiated approach that builds on their unique foundation in streaming as you say they have all access they have pluto. they've got something yet to come go to market strategy. it also includes partnerships with traditional and new distributors by the way, though, they are also a provider, an arms dealer to anumber of the other big streaming services so it is not as though they're going to be providing or creating content only for their own platform, which is more of the strategy at time warner and disney, obviously their

platform well hbo max -- >> brutal move on the shares today. as we head to break look at the shares of l brands the company selling a 55% stake in victoria's secret to sycamore partners valuing it at $1.1 billion les wexner stepping down from his role as chairmannstions clod the stock has turned positive. ( ♪ ) - [narrator] at southern new hampshire university we're committed to making college more accessible by making it more affordable. that's why we're keeping our tuition the same for all online and campus programs through the year 2021. - [woman] i knew snhu was the place for me when i saw how affordable it was.

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welcome back to "squawk on the street." a fiery democratic debate last night in las vegas we have some of the key moments. kayla? >> reporter: david, it was two hours of straight fire with many of the six candidates sensing their window to make an impact on the race might be closing senator elizabeth warren specifically launched strategic fire on mike bloomberg who fielded questions on everything from his wealth, his taxes, and he endured this withering

exchange on nondisclosure agreements inked with female employees alleging mistreatment. >> we have a very few nondisclosure agraemts >> how many is that? >> let me finish >> how many is that? >> none of them accuse me of doing anything other than maybe they didn't like a joke i told and let me just -- there are agreements between two parties that wanted to keep it quiet and that's up to them. they signed those agreements and we'll live with it >> so wait when you say it is up to -- i just want to be clear. some is how many and when you -- when you say they signed them, and they wanted them if they wish now to speak out and tell their side of the story about what it is they alleged that's now okay with you? you're releasing them on television tonight >> senator -- >> is that right >> reporter: in the wake of that warren's fundraising erupted and

bloomberg's campaign recoiled issuing a statement saying he was just warming up tonight. we fully expect mike will continue to build on tonight's performance when he appears on the stage in south carolina next tuesday. the campaign suggests that bloomberg was an effective spoil against senator bernie sanders with bloomberg arguing that sanders' wealth undercuts his policy views >> what a wonderful country we have the best known socialist in the country happens to be a millionaire with three houses. what did i miss here >> well, you missed that i work in washington. >> that's the first problem. >> work in burlington. house two. >> that's good >> like thousands of other vermonters i have a summer cabin. forgive me for that. >> reporter: it wasn't all bad gnaws for bloomberg. worth noting he did bring in three new endorsements this morning in the wake of the debate from three democratic lawmakers and also we should note that the three other moderates, biden, buttigieg, klobuchar also came out swinging, understanding that voters are going to want to

consolidate and gather around a candidate in that lane in the coming weeks though bernie sanders the front-runner in this race emerged relatively unscathed he wore the badge of socialist and corporate crusader proudly throughout the evening guys >> wow something roger altman was just commenting on a moment ago, kayla. thank you for that our kayla tausche in las vegas up next do not miss the ceo of l' oreal on the state of the consumer and impact of the coronavirus on his company's quk t smoe and a lot re "sawonhetreet" continues in a moment. pping and shouting] [cymbals clanging] [knocking] room for seven. and much, much more. the first-ever glb. lease the glb 250 suv for just $419 a month at your local mercedes-benz dealer.

some of the highest dividend paying stocks are performing the worst. is the hunt for yield worth the cost find out more on cnbc.com. more "squawk on the street" coming up.

( ♪ ) the world health organization reporting moments ago it is encouraged by a new trend in coronavirus cases in china and says it expects

results from clinical tests for treatments in three weeks. as the number of cases near 75,000 with 2,000 desks global corporations are figuring in the impact the ceo of l'oreal addressed the issue in this month's earnings release saying, quote, the experiences we've had with similar situations in the past show after a perios stronger than before joining us now is the chairman and ceo of l'oreal who will be presenting at the consumer analyst group of new york tomorrow morning joining us here first. nice to see you. >> good morning. >> first on the coronavirus, you have 12,000 people in china. what update can you provide on how many are back to work and how disrupted your operations are there? >> the good news is that they are all safe and healthy so that is great and our offices started again last monday and day after day we have more people coming

to the office. and what we know today is that our online sales are very good pretty strong. and that the department stores are opening again more and more. so i think that we are going the right direction. >> how slow has consumption gotten in china? >> many stores were closed they were closed for oneweek during the vacation and they stayed closed for another week after. but now they are opening again so i think we'll see a progressive ramp up opening of stores, consumption. it will come >> what makes you think it'll actually come back even stronger do you think people are really going to delay those decisions to buy extra makeup and skin care and they'll double down >> that's what we've seen in the past i remember in 2003 there was the sars epidemic and then the mers epidemic in 2015 and what we saw was there was a drop obviously

for a while. temporary drop and after that, when consumers were back in stores, both in asia or in retail, consumption was even stronger like a bounceback of consumption. >> what about supply how much of your production actually happens in china? >> in fact the way we are organized is that most of the production we do in china is for china. so it doesn't really impact the rest of the world. it's not like some other companies where the supply chain goes through china for everything and already one of our factories is open and running very well. and the other one will probably open in the next ten days or two weeks. >> so you sound pretty optimistic though you're coming off of a period where asia pacific i think saw 25% same store sales can you really keep up the double digit growth in this environment? >> yeah.

you know, for -- as we said, there is an impact clearly first and foremost let's not forget it is first a human tragedy. you know, people are suffering and dying. so it's, the human factor is the most important first but then of course this is impacting but it will have an end. it will probably finish in the next weeks or months and then life goes on again, as i told you before, what we have seen is it comes back pretty strongly >> have you seen an effect outside of china i know travel retail is really big for you. estee lauder is huge what are you seeing in terms of traffic and buying outside of china and around tourism >> it is mostly airports -- obviously people,chinese peopl don't travel for the moment. and that will again impact the next few weeks but after that again i think it will come back. >> is there a sense the rebound will make up for lost sales or

are those sales lost for good? and the rest is just trying to get back to trend? >> it is very difficult to predict. if we look back at 2003 the rebound was so strong that it made up for the lost sales will it happen also? i don't know definitely again the impact will happen, but i think what we should not forget is that in the mid and long term the perspective we are in china, in asia, are extremely strong and i don't think that this will disturb the trajectory >> is there any reason to think, i mean, whether it's a fact this virus came about, the response to the virus, does it change your secular view about china as a growth market? >> not at all. not at all you know, i think that china, the chinese economy is here to stay the china market is here to stay it's growing year after year

this is of course an unfortunate episode in the long story of the china growth i'm very confident. i know this country well i've been there 60 times i started the subsidiary myself in 1997. we have a great team there i am very confident that in the long term it would continue to grow and become one of the first markets in the world if not the number one market. >> you mentioned you'll be with investors tomorrow at a big conference pg&e was there today and did warn on coronavirus. since you are here first what are you going to be telling investors tomorrow >> i'm going to be telling investors what they already know, that the middle term and long term view on the beauty market and l'oreal as champion of the beauty market is a very positive one we are very confident. we are getting market shares we are strengthening our leadership position everywhere so no problem. >> what about north america? that has been a problem.

you haven't seen growth there at a time where china is slowing down should investors worry that it's hard to make up here >> the long term, it was not a problem because we started from scratch here 50 years ago. we are number one today in america, twice the size of the second leader. other years we get a bit less. last year was not the best year we had, but we are very confident. we have a very motivated team and, you know, i just renewed a plan this week with a team in new york and we are very confident that we're going to bounce back also here in the u.s. >> is it the category that's week in the u.s. or a specific l'oreal problem with your brands >> the market was a bit weak on makeup there has been a boom in makeup for past five years, a huge boom, and obviously this has slowed down a little bit the skill care categories are accelerating because we were so strong on

makeup, overweight in the makeup, it was a bit adverse for us, but now we are back on a good dynamic >> a question you're sure to get involves nestle's ownership. you said a number of times l'oreal stands ready to buy that 22%, 23% stake any word from nestle at all? anything advancing >> the last words i heard from nestle they were very happy with having their 23% at l'oreal and they can be because the stock price has been multipled by three to four times in the past ten years, so i think they made a very good investment and they are very happy with it nothing else >> nothing else. they had been under pressure in the past to potentially sell given the amount of cash that would be available to them to use for different acquisitions and/or moving in different directions >> again, they are pretty happy.

the ceo said it was one part of the company that he really liked very much too. so he's happy with that. >> so you mentioned this interesting trend happening right now where skin care is very strong and makeup is not so hot. why do you think that is ole announced yesterday it won't be retouching its ads. this sort of trend toward natural beauty, is that what's happening? >> i've been in this company and business for 40 years, so i have a little experience and i know there are cycles especially makeup, you have cycles, four or five years of boom and it slows down and is a bit more quiet and it stards today. the trend today is more about natural look you know that very well because you probably were using -- >> i use a lot of makeup >> putting makeup on the other moment >> still on contour. >> on tv if you want to look natural you need a lot of makeup

>> true. >> that natural look doesn't mean no makeup >> john paul, thank you for coming by. >> thank you very much >> "squawk on the street" is back after this. the lexus nx. modern utility for modern obstacles. lease the 2020 nx 300 for $359 a month for 36 months. experience amazing at your lexus dealer. lease the 2020 nx 300 for $359 a month for 36 months. ♪you got to ac-cent-tchu-ate the positive♪ ♪ e-lim-i-nate the negative "slow it down a little" ♪ and latch on to the affirmative ♪ "it's okay" ♪ but don't mess with mister inbetween ♪ we segetting to patientscines in record time. at emerson, when issues become inspiration,

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as we wrap up things here, time to turn to sara and ask what's coming up on the excite, thrilling "the closing bell. >> jim koch is coming on, bos to tn beer company's chairman and co-founder they came out with founders, truly a success, triple-digit growth at the expense of margins but it's been an overwhelming success that speaks to the trend of hard seltzer. you and i haven't gone there but carl's a fan >> seltzer in general, which is -- i think it's 5% of the category now, the beer category, going to 12%, they say it's not a fad >> no. that ice's a big part of the sty we'll talk about that. >> david, see you later. after the break, former wells ceo weighs in. edge-to-edge inte gives you the power to see every corner of your growing business.

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♪ >> good thursday morning welcome to "squawk alley." i'm carl quintanilla with morgan brennan and jon fortt at post 9 of the new york stock exchange we're going to start today with morgan stanley's