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. ♪ ♪ tonight you're gonna get your time to shine ♪ good friday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. coming off thursday's drop, futures suggest the dow and s&p may see their first weekly decline in three weeks, maybe the nasdaq, too. pmis in europe were good we'll see the u.s. number in about 45 minutes ten-year below 1.48, even as gold now approaches 1650 road map begins with the coronavirus risk for stocks. futures lower, coke, daimler and

others warnings of continued outbreak headwinds plus mobile merger revision, why softbank is cutting its stake in the overall company that will be created between sprint and t-mobile, and why it's so much more likely to happen and shares of deere are up, reporting abunexpected rise in profits, shows an early sign of stabilization for the farm sector coronavirus worries putting stocks on track for a negative week there's a spike in new cases both in and outside of china you got coca-cola joining the list of companies impacted by the outbreak, saying it expects it will cut quarter earnings by one to two cents a share they coupled that with a 2.5% div hike and we heard from lulu, daimler and others as the list is getting longer and will get longer from here >> one of the things people took the cue was from proctor said it was going to hurt us,

the stock was up and climbed form the rest of the sector. why don't we tell the truth? a little too premature, they all presume it will be solved within a foreseeable time frame the medical professionals are not saying that. you've got companies that are, make carbonated water and shampoo, and they're making the judgments. i don't buy it >> do we know whether -- you say the med ral professiical profese not certain. they don't know or believe it will spread. >> they believe it will spread >> and it won't just die in may and go away? >> what is it like sell in may it's a disease it's not a stock market. >> yeah, but the warm weather is expected >> fauci is no longer, dr. fauci is not saying it will stop in april, and i think that what

these guys are like betting on april to stop and i think they're also not counting on like what happened in korea yesterday. >> the kospi is, has tumbled this week as the number of caseloads there obviously a low number >> right >> up six-fold in three days >> yes, so people are starting to say you can't control it. we have a hard stop from people from china we do not have a hard stop from people coming from korea >> and japan has a few more people as well now >> they do >> it's being contained it would seem but when you start to hear concerns about the olympics. >> london saying we're ready to host >> really? just as a -- >> yes >> what they've done in tokyo is incredible >> gdp down 6 in q4. pmis, 47.6, ten straight months of contraction >> when they canceled the cell phone conference in spain,

people understand, that's where business gets done i mean, cutting numbers, cell phones we are -- i think we're whistling past some of a very difficult graveyard, which is dollar up really huge, hurt earnings, okay lots of places where you can't gather for trade it just comes out to be that there's just, you can't buy everything through zoom technologies, so i just think we're a little too bullish i'm not saying that because we're a little too backish >> what about the notion that if there's really global turmoil, all the money comes here >> okay. where? does it come in bonds? bonds are below 1.5. the money seems to always try to find the thing that doesn't make any money for them i remember when i wrote my first check, pay me this i was like darn, i'm not making any money on my checking account. i can buy a cd it does come here. it does come here but it's got

to be with companies that have yields that are not hurt i've been working on the drug side because they seem to be right. i find out that 80% of our pills or at least the ingredients originate in china there are 48 plants in the province that's got cordoned off. are they going to be able to deliver us what we want? >> now you're getting into the inflationary aspect of all of this >> yes >> reuters with the story about suppliers to deere and cat having to turn to domestic supply for 40% more and they're going to pass that on. we'll see if deere addresses that in the call >> deere like the quarter was, i know the stock is up and i know the bar was good but if you go through the deck, almost everything is bad. the gross margins were good. that's not necessarily how we want the company to make its quarter. also there's a line about farmers get money. it's an election year.

bloomberg have money >> he'll give anybody money. >> he'll give anybody money? you sound a little chagrinned today. >> i do? why? >> it's a tv show. >> i'm listening i only interject when there's something worth saying >> what are you, at the club you're at the club >> i am your rich uncle at the club >> what kind of -- you're my auntie >> have a couple of, what do you drink at the club? >> i don't know. i don't drink. >> what do you drink at the club >> mets cup. it's hard to take david seriously. i'll going to address you. >> guys, keep doing this every friday, go ahead >> the ceo of domino's talked about it with jim last night on "mad money." >> the theme on the ground in an effort to look out for the safety of our team members and our customers have put protocols in place for us to safely

deliver pizzas to the customers in china, without a lot of direct contact with one another, and as you said, jim, really first and foremost, at this point in time, it's not sales. it's not store openings that we're concerned about. 'about the safety of our customers and our team members >> that stock was up 75 yesterday. a lot of people were short it. there are some people at various publications who said it will blow the quarter rich did a great job i think that what we're getting is what dr. mark bristow predicted, doing a great job where the ebola was raging where he was mining for gold in africa and he just said first of all, jim, don't be a sissy. always aggravated me he called me a sissy bus that he' okay because i'm jimmy chill. he said you just don't shake hands. you never shake hands. that's apt >> try doing that during the course of your day and frankly, we have people who know, they

want to come up to you, they say hello to you try to just say no, i can't shake your hand. >> we had one guest i will not name him said listen i don't want to shake your hand. i said okay. >> we could change the way that we go about doing it i've said that, this, this >> taiwan will get it. >> even the bowing >> a bowing? >> a bow to you. >> have you stopped shaking hands? >> yes but you know me. i was first in wiping down this desk every morning now we all do it >> i've taken my cue from you. >> that's true >> and i'm anxious not to shake people's hands i have a mask here >> could literally save lives not shaking hands. wasn't it done to show you didn't have a weapon we don't have weapons. >> it's weird to do the elbow thing. >> not armed >> i got guests and all the guests want to shake my hand at the end of the interview because it looks like that i like them i'm not, with the exception of, you know, there's one company i

wouldn't shake hands with even before the virus, you know what that is, but -- >> everybody knows which company you're talking about >> i am struggling, i want everyone at home to know i don't want to shake anybody's hand >> the three stooges used to do, let's do that. >> boom! >> do not miss our special report on the outbreak tonight 7:00 p.m. eastern, not a laughing matter, trying to wrap up the headlines of the day on cnbc david? >> let's talk about sprint and t-mobile the two companies are on the verge of getting this deal con, a deal announced almost two years ago in late april it was of 2018. they are now targeting april 1st perhaps as the day which they'll be able to close the transaction. remember of course we got the all-important judgment from judge marrero earlier last week that allowed the deal to continue to move forward saying

to the state ags, you don't have a case the companies i believe will be pro-competitive getting together and yesterday we can tell you as well of course it's been reported that they agreed to a new deal remember i've been saying for months to expect once and if they got the approval from judge marrero or he ruled in their favor that t-mobile and its parent deutsche telecom would be pushing for a reduction in the price. that happened. it wasn't a particularly onerous, and it is borne entirely by softbank softbank owns, what, 83% or so, somewhere in there of sprint shares, the remainder is of course public. the public shareholders will continue to get the same ratio, 9.75, sprint shares for each share of t-mobile, but the effective ratio for softbank will be about 11.31. so it will bring the overall number to 11, but they're taking

all the hit in terms of at least the reduction. it amounts to about 48.8 million shares that will be surrendered by softbank essentially. they do have a provision in this that says if t-mobile shares maintain a certain price after the deal, and this will be measured sometime after they actually will have a make good and get those shares back in the combined company >> sheesh. >> what it does in effect is allow the deal to happen we're waiting for the california publicutility commission to rule i am told they're going to wait. they're going to try to wait, not going to close it in the face of a waiting of the ruling from the puc in california that's about it, all that stands in the way at this point the renegotiation is done. april 1 is the target date and guys, then we'll really be talking about a significant change in the wireless market in this country, what the competitive effects will be. dish will be off to the races, of course, in its efforts to

become a real player nationally in wireless. so many different things this was the key, final key hurdle perhaps, california puc notwithstanding. >> let me ask you a question i spoke at length with dan hessy, former ceo of sprint. why is he not getting credit for saving this company? why did we not hear? he saved sprint. >> dan hessy >> yes, he did >> okay. >> but there's not a plaque. >> was it really saved >> yes, it was at $2 he came on "mad money" i said this company is going bankrupt you are going -- >> this is you talking. >> two bucks, you're going to file for bankruptcy and he said absolutely not this company is a buy. the shares are a buy why does he not get any credit >> well you're giving him credit right now. >> that's all i wanted to do because look at what was kind of a five-bagger if you listened to dan hessy. >> at that point how many years ago, that's a long time? >> it was done the same weekend

the hostile. >> for t-mobile. >> for t-mobile. >> that's 2011, isn't it nine years ago >> in dog years. >> that's a long time. >> i just think it's important to give credit to people who saved that company dan hessy saved it >> remember, of course, it was the sprint nextel deal which almost doomed it >> not that good >> right up there of the worst deals of all-time, aol, time warner, sprint/nextel, monsanto/bayer >> i thought it was important to pint out someone kind of a hero of mine, kansas city, family guy, a lot of kids go to notre dame, just a good man, all right? >> okay. >> i thought it was worth it it's not like, i know he's going to hit impact hp and say things that are somewhat negative >> negative on who >> come on, you're going to be

negative you hate poison pills. >> i am known for hating poison pills? >> you are >> interfere in the governance of corporations in an effective way? we'll talk about that, a lot of m&a tactics that are interesting going on at hp xerox i want to get your full take on it, jim. >> you got it. i've been working on it. >> we'll get to other movers today including slack, call on chewy and a bunch more cramer's "mad dash" and the opening bell in about 16 minutes. don't go away. ♪ yes i'm stuck in the middle with you, ♪ no one likes to feel stuck, boxed in, or held back. especially by something like your cloud. it's a problem. but the ibm cloud is different. it's the most open and secure public cloud for business. it can manage all your apps and data from anywhere.

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welcome back let's get to the "mad dash" as we get ready for the opening bell on friday, about 13 minutes from now we'll start trading chewy is a name you want to discuss. >> rbc capital comes out and says yes, this dog can hunt. that's not the only reason i like the beast it talks about a profitability inflection fiscal year '20, that would be something this is a very fast-growing company. favorable risk/reward.

anybody who uses chewy knows the service is extraordinary it's a subscription business which i happen to -- i love subscription business. it's very satisfying for dog owners and you know what they're talking about the private -- fastest growing vertical is pharmacy anybody who also knows when you have dogs, and we have a dog with a cough right now, nvidia has a cough. we have to flood nvidia with at buy antibiotics. >> you get everything from chewy? >> some. they send us lice pictures of our dogs they tell you the dog's birthday >> amazon? >> no. you do dog food chewy. furniture you go to amazon judging from that wayfair layoff >> wayfair they have a production issue, right? >> i don't know, david but i can tell you that this one is headed higher >> chewy is headed higher. >> chewy is a real subscription business >> got it.

>> you have a dog. what's its name? >> scoop >> oh, like you, you scoop -- oh oh it's cool, man how about purse sources. is that your second? >> one dog, scoop the one and only a lot to get to. we'll talk about hp and xerox and look at viacom day two after that hellacious beating. stick around of course watch us live on the go on the cnbc app imagine traveling hassle-free with your golf clubs. now you can, with shipsticks.com! 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.

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the opening bell is brought to you by nuveen, a leader on income, alternatives and responsible investing. >> you're watching cnbc's "squawk on the street" live from the financial capital of the world. the opening bell in about five minutes as we close out what's been another although short, crazy week of coronavirus headlines. jim, some of the metrics coming out of china, the passenger car association. first two weeks of february cars down 92%, in the first week down 6%. >> a lot of companies are really -- there's a lot of people who feel this will end very soon and i think the revisions down, illinois toolworks hit an all-time high they have a lot of auto. people don't care. >> investors don't care. they talked about the chinese economy especially having been closed for a couple of weeks and barely reopened for sometime

therefore. don't care >> people don't care >> when do they care i don't know don't ask me >> it's unlike, it's uncharacteristic that people don't care about numbers coming down uncharacteristic >> they think this will be contained. >> yes and they'll have sold their own tool >> demand will return. they look at history and that's what it has shown. >> i talk to the robin hood types and they say jim, what have you taught us they always come back. i have never said -- no, you always said they come back they don't necessarily come back i know younger people who own galactic of battle virgin and they are like i'm up 100%. what do you know about stocks? only time i heard was 1999 for a long time i looked like i was foolish. >> it's funny you mention that,

bloomberg has a piece out this morning about i'll read the headline, mom and pop are on an epic stock buying spree fueled by free trades >> yes >> on the heels of the e*trade morgan stanley >> people do not understand. >> we're in that period. >> we keep hearing all people do is index fund. that is wrong. that's brain wash. people are also buying -- look, i had a very smart guy come to me and say how could i lose money on gme on gamestop, how could i lose money? you could lose all your money. well, no, how could i lose money? >> if we're back to this jds uni phase era. >> just don't sell us, jdsu. >> the difference is going to be what, profitability? >> i don't know. it's index funds and if people don't use margin it may not go down that much because they might just say you know what it's going to come back. >> it's also easier to say it's going to come back when the

ten-year is 1.5 or less. >> not 7 or 6. >> you go to cash only to realize -- >> you feel like such a chump in cash >> let answer not forget the bull market in bonds has been a what 30-year plus market if you invested in bonds you've done very well >> what is our job to say you know what? slack is up because they got an uber deal, you should sell slack? >> that is the story out this morning. "business siinsider" says uber moving all 38,000 employees to slack which faced increasing competition from microsoft so it's up >> i know. >> we're in an era of rewarding large contracts. >> yes we are. when i got in the business, used to be this, there was a machine where you could get the quotes at grand central, right there, merrill lynch machine and every time even a military contract, raytheon will win something. buy raytheon the numbers would come out on friday, rigs are up.

go buy halliburton it worked like that and we got algo and post algo like post expressionism. >> i like post expressionism >> do you? campbell's soup cans >> yes wish i bought them in 1963 >> i wish i did. how about a mare lon shot red? i wouldn't be working. >> i like slack. >> how about tesla coming back tesla is up 40 points the last hour of trading? this is the sign that they know more than we do. when i meet younger people, they instinctively know more than i do they say you know, you're too old. you don't understand stocks go higher >> i see so we definitely need a sarcasm. >> i know. jimmy chill just says all right, go on galactic battleship

virgin, go ahead [ applause ] >> cash is trash cash is trash. >> i kind of like some cash. i like some gold [ bell ringing ] i like some gold, david. put a lot of ties in my trarn. >> opening bell at the s&p 500 and the big board is dny technology group celebrating the first day of trading at the nasdaq, duos technology group, a provider of intelligent analytical technology solutions. >> the market is all red did millenials come in and say go to james gorman and say what should i buy gorman now runs e*trade. >> not yet it hasn't clicked. >> no, but mr. gorman, you mind if i buy some stock? mr. gorman, what do you think? do you think it's going to be like that? >> no, i don't no e*trade will be a unit of morgan

stanley but it is an interesting culture. >> it was a sentimental deal and we can't let it just stop. let's talk about that deal e*trade is an upstart culture from the days when it starts it has always been a rebel morgan stanley -- a rebel without a cause, by the way. morgan stanley is as -- i remember when i went into morgan stanley the first time i shined my shoes i heard it was white shoe. i didn't have white shoe but i had port-a-advanvance. i knew i was out of my element morgan stanley >> that's a long time ago. >> i know. >> dean whiter >> it was unfortunate, sears >> didn't work necessarily >> morgan stanley is -- well goldman is doing, i don't know, spinning disks over there. i thought that morgan stanley and e*trade is an odd couple

>> well, there's some good pieces out this morning sort of framing the deal yields are structurally depressed around the world >> right >> programmatic trading has altered the brokerage business zero commissions, altered the trading business and so everyone's going to chase the consumer everyone where else would you go? >> he's created james told me created a gorilla, the technology is good across both platforms. i believe in the deal. but i think it's, everything is robin hood the darned robin hood. when they passed $10 million, that's almost twice e*trade. >> 10 million accounts >> 10 million accounts they buy single digit, because they buy ford, they buy a lot of ford they don't like to buy, you know, amazon >> they like to buy tesla, that's $910 a share.

>> we don't care to them enough. i tried to on "mad money" but they trade like ten different stocks >> your whole show at night is based around educating retail investors around single stocks >> yes, i don't want them to lose money if i had my show in 1999, i think i could have stopped what happened in 2000 >> no, you couldn't. >> yes, i could have >> no, you couldn't. >> i could do anything you do, wow, better. >> no you can't. >> yes i can >> no, you can't >> when the broadway stuff comes up it's my favorite. there is a look at breadth which is negative, on the dow two stocks up, mcdonald's and travelers. exxon and microsoft will lead you lower. >> people are thinking that the strength in dropbox shows that microsoft is vulnerable. dropbox had good margins, dropbox going against microsoft. betting against satya in a tell nadella is not a good idea

people say dropbox they're vulnerable they're not vulnerable that's wrong people feel crowdstrike is vulnerable because of the z scaler >> apple shares are barely down. in fact they were green for a moment there, down 15 cents on a $320 stock price it's still up 9% for the year. >> okay. >> that's all you have to say? >> that's all you have to say? >> kind of giving it to you guys to bat around a bit, give me your thoughts. >> tim cook immunized it, the first to say i don't know what the downside is going to be. >> that's how we started this week >> yes, and people didn't go out and blow it out because people are convinced that this is going to be like ebola, like sars, like mers. it will be solved. when i speak to drug companies and i speak to the ceos of drug companies, no one has anything really confident people are saying we don't have it, it's hard keeps morphing

>> china's adjusted the number of cases three times this month alone, so that's thrown their legitimacy of data into question and chinese said "it will be eradicated in a month's time, we will win a complete victory" was the quote. >> "complete victory," okay. look, i want -- you know i search every night, it drives my wife crazy i go to every one of the sites, i go to the lancet, the cdc and the whamma jamma and go to my interests and great guys who are involved the fauci types i keep hoping to hear something good no one will give me anything good i'm d i'm begging for it david, it's on a podcast you have to do something other than nodding your head.

>> oh, nodding my head >> are you antagonizing me i'm going to the stock -- >> if you go there i'm leaving >> down another 1.7% >> you're going there? >> yes, of course i am we need to discuss what happened to viacom yesterday. >> wall of shame did you read the sales reports even more negative mafia nathan your friend >> bob backish welcomed a number of investors redstone give us time, patience, you guys are overreacting. i'm not sure how that was taken. i am paraphrasing based on people who were there telling me >> saying this wasn't a real quarter once they get together >> sort of trying to -- >> sonic the hedgehog. >> it was an overreaction on the part of the selling. receipts down again. listen >> i'm listening >> these are some of the questions. the direct to consumer, isn't it somewhat murky, some say

what's the value proposition there when you're selling some of your shows, like spongebob to other streaming outlets, what's the value proposition in terms of what you're offering there in the so-called house of brands. >> house of brands >> questioning the efficiency of the business model the key thing as well was at fill yapt the affiliates they included reverse comp. and eps. when you broke it out it was down 8%. we know that this because the available universe homes for cable is down 8% that was troublesome to some and always the case questioned some of the deals that had been done in terms of re-upping with the big cable companies, what really were the economics of the deals. >> write-off, david. >> we talked about the nfl but you get questions 2 billion in adjusted free cash flow for this year going up. when the deal was getting done,

they were talking about $3 billion. so now they're talking about $2 billion and then it's on a $30 billion revenue base, and so on an earnings base, yes, it is cheap which is why you had so many value investors move into this stock but on an adjusted free cash flow basis, obviously growing dramatically >> 18 billion in debt. >> a good amount of debt, owe $5 million in dividends every year to national amusements, something approaching that by contrast for example discovery has 11 billion in revenues and 3 plus billion in free cash flow it's interesting >> they talked about doing opportunisti opportunistic. they did buy stock back but i read that david -- >> this is when negativity crests and everybody has terrible things to say and we move on >> that's your hope. your hope is it can't be worse but there's greenfield on the conference call says listen, not

going to be able to get carriage because disney plus is doing so well against your programming, nickelodeon. you have people obviously saying they can't get the nfl deal even though they have great relations with the nfl write-off was miserable. >> the economics, what it will do to free cash flow >> pluto >> pluto, dopey, right >> are you going to, you didn't bring back the wall of shame last night >> i said if this win doesn't come back up the wall of shame will be activated. it was not pleasant. i lost my temper last night. i know that. my executive producer regina was quite surprised that i was as upset. i hurt my travel trust, i hurt my people, sometimes you just get had. i was wrong. that's it, you're done with that don't want to mortify me >> i'll do a faber report, a

poison pill came late yesterday. hp put a pill in not perhaps unexpected by some, because this is a company without a staggered board. of course just remember 24 bucks is the bid from xerox, challenging all the directors on the board who are up for election, that is the entire board of directors of course on monday, hp will report earnings after the bell. >> yes >> we'll be focused on those, see whether the company gives anything more there in terms of a plan that goes beyond a year or two, unclear exactly what will be offered but there is an expectation perhaps it's going to be more than just a simple earnings on monday but those will be important of course in and of themselves as this battle continues to rage. okay, they put the poison pill in 20% you can't go beyond that why? these guys put the tender in remember now the idea that they were going to get more than 50.1 and be able to close a tender seemed unlikely this does appear still more on

the road toward going toward an actual vote, again we'll see if in fact the companies do choose to engage. there is a belief, however, on the xerox side they don't necessarily at this point have to engage with management, or the board having to engage with the top ten shareholders who could deliver the votes to change the competition to the board and tell them work a deal with them, they find acceptable to get their votes in a coming vote that won't take place until let's call it late april or may. we have a statement from xerox as well on this plan that was put into place by hp in terms of the poison pill. the hp board clearly adopted a poison pill because our offer is receiving overwhelming support from their shareholders regardless of the what the company and the advisers announced monday, along with earnings, we believe hp shareholders appreciate the value we create combining xerox and hp outweighs and incremental

to anything hp it create on its own. we will press ahead with our previously announced tender offer and electing our slate of highly qualified director candidates." i should note of course it's not unusual to put a pill in at all in these situations, happens any number of times. what is somewhat different we used to have staggard boards how this is viewed from a governance perspective when votes come in and those and i and others weigh in on the votes will be interesting. poison pill is not typically well viewed from a governance side of things you got icahn in favor of john byzantine running this combined company, 8% plus holder of hp shares, plays an important role and darwin at xerox who would roll into any deal, i had a statement from him, deason telling me i'm not a seller of xerox, i'm a buyer i don't know taking over

management and driving to these amazing synergies, talking over 2 billion in over 50 years of doing deals i've never seen one more obvious han that. i don't know is the right person to do it it's clear as day to us down here in texas. says darwin deason jim, where are the longs on this i have not spoken to the big guys clearly telling me not on or off the record they are going to be in fave. they've got to win them. if they do, this whole thing could change dramatically. hp does not have the ability to reverse the deal in terms of saying we're going to try and take you over, even if you don't want to, because they missed the nominating deadline to nominate directors from xerox and so it's a very interesting combination >> chairman of levi's? >> certainly he's quoted in the release in favor of putting the pill in. he says the board's focused on

creating long-term value and essential. hp shareholders have sufficient time and full information when considering any tender offer >> weight bearing. >> giving time just in case the tender were to come in and they were able to close around it, get more than 50%. >> let's see the quarter >> businesses having the impact you might have expected. hp is going up on the higher likelihood if this were to get to the finish line xerox would be the buyer in the past so often everybody is expected if they ever sit down they'll reverse it. hp will buy them this is the market saying maybe not as likely as we thought. >> i've got to tell you the debt will be valued at what what kind of debt? >> the companies with a lot of debt do not get great multiples in the stock market. >> maybe that's something individuals would take down, take a lot of risk for yield, reaching for yield i don't like that deal >> guys, we're down 200. 30-year year at aball-time low,

close to 191 and exxon below 60 for the first time since 2010. >> ooh the new tobacco. no one believes me >> seema modi. >> the major averages pulling back once again from record highs. a lot of the cues taken from the bond market. the ten-year yield sinking to its lowest levels of the year. lowest level since september now propping up some of the rate sensitive sectors, utilities right now in the green big question is how much has the coronavirus fears impacted earnings estimates going into this year's profits expected to grow over 6% in the first quarter. today wall street cut that estimate by half to around 3%, weighed down by major cuts in the deep cyclicals like autos and energy the sector arguably hit the most is the cruise lines by the coronavirus fears. norwegian yesterday on its earnings call despite not having exposure to china said that it is canceling all cruises in asia

'til september of this year. you can see all the cruise lines are down on the week take a look at shares of deere up about 8%, biggest earnings beat in nearly three years and it follows positive comments from deere's ceo john may, seeing early signs of stabilization in the u.s. farm sector and says farm confidence though subdued has improved. deere optimism following similar commentary from peers in the agricultural equipment space now the big question is how is coronavirus impacting its global business conference call starts at 10:00 a.m. and i will be on it carl, back to you. >> all right thank you, seema sorry, just looking at these u.s. market pmi numbers. we've been talking about them all morning long not bad in europe, above expectations in some cases but services come in, jim, at 49, sorry, give me a second here but i think it does explain the drop we just saw, 49.4 on services.

>> it's chilling because it really does say the economy is going to be full i think the virus is totally underrated lululemon came out today and said the virus is going to hurt them at what point do we say you know what many, many companies are hurt by the virus, we're paying too much for stocks i don't like monday, i don't like what it will be like monday charitable trust selling i don't like it. >> we'll bet berkshire and buffett. could be a day for it. rick santelli, you're not a huge fan of the market numbers but what have we got today >> yes, no, listen, i'm a fan of markets. i'm a fan of fair price discovery. we'll go into that some other time but this is an historic day on so many levels. the biggest you've been talking about it, here is the 20-year charted 30-year bonds, longest chart we could show you.

will you not find a lower closing yield than 1.95 except for right now we're trading at 1.89 you get the picture. if we close down here new all-time forever low close for 30-year bonds. ten-year note notes 2 basis points we have inversions on some of the more bill related comps to the long end as you well know, the recessionary indicators, although they're probably not recessionary indicators. capital flight from japan and all points around the globe are pummeling into the u.s look at a 24-hour of tens. we had basically a 1.46ish test. let's go year-to-date and see how much damage is being done. year-to-date we're obviously taken out the end of january 1.50 plus close. zoom back a little farther to

september, we've already taken out those double bonds in the low 1.50s and zoom back to august and here is the key, 1.45 and change is the cycle of yield close. now theoretically we could make a double bottom there and all could be well, except for if you go back to 2012, at 1.45 and change we have the big double bottom from 2012 and 2016 at 1.36 and that's what makes traders nervous. 30 years have already gone through. it's like almost impossible traders say not to see a test in the huge double bottom finally i wish i could go through all the currencies but japan is at the epicenter, their economy may be floundering, maybe they're already in a recession. a variety of reasons, including coronavirus capital leaving flight to safety currency designation, seems to be gone. right now they're at a ten-month low against the dollar, very close to a 14-month low going back to december of last year.

carl, jim and david, wish i had more time. back to you! >> we'll talk to you again soon, rick guess who we'll talk to at the top of the hour, larry kudlow from the white house about the markets and the economy, as rick said, ten-year 1.45 and change has not year, 1 change, has not closed here since mid 2016 the dow is down 289. people know aflac... aflac! ...but not what they do. so we're answering their questions. aflac is auto insurance, right? no. uh uh. is it homeowner's insurance? no... uhuhuhuh! is it duck insurance?

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welcome back to "squawk on the street". home sales dipped 1.3% in january to seasonally adjusted 5.46 million units that is still better than the street was forecasting but the national association of retailers calling this just a minor retreat. sales were up solidly over the year, 9.6% compared to january, 2019 inventory continues to shrink. at the end of january there were 1.42 million homes for sale a decline over the year and the equivalent of a 3.1-month supply so tighter than the market was a year ago the lack of inventory is continuing to push up prices,

the median home price in january was $266,300 up 6.8% year over year that means that home prices are rising at twice the rate of wages. now, mortgage rates of course are at the lowest level in years but chief economist says he expects they should be even lower given where the ten year treasury has been. thinks they should be closer to 3.2% and says the market could be pricing in potential changes to fannie and freddie but overall a minor retreat for existing home sales down 1.3% in january to a seasonally adjusted 5.46 million units back to you. >> thank you for that. good friday morning everybody. welcome back to "squawk on the street." i'm carl quintanilla with david faber and jim cramer sticking around for the top of the show sara eisen is on assignment. dow down 267 we got a tumble as the u.s. market pmi shows contraction for the first time since october of 2013

that's when we really saw this sell-off begin >> yeah. i'm uncomfortable with the 30-year below 2 and that's just because when i see that, the saying is people just really think there is a hard stop to growth and that is related to a ripple of the coronavirus. i don't think it's obviously a statement of our country our country is doing pretty well we're having money coming in remember the chinese when they were supposed to sell our bonds, supposed to wreck our market, they've been cellar. so what? the economy, two tracks. you talk with people and they say i don't know where this is going to end i don't want to be in the room i don't want to get with customers. then the economists who say listen, this is going to cost two cents per share. i think the first economy is more like the one we have. i don't want to scare people but i have way too many people in my day to day who are very concerned for their employees. yesterday i had dominos on what is he talking about

china. two quarters ago the greatest opportunity. now the hopeful, against illness, i don't want to say mortality but the lethality is not horrible for younger people but you talk with someone about greatest growth area and then now they speak about can they live it's chilling >> it is obviously we're dealing with the continued effects of the slowdown in the chinese economy and what the impact is going to be both there and around the world as a result of disrupted supply chains. so many other things, jim. that said, it will come to an end. >> yes, it will. maybe that's the optimistic note we should now go to our guest larry kudlow for more on today's market drop, the coronavirus impact for stocks, and the outlook for the u.s. and global economy and where we're going we're joined now by white house top economic adviser larry

kudlow welcome back to theshow. >> thank you, jim. appreciate it. >> so how dolls tes the u.s. ec stop itself from being entwined with the world's second largest economy that is truly paralyzed right now? >> well, look. i don't think -- we're not going to decouple. everybody knows that the tragedy here, i see it in human tolls. you know, people catching this virus, many people dying i guess new numbers out today were not good. you know, that's most regrettable. incidentally, we've done what we can to help them and i announced this two or three weeks ago but finally, as you probably know, china has allowed u.s. cdc experts to go in with the world health organization experts that's a good thing. and i hope it works. now, coming back to our story here, i just want to raise this

point. if you look at the atlanta fed gdp now, they're predicting a 2.6% increase in the first quarter. and that's a pretty big number because of what we've seen in china. 2.6% now, whether that number holds, remains to be seen i understand it fluctuates but i think that is very promising second point, jimmy, yesterday as you know, we had very positive reports from the philly fed manufacturing and the new york empire state manufacturing. and here's the key point in both of those mid month surveys they did not find any major supply chain problems. now, again, i know this could change the first quarter has, you know, month plus to go but, nonetheless, as early indicators, the gdp now and these ism reports and of course

at home we're in a housing boom as you well know so i just think we should be very calm about the u.s. side of the story which is looking pretty good. on the other hand the chinese side of the story is very difficult. it's a human tragedy it will come to pass at some point but i'm not smart enough to know when that is >> what is the 30-year all-time low yield say about this economy and the perception >> well, look. i have to think, david, that is a run to safety. i have to think that with respect to the outbreak of the virus in china, perhaps the worst thing with the virus, i'm not an expert on that. asia is obviously on red alert regarding the virus. we don't see too much in europe. but i just think in generally would be very careful to put too much emphasis on what bond rates

are doing or interest rates are doing or even in the short, short run, the stock market. i think you've got a lot of mood swings here and i don't think it reflects the fundamentals. >> all right larry, just something that i'm very concerned about can you go to the president and tell him that it's possible to have as much as 80% of the pill, of the pharma business, ingredients and actual pills, that are made in china, 48 plants in the wuhan area, can you tell him, we do not have enough medicine, we do not have enough supply in this country? this is going to be a problem in three weeks and we've got to do something about it it may come down to the president doing something about it >> jimmy, when you say we're not going to have enough supply in this country do you mean the u.s.a. or china? >> u.s.a because, unfortunately, we somehow let the chinese become so important in the actual manufacturing of our medicine,

larry. i know you and i are not happy about this we can't that they became so important. we used to have it made in canada, made here. but we've let the chinese be so powerful in the actual supply chain of our pharmaceuticals that a lot of the doctors i talk to, larry, are concerned we just want to be sure that we do not have shortages in medicine which you know would then cause inflation and people's lives >> yeah, inflation or perhaps even worse human suffering >> of course >> i'm not too worried about the inflation. look, president trump from day one, let me go back a second, from day one in a meeting in the oval office instructed us to engage with china in every way possible to help china, to send our exports to china it took a while to get that done but it's getting done. as a humanitarian gesture. now, that doesn't answer your question precisely but i'm just

saying that's been his attitude. just help china engage we have good relations with them now. with respect to pharmaceutical products here at home, jimmy, i'm sure the president -- i have not spoken to him since he got back last night from his west coast swing. i'm sure he will want to do whatever it takes with respect to secretary azar at hhs and the fda and so forth to make sure we have sufficient supplies to take care of business, illnesses here at home. i'm sure he will do what he can to expedite that whether that means special deregulatory efforts, whether that means executive orders, remains to be seen i don't want to get ahead of the story, out in front of my skis but we will do whatever it takes. now, as you well know, the virus story is not an american story

i mean, we've been very, very, very well contained. and so i think -- and i've talked to dr. fauci about this, who is a genius. and we're, you know, fingers crossed, god willing, we're in pretty good shape here at home and the other point i'll make, and this is not a cynical point, just a factual point, in a typical flu season in which we find ourselves, these, you know, deaths in the u.s.a. can run upwards of 20, 40, 60,000. and that's an ongoing issue. i'm pretty certain we have enough supplies, vaccinations, and what not, to deal with that. but without speaking to the president yet and i will within the hour or so, he will do whatever it takes, jimmy, to make sure we have the right medicines available. believe me he will. >> thank you it is very important for people's lives >> larry, it's carl. you talk about bond yields not reflecting fundamentals. i mean, it was ten days ago the

president pulled out a list of four companies did fundamentals, we're heavily reliant on four big names. >> well, carl, i can't -- i'm not going to dig in here look we've had a fabulous stock market i mean, just in the last 12 or 13 months it's up over 30% including today's correction i, by the way, view that good market as a sign of business and consumer confidence and a sign that business conditions in 2020 will get better not worse. going all the way back to the president's election i believe the s&p 500 is up close to 58 or 60%. so it's been a terrific, terrific market. and i think the fundamentals of

this economy are very solid. all right? very solid even with headwinds we've had very tough fed tightening. wish they hadn't but they had. now they're beginning to unwind that, add to the balance sheet that's good. but that hurt us a lot the boeing shutdown hurt us a lot, carl, as you know we'll see about the virus. somehow at this point it doesn't seem like a problem. here's where i'm going to. in the three years under policies of lower tax rates, deregulation, independent energy, and better trade deals to open up an export boom, we have managed a 2.5% growth rate on average for three years that is significantly better than the prior administration. it is also significantly better than what the cbo has forecasted i'm going to add to that in the area of fundamentals america is working and there is a blue collar boom we've created 7 million jobs

cbo said we'd only get 2 million. we've created 7 million jobs and the wonderful part of the blue collar boom is that the bottom half, the bottom quarter, and the worst 10%, the plant workers if you will, the assembly line workers and related white collar, are out performing their managers by substantial amounts. i mean, one little factoid, i know there are a million numbers here, average weekly earnings for production workers up about 5% okay over all i believe the number is 3% and that is not only true for the blue collar boom but i want to add to this there is a women's boom. women participation rate, women now the majority in the labor force. i think 3/4 of the new jobs last year came from women something like that. there's a women's boom and finally, i know i don't have

any millennials here on the panel, but the snowflakes -- >> thanks, larry >> well, i'm just guessing the snowflakes and the millennials are working. okay their participation rates are going sky high and their wages are rising at close to 5%. so this is a fundamentally very sound economy. >> let's get back to the economy though and the virus, itself you just said it doesn't seem like a problem and, certainly, from a health perspective at least in the u.s. thankfully it doesn't. but you also said at the very beginning we are not decoupled from china >> right >> their economy is essentially shut down, you know, for a month or so now. there are a lot of supply chains, despite the trade war that raged for two years, that is still interconnected into that economy what are your expectations when it comes to supply chains, when it comes to a virtual halt in the world's second largest economy on the impact here i mean, there's got to be a significant impact, doesn't

there? >> well, it's a good question, a good point now, the word significant, david. i don't know our views here at the nec and the cea are very close to the private sector views we were looking to clip 0.2 or 0.3% of gdp off of the first quarter because of the issues that you raise supply chains and other things okay so that is just guess work if you want to know the truth we don't really know i don't know how accurate the information is out of china. now, look. to try to focus in on specifics which is what you're asking me, it's not easy. but i'll repeat what i mentioned to jimmy earlier some of the indications -- we're in mid february right now -- february 19th to february 20th, whatever day is today. so far, it does not look like

whether it be supply chain or other problems that the u.s. economy is getting hurt in any significant way. in a small way, yes. in a significant way, no again, i go back to these two points the atlanta fed gdp now number through february 19th is 2.6% for the quarter. that's a good number because you know we lost half a point on boeing. so it could have been over 3 that's one point i know that can move i get that but i'm just giving you the only info i know. second point, on the manufacturing indexes yesterday, from the philly fed and the new york fed, both were much stronger than anyone thought and neither of them saw a supply chain problem. now, that's the middle of february okay so this could change it could change for the better or the worse all right? all i'm saying is what we now know does not seem to be a major blow to the american economy

that's what we know. the other point i want to make is, because of strong job creation, i mean, our job story objectively has been fantastic with low unemployment across the board and the lower income wages doing better than the high income wages the housing market is very strong now you have low mortgage rates. that's a good thing. you have more people working and their incomes are rising and i think there's a housing boom out there that's going to really boost the economy by the way, you know, i've seen some of this back and forth politically. let's not forget, we did a calculation on this up and down from the census bureau and the bureau of labor statistics in three years, and i'm proud of this, in three trump years, with low taxes and regulations and energy and better trade, average family incomes after tax, after

inflation, are up $5,000 nothing like this has been seen. this is just in three years. in the last 20 years under republicans and democrats. and on top of that, the savings from low energy prices, from the fracking revolution, we calculate $2500 per family, and on the deregulation, which is probably the most underrated thing, deregulation is so important, particularly for small businesses,we calculate $3100 savings for the average family now, those are numbers we haven't seen in over 20 years. it shows the health of the economy. it shows the health of the worker and the consumer and the family and it shows that some very good things are happening inside the economy. so i just will leave it at that. i am not saying we decouple from china. look, even phase one let's go to that for a second. give me a moment on this

i know you're always tight >> oh, boy >> china has cut tariffs three times if i'm not mistaken. at least twice they just did a third time last night. that was not specifically part of phase one the $200 billion increase in u.s. exports to china was predicated on exclusions and waivers. they are cutting tariffs, which is a permanent,efficient way t do it. that's an awfully good thing president xi assured president trump a couple weeks ago that china, even if there are some delays, intends to meet their obligations. now, what does this mean it means we are looking at a potential export boom the likes of which we have not seen in i don't know how long. and export boom, whether it's farming, manufacturing, autos, technology, pharmaceuticals, you

know what? export booms -- >> that's the highest wage people >> i'm sorry >> we have to run, larry thank you again for going right to the president and telling him about the pharmaceutical shortage that we do not want to be hostages to the chinese a very good case for why unemployment is so strong. >> i will carry your message, jimmy. it as good message by the way jimmy cramer you've been very constructive in this and i thank you very much. >> thank you very much to my old partner larry kudlow from "kudlow and cramer" always good to see you and i love the upbeat news. have a great weekend, sir. >> thank you >> all right, jim. so we seem to have stablized here at these levels just south of 29k and as we mentioned with -- everything all right >> no. i'm just saying. i was look aing at david doing a tweet. >> i'm not tweeting. i'm texting. >> larry talked about employment i am upset about this chinese

thing. okay i am when i have to start talking about whether to fist bump, shake hands, we are in a different regime i do think i want larry's view of things to be the only narrative. the chinese narrative is not something we can get rid of. how about that >> we didn't really dig into cooperation between us and china nor the fed response whatever it should be. >> no. >> it's hard when larry's answers run into the minutes rather than seconds. >> my friend larry, uhe has a great optimistic view. i tell you, it is in short supply particularly with this coronavirus, which i don't want to make too much of. my wife says every night why are you making so much of it and i just think that it's my job. >> what are you going to do on "mad" tonight >> okay. we'll go into a cyber security company. proofpoint and a couple surprises of stocks i think you should buy i've been working on counter cyclical and counter pharma.

counter coronavirus ideas. >> all right, jim. >> i really hope the weekend goes well and we get good news out of china >> it's going to be full of news the nevada caucuses saturday and the berkshire letter on saturday as well. >> and positive with beck oin monday i can't wait >> yes when we come back a lot more on today's sell-off which is easing off just a touch nn lk atlanta fed president deisochardt is with us don't go anywhere. ♪ ♪ ♪

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st. louis fed president james bullard joined "squawk box" earlier this morning. here is what he had to say about the coronavirus and the impact on the economy take a listen. >> if you think that this virus is going to dissipate and then we're going to have a temporary shock and everything is going to go back to normal, yeah. i think the fed is in great shape and we don't have to lower rates in that scenario >> for more on the virus of course and the impact on the u.s. and world economy let's bring in former atlanta fed president. i don't know if you had a chance to listen to larry kudlow from the nec. still, suggesting economic growth here in the u.s. will be fairly strong. what is your view in terms of the overall impact knowing of course how uncertain everything is right now in terms of the virus and its impact in china and on supply chains and economies around the world >> i agree with both jim bullard

this morning and larry kudlow that first it's a little early to tell. and it's a wild card factor but i think we should not panic at this stage that it is going to have a major impact on the year i think the federal open market committee members are likely to look through this unless the evolution of this is very, very severe so i'm in general agreement with bullard and kudlow, both >> and again, in asking mr. kudlow about the move in yields on the 30 year in particular to all time lows, he suggested safe haven. are yields telling us anything at both the 30 and 10-year level how low they are >> i don't think they are signals about the economic

future in the country. i really do believe these are the result of capital flows into the dollar the dollar being extremely strong now and you can imagine that investors around the world are trying to seek a safe haven, to use that term, so i, again, agree with larry kudlow's view on that. >> what are you watching closely to try to determine, perhaps, if there is going to be more of an impact or a way we can actually foresee what the impact will be on the u.s. and world economy from the growth of this virus? >> well, i see three channels if i can take a moment. the first one would be that the disease actually comes to the united states and is virulent enough that it affects our work force and we get a mirror image of what's been going on in china. that would obviously be a very serious development. but the indications of that at this stage are very, very small.

and so i am not too concerned that we're going to see a true epidemic here in the united states so then you move to the supply chain effect and the export channel effect supply chain, mixed indicators there's a lot of anecdotal feedback that supply chains are being affected and of course you have the apple news last week or earlier this week. but again, i think it's a little early to tell that the supply chains are going to be disrupted enough to have a sustained effect on the u.s. economy and then the export channel, likely some effect on exports to china. but i would say, fortunately, the motor of the u.s. economy is domestic consumption and that is a very benign picture at the

moment so i can't get overly aroused about exports taking a hit >> dennis, as we're talking, this happens a lot the president tweets in all caps, says if our formerly targeted farmers need additional aid until such time as the trade deals kick in that aid will be provided by the federal government, paid for out of the massive tariff money coming into the u.s.a. again with the caveat that we are in early days how much of this is unwinding the presumed effect of phase one? >> you know, i don't have good information on that. you know, i would assume that just as phase one was coming into play the chinese were hit by this and it's going to affect their imports from the united states and, therefore, a lot that was promised will not be delivered at least in the short term that would be my working assumption at this stage

but we'll see how long this virus affects chinese demand but, you know, the principles involved in phase one will probably be met if we just give it some time >> also while we're talking brainerd is on the tape talking about potential tools if rates go to the lower bound. in this case she mentions yield caps specifically. do you think the fed is going to need to reach deeper into the tool box given what yields are saying about potential growth? >> well, i think they have been looking at the, let's say, the odds of hitting the lower bound again in general and somewhat theoretical terms. that is not a forecast of where the economy is headed. the fomc naturally is doing planning for various contingencies. when and if that happens, i

would think they would resort first to quantitative easing and then conceivably some form of forward guidance rate caps are one tool they need a robust set of tools because the conventional wisdom today is that the tools they have are simply not that potent when you're starting at a low interest rate environment. so i'm pleased to hear that there's a lot of discussion going on about what could be done if we ended up at the lower bound again. >> mr. lockhart, we appreciate you taking time with us. thank you. >> thank you >> dennis lockhart don't miss our special report on the coronavirus outbreak it is tonight at 7:00 p.m. right here on cnbc all right. dow is down 247. let's get a news update this morning with courtney reagan at hq the countdown to the signing of a peace agreement between the

taliban and the u.s. will begin tonight when the seven day reduction of violence promised by the taliban will go in effect the deal will be signed february 29th paving the way for withdrawal of u.s. troops and intra-afghan negotiations. iranian leaders and candidates joining millions in voting for a new parliament there is the possibility of lower than usual turnout the u.s. extradition hearing for wikileaks founder julian assauge is scheduled to begin in london on monday. the u.s. has charged him with leaking thousands of classified documents and wants him to face trial. he could face up to 175 years in jail if found guilty a government sponsored mass wedding in the philippines saw 220 couples exchanging vows amid a coronavirus threat some of the couples were provided with surgical masks how romantic the annual masked wedding is a post valentine's day tradition

in the country that is the cnbc news update for this hour. back over to you >> thank you a quick programming note as we go to break as we mentioned earlier, warren buffet live on "squawk" on monday. he'll sit down with becky quick to answer her questions and yours as well. you could send them to social media using the #askwarren of course the berkshire letter will come out tomorrow more "squawk on the street" after the break. ( ♪ )

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try to win by attacking, now, we know the trump strategy- 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. the founder and chairman and long term ceo les wexner stepping down yesterday. the company announced a sale of the majority stake victoria's secret to private equity firm sycamore partners. joining us at post 9 is the "new york times" prize winning columnist jim stewart. jim, it is good to have you. >> great to be here. >> big news yesterday not the

least of which is the implied valuation of what we thought was a pretty storied brand in vs >> well, right i think this shift is coming out a moment too soon. a couple -- i looked at the numbers from last quarter on victoria's secret performance and there is a down ward spiral even worse than i think i realized, the deterioration there. you've got a big consumer brand like that. they've got to stop that quickly. beyond that as we wrote in the piece in "the times" the culture here needs a complete revamping. considering it is a company that is -- the customers are overwhelmingly female women -- the way women executives and workers were treated over the years is pretty appalling. by the way, we heard from board members who put out a statement for the article and i believe them i think they really are committed to trying to do something dramatic there they -- one step which we saw

this week is they've gotten rid of the wexner cronies on the board. >> in terms of operating models, i mean legacy models, do you think it is mostly about the mall and physical distribution or was it about athleisure, some sort of fashion cycle that brought about the decline? >> i think a lot is more the latter that does i think suggest an opportunity for a private equity owner here because i think the whole image, the whole branding, the whole marketing was looking back on it now was basically a male fantasy of what women should look like too bad we don't have sara here today. >> to keep us honest >> we don't need an all male panel here some of my women colleagues said -- led me through alternatives it is astonishing the different marketing approach, the diversity of the models, embrace of different body types,

different agaethnicities, the recognition that beauty comes in many different varieties not this sort of rigid image, which is basically very difficult even for very young women to achieve. but, you know, when i looked at the site for the first time a while ago it was the women may have been different races but they were indistinguishable. they all looked about 16 or something and unbelievably slender. so it was a very certain type. you know, the world just isn't that way i think they have to dramatically address that issue. and abandon this kind of, frankly, decades old image of what women should look like. >> so if you address culture and you address product and you address marketing, what else is on the checklist >> then you've got to deal with the broad issues of facing -- facing retail. but at least from talking to

women i think that's something where victoria's secret may have an advantage there are a lot of women who feel the need to actually try these things on to go into the stores i'm also told the technology of making these things is quite complicated and that there is room maybe for additional innovation there so i think there's a lot of upside there they are still going to face the broad issue of the retail environment. which by the way, what is left, you know, the publicly traded l brands, you know, the bath and body product, that is i think more vulnerable to the broader problems facing retail they've got solid numbers there, which are, you know, impressive, but they're not off the charts the growth story there it is a relatively mature business i'm not wildly excited about that i'll be very curious to see what kind of multiple the market puts on the remaining part of l brands >> plenty of news to get to this week as well not much time to do it you already discussed the

milliken pardon given your knowledge of that. the definitive book on that era in many ways let's fast forward to the debate earlier this week and bloomberg's poor performance what is your sense in terms of what that means and how it will be viewed in the market place and beyond >> i think that was the headline coming out of there, there were a lot of people sort of in the moderate camp who were looking to bloomberg as their savior but hadn't really seen him in recent years, hadn't seen him on a debate performance i think the sense of deflation has been tremendous. not that i would by any means count him out but there has to be a dramatic turn-around there. and i have to say, if i was trump i would just ignore all this stuff about the russians. because why, you know, who cares about the russians the democrats are a russian dream at the moment the way they're pounding on each other it is quite startling to me as bernie sanders seems to be ever

moving more firmly into the front position that, you know, why are klobuchar and buttigieg beating up on each other when bernie is sort of running away with the whole race? i hope people ask him some tough questions about who is going to pay for all of these giveaways history is filled with examples of all kinds of leaders who promised, promised to give away practically everything without saying how we're going to pay for it and there are some famous disasters. look no further than venezuela i'm not saying he is a venezuela but it's the oldest trick in the book is to promise things. >> to be fair we're running enormous deficits over the last couple years you could have said the same thing about the tax cuts not in any way saying sanders' plans are not -- are very much unclear in terms of being paid for but that is the world we live in >> giveaways, what did we do with the banks ten years ago we've been doing giveaways for a generation >> that's true we have done any number of giveaways. i'm not saying they'll ever go

away but if there was a finite number on that package, a big number, but i still have people sharpening their pencils trying to figure out what the deficit numbers are going to be under sanders but the numbers i've seen are massive they're like way beyond anything we've seen it is currently sort of fashionable particular in the pop list wings of both parties to say deficits don't matter but i couldn't buy that. there is a point where, yes. deficits are going to matter you know, do we really want to test that boundary >> you would think given the deficits already at a trillion bucks a year in a growing economy it would already be alarm bells ringing but it's not. >> no. i think economists are going to have to do a lot of research to try to figure out how we're in such an incredibly low interest rate environment where we are having massive deficit spending. i don't think it is an issue that is going to go away and it is surprising that the other democratic candidates have not focused more on sanders, who is at this point the clear

front-runner even though he is still only mustering 25% of the democratic vote. >> right see what happens in nevada this weekend. jim, thanks. >> sure. as we go to break, take a look at the markets here session lows down 307. and the s&p is back to 3335. more "squawk on the street" en ce ckwh tto examine investmentgo opportunities firsthand, like innovations in agricultural research. because your investments deserve the full story. t. rowe price

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these could be the best stock picks to ride the growth wave find out which on trading nation.cnbc.com. more "squawk on the street" coming up.

but we're also a company that controls hiv, fights cancer, repairs shattered bones, relieves depression, restores heart rhythms, helps you back from strokes, and keeps you healthy your whole life. from the day you're born we never stop taking care of you. if you're just catching up this morning dow down 312. the stumble began when the u.s. pmi came in showing contraction for the first time since 2013. and you got the 30-year bond at an all time low yield below one nine earlier this morning. the morgan stanley ceo james gorman making the case for his company's $13 billion deal to buy etrade

>> i never worry about strategy, never trying to copy what somebody else is doing we have to do what's right for morgan stanley when you get that done you have to be very opportunistic and move and move quickly. so we put in obviously a very full, i think, appropriately, bid for a great, great company with an iconic brand if we'd messed around with that and tried to do this on the cheap that would have created all sorts of turmoil so when you make your mind up be aggressive to get the job done >> the stock extending losses from yesterday when the deal of course was announced it is an all stock deal so it has the effect of depressing the over all value our next guest says investors should agree with the overall logic behind the deal. he is noted m & a attorney and senior chairman, joining us right now. the man has done probably more deals in the banking industry than anybody i know you won't say that but it's true. why do you like this deal if you do >> because there is an inherent industrial logic to the

transaction. there is a need for scale. there is a need for consolidation. nowhere is that need greater than in wealth management. i think there is also a recognition, quite correctly, by morgan stanley that diversification is valuable and that being able to add revenues in what i would call an asset light way is very helpful. >> we have seen -- obviously morgan stanley leading in terms of strategy with the acquisition from solomon smith barney years ago, following it up here. what about the idea of a culture clash, etrade, morgan stanley, very different organizations perhaps don't fit well together? >> that is a question ultimately of integration management. if you go back long enough, you can see a culture clash at morgan stanley of course with the dean witter deal

and it can happen but it can also be managed. and i suspect that james gorman, who really knows this area, and is a very excellent people person will figure that one out. >> it was interesting. they used stock in part because they can't use cash because of the oversight from the federal reserve that won't allow them to use as much if they want to continue to buy back stock which then goes to the larger banks, rodg, which really can't do big deals they're cut off from doing a large banking merge the likes of the consolidation of which you advised on so often during the '90s >> quite correct the very largest banks, the big three are all limited by a national deposit cap and they are all over it. b of a, jpmorgan, and wells. but they can do other types of

transactions which don't involve deposits such as asset management >> is the pattern we're seeing right now in m & a a recognition that structurally low yields, programatic trading, and deflationary commission structures are not going i think that's right and that puts the pressure on to engaging consolidation transactions because by increasing your scale, reducing your cost, you can buffer all these external factors which are really a potential very strong head wind in this area >> do you give morgan stanley credit for seeing it earlier than their rivals? >> i give them credit for having a vision this is where they want to be. it's right for morgan stanley. it may not be right for anyone else, but it is right for them >> what do you think about goldman sachs and their efforts

particularly the focus on the consumer it's a nascent effort but one that's not unimportant in terms of that institution and the significant change that seems to be undergoing. >> again, i think they have made a decision, and i am sure with a lot of care and research, this is an area they can serve and serve well they clearly have a century-plus-long track record of figuring this out and i suspect they will do just as well with the consumer as they have done with the institution >> e-trade is a name we talked about 20 years ago in a much different expecter of the markets. now with zero commissions there's data coming out that retail investors are trading with more frequency because it's free, essentially. >> sure. >> i wonder what kind of implications that has for m&a? if we're truly in an era where mom and pops are getting back in the market >> well, i think that is a

positive to your earlier question, the vision to see that at an early stage and capitalize on it rather than retreating from the area, maybe it's the time to move forward >> finally, rog, do you expect to continue to see more consolidation in this asset management/wealth management sector >> i do for all the reasons that have motivated morgan stanley. i think more generally we're going to see consolidation in financial services, and the critical element here which i think has been largely overlooked is why scale is so important today. it's always been thought of as a back-office issue, technology and control. now it's front office. how do you market services and products how do you deliver services and products and that's where scale is so critical >> roger, always appreciate your stopping by. >> great to see you. >> take a look at the markets here dow is down 276. squawk quack is back in a moment

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welcome back to "squawk on the street." i'm dominic chu. stocks poised to close lower for the week we're just off the worst levels of the session, the s&p down by about 32 points. we are in negative territory and

many of these sectors are including technology, you can see on track to be the worst perform they are week, even after recording a record-high for that sector two days ago we see some of the biggest declines in names that have pretty much led the rally so far including the semiconductors, the chipmakers amd and nvidia holding on to double-digit percentage gains for 2020 but today's loss is slowing that momentum down keep an eye on all of those chip stocks as well as the hot software ones. back down to you guys at the new york stock exchange. >> dom, thank you very much. watching the markets, dow is down 255 we have breadth improving on the margin coke has crept into the green, but the ten-year is still below 1.46% and the 30-year below 1.9% back in a moment [ applause ] thank you.

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good morning it's 8:00 a.m. at dropbox headquarters, 11:00 a.m. on sweet wall stre sweet sweet and skie is live ♪ want the funk ♪ we need the funk we got to have that funk ♪ >> good friday morning i'm carl quintanilla with morgan brennan and jon fortt at post 9 of the new york stock exchange obviously a sell-off is in place, althougwe