Transcripts For CNBC Squawk On The Street 20240713

Open, wall street looks to close out a recordsetting week. Peacock joins the streaming wars, how comcasts forthcoming platform looks to separate itself from the streaming flock. Joining the four comma club, alphabet more than 1 trillion all together more than 17 of the s p 500. Stocks looking to hit new record highs upbeat news on the economy as Housing Starts rise in december to their highest level since 06 up 16. The and just to put that into perspective we are looking for an increase of 0. 4 amazing, and of course the commentary from tepper and druckenmiller over the past half hour has done a lot. Its fed in the same direction. Well pick apart if weather was a factor in the Housing Starts and the rest but that is when the equity futures took another leg higher when the numbers were reported comes after we got other good housing data its become very hard to decide that the headlines are going to get in the way of a market thats been on this autopilot higher the guys like david tepper and Stan Druckenmiller know better than than to get in the way of a market that seems to be working and refreshed every day by really strong credit markets and people feeling a little bit too cautious coming into the year. Were going to reach a limit to this on every metric, the indexes are very stretched, and sentiment is getting a little bit overexcited, but its been very, very hard to pluck out that point to say okay, its done enough in the short term. Headed into earnings season, of course, there was a neverending of chorus people come on our air, earnings are important, we have to justify the multiples. Weve only gotten the financials what is your sense people are essentially saying this reminds me of the last three quarters or so where expectations are super low every company will come out and beat by a lot. The reactions wont necessarily fit. No. I think its enough to keep that story line intact to say that we are an improving trend and not otherwise. By the way, were talking about the top five, you know, nasdaq stocks driving things. Its not about earnings. Its not about this quarters earnings its about many, many years old worth of earnings that the market is betting will continue to come through. So its a short term longterm the banks didnt hurt in terms of earnings picture. Theyre not leading the way. No, but nothing that occurred there is going to stop anybodys belief in the momentum of the overall market or the ability to continue to pay these prices were in the virtual circle point of this rally where its like everything seems to be working, and you know, its hard to decide when its going to overshoot. Now, you got some transport needs. I was going to say that are not working. Csx volume down seven, another challenging year ksu low single digit growth in 2020 expediters, q4 activity weakened dramatically how long do we look past weak december data, at least in transports, weak q4 data its a good question, how long i do think that the trade agreement, whatever the merits and the substance were, it gave people permission to say now we can bet on a ma to re turn you have to start to see the ma to cro turn in terms of the industrial and freight part of the economy. The subindexes of the transports were trying to do better, trying to pull away and well see if this sets them back. Fascinol, ppg, none of them, again, the industrials sort of, i dont want to call them bellwethers but reflections not looking as good. Theyre not and you might have an investor say exactly why you buy apple and alphabet here and i think it all fits the same story, because if youre not talking about a recession, if youre not talking about an inverted yield curve, if youre not talking about rates going too high to compromise valuations and not talking about credit stress, whats your catalyst right now, the context is the upside catalyst. Stuffs working, and look, were getting to a point, it looks like january 2018, were half way to that gain we had in 2018 in terms of yeartodate on the s p and it got too much at a certain point and it didnt take a lot in terms of news flow to set it back. On the other hand, maybe some of the weaknesses this boeing noise which well get to more, incremental news on ba today there was china data overnight. Euni eunice yoon in beijing china grew at its slowest pace since 1990 pu picked up at the end of the year. It came in at 6. 1 , q4 at 6 because of the trade war and weaker private consumption the december data has been raising hopes the economy here could be bottoming out the Industrial Production new blew past expectations, manufacturing investment came in at 3. 1 , this was much stronger than the past four months, and that led several Research Houses to raise their estimates for 2020 socgen and fitch upped estimates to 5. 9 growth oxford at 6 with an improved outlook. Chinese leaders have political reasons why they want to see the economy growing around 6 mainly because they promised the public here that theyre going to double the gdp and incomes from 2010 to 2020 so the Statistics Bureau today said beijing would ensure economic growth, stays within a reasonable range and roll out support measures if necessary. The trade deal is expected to help stabilize growth. The Research Firm Capital Economics believes that the tariff relief and reduced tensions will lift gdp by as much as 0. 3 fitch sees a bump of 0. 2 , so that impact might not be as much as people had hoped, but it seems to suggest that a lot of the problems of the economy lie elsewhere. Zed said theyre concerned Consumer Spending could be a wildcard, worried consumer also hold back because of anxiety over the slowdown. David . Eunice, thank you eunice yoon reporting for us live from beijing. Back to report news. Late yesterday comcast, our parent company, unveiling details regarding peacock, its Nbc Universals entry into the socalled streaming wars the free version of the service is going to launch july 15th, consists of 7,500 hours of programming. It is ad supported, meaning there will be advertisements the Premium Service will launch in midapril on a limited basis. It will have a 4. 99 a month cost, that is with commercials as well, it will be 9. 99 if you dont want any ads, in both cases subscribers have access to about 15,000 hours and it will increase over time of programming. Yesterday, at an event that showcased peacock, Nbc Universal chairman steve burke spoke about how the company views the ability to capitalize on streaming. We think theres a clear opportunity to create a streaming platform that we own and operate, that give people what they want, when they want it, but allow us to monetize we also think were uniquely positioned to take advantage of this opportunity and play a leadership role in the on demand streaming world. The company has positioned itself, guys, in what they believe is a white space, a different area than of course the key competition between netflix and disney plus and the coming hbo max and amazon, and others, and not competing against youtube, or facebook, where they have user generated content, youtube to a lesser extent pluto but this idea of high premium content, ad supported and really when you talk to executives, and i did get a chance to talk to steve burke and Brian Roberts, the ceo of comcast, prior to the meeting yesterday, in many ways they viewed the real competitor here as youtube yes so much time is spent on youtu youtube, so much of it is spent they say with Nbc Universal content, think snl or the tonight show cut up in parts theyre not getting monetization from and love the opportunity to bring back that content and actually monetize, not to mention obviously a very broad portfolio of entertainment, including a bunch of new shows as well, and the ones that you see right there, some of the old favorites from years gone by that will give them the opportunity they believe to sort of benefit in a way, also pointing to hulu, where its the ad supported part of that service that actually is the most profitable and getting as much as 10 in advertising i think its per sub, so those are the numbers theyre looking at is where they see the opportunity. Yes, i mean, obviously, competing with youtube for eyeball hours and the ad dollars that come with it, and it is a different equation from the pure streamers like netflix, where its about well, weve got to constantly have this impression of newness and abundance, just to get people to pay the Monthly Subscription fee, as opposed to we need them to really latch on in large numbers to what we put out there, and so i do think its fascinating, plus the live piece of it i guess there is a live aspect to it, which is different also i thought it was impressive in terms of the User Experience and theyve gone a bit about it differently as well. Youre going to have live and sports, but its not as though i dont believe theyre going to be streaming cnbc service. Yes theyre going to be cureating toorlds the b towards the bigger story of the day. When you go to it youll have the ability to look down into a news part of it, that gives you information on the bigger stories of the day the olympics will be available on the service, but dont expect the nfl or anything like that. However, who knows where things will go over time as this continues, this platform continues to evolve. Yes, also theres the affiliate relationships you got to remember. If youreable to see fallon before it airs on television, thats bending the model in ways we have not seen before. Thats right and you will be, 8 00 is when its going to be available, eastern time on the service, so yet another reason they hope that they are able to bring what they believe will be as many as 30 million to 35 million subscribers by 2024. Remember the idea is to be break even by 2024, roughly five years, by the end of five years after the service is launched. Weve already discussed and they reiterated 2 billion in spend over the next couple of years, programming, marketing, technology, obviously being the key part of that, and some new, there will be some new programs there as well, but the idea is not to spend anywhere near, not to get in wars in terms of content with the likes of a netflix spending 17 billion or amazon or warner, and we will continue to have content produced at Nbc Universal that finds its way into other platforms still. Yes interesting, a lot of fun with the peacock theme. Yes in the marketing. A lot and jokes that you can finally watch law order 24 7, never been possible. Yes when we come back, shares of microsoft surged more than 300 since innadella became ceo six years ago. Take a look at the premarket here, downgrades of ibm, southwest, marriott, ebay, Morgan Stanley, twitter, well get to all of that when we return thats why Xfinity Mobile lets you design your own data. You can share 1, 3, or 10 gigs of data between lines, mix in lines of unlimited, and switch it up at any time. All with millions of secure wifi hotspots and the best lte everywhere else. Its a different kind of Wireless Network, designed to save you money. Switch and save up to 400 a year on your wireless bill. And save even more when you say bring my own phone into your voice remote. Thats simple, easy, awesome. Click, call or visit a store today. All right, we got the Housing Starts number. Lets get Industrial Production with Rick Santelli hey, rick. Yes, a minus sign unfortunately, down 0. 3 for Industrial Production for december so that completes the year, not necessarily a great year there was seven negative month over month changes, only five positive for the 12 months of 2019, and if we look at utilization rates, 77. 0, exactly as expected. 77. 0 fits in nicely with last month, of course, sequentially it was upgraded to 77. 4 but these are pretty good numbers. The lowest number october at 76. 6 weve seen rates move up considerably, considering how tight the ranges have been, carl, and a lot of that of course happened after more positive data this morning and whats going on globally david, back to you rick, thank you, Rick Santelli in. In his nearly six years as ceo, Satya Nadella transformed microsoft, a trilliondollar behemoth focused very much so on the cloud, but a new part of the companys strategy for the future involves a goal to be carbon negative by 2030. Last night on mad money nadella expressed to jim cramer about cloi mat change and having it a potential impact overall on the world economy. The science i think at this point is very clear. If the temperatures rise, i think the impact its going to have, on the economy we enjoy or the capitalist system we all enjoy i think will fundamentally be in jeopardy if the planet, which is the resource, the factor of production that fueled all of our capitalist society is in danger. To me thats the existential priority its been quite a week, beginning with the announcement of a fundamental reshaping of finance. Now some people took it as talk from black rock and Ceo Larry Fink i think it was significant in terms of their letter to the ceos, how theyre focused on companies far beyond the metrics of earnings per share and revenues but including in a significant way their impact and sustainability goals and then seeing Companies Like microsoft come out with very specific plans to become carbon negative by 2030 and this is more interesting in some ways, we move all the carbon they put in the atmosphere since 1975. Remediate the whole thing by 2050, which will involve a lot of new technologies they were talking about, some of which exist, others of which are not fully developed. A forestation and reforestation, soil carbon sequestration, bio energy with Carbon Capture and storage and direct air capture. Right i dont know direct air capture . Pull the carbon out of the air its crazy. Theres sort of an amazing tiering of motivations for a lot of this, it would seem one take it on face value, a principle stand, the right thing to do. Two, dollars are moving in this direction in terms of both younger customers wanting to buy products from companies that reflect these principles, and also just Institutional Investors doing it, and you know, i think also theres an Employee Service aspect to this. Youre competing for talent. It seems everything you hear, people under the age of 30 or whatever want to work for a place they believe is doing the right thing. T puts that Business Roundtable shift in what the Corporate Mission is in general into sharper relief with every incremental move pepsi, blackhock, microsoft, the airbnb news that chesky has given to sorkin. Companies are thinking in different ways i think this is really, i mentioned it last year of course, because it did feel like really youre starting to see the assets accrete to these kinds of strategies, so where the money is going to be invested, and the companies are responding the investors are responding obviously in terms of blackrock, and the companies themselves, but theyre talking about a 15 metric ton fee that theyre going to put in place immediately on all scope of one and two emissions, scope three travel emissions, so everybody in the company is going to be think being their own Carbon Footprint but for a company like microsoft, its also about all their vendors and how theyll be evaluating them and how those vendors go about delivering the service they do and perhaps a much better way in terms of efficiency and lack of Carbon Footprint. This is having an impact, when it must be said our government, of course, is not taking the lead in any way, shape or form in terms of trying to combat Climate Change were aware the market is giving microsoft all kinds of credit to do whatever it wants to do because stock is working interesting to hear nadella tell jim ballmer gave the go ahead to the cloud stocks aiming for another historic day look at the futures here, a reminder, you can always catch us live on the go, on the cnbc app, stick around for more squawk on the street, as we count down to the opening bell in nine minutes. I can. The two words whispered at the start of every race. Every new job. And attempt to parallel park. electrical current buzzing each new draft of every novel. typing clicks the finishing touch on every masterpiece. newborn cries it is humanitys official twoword war cry. Words that move us all forward. The same two words that Capital Group believes have the power to improve lives. 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Good morning weve been looking at this relentless rally its orderly not given a chance for people to buy dips and pullbacks. The only question, has it stretched a little bit too far or can you bet it keeps rolling . Listen, i thought it stretched a little bit too far two weeks ago, right ive actually been expecting i thought 3,300 would be where we hit resistance, tried it a couple of times and yesterday we blasted through and landed solidly on the other side. This morning the markets are up again, Global Markets are up china came up with a decent report 6. 1 is the slowest in 27 years or whatever, the fact is, it is growing at 6. 1 in the middle of what was this ongoing trade war crisis that was going to bring the Global Economy to a halt its done nothing like that, and so now weve got trade 1. 0, we have china growing, robust u. S. Economic data, great earnings so far, and so the skys the limit. So in other words, a lot of this stuff we were worried about seems like we didnt need to be worried about it right now, were almost up 3 yeartodate for the s p 500 most of the strategists out there were saying were probably only good for a 5 or 8 full year and were only two weeks in what does that mean for the dynamic, people trying to chase it or upgrade where they think this market could go and how do you treat the first pullback, when tever it comes . Im in the camp i thought this year, if we got a 10. To 12 return all in, i thought that would probably be about where we are and youre right. Were already up 3 , not even done with january yet. We still got another week and a half to go before the month is over, but i think you have to, it depends on who you are. Youre the longterm investor, you got to stick with your plan, whether its consistent investing, monthly, quarterly, however you do it, you should stick with that plan and eliminate the noise around you look, when you just asked me, we were all concerned about all these issues going forward, but in fact, we were concerned all of 2019, and the market just kept going higher and higher and higher it never really pulled back and doesnt feel like necessarily today it wants to pull back either that being said, when the market does pull back i think theres still plenty of demand but depending on the speed its algo driven, the buy side will back off a little bit, let the sell side come in, the market should shake the branches to see where everybody stands i think the market is in a very good place all right, be in a good place if we shook out a little bit kenny, thanks a lot. Good to see you. Yes, you as well. Shake out does not look like its going to happen at the open were looking for some record highs, opening bell say few minutes away dont go anywhere. Danafarber Cancer Institute discovered the pdl1 pathway. Pdl1. They changed how the world fights cancer. Blocking the pdl1 protein, lets the immune system attack, attack, attack cancer. Pdl1 transformed, revolutionized, immunotherapy. Pdl1 saved my life. Saved my life. Saved my life. What we do here at danafaber, changes lives everywhere. Everywhere. Everywhere. Everywhere. Everywhere. Ive been a caregiver for 20 years. No two patients are the same. Predicting the next step for them can be challenging. Today were using the ibm cloud to run new analytics tools that help us better predict and plan a patients recovery. Ultimately, its helping thousands of patients return home. And who doesnt love going home. Whatever happens out there you have the hilton app. Will the hilton app help us pick the starters . Great question, no. But it can help you pick your room from the floor plan. Can the hilton app help us score . You know, its not that kind of thing, but you can score free wifi. Can it help us win . Hey, hey were all winners with the hilton price match guarantee, alright . Man, you guys are adorable alright, lets go lose this soccer game, come on book with the hilton app. If you find a lower rate, we match it and give you 25 off that stay. Expect better. Expect hilton. The opening bell is brought to you by nuveen, a leader in income, alternatives and responsible investing. Youre watching krn squawk on the street live from the Financial Capital of the world, the opening bell in less than a minute its been a busy week, but were not slowing down on this friday, obviously. Commentary out of druckenmiller and tepper, futures along with Housing Starts we will get to the downgrades which really have not appeared to be a factor at least for sentiment at the open, but they do involve some broad names, largely at least in the case of the ibm downgrade on the notion that i. T. Budgets remain stretched. [ cheers and applause that was the one kind of macro take away from some of the downgrades today well see how that filters through if at all, just an excuse to downgrade ibm. The opening bell and s p 500, at the big world its Phoenix Tree Holdings, and Apartment Rental Service provider in china celebrating an ipo well talk to the executive chairman on squawk alley. An audio entertainment platform in china [ bell ringing ] so on this ibm downgrade its Morgan Stanley, they go to equal weight their point is i. T. Budgets are under pressure, especially in hardware, because they argue companies are still digesting the excess capacity they brought in after tax cuts, after repatriation, after asset depreciation, and essentially a share loss story they argue in ibms case in particular, type of hardware, too. It does seem as if this is exactly where ibm would be impacted you see the stock opening up, down about 1 right now. Obviously not been one of the leaders if this isnt characteristic of a lot of the upgrades and downgrades going on now, i think its a lot of people trying to reckon with valuation levels, where weve gotten to and decide to double down or take money off the table. This is interesting, though, because software has been the comeback story within tech as well as semis this year. The rest of it seems to get left out. 5g replenishment type story. Ibm one of the big names well get next week, along with the netflixs of the world, airlines, our parent comcast, p g. For the time, ibm is the big laggard on the dow along with unh. The other someoone is airlines. Were waiting for a bunch of airline news regarding boeing, story on our website from leslie joseph, street trying to come to terms what additional writedowns may be the line out of b of a, we are increasingly fielding concerns from investors the likelihood the max never returns to service. I mean, i think thats always been the real kind of shadow over this whole story, basically a lost generation for boeing dont know that yet. I dont think you can say that but airlines patience being tried, them figuring out their capacity situation at this point in the cycle all of it fits together. Its a little bit of pressure on that area, and its, again, all the more reason why investment dollars seem to feel like its just less difficult to buy the obvious stuff, and i dont think that can go forever, but the obvious stuff being the nasdaq 100, which is dominated by four or five names. It is stunning, though, to look at those four or five names or at least a few of them. We have three companies now that are above 1 trillion in market cap, apple obviously the leader. Alphabet and microsoft i mean, apples market cap is now a trillion plus more than an exxonmobil yes above, in fact i can remember a time when exxonmobil was the most highly valued company, certainly amongst the top two. 08 definitely the top the numbers are extraordinary. This move up in alphabet approaching 10 , mike, just this year it lagged a bit last year. The dollar values are alarming, and i mean obviously you get a little bit of a sticker shock. I think it makes sense to anchor it somewhere, so these companies the top three companies, lets call them, the top three trilliondollar companies, about 3. 7 trillion in aggregate market value. This year theyll have 140 to 150 billion in net income. Its 25 times earnings for this block of 3 trillion is that insane does it make sense what is the blended growth rate, too . Double digits alphabet insanely still grows close to 20 at its size now if you go back, so microsoft is twice the market cap it was at the peak in 99 so 600 billion back then, about 1. 2 trillion now. Its making way more. Four times more its twice the size making four times the money. When do we tip into crazy from just aggressive and complacent i dont know what that point is. So that to me sets the scene for where we are will you send me a memo ill put it on the calendar just keep it quiet. Of course but yeah, so when to get off the horse in david tepper terms. Right, exactly. By the way, tepper, as a credit guy, you know, used to be mostly a credit guy. If youre staring at high yield bonds in aggregate yielding 5 , i dont know if i have something to worry about until that gets disturbed. Listen, so much of it comes back to rates and where we are and where you get a return i mean its fairly simple. Druckenmiller has been notably bearish in past years, 2015 he irvish issued a warningt the future he pins hopes on the idea trump gets reelected. Right druckenmiller, too, to his credit, he was bearish and not sure about policy, he said own disruptive tech. That goes back years, where he was barbelling things. But i think hes correct that this lag of the rally has coincided with the betting markets raising the probabilities of President Trump getting reelected. The main factor cant say but its part of the atmosphere driving this market without a doubt. Dont want to toot our own horns too much, david, but comcast alltime high. Its been a while since weve been able to say that. It is, yes, and again, back to market values 215 billion plus, not that far away from verizon any longer, at least within sight, which is always an interesting comparison, but a positive reaction to the unveiling of the companys peacock streaming services, as we tried to say and of course they spent a lot of time the executives at the company saying yesterday trying to differentiate itself from so many of the services that are already out there, by having really what they expect will be the most popular part of the service, being free. 7,500 hours of programming there, but free five minutes of ad load an hour by the way which is low, certainly given our viewers know what typical advertising is in a given hour of television programming, and so thats their expectation and hope they believe there is a great deal of demand for Digital Advertising dollars. Linda yakerino made a presentation yesterday as well and i i have heard numbers as high as they think they could sell 5 billion of digital ads. Thats an interesting part, the idea what youre doing is creating digital ad inventory that didnt exist before in a quasilinear tv way and so thats kind of an interesting element of it. Actually it mirrors what happened in parts of the dotcomboom when newspapers were going online, we cant keep up with the inventory it didnt work for newspapers but it worked for the overall digital ad the question is how much of that will come from youtube, where shows are watched, where parts of shows are watched, and where frankly the monetization for the creator of that content, Nbc Universal, is not really being paid also, you cant discount the legacy notoriety and built in awareness of a name like hbo or comcast, because reports today that facebook is retrenching on some of the scripted shows its very difficult to get these shows get consumers familiar with them, even despite the cost yes even the whole flap over oh netflix is losing the office and friends, there may never be shows like that again, that many episodes, that much popular recognition, and here we have law order trying to get in that league. Every one of these has their tent pole. Law order the franchise for disney the simpsons 30plus seasons yes, 30 and things of that nature really quick on the judy shelton among them, got this 20year bond out of treasury to help finance ongoing deficits. This debate kashkari is tweet being how its not qe, the c conspiracists and repo, when the fed decides to step back if they ever do, what is the market going to do then if the markets at a point where its looking for a reason to say okay, weve done enough, then it matters. I do think you have to keep going back to the idea that this market was up 25 off the low, in october, when the repo stuff started. Its up 11 and we also got the trade stuff in there as well a lot of people want to connect a lot of the dots and i dont think if people think it matters, it matters but i dont think that theres a way to draw true liquidity pipeline from one into equities. Your point though, people believe it is, so it doesnt hurt, but by the way, people believe the trade deal that all it did is remove a friction point that was imposed on the market. It didnt get you forward really in any material way in the horizon the markets typically care about a couple of the stocks we should mention, the gap we havent mentioned the decision to no longer split the company interesting in that. A lot of shareholders were scratching their head for some time, shares of gps of the gap are up a bit no, actually not doing much right now. Did that news comeout yesterda before the close no, i think it was after the close. It was, okay. I wasnt sure. Wanted to make sure if there had been a reaction. I wanted to mention dave busters its small, but kkr files for the 6. 3 position, total Purchase Price there of that position given the market cap is about 77 million. But whats interesting along with the 16 increase in the stock price is that kkr does in the language of their 13d say they will certainly consider taking actions concerning any extraordinary corporate transactions including but not limited to a merger, reorganization, liquidation, sale or transfer of material amount of assets, change in the board of directors and management it reads like an activist 13d. Called kkr because they dont engaming in activism they were maim fame us for never engaging in what they would call a hostile. Ill take it for what it is. Stock is up a lot. Interesting its been challenging days for dave busters past couple of squarptquarters, hi, seema. Japan and south korea closing at a 15month high, europe at a record high looking at the stock 600 up about 1 , all of this followings chinas gdp holding to a 6 level, another sign of stabilization. Home builders at this hour after a blowaway Housing Starts number the Home Builders have been outperforming the s p over the past year. Earnings will take in focus among some other Home Builders csx and earnings, the railroads operator revenue decreased 8 year over year in the Fourth Quarter driven by a double digit decline in coal exports. The coal industry has been under pressure in the face of lower costs, natural gas and concerns over emissions and thats pushed a lot of utilities to retire coal plants and seek cheaper renewable alternatives csx said it took industrial activity a while to cool off and will take a while to heat back up the stock is down right now. Finally weve got an ipo on the floor today. Phoenix tree holding, one of chinas largest coliving platforms, rents and subleases apartments, downsized ipo at 13. 50 a fair, well below the range of 14. 50 to 16. 50 and offering 9. 6 million shares from the original 10. 6 million shares chinese issuers had a tough year well see what happens now a trade truce at least for the moment do dow currently up 17, back to you. Thank you lets head over to the bond pits and check in with Rick Santelli at the cme group in chicago. Good morning, david you know, there is is a lot of issues that seem to bug investors lately of course the level of stocks is not one of them, but the level of rates is. Why havent rates followed stocks more closely . Many times rates correlate with stocks rates go up when things are good and stock market goes up this time not so much. But its really sparking to the data today look at the twoday chart of twoyear note yields we had spectacular data on housing, 13year best in terms of Housing Starts, and it popped up, right up to yesterdays highs basically, right up to unchanged, 157 its now 156 its down one on the week, its down one on the day, because it closed at both at 157. Now as you move to the longer end, which is really more economically driven, short ends more hampered by where the fed is with regard to policy, you see the tenyear not only challenge yesterday, it popped straight through its now at 183, up 2 on the day, up 1 on the week and it is getting a nice bounce off of it, you see on the next chart the early december sixweek lows on a closing basis, the day before yesterday. Finally, the dollar index. Like treasuries, yesterdays close and the weekly close last friday are about the same, so dollar index is up a smidge on the day, and a smidge on the week mike, back to you. Rick, thank you very much and when we return, comcast shares hitting a new record high well get wall streets perspective on our parents launch of peacock and what it means for the screaming landscape. Strpt st squawk on the street will be right back new york state is building for the future of your business. With a nationleading 150 billion commitment to infrastructure, were creating state of the art, 21st century transportation hubs, constructing new bridges, bringing highspeed internet to every corner of the state, and committing to lowcost clean energy. With infrastructure built for the future, the companies of tomorrow can thrive here today. See your future at esd. Ny. Gov. Theres one thing you can be sure of. Theyre changing by the nanosecond. Thats why cognizant created a unique engineering approach to design and build new digital products. Learn how cognizant softvision designs experiences and engineers outcomes. Cool. 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, well pick up and deliver your clubs ontime, guaranteed, for as low as 39. 99. Shipsticks. Com saves you time and money. Make it simple. Make it ship sticks. Shares of comcast hitting alltime high this is morning. The company revealing new can he tails about the forth coming streaming problem we are calling peacock. Yesterday the service will launch by the way comcast subscribers april 15th, nationwide not until the middle of july. There will be a free ad supported option and two premium pricing tiers. Here is Nbc Universals ceo jeff shell about the companys streaming content investment im pretty confident when you provide all of this content with our Proven Ability to market and launch new products with symphony and what i think is a really smart strategy of taking light advertising and bundling to create this unbelievable experience free for consumers. This is going to be a very successful product and is going to be one of the key elements of growth for Nbc Universal going forward. Lets get reaction from the street, many of whom were in attendance yesterday rosenblatt securities Bernie Mctiernan and greg williams. What did you think in terms of them trying to carve out this idea theyre not competing necessarily with all the current streamers but in a different area, given the ad support and free nature of the service thats certainly the case we walked away more supportive of the service than walking in peacock premium 24 million subscribers in the u. S. Will have access to the service for free, another 16 million with charter coming on board and theres a high floor for the service, only 2. 5 billion of opex commitment for 2024 that compares to disney plus at 4. 5 billion and netflix 17 billion, next year going to who knows how high a lower ceiling as well. Doesnt seem like its global in nature, only 30 to 35 million subscribers by 2024. Gregory give me your perspective from the financial side bernie mentioned some of the metrics there, 30 to 35 million subs is what theyre hoping for within four to five years getting to break even. Is that something that makes sense to you are you concerned at all about the spend . Sure, i think that the break even is very doable. 30 to 35 million subscribers is doable its free. Its about monetizing the advertising higher than say hulu does, because they said its only five minutes of advertising so theyll need to do good targeted advertising in order to get a higher cpm as far as the financials and overall picture, they said that in december already, 2 billion investment breaking in 2024. Not a lot of things that move the stock necessarily in the next few days. A lot of that information is already wellknown bernie, a big question with a lot of the new entries, how much of it is a zero sum game how much of the new business is really just going to be trying to cover for whats being lost on a traditional side . For comcast, how does that shape through the model thats the biggest question with Media Companies media compn extend your reach and you want to go direct to consumer how much are you going to cannibalize the existing part of the business for the cable side of the house they only make a 30 margin on video so really broad band share gains is still a great story for the Company Going forward. Greg, on that point, i mean, were looking at new highs in comcast. I believe you have a hold on the stock. Peacock is an important initiative, going to be taking some money, but what is your overall take right now in terms of where the company is in terms of the value the market is ascribing to it . Last year the Company Performed in line with the s p 500. We expect a similar performance in 2020. This first half of the year. Peacock is really not going to be that as of yesterday we know that what were going to get with peacock so now theyre focusing on the other investments. Investors are worried a little about sky, looking at the mobile, eventually going into and of course the healthy broadband market in the u. S. And comcasts ability to take advantage of that, which were bullish on but these are the focuses now and peacock is now sort of i dont want to say we can move it aside and focus on sky and mobile bernie, what are you going to be looking for in terms of penetration of the service once it gets going . Are metrics going to become important here yeah, and so a key question coming out of this is are we already at peak number of subscribers getting peacock premium for free because we know video subscribers will keep going down and broadband only going up but what will the attach rate be of flex boxes right now you only get the service for free if you are a comcast video customer or cox video customer and you have the flex service with broadband only with Services Like roku out there how will they make sure flex is an important part of the broadband only household taken all together, does it do anything to mute netflix domestic subscribership . Where does it play that is a great question. I think the biggest impact will be on pricing power. With disney plus coming in at a lower price than expected, apple tv plus, peacock for free, 24 maybe going to 40 million customers over time, that next big price increase could be a long ways off for netflix at least domestic are you in the school netflix needs some ad supported lower price product . I think it is going to be tough because it would be admitting defeat a uturn no doubt exactly we have a neutral rating on the stock, 265 price. We expect Revenue Growth to substantially decelerate from 29 growth last year to 23 going to high teens and because of that were putting a 4 1 2 times revenue multiple in 2021 revenue to get to a 265 target no doubt it is a different market place this year than even a year ago in terms of who is out there for netflix. One of the secret sauces for netflix was their distribution and now that ip streaming direct to consumer is now it is content that matters the most. Bernie, greg, thanks to you both thank you be sure to check out our podcast and listen to the opening bell hour of squawk on the street wherever you get them dow up 32 and the s p 33. 22, less than 600 points from dow 30 k. When we started our business we were paying an arm and a leg for postage. I remember setting up shipstation. One or two clicks and everything was up and running. I was printing out labels and saving money. Shipstation saves us so much time. It makes it really easy and seamless. Pick an order, print everything you need, slap the label onto the box, and its ready to go. Our costs for shipping were cut in half. Just like that. Shipstation. The 1 choice of online sellers. Go to shipstation. Com tv and get 2 months free. Shipstation. The 1 choice of online sellers. But were 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 youre born we never stop taking care of you. Thats why Xfinity Mobile lets you design your own data. You can share 1, 3, or 10 gigs of data between lines, mix in lines of unlimited, and switch it up at any time. All with millions of secure wifi hotspots and the best lte everywhere else. Its a different kind of Wireless Network, designed to save you money. Switch and save up to 400 a year on your wireless bill. And save even more when you say bring my own phone into your voice remote. Thats simple, easy, awesome. Click, call or visit a store today. Lets look at the nasdaq 100s best performer since the beginning of the year. Tesla at the top of the list with a 21 gain. Over 12 months 46 over six months 100 gain on tesla. Squawk on the street is back in a minute. At fidelity, online u. S. Stocks and etfs are commissionfree. And when you open a new brokerage account, your cash is automatically invested at a great rate. Thats why fidelity leads the industry in value while our competition continues to talk. Talk, talk good friday morning. Welcome back to squawk on the street. On this busy friday, we weigh all kinds of things. A bunch of downgrades on stocks. Some great eco data continues. A commentary from the likes of david tepper, dow 29,348 now almost half way between 29 and 30 k our road map this morning starts with more market records for wall street with the dow, the s p, and the nasdaq continuing a strong start to 2020 plus, enter the peacock what comcasts new streaming service means for the already crowded field. And the tesla trade well speak to an early investor and former board member of the company about whether that stock can continue this amazing run. Housing starts a barn burner this morning, Industrial Construction not so much were about to get Consumer Sentiment numbers. Absolutely. Consumer sentiment on our january preliminary comes in at 99. 1 now, that is a bit light on expectations only by 0. 1 or 0. 2 sequentially it follows what we were expecting, which was 99. 3 but it is a preliminary read now, 99. 1 isnt too bad the month before our 99. 3 was 96. 8 lets get into other issues i find interesting one year inflation at 2. 5, thats expected inflation. Last month it was 2. 3. And the 2. 3 was interesting because that was the Second Lowest read going all the way back to march of 2009. The five to tenyear inflation outlook moved up as well from 2. 2 to 2. 5 so they really have firmd up and finally our november read on jolts a big disappointment 6. 8 million well below expectations it really breaks a string of very super solid above 7 million numbers so job openings and Labor Turnover is a bit of a disappointment but there was a positive revision to last month from 7. 26 million to 7. 36 carl back to you. Thank you very much markets continue the record run then with the dow, s p, and nasdaq all hitting fresh record highs. Earlier cnbc got exclusive comments from the Hedge Fund Billionaire david tepper betting on the bull market to continue he says we have been long and continue that way. Those statements were echoed saying, i revealed a very bullish posture intermediate term since october when powell guaranteed he would not rescind the insurance cuts joining us to talk about all of that our guests. Guys, happy friday good to see you. Data has been, you know, a little mixed when you throw in some of the transports but sentiment is not so which wins out . I think sentiment wins out. And so really all investors, what were looking for this year is some stablization and Economic Activity off of a very weak period we had last summer and policy that continues to be supportive and thats what the markets are applauding this environment of relatively modest growth but stabilizing easy policy accommodations and no real inflation is a good backdrop for risk assets, it was last year, and continues into this year. When were looking at the all the horse riding that was being done this morning, when we were out in squawk box there was a lot of i like riding this horse. Im going to keep riding on the horse and not get off for a while until its slowing down. The work horse is the American Consumer are you at all disappointed by what is coming in . Greg, maybe youd want to weigh in what is coming in on the job openings and Labor Turnover report or for that matter that youve got some Consumer Sentiment that looks slightly disappointing . Yeah. I dont think the data has been weak enough yet to derail this bull market but i do think it is worth looking back to the First Quarter of 2018 where we saw a very similar situation in the market, that the market had an extremely strong january and then we had a very volatile shop selloff in february i agree that the data thus far this year has probably been supported for the markets but valuations are very elevated after a very Strong Performance last year. You know what i think is important to note, though, is that over the last few years weve dealt with some policy uncertainty and weve dealt with some policy tightening that has been disruptive to markets my view is that were an environment of better policy certainty so Federal Reserve clearly. Were not necessarily all the way there on trade but the market doesnt care about good or bad cares about better or worse. Incremental improvements there so i dont know if we need to line this up with prior years. Prior years we dealt with policy shots and i think this is going to be a year of relatively modest growth but improving policy that should continue to be supportive. So is a policy shock now a Balance Sheet in contraction well, a policy shock, you know, it was really, lets call it more of a mistake so the Federal Reserve tightening conditions inverted the yield curve, right and brought Inflation Expectations down meaningfully so its not me saying its a mistake. Its the bond market saying its a policy mistake and so the Federal Reserve had to back that off every time weve had corrections in markets in this cycle, whether it was 2015 or 2018, it was because of tighter policy and a flattening yield curve and so the message in that is in a world of 2 gdp growth just dont do any harm. And so long as we dont do any harm these markets tend to go higher youre right the trend is our friend. You know, greg, its interesting because you actually think were moving from a late cycle trend back to a mid cycle trend. This gives momentum to all of those who would be persistently pollyannaish . I certainly agree the fed potentially being on hold if the data comes in a little bit better than wed expect it, a lot of it is stable growth environment, one that can be constructive for risk assets i think with valuations so elevated it does leave the markets vulnerable to shocks its not clear what those shocks are going to be but, clearly, were in an Election Year and the democratic primary is on the door step now, super tuesday, at the start of march these are catalyst ts that could be potentially significant is that why were seeing defensive doing so well . Yeah. I think the defensive rallying has been kind of an interesting leg of the last bull market and one thats not going to be sustainable in a risk on environment. I think if equities continue to make new highs i dont think the more bond sensitive sectors such as the staples, utilities, can continue to out perform. Where are the opportunities right now . I think in this in an environment where growth is going to be modest and policy is going to be supportive, you should expect rates to remain low. You should expect growth cyclicals to out perform the more value oriented cyclicals and if policy continues to be supportive in the United States, then that leads to a more Stable Currency and some opportunity in nondollar assets, which is why youre starting to see some activity around emerging markets and asian equities and so i think the opportunities continue to be in u. S. Growth and in the emerging economies. U. S. Over other parts of the world . Because weve heard from a couple jpm today, sees u. S. Slowing to one seven even as the globe holds two five, right . Theyre saying the era of u. S. Exceptionalism has come to an end. Lets make sure we know what were talking about. Are we talking about Economic Activity or out performance . In this type of a world where the Global Economy is relatively slow youll look for companies that can generate true, top line Revenue Growth irrespective of where theyre headquartered and that has primarily been the United States because weve been a strong dollar environment. In a more stable environment you can start to look to those companies outside the United States that are generating true Revenue Growth some of them are in china. Some of them are in europe i dont think the u. S. Growth Companies Lose their leadership. I just think that leadership broadens to include some of the nondollar asset companies. Greg, in terms of, weve been through this reevaluation process the last couple months as we really cleared the deck on trade, so is 20 now the ceiling . Where is that window where are we right now i dont think you really see a ceiling in terms of valuations thats one of the things that makes time in the market so difficult. So i think where the data continues to be there is no reason multiples cant continue to expand. But i do think whenever we do hit some potential piece of turbulence where it is political, a deterioration in the data, the higher the valuations go the more volatile the market could be and the sharper correction you could see. The. We stay irrationally bullish until peak positioning and peak liquidity inside a spike and beyond yields and 4 to 8 equity correction. Do you see anything wrong with that game plan no. You know, this idea these cycles will end with euphoria, i dont think were there on euphoria. Talk about peak positioning. Weve actually for ten years been in an outflows environment from equities over ten years in aggregate. A lot of money going into bonds. If you look at the gallup poll Something Like 57 of american households own equities in any form down from twothirds in 2007 and so thats why you hear a very unloved environment and from what i hear more americans played the lottery last year than invested in equities. Your odds on the lottery are 1 in 200 million your odds that the market hits a new high since 1957 is once every 16 days. So i believe were in a secular bull market. Secular bull markets last historically around 14 to 18 years. What were quibbling about o were last summer was the cyclical are we heading into a recession . Recessions can happen in a longterm secular market i dont believe were heading into a recession then we get down to is this economy decelerating and we want to get defensive or is it stabilizing and we want to own the growth oriented cyclicals and think about nondollar assets with the latter i believe were stabilizing. Policy is supportive should be good for equities. A lot to talk about obviously regarding supportive policy and the future, guys have a great weekend see you soon thank you u. S. Home building in a surprise surge to a 13year high in december suggesting the Housing Market recovery is back on track amid low Mortgage Rates. Lets get to diana olick i said its a surprise but it was a stunner. Reporter yeah. It was huge numbers for Home Construction to end 2019 december Housing Starts jumped nearly 17 for the month and were about 41 higher annually, the highest level since december, 2006 break it down by type. Single family up 11 for the month to the highest level since june, 2007 multi family also surged 32 for the month, which is surprising given that were already expecting to see big deliveries of finished apartments this year that just means builders were bullish on rental demand in the second half of last year now, going regionally starts were strongest in the midwest and south. Single family was weaker in the west and northeast i dont see whetheather playinga huge factor since these are seasonally adjusted. Builder confidence is around the highest in 20 years likely due to low Mortgage Rates which came down last summer as well a strong buyer demand and tight supply of existing homes for sale Building Permits which are an indicator of future construction were down for the month both single and multi family. Single family was almost 11 higher compared with december of last year but multi family was 3 lower annually. In general, though, Single Family builders are finally getting into that entry level product, seeing very Strong Demand for more affordable homes. We saw a big jump in Mortgage Applications to buy a home last week and a huge jump in the applications to buy a newly built Home Builders ended the year without a lot of backlog and so we are likely to see strong starts in the coming months, given all this demand. Back to you guys diana, we spent a lot of time talking last year about the fact that there was such a demand for these entry level homes and yet the builders couldnt make it work financially because the materials cost too much and the labor costs too much is that moderating somewhat . Labor costs are not moderating that is a big problem still. But material costs are coming down a little bit but mostly youre seeing the builders go a little bit further out you were seeing a lot of demand in the big cities and in the closein suburbs builders are now going a little further out again trying to get the cheaper land but also building more bulk and also very entry level, that is no particular specialties in the home youre taking away the granite, taking away some of the special perks we were seeing in homes back in 2016 and 2017. Just basic level entry homes and theyre able to sell those now and are actually really starting to ramp up production on those all right diana, thank you very much well, still to come right here Phoenix Tree Holdings you may have seen it making a debut here at the New York Stock Exchange well speak with the executive chair later on jasquawk alley. Heres a reminder. You can always watch us live on the go on the cnbc app at fidelity, online u. S. Stocks and etfs are commissionfree. And when you open a new brokerage account, your cash is automatically invested at a great rate. Thats why fidelity leads the industry in value while our competition continues to talk. Talk, talk we were paying an arm and a leg for postage. I remember setting up shipstation. One or two clicks and everything was up and running. I was printing out labels and saving money. Shipstation saves us so much time. It makes it really easy and seamless. Pick an order, print everything you need, slap the label onto the box, and its ready to go. Our costs for shipping were cut in half. Just like that. Shipstation. The 1 choice of online sellers. Go to shipstation. Com tv and get 2 months free. High protein. Low sugar. Tastes great high protein. Low sugar. So good high protein. Low sugar. Mmmm, birthday cake pure protein. The best combination for every fitness routine. Which is why Xfinity Mobile data,is a different kindent. Of Wireless Network that lets you design your own data. Choose unlimited, shared data, or mix lines of each and switch any line, anytime. Giving you more choice and control compared to top wireless carriers. Save up to 400 a year when you switch. Plus, save even more with 150 off galaxy a70. Click, call or visit a store today. Cnbcs parent Nbc Universal unveiling its streaming service with access for comcast subscribers on april 15th. Nationwide launch will be the middle of july Julia Boorstin has a look and how it fits into the streaming landscape as well. Julia . Well, david, comcast shares up about 1 right now hitting an alltime high this morning on the unveiling of peacock, which is looking to be a new version of broadcast tv for the internet age. Rather than competing with netflix. Now, peacock free will have 7500 hours of content new and old shows, series and films, some live news and sports it will have fewer ads than tv, less than five minutes an hour the premium tier with twice as much content will be available to anyone for 5 a month with ads. Comcast and cox customers get peacock premium for free an extra 5 a month makes the service ads free we think there is a clear opportunity to create a streaming platform that we own and operate to give people what they want when they want it but allow us to monetize we also think were uniquely positioned to take advantage of this opportunity and play a leadership role in the on demand streaming world. Nbc universal forecasts between 30,000,035 million active peacock accounts by 2024. They have not announced their International Roll out plan yet. That is less than hbo maxs forecast at 50 million global subscribers and disney pluss of at least 60 million global subs by that same year. Now, to put those numbers in context, netflix has over 860 million global subscribers but web bushs dan ives says we believe given the massive content library, sports properties, and distribution content that the numbers are conservative rosenblatt calls the advertising innovation a winwin for consumers and advertisers. While analysts are largely bullish guben heim points out it could have a negative impact on the tv subscriptions back over to you which keeps declining of course and the question is just whats the rate going to be each year, julia. You know, it is interesting the inclusion of news and sports here i was trying to get a little more information on it its not as though youll be able to get msnbc fully streaming or cnbc. Theyre going to cureate but at least help people who have an interest in things beyond entertainment get a taste as well absolutely. I think it is really interesting they will curate it. Not like a live feed of cnbc but some live content. I think that is one of the factors that really makes this totally different than you would get from a netflix or even from a hulu, because the idea that they could have some live News Coverage especially in the leadup to the president ial election when people are so interested in news and you look at the fact that theyll have some live coverage as well of the olympics, thats going to be a real factor. Julia, thank you. Julia boorstin joining us now, wells fargo analyst, she covers of course comcast Jennifer Fritzsche what is your overall take in terms of what you thought about the presentation and the impact it is going to have in terms of overall and streaming and specific to Nbc Universal . Thanks for having me, david i thought they showed up and they showed up and showed why they will be a relevant player here i think that they did a very good job at articulating how this ad supported premium content is as they called it kind of a white space for the streaming world. And they certainly have the content catalogued to compete effectively. And what do you make of the targets . I mean, in terms of both subscribers, it does appear it is going to be a Domestic Service for at least the time being. Are they being realistic in terms of who they can reach and are they being realistic in terms of the pool theyre seeking given there be only five minutes of ad per hour yes i think both i heard the prior speaker say this, i think kind of the buzz coming out of that conference from both is that the guidance they offered was extremely conservative especially the revenue number i mean, to put it in perspective the 2024 outlook they gave for revenue from peacock is 2 of their total revenue. 30 to 35 million customers given how many eyeballs and customer relationships and touch points they have i think is extremely doable. Given their focus on advertising here, do you think that this is an attractive platform for advertisers yes i do i thought that, you know, versus some other streaming kind of coming out parties weve seen here, i thought comcast did a very effective job of kind of connecting the dots and the math around the advertising opportunities. I think with the targeted ad of five minutes per hour, you know, youre going to have a captive audience and i think that they alluded to this, that will offer a premium pricing from these advertisers and, certainly, they announced a very blue chip name of initial sponsors and my sense is there were more incoming calls to get those sponsorships than outgoing ones made by comcast. Jennifer, you point out our parent companys chair of ad sales pointing to a study that said 80 of people will choose a tv service with advertising for a lower price. So i guess the question is why isnt that done more often good question i think thats the opportunity that comcast sees as again this white space area to target now, of course, hulu does have advertising and people are paying for that. But i think this is this target, the time amount of advertising cant be emphasized enough, because its small five minutes in an hour. Its not i think in that case advertisers dont see that the consumer will think of advertising as an irritant for lack of a better word. And i think thats the opportunity they have seen yeah. I would add to that by the way in speaking of Brian Roberts and steve burke yesterday prior to the presentation, they were amazed that nobody else had moved into that space so to speak, that white space at least they feel that theyve identified, jennifer, over the last 18 months to two years that theyve been trying to figure out exactly what to do they were relieved that they sort of feel like its Still Available to them right now in terms of what they can do there. Do you believe, though, overall, that it will help to erode the existing Subscriber Base amongst comcast or nbc Cable Network customers . I mean, that is the needle they have to thread. But i think what comcast has effectively done is kind of have more touch points for that Customer Base that they have and i think peacock will be yet another example of that. So i think, you know, for the people who have not cut the cord and thats still a fairly large number, they will also get the service for free and it could be almost an add on to those services i think they said this where the world is going, streaming, and that train has left the station and they have a role here especially from the content they already own the challenge they had before this is a lot of the content that they own was being monetized and profited by other streaming services, so this corrects that. Yeah, right on third party platform. Youtube of course which they seem to be particularly focused on as opposed to the likes of a netflix. Jennifer, thank you. Appreciate your time thank you Jennifer Fritzsche. The Top Performing stock this year but can tesla continue its drive higher Janine Ghostbusters . Of course id love to take an informal poll. I used to be a little cranky. Dealing with our finances really haunted me. Thankfully, i got quickbooks, and a live bookkeepers helping customize it for our business. live bookkeeper youre all set up janine great hey you got the burnt marshmallow out delivery man he slimed me. janine tissue . vo get set up right with a live bookkeeper with intuit quickbooks. The easy way to a happier business. 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, well pick up and deliver your clubs ontime, guaranteed, for as low as 39. 99. Shipsticks. Com saves you time and money. Make it simple. Make it ship sticks. Tesla leading the list of gainers in the nasdaq 100 so far this year but the ride to the top is not without controversy short interests built up in the stock as the Washington Post points out trouble may be brewing for the company in china joining us now is tesla investor, former Company Board member, steve wesley great to see you today good to see you as it stands now, 20 of teslas shares are trading short. Do you think that this 500 share price is unsustainable well, look. Only time will tell. But i have a hunch tesla is going to continue to do well heres why first, theyre growing it to 20 a year while most Auto Companies are shrinking. Second, the firm has 18. 9 gross margins, higher than most other Auto Companies in the world. Third, moving international very quickly in europe, already the number one selling car gas or electric in the netherlands, norway, switzerland, number three in the uk. Theyve moved into china very quickly. Theyre expanding the product line if tesla has had cylinders youd have to say theyre hitting on a lot of them. There is a Bigger Picture here it was said by the head of volkswagen he said, look. All the others are being valued as Auto Companies. Tesla is being valued as a Technology Company theyre on track to do 30 billion this year, 3x multiple if its a tech company, thats a bargain. So part of the drive definitely is this performance in china and the opening of the shanghai factory and, of course, we all saw elon musks jubilation there is the dancing premature when you consider the facs somethinge neighborhood of 400 plus electric Vehicle Manufacturers coming online . I dont think so. Heres why first, china is the biggest auto market in the world. Theres a huge demand there. Second, china has extremely acute pollution problems i believe the demand for electric vehicles is going to be huge dont forget, the tesla model s which was the primary vehicle theyre selling here has a miles per gallon equivalent of 123 miles per gallon whats not to like about that . I spent a lot of time in china and weve done business there. The Chinese Consumer has traditionally, historically been very brand conscious they love apples they love the high end brand names. Tesla, like it or not, is the dominant brand in the electric car business i think theyll sell very well there. I think it is going to be the must have vehicle in the country for those who can afford it. To the point you made earlier, steve, about being a Technology Company, what are your expectations when it comes to autonomous driving . The idea of robot taxi fleets available and tesla being the leader it is funny i hear Different Things about their data capture because they do have so much Data Available given the cars that are on the road but its unclear to me how much theyre actually keeping to help a. I. And to help improve and continue to sort of fuel what would be autonomous look, you put your finger on the key issue of the age one, part of the reason so many Auto Companies may be in trouble is were moving toward a world where more people are doing ride hailing. My kids who are 18 and 20 dont need to buy a car. Theyre happy to do ride hailing. The question is how quickly does it become autonomous mr. Musk has done something some people say is rash others say its brilliant. Well see. But hes moved quickly to put cars with increased autonomous driving features on the road i believe they have captured that data. Its ultimately in the Auto Industry going to be about who has the most data, will be able to produce the most, safous Autonomous Vehicles. With the cost of light r coming down i think youll see Autonomous Vehicles on the road in the next four to five years far sooner than anybody thought. If tesla ends up leading that race 500 could look like a bargain. Four to five years autonomous you know, again, the value here though that the market is ascribing to the company just based on auto sales, you are a believer it is going to be about a lot of other Revenue Sources i assume autonomous being one of them perhaps Battery Technology another that justifies this current market value of roughly lets call it 90 billion . Its all the things ive said simply put they are growing faster than virtually any other auto company in the world. Theyre going to more markets, more quickly theyre now coming out with a full line of vehicles. We all love to laugh at the cyber truck because it looks a little crazy but theyve already taken 250,000 orders some of that obviously has the power of the brand i would step back a little bit and this comes directly from what the head of v. W. Said i think it is a speech everybody should read. Were in an extraordinary age where there are two issues that kind of linger above Everything Else, rise above Everything Else one, people have concerns about Global Warming two, everything we deal with from our homes to our cars are becoming digitized tesla has put a vehicle on the street, 123 miles per gallon, equivalent range the most digitized car in the world. The First Car Company to really realize people wanted more from a car. It may end up being the most powerful Digital Mobile device in our life. We all think thats the phone today and it certainly is. In the future will it become the car . If so, tesla may have the full position if so, tesla may have the pole position also if we can put a plow on the cyber truck it might be very useful in our driveways as well. Steve, thanks for joining us i appreciate your perspective. Happy to be here. Lets get a news update now. Sue herera has that back at hq good morning, david good morning, everyone heres whats happening at this hour ayatolla coc ayatolla is delivering a friday sermon in iran for the First Time Since 2012 as the country grapples with the fall out from the public anger of the accidental shootdown of a ukrainian plane. He lashed out at western countries dismissing american leaders as clowns. 11 u. S. Soldiers were injured at a missile attack in iraq last week and were treated for symptoms of concussion but initially the u. S. Said there were no casualties swedish activist Greta Thunberg joining hundreds of people in a climate march in switzerland. She delivered a defiant message to global leaders. To the World Leaders and those in power, i would like to say that you havent seen anything yet you have not seen the last of us we can assure you that you are up to date. Thats the news update this hour ill send it back downtown to you. All right, sue. Thanks for that. When we come back the Bernie Sanders economy. What the president ial hopefuls policies could mean for your wallet squawk on the street returns t mutes a new reuters poll shs Bernie Sanders climbing in popularity now tied with joe biden among registered voters. Robert frank joins us now with more on senator sanders proposed plans and what they could mean for the economy we spent a lot of time on Elizabeth Warren perhaps not as much on mr. Sanders. Certainly looking forward to hearing about this, robert david, the numbers are even bigger Bernie Sanders plan for health care, the Green New Deal, and jobs would more than double total federal spending sanders has not released the total cost of his plans but a new estimate by the former treasury secretary Larry Summers finds the plans would cost over 60 trillion over the next decade more than the total spending of 52 trillion. It would be two and a half times bigger than fdrs new deal and federal spending as a share of gdp would grow by 20 . That would be the largest since world war ii now, you compare that to senator Elizabeth Warrens plan. That would increase spending by 12 of gdp buttigieg by 2 . And biden by 1 . Sanders big ticket item is of course the medicare for all plan that would cost around 30 trillion over the next decade. His Green New Deal adds another 16 trillion add to that his jobs for all plan that would give every american who wants a federal judge a job. That adds another 7. 5 trillion. On top of that youve got the plans to cancel all student debt universal preschool. And universal child care all of which expected to bring it up to that 60 trillion number now, sanders has proposed about 20 trillion in new taxes that would be on the wealthy, wall street, corporations unclear, though, how he would raise the remaining 40 trillion no comment from the Sanders Campaign on the total costs of the taxes and plans. Guys those are some big numbers, robert yeah. Very big very, very large. Okay thank you. Robert frank with us to weigh in on the sanders plan as well as other news this week such as the u. S. china trade deal, i got another question as well on the comey stuff, jim, i want to hear from you it is jim stewart, New York Times Pulitzer Prize winning columnist, author of deep state and first we always refer you spent a lot of time reporting on taxes and plans what do you think when you hear Something Like that . Well, i will say the sanders plans are bold i mean, they are so far from the status quo they are very far out there. Apart from that, it is the philosophy of this i think is really a very profound difference between him and the other democrats and certainly trump. Take the free trade. He is totally hostile to free trade. He wants to use tariffs and other protectionist measures but his goal is purely protectionist, to support American Workers and American Industries it is not to use it as a weapon to increase free trade which is what trump has sometimes said he is trying to do like with china. He is very pro worker but has no interest in the American Consumer put aside the taxes. The cost of the protectionist plan in terms of higher prices is something i dont think people focused on at all and he certainly has no interest in share holders. He really wants to soak corporations i sort of wondered, okay he puts in all these protectionist policies maybe corporate, american corporate profits go up. But then he wants to take all that money and hand it over either to the federal budget or redistribute it to the workers and the corporations it strikes me as a very 1930s view of the world where it was much more worker, owner, labor, capitalist its like it doesnt seem to take into account like the small businesses, entrepreneurs, startup. I mean, the economy is so much more diverse and dynamic and the classic kind of laborer pool is much smaller it seems to be getting traction. Why do you think that kind of plan is so appealing hed now be in the lead among potential democratic voters . I think the rhetoric is resonating he says there is too much inequality the rich are too rich. A lot of people agree with that. I honestly cant believe they really focused on the details of how you take that rhetoric and translate it into policies that would significantly change that. By the way, i think the jury is certainly out on whether this would help i mean, other countries have gone down this path mostly in developed europe and looked at the future and backed off from it theyre like they are backing away from the wealth tax, from state ownership, you know, the means of production. He is doubling down on that. I think many voters have just not gotten down into the details. Sanders has been sanders for years. Yes i wonder if you think we got republicans in the white house running trillion dollar deficits if that has cleared some runway for him to be even further out on pole arty at least of policy. I think thats correct. I mean, republicans have given up the balanced budget argument and oddly enough now the democrats are saying trump is blowing up the deficit there is a sort of prevailing sense that deficits dont matter i havent heard sanders quite say that yet but when he starts getting pressed about where do you come up with the extra 40 trillion i expect we will hear something, oh, well, its clear we have the borrowing power. Were investing in the future. I will say another spending thing he is big on and hasnt gotten much attention similar to trump though trump hasnt done anything with it is infrastructure he has been calling for a trillion dollar investments in infrastructure which i actually think is a prudent use of government spending. Yeah. I mean, we have our National Debt what, about 23 trillion right now. Somewhere in there were adding to it very quickly. We are. But this would be a scale that is so unprecedented. Yes i just cant believe voters have really focused on this very much and i am kind of surprised democratic rivals havent been hammering him more people tend to lump him and Elizabeth Warren together in this stuff but they are philosophically very different compared to sanders, warren is a red blooded capitalist thats what she says she is well, she knows shes got some pretty redistributionist policies going there, too they both jumped on the wealth tax but again, philosophically, sanders is way, way to the left and any candidate ive encountered in my lifetime is bloomberg making any headway with all of the millions he is spending on advertising . Well, some, i think i dont see any surge in the polls but i think the bloomberg strategy has always been keep the awareness out there and when all of the chips fall, people are going to realize im kind of the only possible candidate who can beat trump and then theyll come around. I think he is playing a longterm game the spending is not aimed at the polls today or tomorrow but super tuesday, down the road, when we see more and i think, yes he is maintaining that awareness level with the money its expensive look, hes got the money jim, i did want to come back because i mentioned some of the news of the day. It is not involving this at all but the Justice Department potentially investigating leaks from jim comey but theres a reference in the New York Times to your book. Right where you apparently did disclose some russian document thats right. What do you make of this seemingly out of nowhere investigation of comey and this document that theyre talking about that you wrote about in your book . Well, i did write about that document im kind of surprised it didnt get more attention at the time im hearing rumblings that it was, you know, the references in the book that got the Justice Department interested. I dont know if thats true or not. But i think its very worrisome that at this juncture there seems to be this concerted effort to get comey on something. And i dont want to comment on, you know, where information came about for this particular document it remands a very heavily classified remains a very heavily classified document. The origins of it are still very classified but theres a lot of people who know that this document, knew about this document, knew the role it played i reported it in the book that Andrew Mccabe went and gave Loretta Lynch a briefing on this document there were a lot of people in the previous Justice Department who knew the existence of this when you start going at a leak, i will just say generally speaking as a reporter the top person in the agency is rarely, if ever, the source of this kind of information are they trying to weaponize the department of justice . Absolutely. I think that pattern is now very, very clear how many times has comey been investigated over the memos, over the other supposed leaks . No prosecution now they have another one going on him they still have mccabe under investigation. Who knows who else theyre looking into there i do think it is a worrisome sign that, how politicized the Justice Department has become and how vindictive they are to try to go after the fbi who i still think, yes, theyve made some mistakes here and there theyre human beings but they did, you know, Heroic Service to the country they still are doing it. Jim, thanks a story well keep an eye on as well of course given your reporting on it. Jim stewart. As we go to break take a look at shares of gap today. Erasing gains it did generate since the close of trade yesterday as they canceled plans to spinoff old navy as a separate company dow is up 63 points. I can. The two words whispered at the start of every race. Every new job. And attempt to parallel park. electrical current buzzing each new draft of every novel. typing clicks the finishing touch on every masterpiece. newborn cries it is humanitys official twoword war cry. Words that move us all forward. The same two words that Capital Group believes have the power to improve lives. And that, for over 85 years, have inspired us to help people achieve their financial goals. Talk to your advisor or consultant for investment risks and information. Talk to your advisor or consultant thats what happens in golf nothiand in life. Ily. Im very fortunate i can lean on people, and that for me is what teamwork is all about. You cant do everything yourself. You need someone to guide you and help you make those tough decisions, thats Morgan Stanley. Theyre industry leaders, but the most important thing is they want to do it the right way. Im really excited to be part of the Morgan Stanley team. Im justin rose. We are Morgan Stanley. Market expert Jeremy Siegel has a warning for investors after the record rally resqwkn e reet coming up. Through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From using feedback to innovate. To introducing products faster. To managing website inventory. And network bandwidth. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. Welcome back to squawk on the street. Rick santelli here live on the floor of the cme group if its earnings season its Rebecca Corbin 2019 pretty good year. Were already up what, over 4 in the nasdaq and its only january. The respondents seem to have done pretty well in 2019 highlight their top answers and highlight where they were a bit light. Institutional Global Investors 1. 2 trillion in Equity Assets feeling very good about not Fourth Quarter 2019. Thats baked in. Feeling really good about 2020 according to survey respondents 73 are expecting 2020 outlooks, guides fro guides from corporates to come in line to be better than 2019 results. If i look back, there was Something Big everybody was talking about, recession your respondents didnt put that at the top of the list at the top of the list was trade and just the u. S. In general and considering inflows in the u. S. , they were correct. What about recession and all these issues moving into 2020 . Recession was pushed off the table. The majority of investors think thats 24 months out they have got their arms around slowing growth corporates have done an exceptional job managing expectations heading in, downshifting from the second quarter, third quarter, they have a job to be conservative coming into 2020 u. S. Trade split investors were split on whether that would be resolved by u. S. President ial elections they got a boon. They have been in cost cutting mode thats going to be helpful to margins. Talking about margins, investors are expecting rezil je resilien markets. Theres nowhere else to place your money so we have money coming in to equities, we have corporations managing expectations. We have a tremendous amount of Free Cash Flow, theyre expecting big Free Cash Flow that has to go somewhere it has to get reinvested, has to go to buybacks, m a. Ultimately its going to it be a pickers market obviously your respondents are looking at various industries trying to handicap where the opportunities are. Your final thoughts here is the elk sh election coming up and trump and the administration, are they figuring into to the respondents answers . 97 of investors do not think the hearings will lead to trumps dismissal. I will tell you the only thing that probably could bring these markets down is trump not getting reelected who would have thought that a few years ago. Thank you for joining me in chicago on this earnings season. David faber, back to you all right thank you. Now time to send it over to jon fortt, another man who does not wear a tie every day im only fridays, jon. Welcome to the club its a little like the wework of residential Apartment Living in china. Its not profitable. Its fast growing and it just ipod here at the New York Stock Exchange we have the executive chairman coming up on squawk alley. It easy and seamless. Pick an order, print everything you need, slap the label onto the box, and its ready to go. Our costs for shipping were cut in half. Just like that. Shipstation. The 1 choice of online sellers. Go to shipstation. Com tv and get 2 months free. This rounds on me. Eat. Shipstation. The 1 choice of online sellers. Hey, can you spot me . Come on in. Find your place today, with silversneakers. Included in most Medicare Advantage plans. Enroll today by calling the number on your screen or visit getsilversneakers. Com welcome back to squawk on the street. We want to call your attention to technology and the s p 500. One of the best performing sectors out there over the past year look at that out performance the gap between the s p 500 Technology Sector and the s p overall is 24 percentage points. A huge move. But not every single tech stock out there has been doing its fair share and participating check out these three stocks that have underperformed over the course of the past year. Dxc is down 43 during that time span Juniper Networks down 12 in that span. F5 also down 11 as we talk, carl, about the tech stocks leading the way higher, some of them have lagged you wonder whether traders and investors at some point will look towards some of those underfunde underperformers to see if they will catch up to the Broader Market thanks. We do want to mention a quick programming note do not miss our sara eisen making her return to cnbc live from davos, switzerland. Shell be reporting from the ground with ceos of u. P. S. , Philip Morris and micron we cannot wait to have sara back it will be another year where clarity of Central Banks will be a big forecuss sara who . Sara eisen. Just kidding. That would drive her crazy looking forward to her being back very much. All right. Coming up on squawk alley, a public debut at the nyse the executive chair of Phoenix Tree Holdings will join us after the break. Dow is up 41 our Retirement Plan with voya gives us confidence. So we can spend a bit today, knowing were prepared for tomorrow. Wow, do you think you overdid it maybe . Overdid what . Well planned, well invested, well protected. Voya. Be confident to and through retirement. Car vending machines and buying a car 100 online. Vented now weve created a brand new way for you to sell your car. Whether its a year old or a few years old, we want to buy your car. So go to carvana and enter your license plate, answer a few questions, and our technowizardry calculates your cars value and gives you a real offer in seconds. When youre ready, well come to you, pay you on the spot, and pick up your car. Thats it. So ditch the old way of selling your car, and say hello to the new way at carvana. Good morning its 11 00 a. M. At comcast headquarters in philadelphia, its 11 00 a. M. On wall street, squawk alley is live good friday morning. Welcome to squawk alley. Im Carl Quintanilla more record highs today as the ru