tv Squawk on the Street CNBC March 2, 2020 9:00am-11:00am EST
mpbltsz i want to thank liz young for joining us this morning. thank you. time for "squawk on the street." ♪ welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. it was another wild future session. a thousand point swing investors weighing fundamentals along with hopes for central bank intervention and we have upgrades jpmorgan, ge, apple and more europe is red, down about a percent, ten-year 1.07 they peaked on hopes central banks might act to combat the economic fallout from the coronavirus, the fwanz have been
erased but futures have jumped back into the green. jim, we know it's going to be another crazy week, very hard to predict. so what is your tell this week >> i thought the advice we got from friday ended the teeth of it but if the market is up, we're still oversold and that's what you got for it but i don't think there's much that you want to buy i think you'd rather wait until it goes back that swing, at 3:30, the futures were up 80, it was crazy, but i think what matters is that there are a lot of people, the feds will take action today and i come back, peter bachvar was on with dominic chu unless the fed can create a vaccine or beat the virus it doesn't matter >> you said on friday this is a biological crisis. not -- >> ultimately it could -- i don't think it will turn into a liquidity crisis, for a state at home economy and when you have a service economy like we have,
you get an upgrade for darden, for instance, last week, cheesecake factory are you kidding me anybody anywhere there's a gathering is going to be a place that i think people will be reluctant to go and that's just the way it is. i don't want to, 1.4% is the percentage of lethality. >> it depends where. >> right >> there's so much they don't know that's part of the reason why the market is reacting at somepoint we will know a lo more >> we know that it's appreciably worse than the regular flu >> we do although at the same time given the lack of testing that's been done and around our country. >> right >> and in other countries it's unclear how many cases there really are >> right >> anecdotally you can talk about people come back from milan not feeling well it's here and the question can also be and a lot of people have got continue and gotten over it.
>> yes, never knew they it h it. i think the lethality is wrong, it's lower and almost no under 15-year-old people who have got it, which is quite different from our current flu david's right. everything is so anecdotal, drives you crazy there was a tremendous piece last night, last week in "new england journal of medicine" by dr. fauci, who everyone told me was silenced read him he's right there and i'm not saying he's reassuring but let's deal with facts. dr. than lapook on cbs said deal with facts you deal with facts it's not as scary as the fictions. >> right, but as long as we're dealing with uncertainty, the idea that people are going to pull back, not gather, not create a lot of economic activity certainly still is in the foreground and how you
discount that in the marketplace. >> it's a travel and leisure recession. it will be short but obviously there's just a lot of cold water poured on the idea that it's over in april. we have, governor cuomo said listen the idea we only have one person that has it in new york, i mean it's kind of silly. >> of course you guys are talking about the demand shock the other side is the supply shock. port of l.a. forecasts containers down 25% this month imagine one in four products coming from china not coming in anymore. that's something that is even harder for the fed to arrest >> right look, i think we covered the fed. we're a financial network and obviously the fed does what it does i care much more about what moderna does than i care about the fed. i care whether the chinese will do what an authoritarian government can do, to front-load the virus, they give the vaccine and immediately give the virus to people. we are obviously, do not believe
in that. the reason why it takes a year to a year and a half is because we are reluck dactant to give pe something that can kill them i don't know what the chinese way is one of the things we know, the wet mark why aren't they closed if it was the wet market what do we know about the 58 million people quarantined they shut down the news out of china. >> it's still very difficult to measure the economic impact that it's had there other than knowing it is quite significant. >> right >> and the question is what they will do to try to spark the economy in some fashion. >> yes >> how quickly it's coming back, and some of it's anecdotal depending on who you speak to, what ceo, the manufacturing plant was, how many are coming back to work it's hard to piece together. >> right hp, hewlett-packard a third of their factories are up but they're running, actually a lot of factories are up but not running. >> may not be running full tilt.
>> therefore they can't meet the demand >> but they will and the good news seems to be at least as of now new cases certainly have dropped dramatically in china. >> right >> now everybody back to work or many people returning to work there is that question as to whether it will spread again and we'll start to see an increase or whether they're not going to be testing or who knows. some of these countries, it's not necessarily in their interest to track every case >> no. >> they have to close down their own account. >> one of the things that we are used to now from the chinese is the numbers are let's say lies >> fanciful? >> fanciful, i like that, fictional. their economy, the pmi recession number for china are they making it so that you go and we accept the fact some people are going to get sick no one believes the current mask
they use are valuable. honeywell mask very good, a couple hundred >> a couple hundred? >> yeah. it's a real mask >> we'll leave it on that, there are mixed signals wearing mask don't wear a mask, the surgeon general went out on twitter saying stop buying masks >> the ones that are traditional, the molecules are so small >> sure. >> as ed gardini said we're not virologists and endeemologists i can't even play one on tv. >> no, you can't all the volatility is a topic of interest in terms of how it affects consumer behavior and spending patterns, what lee cooperman talked about on hour air last night >> this volatility is scaring the public it's also amalorate the capital to business. jobs, tax revenues, et cetera. 50 to 100 point swings up and down in 50-minute time frames make no economic sense why don't they reinstate the uptick rule. the president should stop leaning on the fed
chairman powell knows what to do he's done a very fine job. >> the president over the weekend did say the fed needs to be a leader, his code for cutting rates which odds of a 50 basis point cut 100. >> look, i think they can do that is lee right about the uptick rule that's a battle that i fought, a huge number of signatures to be able to bring it back and the exchanges want the volume. it could cut down on the volume. they don't care about directional. i believe that lee is right. it was meant to be able to stop the air raids but according to people in the know, it would be much better for an individual stock but the exchanges don't care about -- this is not the era of dick grosso where the individuals are celebrated the era fast traders are celebrated >> what about the argument we only complain about market structure when market is down, way down >> i hate any run that is
aggressive either direction because it means the algo people are exacerbated. when this -- i saw this morning when i got up at 3:00, the rally from 600, 700, you talk about 800, a full swing now. 1,000 ticks. >> i know. >> i hated that rally. it's a phony rally the pajama rally >> my keen sense for the obvious. last week was an extremely violent week in the markets. there was a lot of money pushing through. >> right >> a lot of positioning getting done, i would assume >> right >> can we assume this would be a quieter week as a result >> i think that everything depends upon the virus news. if you have an outbreak, a cluster in the state of washington, i think that's going to impact the futures. >> you do? >> yeah, i really do i think also anybody who is visible catches it, even though it's wrong, i think that matters. study what happened in iran high
level officials dying. >> eiran is not the united state in any way, shape or form. >> talk about master of the obvious. we have a primary that could be, we could, you know, got to move on but the primary is very important. >> biden's ascendance could be a positive for the market. >> that we can talk about as easily as the fed i guess. >> we want to get an update on caseload and what scott gottlieb said on "squawk" this morning. meg tirrell, good morning. >> multiple cases in california, washington and oregon a nurse facility in a seattle suburb has more than 50 residents and staff showing symptoms a patient has died bringing total deaths in the u.s. from the coronavirus to two experts suggest there are many more cases circulating
an analysis in snohomish county, washington, suggests the virus may have been circulating there for six weeks and there could be 150 to 1500 cases already in the community there. the new york city also responding to its first case, a traveler from iran, governor andrew cuomo saying in a tweet this morning the patient lives in manhattan and had no symptoms upon arrival, noting she is a health care worker, knew to take precautions and didn't take public transportation. still the medical community on alert and doctors expressing concerns about a continued lack of coronavirus tests dr. matt mccarthy on "squawk box" saying he has to plead his case with the department of health in order to get a test and that he expects thousands of cases by next week this as pharmaceutical executives head to the white house for a meeting this afternoon on vaccine development. the ceos of glaxosmithkline, gilead, moderna, and research of
johnson & johnson and pfizer will be in atendance >> the meeting was already scheduled to talk about drug pricing but they'll obviously pivot to this today. >> you look at pfizer one of the highest yields in the dow, 4.5, sells at 12 times earnings, kind of interesting stock i've never been a big fan of pfizer but you look at the companies in the dow that could sustain that dividend, that's one that comes to mind david, you've always seen that company as being a consistent company. >> it is it's still being penalized by that deal it did with mylan in terms of the reverse trust it's never fully recovered from that >> no. >> it is down this year fairly sharply is pfizer but yes. >> no one can pound the table. it's interesting, like again we think about, like i said to my wife, lisa, i don't want to be subdued. she goes why not i don't want to be subdued
because i'm not a subdued guy. she said that's wrong. david, how subdued do you feel >> typically am. i try not to be too morose or mournful i'm occasionally lugubrious. >> you were upbeat saturday. was that the phony faber or real faber? >> a couple of tequilas in faber. we are in mourning this morning, jack welch has died at the age of 84. as ge's chairman and ceo over two decades he transformed the company and grew its market value from $12 billion to $410 billion. fortune in '99 dubbed him manager of the century could you choose the board manager, leader, motivator, jim, he was all of those things >> right all of us think of him here very fondly he cared about us and the
network more than pretty much any ceo and david, how many times did he weigh in just in terms of your day? >> and when i started here in 1993, as a young person, having exposure to jack welch is something you could never imagine. we had an outside presence with him given our lack of importance overall to ge. at cnbc, he enjoyed the product a great deal and he was an incredible motivator, as you said knew how to celebrate success. >> yes >> and i obviously am very happy or look back on the years that i had that kind of access to him and time with him is a real gift >> that's a great point. i'm sure you saw this, too, carl he knew us and he would say things, i used to get the facts, it was like you get a fax, f-a-x kind i did good you liked me today >> you could be brand new as an employee and he would be aware
of what you were contributing already. it was stunning his awareness of the rank and file. >> amazing, and his notes, we would send you notes >> right >> via fax or mail sometimes >> right >> and/or eventually email it was important to state how important he was when ge was one of the largest market cap companies in the world, when it was seen as a paragon in terms of operations and he was viewed as the single most successful ceo, certainly of his day, if not overall. now time has a way of course of changing perspectives and views and we can sit here and talk about the influence that ge capital had overall on ge's earnings and how much that certainly came to pass offer the financial crisis >> right >> but this guy was number one ceo in america for many, many years. >> i think that there are people who have been in that room, when
he would do the end of year review about how you did he knew everybody. first asked how is your wife, how is your kids, know them all by names, how is this going, and then ask you, not tell you, but ask you, how's it going? what can i do more of? in a very positive way obviously if you didn't do well, that's a different thing. i know people who all feel -- i don't want to annal jiz the present day but how everyone loved kobe, and they said that they were his friend and it's always surprising? all the people who worked for jack, except for the ones obviously he eliminated because they underperformed, they all said jack knew them. jack knew them jack knew me i mean jack knew you jack knew you. and what the hell was do he doing knowing us >> our thoughts are with suzy, his wife, family, his beloved dogs there will be a funeral mass in new york at st. patrick's, they're determining the date on that it will be open to the public.
in lieu of flowers asking for donations made to the boys and girls club in salem, massachusetts. as jim said, he will be missed jack welch, dead at 84 we can't calculate our total taxes? do you realize how many otal different taxes we pay? sales tax, different p-o-s systems in all seven countries. and online sales? that's a whole other system... and different regulations. therere'realal eate e crits,s, .
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will they? not as long as thanksgiving is a holiday. planning for the future is about more than just money. let equitable be your guide. welcome back to "squawk on the street." we have about seven or so minutes before we get started with trading for the week and what a week it may be. let's get a mad dash ahead of the market open and talk ge. we were talking about its leader for many years, jack welch,
during its most successful period the last few years for ge not quite as successful but today good news from an analyst being negative and influential >> steve tousa who will be on "halftime" request scott wapner goes from sell to hold, just a couple of things showing how humble he is he says we were wrong and likes the fact the free cash flow was better, talking about how a lot of it is timing but there's an element to this and it's a long report, an element that says look, they're through the true hard times he's using an $8 target. >> significant amount of downside >> you've been critical of him missing the boat after having been influential and right for so long. >> right >> is this capitulation on tusa's part? >> yes, to some degree when he
says we were wrong i did not like giving him the lampoon treatment because he's so rigorous. he was concerned about headwinds he's no longer worried about that's the last, he was looking at the last three quarters as glass half empty and not half full he was one of your great mainstays and doesn't feel like that anymore he's a very good guy and does good work and i think that this was a sign that larry colp nice note about jack welch but the ceo is managing things better and this is an owed to larry kolp saving the company and bringing it up to where it will be an industry and i think that's not more than that but
that's a bold thing to come in at 10 and 11 and say you know what i was wrong, after being right from 27 down to 6. he's hard on himself >> you point out he had a $5 target previously i believe. >> it does bring us to the wave of upgrades today. i'm trying to make a list, jpm, ge, southwest, apple, western dig, micron, dow, deere, lyft, twitter. what's going on? >> upgrades on people who were right, they were right now, whether -- they didn't seem right at the time because they fought this market but all the upgrades that you meant almost every one were people who said the stocks should go lower, lower, lower and they went lower and now they want to take advantage of it to buy, and i mean, there's just these little notes like baird came in, western digital selling could be done it wept to a buy from a sell and i think what's happening is people who really got it right
are getting the chance to declare victory. a lot of victories to declare. the optical pieceon apple, there's a person who basically missed the run he missed the run. it's come back and now he wants to participate i thought it was a thorough piece, it talks about the ancillary products you don't give apple enough credit for >> even a huge disruption in supply is immaterial in the long-term given the way they've worked themselves into our daily lives. >> i totally agree we are in a position where a lot of people are trying to figure out when do you buy apple? not a lot of people think being when to sell people have seen the stock fall and do you give it a 16 multiple, 18 you've got china on the bye side and china on the supply side i don't think the stock should be more than say 240, 250. we have an algorithm driven market where if you say apple
should go up and the futures turn you'll see 240 intraday and that's because the way that the darned futures work, chicago way overpowers new york. apple has the cash flow to buy every share down there, right? david, the cash flow is king there. even with this obviously slower demand that everybody's featuring. stay at home economy, keep thinking about that, stay at home economy no one goes to gathering places, no one -- many people stay away from gathering places or when this thing continues, when i say when, because pence is saying things are going to continue >> and your point, you've been preaching this gospel on travel related names, jim now the list of companies with mandatory restrictions add amazon, goldman, we talked about nestle last week, twitter and others >> nike. nike across the board. i just think that stay at home
is powerful but there's a lot of people if they have to stay at home they can't keep their job that's part of the recession, a potential recession is that part of what the fed can do again what you need is something that gets you out of the hospital fast. a lot of the doctors are focused on the vaccine i this i that's wrong. i think we have to focus on getting people out of the hospital because people die in a hospital because of the illnesses they catch >> thankfully thus far we don't have many people in the hospital in this country. >> are there enough respirators since we don't have enough for a bad flu. bad flu 2017-2018 a lot of people died. >> the dow futures the volatility over the last 24 hours how much of that is coming in this morning there was this expectation, carl mentioned it earlier of 50 basis point cut, almost immediate >> right and that's what drove the futures last night the goldman piece, this sweeping
goldman piece, so then the shorts go nuts and people think it's a big rally and somebody in new york contracts it and futures sell off, because where new york is close to home. this stuff is so emotional i advise people at home if they want to put an order in, when the market gets cracked, because of futures, that makes sense but to just go in today and say, whoa, this is the level, you better know what you're doing. you may find another level after. >> this piece right here you're referring to, there's goldman's look, they cut numbers again, q1, 0.9, q2 flat, q3 1 and you make it up in the back quarter with 2.25. they say recession is not our baseline but the recessionary risk is real >> right >> evercorp ed hyman sees flat q2 and q3. >> how is the mall going to do in this period people already didn't like the mall
now it accelerates you can buy things via amazon at home that's what matters. [ cheers and applause >> the opening bell s&p 500 at the bottom of your screen and the big board it is medifast, nutrition and weight loss company, at national $ing ofor international women's day members of the united nations entity for gender equality and the empowerment of women also none as u.n. women, along with nasdaq's ceo >> there are people who want to buy, analysts who want to buy anything, right on my desk, stifel encourages long-term investors to take advantage of cruise stock valuations. chipotle was under pressure 18 months after what happened with the norovirus and december 7th incident, 18 months to come back why would we think the cruise chips could come back faster than that? when you get the cruise ship
that happened off yokohama, i just don't know if these guys came out and said look we have a lot of cancellations don't worry. i would lie look at chipotle they had one boston store, a couple out west and almost let's just say shut down for a year. you had to have a "b" in the window oh, my god >> unlike chipotle the cruise liners will take the empty ships and send them to areas where capacity is already high so you got the knock-on effect because they can move their capacity around the globe. >> i want to see the order book cancellations because as much as i like these companies and i think they have okay balance sheets, we got to accept the fact that all of travel is being cut, not just cruise ships, and i think people are reassessing the idea of taking a cruise after what happened. >> listen, there's definitely going to be a reduction in economic activity, as a result from people not gathering, whether it's conferences being
canceled and every day seems as we get another one, a large one. >> yes >> whether it goes until this summer, whether the olympics are really in play as potentially, i mean just the knock-on effects of the lack of travel. >> right >> sarah week is canceled. >> big energy. >> in houston. opec will have their meeting this weekend >> they've been disciplined, we've been cutting back drastically in this country in terms of drilling but it's not stopping how much oil we're producing. it is still an up year some of the oil companies are really like apache, apache stopped its alpine high, the principal driver where people had the stock of apache, turned out to be natural gas not oil. there's way too much oil in the world. the curve went down five years dropped to 48 from 52. you don't want to own the oil stocks you want to sell >> you want to sell still. >> right into this >> with with, ti a little over
$46. >> the problem is chinese demand and lng, they have less of a demand there >> when i look at the ten-year yield which is stunning, having hit a low of 1.030, i think of the yield is up a bit from there, we can see it there, we're at 1.093 now is that a re-election of an expectation of a cut coming or is that simply where the market is, because of flight to safety and everything else we talked about? >> flight to safety. they're safe i mean, they're safe a lot of people don't want to be in the stock market. stock market turned out to be an uncertain asset last week. largest point decline in our life time and you don't hear a lot of people say this is the fire i want in there are shortcomings people say it can't be this bad i get that for some stocks but a lot of other stocks i just question how much economic activity there's going to be when you're at home, you tend
not to -- look, do you order domino's >> you know i never order dom o domino's >> banana peppers and goat cheese option. >> costco is up 4.25% as social media over the weekend was full of images of people stockpiling goods. you talked about what you already put at home. >> my travel trust owns it >> we'll get february sales later. >> yeah, i don't know, costco is, when you want to hoard, how about that co costco, when you want to hoard >> apparently it was quite the scene at crosscos over the weekend. >> right and the purel and trying to get the wipes. we know that they have some, you have to do it for 20 seconds, you have to sing "happy birth day to you" twice, that's how you decide how long. >> washing your hands, sing "happy birthday" two times
>> our hands are going to start to get very chapped. >> that's true >> you need -- >> there you go, chapped versus ventilator, i guess, i'm goingor chapped, david >> there are some news stories to get to this morning, guys, including a deal, gilead buying 47 >> yes >> this is 47 is the key number here because that refers to antibody cd-47, a company developing therapies for blood cancer, and it's a huge, well there's gilead, which was responding positively. look at 47 the deal is 95.50, all cash. it's another one, and we've seen of the willingness of the larger pharma companies to spend big money to acquire therapies that may prove to be blockbusters in time and gilead of course has been looking to reshape its portfolio. it's the hep c giant, the pharma
ced deal which did so well for so long for all of them. for here we'retalking about what they hope will be a transformational drug in terms of blood cancers, and as well the potential at least that at some point it could be twinned with some of the other drugs they have under development, so there would be no need for chemo prior to a bone marrow transplant i'm told by significant holders they believe it's a great fit. of course they're happy as you might imagine. this company did a secondary in december or a primary offering of shares at 35. >> wow >> there is the 107 million bucks in december of 2019 at 35, they know sell at 95.50. interestingly, jim, one person who knows the company well said this is a company novartis should have been taking a close look at as well given their therapy, strategy and it would
have gone well >> my charitable trust sold novartis, an extreme disappointment, break even a drug they thought would be a terrific tussle and they failed that they bought a company where there was falsified data and that company's turned out to be an empty suit and it's a little disspiriting i think the gilead thing is interesting, people who like gilead for the drugs they had that might work against the virus. >> yes >> they're being tested in china, which means we have no idea what they're doing. >> anti-virals. >> china continues to get away with this, very few people are as upset at china. w.h.o. seems to be captured by china. it's kind of revolting, and the lack of information getting out of there is just, what a communist authoritarian state that gives us nothing.
>> to quickly finish up on forty seven, 62 patients in a phase 1b trial so that's a very small sample >> yes, geez >> in mda and aml patients but they've had the number, the response rate's 92% in some of the cases, so early going here, again early going, those could become if it is a multibillion-dollar drug >> is it possible people saw the results tlof that and even thou there was a secondary. very positive. >> back to our main theme, there is a carve-out in the merger agreement with the change clause for epidemics. >> wow >> which is going to be the new rule in these kinds of contracts, if there is an epidemic and impacts our business, with can he get out. >> how about the fact that gilead actually ended an illness and because of that, it was
punished >> yes >> you go to the drug companies they want maintenance. the idea that they cure you is kind of a one-time only thing but if you have it, hall huhallh >> so much pushback given the high price of the medicine but the point was that the damage or the cost to treat people who have damaged livers versus curing them over what was it 12-week period or 18 >> i'm not sure. >> but of course what happened with gilead's revenues, also reflected that suddenly the patient population went away. >> and it's been a terrible stock since then maybe this drives it it's a great company but that doesn't matter. the companies that are involved with vaccines i still believe in moderna. i believe moderna could speed things up obviously in china, different rules from our fda very different >> maybe we get some -- we are looking for guidance this afternoon from the fda on the ability of states to develop their own protocols. >> right >> on tests, and obviously the
time line for a potential vaccine. david, i thought you were going to go to twitter up 7% here. >> we should do that as well reports of course late friday coming out, we can confirm elliott with a billion-dollar position in twitter, give that perspective, about a $27 billion market cap right now but it's up as carl just said at.5%. they want jack dorsey out. they've nominated four from the board, it's a staggered board. three of the seats are coming up, they've nominated four don't know who the nom finees a. this is a focus on dorsey and what they feel has been a lack of operational improvement in the company, over a long period of time. we can talk about the fact that they have taken the lead in terms of dealing with some of their policies but their feeling is that a company that is growing users faster at a percentage basis than facebook is nowhere near growing its revenues or earnings as fast, and that when you look at the, when you look at twitter today,
it is still very similar to what it was seven years ago think about facebook in that way or snapchat even that's not the case. and so they believe that there are significant improvements that could be made if you had a full time ceo. as we pointed out many times mr. dorsey shares his time between square and twitter he's been back at twitter now for over four years, as its ceo and don't forget he's also planning on taking a lot of time in africa. and so they may meet with some, that argument may have some resonance with the shareholder base it's not exactly going too far to simply say hey, you know, the company probably should have a full time ceo. >> right, there was a meeting last week that they had, less cordial. jack went there. >> mr. dorsey did not come this was my understanding, this is not a public campaign by elliott. it did get out, unclear but
talked to a number of people but it's not one where they're writing the letter and doing things of that nature. however, they are hoping to get their nominees elected, and even though mr. dorsey is not up on this stag report if they are successful, it would be a significant sign he should leave. >> there are many companies that if you still like them because they have a terrific franchise, not many people -- >> need to buy them. >> not many franchises and siegel is doing a good job the cfo, and i think there's overall beli belief, twitter. >> yeah, we'll see what develops here but watch it closely. the stock is reacting positively the possibility of a change in board and potentially their desire for mr. dorsey to give it up >> and the analyst on it ed
paul >> yes >> jesse kohn, leader of their activist practice and they've been around a lot of technology companies as well. >> we don't know yet the people they're seeking. >> it has not been made public >> jim, quick before we go to santelli and wait for our pmi number, gold's action on friday had a lot of people confused >> liquidations. >> people began to sell because they were up a lot and it took momentum, and you have these algos that take whatever they're given and accentuate it, the sense if gold were to go up right now, boom! the algos would take it. tremendous opportunities in that decline and the one just so you know dr. mark ristos doing his thing, down a lot which is gold, i remember dr. mark bristow in the worst of ebola said don't
shake hands. i said that was aggressive, he said i was a sissy >> are you in the camp to the degree we see lrallies 3,000, 3,100 is firm resistance >> will you give me a break? right now news involving coronavirus what were talking about that level it was something that made me feel calm. there is a steeplechase, a gauntlet kind of like clint eastwood >> the gaunt let, like a big gun. >> a bus he had a big gun but that was -- >> but it was a gauntlet and we have to accept the fact that every single -- you gave us all the different things that are going to happen this week. man. >> we do have data on the way, right now and ism in a few minutes. let's get to the bond pits and
rick santelli. good morning >> good morning, carl. this is the market february read, we had a mid month and top of the hour we'll have the big ism. we're expecting a number that is somewhat above 50, at least that was the mid month read and these things always get difficult. right now you're down 11 basis points in twos, down seven basis points in tens and you have arrived 50.7, 50.7 so the final read is just like the mid month read except for 0.1 lighter and 50.7, well it's the smallest number since the low was established at 50.3 in august of last year, the series obviously not as long as ism so at the top of the hour we give you a number, maybe a little bit more steeped with regard to trader strategies. carl and the gang, back to you >> thank you so much, rick we're remembering one of the most iconic ceos of the 20th
century, a great man we all know, jack welch, has died at the age of 84. this is somebody who understands the situation. we have to bring in former ge board member and co-founder of home depot, investor and philanthropist ken langone can you give us your thoughts about jack welch >> well it's an enormous loss. it's a loss for everybody. jack had a great life. jack and suzy had a wonderful, wonderful marriage his retirement years were nothing but joy and happiness, writing books and founding his university, online university which became a big success but jack, if jack was anything, jack was a strong devotee of education, both in ge and after ge he had a great knack and talent for developing people far beyond what they thought their capabilities were. he was a motivator he was a fierce competitor, but he was also a compassionate
competitor he understood the importance of a pat on the back. he understood the importance of self-respect, and i always marvel at the way jack, when somebody's career was near the end at ge or they weren't going much further, jack would make sure he had a chat with them, and that at the end of that chat, most of the time, the person would feel like hey, i just was told my future's gone here or it's over, but damn it, i fell like i just got a promotion, because he gave them hope and he would also reach out and make sure the head hunters knew that this fellow, gal was available and they were talented, they'll do a great job wherever they go in fact, i don't know the exact number, but i'm guessing and i think i'm close to right, at one time three or four of the dow jones 30 stocks were run by guys who were trained under jack welch. he loved to compete on the golf
course he loved to compete in business, but as i said, competition knew limits in the sense he had compassion to go with it he was a great sense of humor, great humility, everybody called him jack in the company, secretaries, drivers, you name it, he made it an effort to make sure that we're one big team he celebrated effort, and he had no time for mediocrity in anything if people were given it their very best, and they weren't going to do much better than that, as i said, he would make the effort to understand that they knew they had a future, not there but someplace else, and he was going to help them realize that future. so those are my memories of jack, besides the fact that he was a fun guy to be with he had so much fun in private, at the golf course he and suzy had, it was a love affair jack and suzy was a love affair.
they met in jack's later years, and they got married and they, her children effectively treat jack just as if he was their natural father, and he had a great relationship with them, as with his own children. so it was a life well led, and a great human being, with kindness and compassion and great spirit. and he knew how to overcome disadvantage jack, you know, had a stutter, and he proved that he could rise above whatever challenges that presented. at the same time, he was a staunch supporter of the organizations that were focused on helping people with stuttering he would go to all their events, he would speak at them he was passionate about making certain that people know that a physical disability did not necessarily mean a drawback to be successful, in whatever you did, and he was a great inspirer
of people. he wanted people to know that if they did their very best, gave it all they had, he would do everything he could to make sure they realized success. >> ken, can you speak to the legacy of jack, from a kid kid salem, worked his way up, versus what is going on in politics now, where there are people, democrats, for instance, who really don't give a darn that someone started from nothing and made themselves something. what happened? why did that go away >> well, jim, let me tell you. one thing jack celebrated was merit, meritocracy unfortunately, too many of our politicians are more interested in how they project and what their image is like as opposed to what they accomplish and what they do.
jack had no time for fluff jack had no time for propaganda. jack knew when he was running a company or business within ge it had to be number one or number two and every effort had to be made to make sure it was today, jim, our politicians, it's all about how do i look how do i project how do i appear? more mirage than substance jack wanted no part of that. >> isn't it true that this country wanted something, wants someone like jack who started from nowhere and created, really took a company out of oblivion and made it into one of the greatest companies on earth? we actually -- isn't there an under current that is being missing, really, where we like guys like jack >> you know why? they deliver they get the job -- it is no coincidence that jack never went
into the government. jack could have been secretary of the treasury -- anybody would have wanted jack welch in their cabinet, i'm talking about clinton, i'm talking about bush, anybody. why? because he got things done he did it in a constructive, positive way very frankly, jim, that is not the case today that's not the case. people are caught up in image, aura, in oh, look what feels good okay jack knew one thing. at the end of the day you had to be realistic and you had to deliver. and it had to be measurable. when it was measured it was rewarded jack had a great knack, jim. if somebody did a bad thing at ge he wouldn't give them the day to get out but if somebody had reached a limit where jack felt they really had gone as far as they're going to go in ge he would work with them he wouldn't put them out right away look, he says, i want you to
start looking around now by the way, i'll call up tom neff at spencer stewart or jerry roach and i'll let them know you are a hell of a person and ought to be given consideration if they have any opportunities out there. he would help people he would absolutely help people that he -- because he felt strongly it was unfair politicians don't know fair or unfair politicians know it looks good or it doesn't look good. that's the difference. >> ken, please speak to the idea that he had a bench. you can't all be ceo you can't have five ceos but there were five people at any given time that could have been ceo and then went on and became great ceos elsewhere >> that is my point. look at dave cote, on to honeywell, larry johnson, dave k
kul -- calhoun now at boeing jim and became head of triple m and then boeing. you go on and on i could name all these different people that were developed under jack's guidance and under jack's -- jack's biggest and greatest asset in general electric was the learning center on the hudson and in tribute to that when he retired we named it the jack welch education center. he used to go there and teach the classes himself. because he knew these people had -- they had to have one thing to start, a burning desire to succeed and get things done if they had the basic talent and skills, jim, he would pour his life into helping those people realize their ability to capitalize on their ability to get things done. and when they left they all loved jack they had great relationship with jack they maintained relationship
>> you're absolutely right >> he went, when he got it, it was less than a $15 billion market cap and if my memory is right i think if you take the peak of the stock it was over half trillion dollars. that was 20 years ago. the most valuable corporation on earth when jack left and, of course what happened in their later years -- >> yeah, well, look, ken, we want to thank you for joining us >> thank you >> i want to emphasize ken langone the most charitable person i've ever met which matters more than anything ken does thanks so much for calling in. >> want to move on now and actually continue to talk about jack welch joining us on the phone is the current chairman and ceo of ge larry culp lots to ask mr. culp about involving the company now but
we'll leave that for another day. today is about jack welch. as ken just pointed out, larry, almost 20 years since mr. welch stepped down as ceo of the company you now lead i'm curious, though, when you look around and in the work you do, do you see his influence still at ge? >> david, good morning today obviously is a very sad day for us here at ge and for the entire ge family those of us who knew jack knew him as ken said earlier to be a larger than life figure and certainly was the heart and soul of this company for over half a century. i think with respect to his influences today, i think we certainly see a great deal of those influences around the company today. i know speaking personally he was a strong influence on me throughout my career, despite the fact i never worked for him. as we look around the company today, i mean, his memory and
his influence is certainly very large. >> tell us a bit about your own experiences. as you say, you never worked for him, but at the same time how did he have an influence on your career, larry? >> david, i had a chance to meet jack back in the late '80s when i was a student at hbs i remember it vividly. i suspect jack didn't. but anyone who grew up in the industrial world or even more broadly during that time, i think went to school on ge and whether it was an orientation toward talent, globalization, and the likes, those were ideas that jack was able to execute on and i think taught many of us how to do the same i would say even in this role jack has continued to have an influence on me. i remember when i saw him last what i'll always remember most vividly was jack leaning across the table and asking, how
exactly are you running the company? jack was still very much in the game, very much committed to our success, and, frankly, to have jack ask me how i'm running ge was a rather humbling moment >> i'm sure it was as he knew very well of course, larry, businesses are dynamic things you can't stay static. ge certainly has changed a great deal since the times that he put together what was that enormous company at the time. talk to us just briefly about the changes of course but the legacy of mr. welch in your opinion as well at ge? >> well, i think jack was first and foremost about talent and the team and he had a deep passion for winning. those are very much values that we embody today and the biggest tribute we can pay jack going forward and jack was always focused on the future, was to
continue to strengthen this company with an eye toward winning. >> larry, we certainly appreciate you taking a few moments with us to remember mr. welch. somebody all three of us here of course also knew well through the years and remember so fondly larry culp chairman and ceo of ge >> there you go. great leaders weigh in if anyone thinks i was being political, i just introduced the front-runner in the democratic party who is a socialist and would not necessarily approve of what jack did. there is nothing wrong with saying that. >> i don't think anyone -- >> get him on the phone? i guess i could. what do you think about the way jack ran ge? maybe he was a ge fan, jack welch fan. i just think that is unlikely. >> what are you going to do tonight? >> listen up millennials we have beyondmeat ethan brown might whip something
up for me and alan trefler, great numbers from pegga beyondmeat is not pro meat but a way of living. david doesn't even know what i am talking about >> i do. it is a way of living. that is what you just said >> 6:00 p.m. eastern time. let's get to rick santelli at the cme. >> yes, ism of course the biggy. the big ism. february's read comes in at 50.1 it is definitely less than the 50.5 we were looking for sequentially follows 50.9. that is unrevised. 50.1 is the lowest level since the end of last year when it dipped under 50. it was 47.8 in december. we're not done now construction spending for the month of january, expecting up 0.6. more than double, up 1.8 triple, up 1.8 sequentially following an upwardly revised
minus 0.2 that becomes the mirror image, now up 0.2 1.8 is really a solid construction number. as a matter of fact, to find a higher number i'll have to go back to february of last year, where it was 2.9 and that is the 20-year high so this is really a solid number we all know that construction spending and a lot of the numbers we're seeing recently that are very good are not going to be as meaningful considering coronavirus and of course not only do we have to wait for how the data comes in on coronavirus but how the data describing the economy during it comes in so, of course, we'll be looking at the next three to seven weeks as the data catches up with the economy in its current form. carl, back to you. >> all right, rick we'll see what the services number says on wednesday rick santelli. stocks are attempting here to stage a rally this morning let's get over to bob pisani and take a look inside >> hello carl. happy monday, everybody. we're not only attempting a
modest rally here but overseas as well. you just take a look, we closed up, most of the parts of what's going on in asia, shanghai, hang seng, japan, all up. these are stimulus hopes that's what's going on here, folks. kospi is up a little bit europe trying to come off its lows in the united states we look at some of the big movers i want to show you the dow jones industrial average futures overnight. we moved in at nearly the thousand-point range overnight if you look here we're looking at 26,000. here 25,000. that's a thousand-point range. this is in a few hours overnight and of course we've got almost half of that declined back here. that is confusion, folks if you look at the dow movers today we've got modest up moves, most got the stuffing kicked out of them last week. apple, microsoft, visa, ex-son no real bounce in the banks at all yet. the confusion is understandable. we've been looking for these capitulation signs that have been out there and they are extremely over sold. look at these readings yes traditionally this is a buy
opportunity. a thousand new lows on the nyse on friday. that is screaming buy. extreme vix readings oh, yeah got them, too. other things are out there the put call ratio has been elevated all of this kind of says buy in a traditional way but nobody is sure if they should do that because maybe this is that time when all of the indicators that have been reliable in the past don't work that is why everyone has this deer in the headlight looks and you're getting these wild swings in the markets preopen and even during the day the important thing to look at here is everyone believes stimulus is coming you want to talk about a coordinated response they already have a coordinated response powell said the act is appropriate. over the weekend said we'll take the necessary steps. the ecb says they stand ready to act. this is coordination already italy has a stimulus package the g-7 is going to have a teleconference in the next few days what do you think will happen there? the bottom line iswe're moving through this i just want to point out one thing.
warner music and cole haan were scheduled to start the road show this week or next. that is getting postponed and is certainly understandable in this kind of market the big question now with this down here, that is the ipo etf is whether or not something like airbnb might be imperiled. we don't know. that is obviously in the near future looking for that but rocky market right now for the ipo business back to you. >> all right, bob. thank you very much. good monday morning everyone welcome back to "squawk on the street." we're at post 9 of the new york stock exchange we talked about the wild overnight future session thousand-point swing on that front. and we have tried to rally here right now dow sitting in the middle of the range of 92. >> let's get to our senior economics reporter steve liesman with more reaction to today's data and how we formulate an outlook from here, steve >> good question obviously not a laughing matter. i want to give you some details from the ism report. some of the commentary that comes in along with it, somebody in the computer and electronics
virus, coronavirus is wreaking havoc on the electronics industries companies are delayed in starting up production lay offensive are here said somebody in the transportation business coronavirus, we will see some softness in demand but also havoc on items, from china, and that may cause significant delays to production it goes on through there looking at the details of the report i see a decline, huge decline in imports you would expect that. also a decline in exports, the new export orders. prices also came down rather sharply. in addition you have a decline in production. perhaps that is related to the inability to get some of the parts they need to produce meanwhile, expectations for aggressive intervention by central banks around the world rising faster or as fast as new case numbers for coronavirus some of the things we're hearing, multiple fed rate cuts expected possible emergency cuts. speculation that you may end up with a zero funds rate recession, however, among the
economists i'm reading not at this moment, the base case these are showing rather dramatic shifts in the outlook for the fed's fund rate. i had to do a double take on the numbers, guys. take a look at the probabilities just for march no chance of a 25. no chance of a 50. there is now a 99% probability of a 75 basis point cut built in for the march meeting. and obviously a lot of speculation that can either come before the march meeting taking a look at the trajectory now priced into the market, a full basis point, full percentage point of a cut by july down to 0.6 from 1.6 goldman sachs now sees the economic impact from the supply chain to the u.s. consumer in a commentary they wrote in a more adverse scenario the impact of supply chain would grow quickly and consumption cutbacks driven by virus fears could be quite large.
expectations among economists include by global central banks including england, europe, japan, and china there could well be moves beyond the funds rate here from the fed including regulatory and supervisory relief for banks that is speculation among economists less certainty about whether the fiscal side of the u.s. steps in through spending or tax relief though many say it could be as or more effective than fed action, sara >> steve, thank you. volatility as we mentioned continues this morning dow is higher by 32 points let's bring in jpmorgan's asset management chief strategist david kelly and wells fargo head of global market strategy. good, gentlemen. steve just laid out the markets fully expecting sort of a double cut, 50 basis-point cut by march. what would that do to the markets? >> actually triple cuts looking at 75 basis points i think it does help put a floor untd stock market.
i don't think it does much for the economy because honestly it is not interest rate decisions that are driving economic problems right now but the lower you push long term rates and the lower you push short term rates the harder it is to justify being in bonds as opposed to stocks. i think that does help put some sort of floor under the stock market i think for investors the key thing is to recognize we don't know how deep it is. that is the problem. we don't know whether we're talking about hundreds of deaths in the united states or heaven forbid thousands of deaths but as the number grows you could have more social distancing and affects servicing and could put the u.s. or the global economy in recession what we do know is it won't last forever. i always thought 2020 would be the year of the election turns out 2020 is the year of the virus. it's probably just this year at some stage given advances in medical technology we will have a vaccine, ways of dealing with this if you are a stock investor, if
a pe 16 times this year is earnings that means this year's earnings matter but only count for 1/16 of the value. the other 15/16 of value are the next year and the year after that and the year after that these are long term investments. we have to remember that we don't know how deep it will be >> so your horizon is longer than this year >> if your investment is shorter than this year you should never be invested in stocks. >> your emphasis on the temporary nature we hope of this is not an argument for the fed to cut is it >> i think it is i don't normally believe the fed -- i think the fed should have raised rates a lot sooner in the expansion but there is a wealth effect from a falling stock market and so if the fed cuts rates and that limits the damage to the stock market, i think that will actually help the economy. >> we're just talking about saving the stock market. >> that's part of it i think we also need to think about stuff from the government. there are a lot of companies that are probably a little bit more vulnerable particularly the travel and service industries.
what can the government do to help some of these companies tide over what could be a pretty difficult year >> that is quite a statement just made that the fed can put a floor under the stock market even with the big uncertainties with the virus and the economy do you agree >> absolutely. the sorts of declines we've seen in stocks and the buying in bonds, this is an unprecedented stock correction puts to calls. no matter how you look at it this has been extreme and shows signs of panic people are willing to pay $10 for a mask that used to cost a few cents. that's panic >> i think a lot more than that. >> well, at least for right now it's panic if there is down side risk there is also upside risk. we're not hearing many people talk about that here in terms of the coronavirus. so, yes. could the market use some help from the fed in putting in at least a short term bottom while we get more information and make a more rational set of decisions? the answer i think is yes. >> well, david, you know, we go
back to october. things look good on the economic front. and the market rallied significantly on the idea that there is not really that much that stands in front of us right now and with rates as low as they are you can understand. where are we now in terms of if you are looking out again to your point i understand. years from now, certainly. but for the rest of the year and into next year >> well, i think there is a down side risk but because, you know, we have not seen economic numbers yet apart from pmis out of china and to some extent the u.s. we haven't seen a big economic hit. the thing that i worry about from an economic perspective is a hiring freeze. if you see hiring come down in the u.s. that's what could trip us into recession. it is not consumer confidence. i was in costco over the weekend. god bless american consumers people were piling up pecans for the pandemic why? they had enough mustard for generations. >> they last a long time >> consumers are very brave. it is businesses that lose their nerve. that is the point. >> good point. goldman, travel restrictions
target cancels the investor day. vanguard is cutting all cross border travel for the foreseeable future who is freaking out more, consumers or companies >> i think businesses have legal concerns and there are some genuine concerns but businesses are cautious about this they don't want their employees to come down with this virus a lot of things can be done with telepresence and teleconferences. businesses generally act more prudently. consumers when it comes to the issue of consuming are pretty brave. >> last question to you. you're talking upside risk and say there are buys out there which industries are you looking at >> we think there's still enough worry for the down side and enough uncertainty overall that we want to stick with quality. it's where we've been for the last year. we like good cash flow companies, companies with good cash to debt ratios. companies that have good earnings prospects and that leads us to still tech, yes.
communication services consumer discretionary those are our favorites. we'd be moving money out of materials and energy >> paul, thank you paul christopher, david kelly. good to see you both >> thanks. >> we are getting news from the white house right now. let's get to eamon javers with more >> reporter: good morning, sara. the vice president is leading the coronavirus task force and we are getting new details on his plans for this week and they involve the private sector we're told the vice president is going to meet with airline ceos here on wednesday to discuss how the virus will impact that industry he is also going to meet with cruise line ceos in florida on saturday and the vice president is going to be traveling to minnesota where he is going to go to 3m and talk with that company as well on thursday so a slate of ceo meetings for the vice president dealing with the coronavirus during this week one other issue that has been on the plate for this white house is the question of travel restrictions i can tell you there are some people inside this building who feel we are now past the point where travel restrictions make a
whole lot of sense given that there is a relatively large enough number of cases inside the united states that we are probably looking at a spread of coronavirus inside the united states on its own with or without travel restrictions. so that one might be one that is already off the board here in terms of options for the white house. and, of course, we'll see the drug company ceos here at the white house this afternoon at 3:00 p.m back over to you >> thank you very much, eamon. sad news to share this morning, former ge ceo jack welch has died at the age of 84. in a statement his wife suzy says more than anything else, leader, business icon, management genius, more than those things although they are all true, too, jack was a life force made of love, pure, bright, undiminishable love. his irrepressible passion for people, all people, his brilliant curiosity about every single thing on earth, his giant generosity toward friends and strangers alike added up to a man who was super human yet
completely human at once he changed the world by touching people deeply and authentically, helping them see and reach dreams they couldn't even imagine for themselves and somehow, crazily somehow, he also managed to be the greatest husband and father who ever lived, giving our family 20 amazing years of adventure, happiness, and joy our hearts so much larger and fuller having known and loved him are broken sue therera looks back at the life and legacy of jack welch. >> reporter: he's been called a white collar revolutionary >> my name is jack welch i'm chairman and chief executive officer of general electric. >> reporter: from working class massachusetts kid to ge plastics engineer to ceo. he took an old line industrial company by the throat and through ingenuity, vision, and sheer force of personality turned it into a global leader in finance, media, and high tech health care. during his 20 years running general electric, from 1981 to
2001, jack welch drove the company's market value from $14 billion to more than $400 billion. he was called neutron jack, a name he hated, after cutting more than 100,000 jobs during his reign. jack welch streamlined ge establishing a blueprint for other ceos along the way he slashed payrolls, closed factories, and shuttered or sold ge subsidiaries that were not number one or number two in their industry >> a role for the mediocre is one that is short lived. >> reporter: welch was passionate and unstoppable a visionary who spearheaded ge's shift from manufacturing to financial services through numerous acquisitions and always made sure to point out that he made his best deals on the golf course in 1986, ge dove head first into the media business, with the acquisition of rca, which owned the nbc broadcasting network
welch sold almost everything else, but he kept nbc. ge executive bob bright was named president of nbc and in just three years the network made its first foray into the cable industry, with the consumer news and business channel, cnbc. welch's decision to spend more than $150 million to buy cnbc competitor financial news network was key to cnbc's later success. >> is no different than any other game what we had to do was to take it from being a dry text in a paper to the locker room if you will to show what the game was all about, how the winners felt and how the losers felt. that's what cnbc was designed to do >> reporter: by the end of his tenure welch was known less as a cost cutter and more for his dynamic management style he pioneered nfinformality in te work place abandoning management bureaucracy and archaic business ways
a demanding but passionate leader, welch emphasized the value of candor. he encouraged employees to speak up, to be up front, and to work hard >> good corporations create a healthy atmosphere where people can thrive and grow and benefit their families and he great lives. i believe that to my toes. >> reporter: a man of surprise, he often unexpectedly stopped in at ge plants and offices or sometimes in the newsroom. in 1999, "fortune" named jack welch "manager of the century. before stepping down as ceo in 2001, he set up an internal succession race for his job calling the eventual choice the most important decision he would ever make. jeffrey imelt followed welch but the company struggled in the wake of the 9/11 attacks and the financial crisis of 2008 which was devastating for the lendin unit welch had dramatically expanded while he was ceo. welch's retirement turned out to be anything but. he continued to lead the
dialogue of modern business as a management guru who concentrated on winning and never looking back >> how can i have a regret i mean, when i was a kid from salem who ends up with the greatest job in the world, and i was trying to make 10,000 bucks to live on i mean, i had a great run. >> he did indeed have a great run. carl, you and i can remember of course from early in our careers when he would focus on you, it was like you were the most important thing. and he would start asking rat-a-tat questions about everything even something as conceivably insignificant as cnbc at the time >> i remember thinking don't you have other things to do than ask me some newby about what i'm up to but he had a curiosity about his people and that was his home work, right? >> without a doubt and i think in suzy's statement that is sort of something that rang as so true having known him for so many years. always asking questions.
always regardless of your stature and his, he just wanted to know. and had a great ability of course as well to inspire people let's bring in somebody who knows a bit about that as well discovery's president and ceo, a long-time meantee of welch spent a lot of time with him through the years. i know david in meetings and of course on the golf course as well give me your thoughts on jack's passing, david >> really hard to put into words really i would say i've never met anybody that loved life more than jack. really to the bitter end he loved his family. he loved suzy. he loved playing golf. he loved to win. and he inspired as you say in listening to suzy's statement, you know, i was a 28-year-old kid that he brought in to ge and nbc, hoping to get into the cable business, and he was like an older brother to me
there's thousands of us. you know, he challenged us we learned that his, on his knee he would sometimes beat us up when we didn't have the right answers. he'd pick us up with a hug there was no better friend and he got so much out of life you know, i think he just loved every minute of life and whether he was on the golf course or whether he was in the -- he loved to win and he inspired so many of us when you look back at ge he was the number one market cap company in the world but the thing that jack was most proud of, the thing he would talk about was we're building value for retirees that there were more retirees in america that owned ge stock than any other stock and we have to come in saturdays, work all night. we have to create value.
he was incredible energy, and he had great love you know, i loved him. it was a gift. i would always wonder, how did this happen? >> yeah. >> everybody got a chance just to really get on that rollercoaster ride, which was just an extraordinary ride >> he was certainly proud of you as well. and in terms of you becoming a ceo. i wonder, david, to what extent do you think about or did you certainly earlier in your career as a ceo think about some of the lessons and perhaps model certain behaviors as well in terms of how you were on discovery? >> well, very much we'd be presenting to jack every acquisition we made at nbc, all of our deals, and over a period of time you start to think -- you would start to think like him because he was tough and as you said, he wanted to know every detail. he wanted to know what was the
plan what was the plan to turn it around what was the plan to win and it rubbed off on you i mean, i remember about two years ago when we acquired scripts i was on an earnings call and the analysts were talking about the industry and how difficult the industry was and how -- and how subscribers were declining and it was being disrupted. i got off the earnings call. he called me up and he said, get over to my house right now and he had been -- he had read all of the earnings calls for all of the ceos and he said you're all doing the wrong thing. you can't change the ecosystem he said, your story is that when you bought scripts, you had 1.4 billion in free cash flow. they had 600 together you're going to generate another billion in free cash flow. that's his story you are a free cash flow machine. when you have cash in a difficult environment, then it's like a moat. and the cash gives you
flexibility and it gives you an ability to win even in a difficult environment. so the way jack thought was different than anybody else. you know, to the very end, i was with him two weeks ago, and he was still completely -- we talked about the old days. we were talking about life and he never stopped -- he never stopped living to the very end it's sad it is a very -- it's tough because we all thought jack would live forever he was that big of a figure. >> i think we all know what you mean by that, david. we had larry culp on a moment ago and he talked about the ways in which jack made ge a truly global company talked about visiting him in recent weeks i wonder, can you share at all what he thought about how people's perceptions of global companies, globalization, they've changed. i wonder if jack's did as well >> well, jack set the path one of the most interesting things about spending time with
jack in those days with ge was he saw the whole world he was above the globe essentially. there were very few -- i don't know if there was any company above the globe and he was hands on he was traveling all over the world. and with all of the businesses that ge had and ge capital, he had a better sense, what are people buying? how are things going in latin america? you know, what's going on in asia where should we be investing when we presented acquisitions to jack, he would look at our acquisitions, our suggestions, but compare it with what was going on an aircraft engine or available in ge capital. jack was really on top of the -- he was above the globe in a way that, you know, i don't think any ceo has ever been and he pioneered it this whole idea of going around the world, and having that kind of scale, and then using that scale to be number one, it was always about being number one. if you were on the golf course with him it was about winning
but it was about winning by working harder than everybody else it was about winning by fighting harder than everyone else. you know, he was -- what he created at ge will -- it became in some ways the way that companies now operate. the whole global idea. >> david, i wonder, finally, it's been over 19 years since he stepped down as ceo. ge has changed a great deal and obviously had a very tough run was he disappointed in what's happened or what happened to the company? did he care or did he think about his own legacy in that way? >> i think jack was extraordinarily proud and all of us that were passengers on that ride, that incredible ride that
jack had we were like a family and just really lucky to be on that jack really focused on -- he and suzy found an extraordinary love and he and his family and friends, i think jack moved on and just went and focused on being happy and spending time with suzy and his family and playing golf a lot of golf in nantucket nobody loved life more than jack to the very end. he fought for her every day. that is the biggest lesson big heart and loving life. >> amen. david, thank you for sharing some reflections we appreciate it david zac love jack welch was 84 years old. and that for me is what teamwork is all about. you can't do everything yourself. you need someone to guide you and help you make those tough decisions, that's morgan stanley.
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we sunleashing the promisegas of clean energy. at emerson, when issues become inspiration, creating a better world isn't just a result, it's a responsibility. emerson. consider it solved. welcome back, everyone i'm sue herera with your cnbc update at this hour. new york governor cuomo speaking after the state confirmed its first case of coronavirus. a health care worker who had visited iran cuomo describing the state's plan for fighting the virus.
>> now is to test as many people as you can you're not going to eliminate the spread but you can limit it. >> coronavirus concerns leading to school closing in western washington state, six schools closed for deep cleaning out of caution. in all but two cases someone with flu-like symptoms had a connection to the school greek police firing tear gas to stop migrants trying to cross the border from turkey, thousands looking to enter greece after turkey opened its side of the border in part to pressure the european union into helping it handle the fall out from the war in neighboring syria. you are up to date that's the news update this hour carl, back downtown to you >> all right sue, thank you the president is going to meet with major pharmaceutical ceos later today to discuss progress on a vaccine to the coronavirus and the possibility of drug shortages amidst the supply chain slowdown in china joining us to talk about that
today, our guest thanks again for your time today. good to see you. >> good to be here >> what do you think ceos can tell the president today with any kind of certainty? >> i think the ceos are going to tell the president that there's a lot of expertise that exists in this country. we are very fortunate to have a very vibrant ecosystem there is a lot of knowledge. is a single strand rna virus we already know about viruses like this like sars and ebola. the last time ebola occurred we came up with a very good product, antibody cocktail, that takes care of the problem. i think the drug industry people are going to tell the president that the industry is working hard already to get therapeutic products in place. you need proeventative and
therapeutic back stops until the vaccine is ready next year i think this is a bad case of a very bad flu causing a surge but the good thing about surges is surges can be battled and then recede so we're looking here at a battle not a war and as we've seen already in china, this is a two-month cycle. they told about the virus on the 30th of december last year the virus peaked on the 5th of february now they are down to 200 cases a day. hopefully we'll see the same cycle here >> all right so vaccine time line will be one thing. supply chain is the other. how worried are you about the summer and how serious should we take these conversations that these companies need to dmes domesticate some of those chains >> i think that should be discussed very carefully because there are certain active ingredients where up to 90% of the manufacturing occurs in china. that is something that is going to create very good conversation
i think there are more countries than china that can make this active ingredient and of course wherever possible we should make that active ingredient here in the u.s. if you make the product here, you can also do better r&d i am always a big supporter of doing it here. >> fred, dr. matt mccarthy was on "squawk box" this morning and said that as one of the busiest hospitals in the country he still does not have a test at his finger tips. that he has to call the department of health and plead his case to get a test i mean, as someone who is in this industry and sort of knee deep in this stuff, what is your assessment on the government issuing of the testing and why that appears so problematic right now? >> well, it's interesting that when it comes to biotech no country comes close to the u.s. but when it comes to a practical item like a diagnostic test the other countries have been ahead of us. south korea is doing 10,000 tests a day.
we're now going to get to 20,000 a day in a few days. we are a little behind here. but the good thing about our country is that once we are aroused, and once we mobilize, we become a very powerful force. i think this testing area is going to come under control in the next two weeks there are a lot of cases out there that are not being reported and we need to find out where these outbreaks are so we can take local measures to deal with them >> right it is about mitigation now a lot of people say, not necessarily containment. when we find out there are thousands of cases, though, should people be concerned or in some way be reassured? >> people should be concerned because this is as i said earlier, it looks like it is more contagious, but unlike sars, it does not have a high incidence of serious cases 81% of the cases are mild. a lot of the cases are asymptomatic
the very thing that makes it a mild disease is the reason it is spreading so much. i think we have to deal with it, take some actions, the hand washing, separations, also avoiding gatherings. but in the end this is going to be more like a two-month cycle and the summer is going to be a very good way to slow this thing down hopefully the vaccine will come on the other end in the meantime, let's hope we get these drugs helping us with the short term therapy for this problem. >> we've been talking a lot, fred, about the corporate reaction function. would you be halting employee cross border travel? >> i would say people have been advised in most companies to be judicious in their judgments but not to totally halt. obviously the five or six countries which are the most affected, they are halted. but overall, people are being asked not to panic i think this panic psychology is what caused the whole market
reaction last week i think companies, ceos, have to be the voice of calm and make sure people are not over reacting i remember i was on cnbc the week in october, 2008, when the market went down a lot, and the smartest people that week were the ones who bought the stock. it has come up multi fold since that time. i think we're seeing the same kind of effect right now >> fred hassan making a stock haul just in terms of what you were saying about treatment and vaccine and the fact we have the best pharmaceutical industry in the entire world how then can you help people understand the flu for instance? we have a vaccine for the flu but people still get it because there are all sorts of strains we don't really have a treatment for the flu and many people die of that. how is coronavirus, covid 19, different or the same? >> that is a very good question. the problem with the flu vaccine is that you have a stable part of the virus and then you have a part of the virus that changes
every year it mutates which is why you need new vaccines every year. that's why we need -- you need to get vaccinated every year in this case, also, the virus has mutated out of animals into humans and it needs a vaccine. for flu, we do have a short term treatment, tamiflu, that if you take it, will really reduce the incidence of the damage that occurs from flu. similarly, there is a very interesting drug from gilead, which is looking very good in terms of the magnitude as you know, most of the contagious spread occurs when the person is ill. so if you can reduce that, you can reduce the overall spread of the disease. i'm very confident that we're going to have a very good drugs helping us this time around because, fortunately, over the last two decades we have become
very good at antiviral research, starting with hiv drugs. so we know a lot about this area >> fred, we appreciate that guidance and insight. as always, hope to talk to you again soon fred hassan. >> thank you virus fears fueling expectations that the federal reserve will get even more aggressive cutting interest rates. president trump taking to twitter a few minutes ago slamming the fed again saying it has been slow to act, saying that the u.s. should have the lowest rates but we don't putting us at a competitive disadvantage joining us now by phone former federal reserve chairman and professor of economics alan blinder. good to talk to you, sir if you were still at the fed, what would you be doing now? >> well, at this point, having made the statement that jay powell made on friday, they're pretty much locked in to cutting rates at the next meeting, which is a couple weeks away
there is even possibility they'll do it before i think it depends on how much panic spreads not so much in the general population but that'll come a little later probably, how much panic spreads in the market so this morning i think they're breathing a little sigh of relief who knows what is going to happen the rest of today much less tomorrow and wednesday? >> so the market is expecting a 50 basis point cut in what, two weeks, at the march meeting? is that realistic? >> i think it is if you would ask me before this corona business popped up i would have said that was a crazy expectation but of course nobody had it i think given the reactions of the market last week, and especially the powell statement, on friday, i don't think that's a crazy expectation at all >> i feel like the difficult part for the fed must be, and, alan, you've been in these
conversations, you know, we need to do shock and awe pleaand get market confidence up and come out ahead of what is potentially a demand shock in this country as a result of a spreading coronavirus. at the same time we don't want to alarm anyone into thinking we are terrified. how do you deal with that balance? >> i think that's right. that is the line you have to walk the one thing i wanted to say, is that you said a demand shock. it will become a demand shock if and when people stop going shopping, stop going to the movies, stop going to sporting events, concerts, etcetera we may never get to that point in the united states or we may. and that of course is the huge problem that the fed has nobody has the slightest idea whether, not to mention when, we
come to the first demand shock in the first instance it is a supply shock it is disrupting supply lines all over the world and that certainly includes us. >> well, that is something we're more certain about, obviously, alan what tools address that? at least from the fed's standpoint >> well, this is the problem the fed doesn't have tools to adjust -- combat a supply shock. they learned that painfully back in the '70s when we started getting oil shocks remember those and the fed had a lever, interest rates, which it still has, over demand and particularly over the interest sensitive components of demand so housing, automobile purchases, business investments, things like that are responsive to interest rates. ordinary household spending like on groceries and restaurants and putting gas in your car and so on, don't really show responsiveness to interest rates. you wouldn't expect that they would.
because they're not bought on, well, not bought on credit they're bought on credit cards that is very, very short term. credit they're not bought on bank loans or bonds or anything like that that's where the fed has real leverage >> what are the dangers then in a 50 basis point cut particularly with the ten-year yield already at 1.60% >> i don't want to exaggerate this i don't think there is a huge danger but the danger is you may come to regret later when you have a demand, if you have a demand shock to deal with, that you spent your ammunition too early. i wouldn't put that high on the danger list but it is a bit of a danger >> one of the arguments among the fed watchers that you might get a 50 is that they would rather do it now than become the topic of political debate closer to election. how valid is that?
>> well, i wish it wasn't valid but with president trump in the white house, it unfortunately is valid. i'd like to put a better face on this and call it a psychological operation. the fed is trying to show the nation that it's awake, that it has things it can do, that it is concerned. and it will provide support for the economy as need be that's what this is about. because right now, popping interest rates down 25 or even 50 basis points is not really going to do much it's going to do nothing for the spread of the disease. and i don't think it is going to do much to ameliorate the economic impact of the disease, which at least now are supply shocks >> so why bother >> well, as i said, it is a psychological operation. first you start with -- so it would be nice if you could just
stop with words. you remember mario draghi in 2012 a few well chosen words worked miracles i use the word miracles because you can't expect that to happen very often if ever. i'm not sure draghi expected it in 2012. he probably didn't but j. powell's words, which were perfectly fine and well chosen on friday, did not work miracles and so they're trying to do what they can to prop up the psyche >> alan blinder, thanks for phoning in former vice chair at the federal reserve. >> thank you >> let's check in with meg tierel >> a media conference just now about the state's first case in new york, governor cuomo saying that patient took precautions and didn't travel on public transportation but more generally he said community spread in new york is
inevitable and that schools and public transportation will be implementing new cleaning protocols including with bleach. meanwhile, the spread around the world continues. the world health organization saying just now in the last 24 hours new cases outside china were nine times higher than those in china its greatest concerns right now are epidemics in korea, italy, iran, and japan. and this afternoon pharmaceutical executives are heading to the white house for a meeting on vaccine development the ceos of glaxosmithkline, gilead, moderna, and others, pfizer, we've confirmed will be in attend annals carl >> all right we'll talk to you in a few moments. let's get to the cme group this morning. dow is up 320. get the santelli exchange. hey, rick. >> good morning. thank you. i'd like to welcome my guest, currently with bank of america but did spend almost ten years with the markets group at the federal reserve bank of new york mark, thanks for joining me on this crazy day let's get right into it. you've been at the fed you were there during the credit
crisis what type of mobilization is going on behind the scenes and how does the fed respond to this notion that they need to step in right now and start putting air in this tire even though there is really not a patch on it with regard to the issues of coronavirus? >> yeah, thanks, rick, for having me. what i expect is having at the federal reserve and in particular downtown at the new york fed is that they're really trying to get a handle on what is happening in financial markets. how are the markets functioning? is there illiquidity, a lot of dysfunction? they're trying to take that information and run it up the chain as fast as they can. i think what the fed's primary aim here in the statement powell released on friday was to try and act as a circuit breaker of sorts to try and stem some of the market fear and try to regain more orderly market conditions so i think the fed is mobilizing quickly. they want to act they want to respond and financial markets certainly do think the fed will act swiftly and so do we just on friday we changed our call we now think the fed is going to
cut 50 basis points in march or at least by the march meeting. there is a real risk that they move before the meeting. certainly we can't rule that out. but the market expects that the fed will respond, try and indicate that they are watching, they are ready to act, then follow through with that and i think that is the right policy prescription. >> do you really think on march 10th there is a chance they go 50 there is this underlying thread right now that we are somehow disenfranchised as the globe's leading economy because we are not in pursuit of negative rates. we start firing off 50s, if this slowly disappears, do you really believe they'll put it back out there? most likely we'll just keep ever getting closer to zero and negative >> you're right. so the fed is going to use some valuable mmunition at least that is our expectation. but if you're the fed you don't want to wait you don't want to first fight the market too much. the market already thinks that the fed is going to cut 50 in march and if the fed doesn't do it they'll essentially be hiking
rates. they don't want to do that in this market environment. second, the fed has told us when they encounter a significant down turn or risk of one, that they want to act swiftly and try and get ahead of it. we don't know where the virus is going to go but we certainly do know it is a material down side risk i don't think the fed wants to sit idle on this one i think they want to be aggressive and i think that is exactly what we're going to see them do. if it blows over quickly and you see inflation ramp up i think that is a problem that the fed would like to have if inflation gets out of -- >> we have to leave it there >> thank you >> i can't wait for the 10th i still will go on record saying 50 is a mistake. we'll have to wait and see sara, back to you. >> thank you stocks rallying here at session highs, 1% gains across the board, dow up 356 points now, 1.4%. just got some headlines from the w.h.o., world health organization number of cases in china continues to decline new cases there lowest level since january 22nd though nine times as many cases outside of
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stockins continuing to build hee coming off the worst week since the financial crisis led by wall a mart, merck, and apple. we'll keep you apprised tick for tick after that crazy week last week america's biggest companies are dealing with the fallout from the coronavirus with new york confirming its first case and washington reporting two deaths over the weekend joining us to discuss how they're handling it, ron chowdh chowdhry, the ceo of panera bread. have you seen any shift in consumer behavior across the country? >> we're watching the situation closely, monitoring all of the cdc notifications, thinking through our supply chain plans and we are well prepared to ensure the ongoing safety of our customers and employees. we just prepare. >> what is your expectation as far as how the consumer responds to headlines like this and where they put going out to panera and
restaurants in terms of priorities >> i think it's early to tell, but clearly, it could have an impact and we need to be prepared to ensure ongoing safety of our customers and employees. >> do you feel you have to make a call on employee levels? >> no. we're just monitoring it, as i said, looking at the cdc notification, but preparing for what we need to do >> are there protocols in kitchens that need to cheik, that are changing? >> the usual protocols around hand washing, sanitization of surfaces >> in the kism ekitchen and out. >> and if employees are sick, they need to go home. >> there's talk about employees in the food service business not having the right health care or the flexibility when it comes to calling out sick, for instance, if they are calling out sick
how do you view that issue >> yeah. i think that's very important, part of the responsibility we have as an employer. i think those dimensions are adequately covered and we're prepared in the event if something escalates to take care of to our customers and employees. >> there's a possibility people will stop congregating, going out as often what are you doing to take precautions in your business in terms of preparing for it, beyond what you're talking about here in terms of maintaining safety >> supply chain, continuity, make sure that is not at risk. we're working hard on that as we speak and developing contingency plans. >> which means what? >> well, fortunately, we don't have any exposure to the infected continue kinfec infected countries on a supply chain, so ensuring that remains the case is what we're focused on >> how has panera been doing it's a private company, joan ow
now by j.a.b what are you seeing in terms of consumer spending ahead of this virus? >> we're doing very well i think we've had a very exciting year. we launched some really exciting products like the grain bowls, sold 7 million of them it's a big success, probably the most successful product we've launched in the last three years. we strengthened our breakfast and coffee program last year, and continued to see growth in our off-premise channel like delivery and catering and so forth. >> jumping on the bandwagon with the subscription coffee business burger king did this >> that's right. >> why are you doing this? >> we are disrupting the industry with the coffee subscription idea. here's the interesting stat. every day there are about 150 million cups of coffee being consumed but more than half
offen tof consumers are conflicted with the price they pay so we have a subscription program. we have high quality coffee and this $8.99 month subscription, we are offering customers incredible value and making great coffee accessible the all. >> would it surprise you if comps started coming in that were softer than expectations manage your peers? >> as a result of? >> consumer nervousness, lower traffic, not sure. >> people are rushing to cvss and costcos and stocking up on canned goods we don't want to make too much of it but this is what we're hearing and reporting. >> it's hard to predict. it's a quickly evolving situation so we're watching. >> is it easier to be a private company in this situation than it might be otherwise as a public company >> i think any company with respectable ownership, you have to do the right thing, ensure
supply chain continuity, safety of customers and employees you're responsible to make sure that happens with the j.a.b. ownership we're excited about taking panera to the next level, strengthen the brand, do exciting things and delight our customers. >> to david's point, what are you doing that you couldn't do under the public eye >> i think we are just ensuring that we are rebuilding the brand for the long term, investing and strengthening our brand, investing in capabilities for organization, and deliver on the potential that panera has. >> thank you for joining us. >> thank you very much >> ceo, panera >> all right >> coming off the session highs. here's the president a few moments ago. >> we have to combine all the elements we have, the record heights we reached in 2019 on
eradication and dismantling the drug cartel. that crime is hurting our people and hurting people everywhere. we need to work jointly in that effort has we have been doing so far. [ inaudible question ] >> we're talking about venezuela, one of the things we're talking about is venezuela, big subject for us. they're treating the people of venezuela unbelievably badly they don't have water, they don't have food, they don't have anything we are talking about that. that's a big topic of discussion >> mr. president, if i may add something, it is very important that we are stronger on sanctions against the dictatorship in venezuela. so they have destroyed all the health care system, so we have to in this year work together, jointly, so there's political and democratic transition that is effective in venezuela.
[ inaudible question ] >> this meeting was set up before about drug pricing, set up a long time ago with the pharmaceutical companies and that was about drug pricing because we brought the numbers down last year, first time in 51 years the drug price prescriptions have come down i have a meeting skcheduled on drug prices but there's another subject to do with the vaccine, how are they doing [ inaudible question ] that's what we're going to find out. we know that we've asked them to accelerate whatever they're doing in terms of a vaccine, absolutely [ inaudible question ] these were set up a long time ago. you could ask that to the democrats because they're having a lot of rallies they're all having rallies that's what they're doing, they're campaigning. [ inaudible question ] i think it's very sad, yes