Detecting language using up to the first 30 seconds. Use `--language` to specify the language Detected language: English [00:00.000 --> 00:23.400] It's 5 a.m. at CNBC Global Headquarters, here is your 5 at 5. [00:23.400 --> 00:27.560] Investors bracing forth a higher open as Fed Chairman Jay Powell heads back to Capitol [00:27.560 --> 00:28.560] Hill. [00:28.560 --> 00:33.040] President Trump had to say about yesterday's testimony that's coming up and Boeing raising [00:33.040 --> 00:37.600] the red blank over a potential impact from the coronavirus outbreak. [00:37.600 --> 00:42.360] Lyft shares sinking this morning why some investors say its CEO needs to get his priorities [00:42.360 --> 00:43.360] in order. [00:43.360 --> 00:48.320] We speak with an early investor in the company and a new meeting for MAGA, what President [00:48.320 --> 00:54.120] Trump has to say about Silicon Valley's tech titans and a slim win in New Hampshire as [00:54.120 --> 00:57.760] Bernie Sanders claims victory in the grand estate yet again. [00:57.760 --> 01:12.760] It's Wednesday, February 12, 2020 and Robot Exchange begins right now. [01:12.760 --> 01:13.760] Good morning and welcome. [01:13.760 --> 01:16.520] I'm Courtney Reagan and this morning for Brian Sullivan. [01:16.520 --> 01:18.760] Your chart of the day, it's kind of an ugly one. [01:18.760 --> 01:20.760] Shares of Bed Bath and Beyond. [01:20.760 --> 01:26.160] Look at this, more than 20% here, the company announcing preliminary guidance for its fourth [01:26.160 --> 01:31.040] quarter coming in well below expectations, much more on that missed a moment. [01:31.040 --> 01:34.320] We're going to give you a look at how futures are looking on this Wednesday morning. [01:34.320 --> 01:39.000] Stocks do look to open in record territory here this morning with the Dow Jones Industrial [01:39.000 --> 01:41.960] Average indicated higher by more than 106 points. [01:41.960 --> 01:48.120] The S&P 500 higher by almost 12 and the NASDAQ tacking on an extra 47 points in the early [01:48.120 --> 01:49.120] going. [01:49.120 --> 01:51.440] We're going to check in the fixed income market. [01:51.440 --> 01:55.560] Take a look at the yield on bonds and look at the 10-year, which we're seeing tick higher [01:55.560 --> 02:02.280] again here today at 1.620 after we'd seen that yield fall for several sessions in a row [02:02.280 --> 02:07.240] as perhaps flashing some warning signs that the equity market wasn't quite seeing. [02:07.240 --> 02:11.680] Let's go worldwide now and take a look at the green arrows really around the world. [02:11.680 --> 02:15.960] In Asia, Japan, China, you name it, pretty much higher across the board. [02:15.960 --> 02:20.080] Seng Seng higher by 9-tenths of a percent, the Shing Hai composite higher by about the [02:20.080 --> 02:25.920] same in the Japanese Nikkei adding on three-quarters of a point. [02:25.920 --> 02:28.160] Let's take a look at Europe in the early going. [02:28.160 --> 02:32.600] Also some green arrows across the world, around the world in Europe. [02:32.600 --> 02:35.200] The German Zetradax higher by 6-tenths of a percent. [02:35.200 --> 02:38.400] Let's do an 100 higher just marginally, but 2-tenths of a percent. [02:38.400 --> 02:42.640] That counts as green and France higher by 3-tenths of a percent. [02:42.640 --> 02:45.760] Investors are waking up to a lot to chew on this morning, frankly. [02:45.760 --> 02:49.800] Federal Reserve Chairman Jay Powell under renewed pressure from President Trump. [02:49.800 --> 02:51.960] He heads back to the Hill today. [02:51.960 --> 02:57.000] Among his concerns, the coronavirus, which he says the central bank is actively monitoring [02:57.000 --> 03:02.000] as companies like Boeing and Kering flag new concerns over the outbreak. [03:02.000 --> 03:06.960] Earning season remains at the forefront as well, names like Cisco, Walmart and Deer. [03:06.960 --> 03:08.760] Those are still on deck. [03:08.760 --> 03:14.360] And a far left win in New Hampshire last night for Bernie Sanders, shaking up the Democratic [03:14.360 --> 03:16.160] presidential field. [03:16.160 --> 03:20.000] Joining me now, Clearonomics founder and head of research, James Lew. [03:20.000 --> 03:22.480] We got an awful lot to tackle here, James. [03:22.480 --> 03:24.160] Let's start with Chairman Powell. [03:24.160 --> 03:27.960] What do you expect from him today when he heads back to Capitol Hill? [03:27.960 --> 03:32.400] Sort of more of what he said yesterday, reiterated with the same or different words or a different [03:32.400 --> 03:33.400] message here today. [03:33.400 --> 03:34.400] Yeah. [03:34.400 --> 03:35.400] Good morning, Courtney. [03:35.400 --> 03:36.400] We think it's pretty much going to be the same message. [03:36.400 --> 03:39.400] I mean, the message from the Fed is that the economy is in good shape. [03:39.400 --> 03:42.480] There are these big uncertainties in the world, as there always are. [03:42.480 --> 03:45.320] Last year it was trade, this year it's the coronavirus. [03:45.320 --> 03:47.360] These uncertainties are very hard to measure. [03:47.360 --> 03:50.120] But you look at last week's jobs report, very solid. [03:50.120 --> 03:52.200] And the underlying trend is still good. [03:52.200 --> 03:57.200] So there's not much more that the Fed can do at the moment other than staying put. [03:57.200 --> 04:00.680] You also look at the market reaction and where Fed fund futures are. [04:00.680 --> 04:06.080] And while the market has cheered what the Fed has done over the last year, you also [04:06.080 --> 04:10.360] are seeing now the expectation that there will be some sort of rate cut, maybe by the [04:10.360 --> 04:14.080] middle of the year, and certainly at least one rate cut by the end of the year from the [04:14.080 --> 04:15.080] market. [04:15.080 --> 04:18.160] So that's something that's evolving over time, and that's changed as uncertainties [04:18.160 --> 04:19.960] like coronavirus have taken shape. [04:19.960 --> 04:22.800] Does that feel appropriate to you to be talking about rate cuts again? [04:22.800 --> 04:26.520] I know that may be what the market is expecting, but is that what the economic data tells you [04:26.520 --> 04:27.640] might be appropriate? [04:27.640 --> 04:28.880] So not from our perspective. [04:28.880 --> 04:32.880] So we think that we're in a position where a wait-and-see approach probably is appropriate. [04:32.880 --> 04:37.160] But of course, the market over the last 10 years has been trained to expect this Fed [04:37.160 --> 04:38.160] put. [04:38.160 --> 04:41.840] And I think from an economic perspective, obviously there's a human toll and a human [04:41.840 --> 04:45.040] tragedy around coronavirus that we shouldn't overlook. [04:45.040 --> 04:49.480] But economically speaking, coronavirus couldn't have happened at a worse time. [04:49.480 --> 04:54.000] And that's because we had all this trade uncertainty affecting trade between US and China and the [04:54.000 --> 04:56.280] global economic picture last year. [04:56.280 --> 05:01.400] And now this year, that issue, especially the spread of coronavirus around the world, [05:01.400 --> 05:03.680] could in fact have a toll on economic growth as well. [05:03.680 --> 05:07.760] So from a timing perspective, it's not great, but these are big uncertainties that are very [05:07.760 --> 05:08.960] hard to measure. [05:08.960 --> 05:10.800] And so the Fed should probably stay put. [05:10.800 --> 05:14.200] Now, the irony, of course, is that the markets are at all time highs and are basically trying [05:14.200 --> 05:15.840] to look through that right at the moment. [05:15.840 --> 05:16.840] Absolutely. [05:16.840 --> 05:19.760] That is something that is so interesting and has a lot of us scratching our heads. [05:19.760 --> 05:23.800] I think the bond market was flashing maybe some warning signs that the equity market [05:23.800 --> 05:27.400] wasn't quite, but to your point, it does seem as if we're looking through. [05:27.400 --> 05:31.800] And Chairman Powell did use the word resilient, I believe, yesterday when he was talking about [05:31.800 --> 05:37.000] the US economy's ability to sort of absorb some of these bigger global problems. [05:37.000 --> 05:42.400] So do you still feel like we are resilient when it comes to the US economy, even after [05:42.400 --> 05:45.360] all these years of growth and a common native policy? [05:45.360 --> 05:46.560] We do think that's the case. [05:46.560 --> 05:51.400] So the US, of course, has been the main engine of the last decade for global growth. [05:51.400 --> 05:57.800] Now the challenge is that if many investors expect a big resurgence in both global growth [05:57.800 --> 06:02.240] and also market performance, not just based on last year, but also where valuations are, [06:02.240 --> 06:05.160] then we will have to see other economies start to pick up slack. [06:05.160 --> 06:10.000] And so you think back to a year like 2017 when it wasn't just the US doing well, we had people [06:10.000 --> 06:13.480] talking about global coordinated growth, global synchronized growth. [06:13.480 --> 06:17.480] And that was a year when not just US markets performed well, but emerging markets and developed [06:17.480 --> 06:18.480] markets also. [06:18.480 --> 06:21.360] So I think that's the type of situation we would have to see. [06:21.360 --> 06:25.600] Of course, the coronavirus does potentially dent that a little bit, but the reality is [06:25.600 --> 06:28.120] it's very hard to measure that effect. [06:28.120 --> 06:32.200] You think about SARS and really those are backward looking academic studies. [06:32.200 --> 06:38.720] You can't just count up the number of items that weren't produced because of disease. [06:38.720 --> 06:40.320] It's also the deals that weren't done. [06:40.320 --> 06:43.160] It's the economic activity that could have happened, that didn't happen. [06:43.160 --> 06:44.400] That's incredibly hard to measure. [06:44.400 --> 06:48.920] Ultimately speaking, you need this global growth to come back in order to justify what [06:48.920 --> 06:51.080] a lot of investors see in the market right now. [06:51.080 --> 06:52.640] All that makes a lot of sense, James. [06:52.640 --> 06:53.640] Thanks for being here with us. [06:53.640 --> 06:57.320] Come back to World Wide Exchange and keep us updated when we have better estimates, maybe [06:57.320 --> 06:58.720] even if it isn't two years. [06:58.720 --> 06:59.720] Great. [06:59.720 --> 07:00.720] Thanks, Courtney. [07:00.720 --> 07:05.600] And now Sanders is celebrating his first clear, albeit slim, when yesterday, in yesterday's [07:05.600 --> 07:10.080] New Hampshire primary, the victory marks the second strong showing for Sanders as he and [07:10.080 --> 07:14.960] the remaining 2020 Democrats now shift their focus to Nevada and South Carolina. [07:14.960 --> 07:17.880] NBC's Alice Barr joins us again this morning. [07:17.880 --> 07:20.400] Good morning, Alice. [07:20.400 --> 07:21.400] Good morning, Courtney. [07:21.400 --> 07:25.320] And turnout was high here in New Hampshire, higher than back in 2016. [07:25.320 --> 07:28.600] That's of course good news for Democrats as they're trying to engage voters. [07:28.600 --> 07:32.800] And you're also seeing the top tier of candidates shifting as they head into the next round [07:32.800 --> 07:35.160] of voting. [07:35.160 --> 07:37.840] Thank you. [07:37.840 --> 07:42.400] Senator Bernie Sanders riding high this morning off a first place finish in the first in the [07:42.400 --> 07:43.800] nation primary. [07:43.800 --> 07:52.400] This victory here is the beginning of the end for Donald Trump. [07:52.400 --> 07:57.480] Former Mayor Pete Buttigieg coming in a close second, roughly 4,000 votes behind. [07:57.480 --> 08:03.280] Thanks to you, a campaign that some said shouldn't be here at all has shown that we are here [08:03.280 --> 08:06.960] to stay. [08:06.960 --> 08:11.840] And Senator Amy Klobuchar placing third, delivering on momentum from a strong debate [08:11.840 --> 08:14.840] performance and rocketing into the top tier. [08:14.840 --> 08:20.960] We have beaten the odds every step of the way. [08:20.960 --> 08:25.600] Senator Elizabeth Warren looking for a path forward after a disappointing fourth place [08:25.600 --> 08:26.600] finish. [08:26.600 --> 08:29.840] This campaign is built for the long haul. [08:29.840 --> 08:34.520] While former Vice President Joe Biden landed in fifth, having already left New Hampshire [08:34.520 --> 08:39.280] before results came in, he spoke last night from South Carolina, where he's counting [08:39.280 --> 08:42.520] on a rebound from a more diverse electorate. [08:42.520 --> 08:45.920] 99.9%. [08:45.920 --> 08:49.680] That's the percentage of African American voters who have not yet had a chance to vote [08:49.680 --> 08:50.680] in America. [08:50.680 --> 08:53.920] How's it going? [08:53.920 --> 08:55.680] The field is narrowing. [08:55.680 --> 08:59.760] Businessmen Andrew Yang and Senator Michael Bennett both announcing they are dropping [08:59.760 --> 09:07.920] out as winners and losers emerge from New Hampshire, sharpening the picture of the race to November. [09:07.920 --> 09:11.960] At this point, coming out of the first two contests, Pete Buttigieg still has a slight [09:11.960 --> 09:15.880] lead in the delegate count, which will ultimately decide the nominee, though, of course, there [09:15.880 --> 09:18.360] is still a long way to go until that decision. [09:18.360 --> 09:19.360] Courtney? [09:19.360 --> 09:20.360] Absolutely. [09:20.360 --> 09:21.360] We've got a long road ahead. [09:21.360 --> 09:23.040] Alice, thanks for being here with us this morning. [09:23.040 --> 09:28.560] Well, when we come back, forget travel, retail and tech, yet another industry, sounding the [09:28.560 --> 09:33.280] alarm over the coronavirus outbreak, bracing for a possible supply chain shock. [09:33.280 --> 09:39.440] A mixed morning has soft bank shares surging to a seven-month high, check out that, higher [09:39.440 --> 09:40.440] by 12%. [09:40.440 --> 09:42.840] Find out why next. [09:42.840 --> 09:47.360] And later, former Federal Reserve Board Governor Sarah Bloom Braskin is here, her take on [09:47.360 --> 09:50.600] Powell's day one testimony and what we can expect from day two. [09:50.600 --> 09:59.160] A very busy hour, still ahead, one worldwide exchange returns. [09:59.160 --> 10:03.280] Can I find an investment firm that has a truly long-term view? [10:03.280 --> 10:08.840] It begins by being privately owned, with more than 85 years of experience over multiple [10:08.840 --> 10:11.320] market cycles. [10:11.320 --> 10:16.600] With portfolio managers who are encouraged to do what's right over what's popular, focused [10:16.600 --> 10:19.720] on helping me achieve my investor's unique goals. [10:19.720 --> 10:23.200] Can I find an investment firm that gets long-term the way I do? [10:23.200 --> 10:25.360] With Capital Group, I can. [10:25.360 --> 10:29.560] Talk to your advisor or consultant for investment risks and information. 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[11:10.680 --> 11:14.000] Watch us live on the CNBC app. [11:14.000 --> 11:17.800] Microsoft, Amazon, Alphabet, Igniting Tech. [11:17.800 --> 11:22.680] Goldman Sachs Lead Internet Analyst, examines what could push the sector even higher. [11:22.680 --> 11:25.480] Squawk Alley, 11 a.m. Eastern today. [11:25.480 --> 11:29.000] Watch us live on the CNBC app. [11:29.000 --> 11:33.360] If you've ever considered getting a walk-in tub, we have great news. [11:33.360 --> 11:36.200] Introducing the all-new shower package. [11:36.200 --> 11:40.280] Now, for a limited time, when you purchase a safe step walk-in tub, [11:40.280 --> 11:44.280] we'll upgrade your order to include our newest and best feature yet. [11:44.280 --> 11:46.200] A free shower package. [11:46.200 --> 11:49.240] That's an $800 value free. [11:49.240 --> 11:54.840] With our new exclusive shower package, you can now conveniently shower in your new walk-in tub. 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So, China is now reporting the lowest number of new coronavirus cases [12:41.160 --> 12:45.720] in the Hubei province since the end of January. That, of course, is the epicenter of the outbreak. [12:45.720 --> 12:51.000] So, officials say that 1,068 new cases are confirmed. That's down from a peak of more than [12:51.000 --> 12:57.240] 3,000 on February 4th. However, there have also been 94 new deaths reported in the region. [12:57.240 --> 13:00.920] Drugmakers are also bracing for potential supply disruptions from China. [13:00.920 --> 13:04.840] The CEO of one of India's largest pharmaceutical companies this morning, [13:04.840 --> 13:10.200] supplies would start running out by the end of this month unless China restarts production. [13:10.200 --> 13:15.960] China makes compounds that are used in antibiotics, pain killers, and also diabetes drugs. [13:15.960 --> 13:19.800] And Fed Chairman Jay Powell, commenting on the impact of the coronavirus, [13:19.800 --> 13:24.280] could have an impact on the global economy, testifying before Congress yesterday. [13:24.280 --> 13:28.200] Powell said that the U.S. economy appears to be resilient, as we just heard Courtney say, [13:28.200 --> 13:32.200] to global headwinds, but that the Fed is also closely monitoring the situation. [13:32.200 --> 13:41.480] We know there will be effects on China through some part of the first half of the year, [13:41.480 --> 13:47.160] and China's close neighbors and trade, major trading partners in Europe as well as Asia. [13:47.160 --> 13:50.760] And we know that there will be some, very likely be some effects on the United States. [13:50.760 --> 13:55.320] I think it's just too early to say. Also shares of Gucci's parent company, [13:55.320 --> 13:58.840] Kering, are hired today after reporting strong fourth quarter results. [13:58.840 --> 14:03.800] But the company also says that it has seen a serious drop in customer traffic in China. [14:03.800 --> 14:07.080] Kering says that it's shifting some inventory to other countries. [14:07.080 --> 14:11.880] Shares of Foxconn rising more than 3 percent today. This is on reports that it aims to resume [14:11.880 --> 14:14.760] half of its production in China by the end of the month. [14:14.760 --> 14:19.640] Reuters says that Foxconn is also shooting to be at 80 percent of capacity by some time in March. [14:19.640 --> 14:22.200] You can see shares are up about 3 percent in pre-market. [14:22.200 --> 14:26.520] And Boeing is warning that the virus will hit the airline industry's profit this year. [14:26.520 --> 14:29.320] Speaking to reporters at the Singapore Air Show, [14:29.320 --> 14:34.680] a senior executive says that's due to travel restrictions and a 70 percent drop in capacity [14:34.680 --> 14:38.280] by Chinese airlines. And Courtney, you and I talked about this on rapid fire yesterday. [14:38.280 --> 14:42.120] Of course, if flights aren't going into China, of course, that hurts the airlines, [14:42.120 --> 14:45.240] but also a lot of the companies that do really well in those airports. [14:45.240 --> 14:48.120] Absolutely. I know the ripple effects, I think, are really hard to measure. [14:48.120 --> 14:51.880] And I have to actually give some of these companies credit for trying to measure it, [14:51.880 --> 14:56.600] even giving us some of these numbers 70 percent, 80 percent, whether they're talking about a revenue hit. [14:56.600 --> 15:00.280] Trying to manage expectations. Yeah. And I think it's just going to be hard to really know. [15:00.280 --> 15:04.280] And as James Lew, our last guest was saying, we may not know for several years down the road [15:04.280 --> 15:09.080] what the collective impact is. It's often pretty backward looking, but we've got to try to figure it [15:09.080 --> 15:15.400] out now. Let's begin. Sure. Okay. Well, don't forget to watch CNBC's special coverage of the [15:15.400 --> 15:19.240] outbreak that breaks down the fast-moving developments and the market impact. That's [15:19.240 --> 15:26.280] tonight at 7 p.m. Eastern time. Well, still on deck, why investors may want to stay away from [15:26.280 --> 15:38.120] that beyond section this morning. Today's big number, $14 trillion. That's the total household [15:38.120 --> 15:54.040] debt in the U.S. It grew over $600 billion in 2019, making it the biggest annual increase in 12 years. [16:08.120 --> 16:26.040] Day of Dog has become the modern, modern and analytics platform in the cloud age. [16:26.760 --> 16:29.640] When we started Day of Dog nine years ago, our mission was to break down [16:29.640 --> 16:34.680] silos and bring teams together. Nearly 9,000 of the world's most innovative companies rely [16:34.680 --> 16:39.000] on a platform daily to run their business and delight their own customers. We see a massive [16:39.000 --> 16:42.760] opportunity in the years to come, and as we celebrate today's milestone, we are even more [16:42.760 --> 16:46.040] excited about the future. Congratulations, Day of Dog. [16:51.400 --> 16:59.320] Every morning, bright and early, 17,000 Edward Jones financial advisors come to work with one [16:59.320 --> 17:10.120] goal in mind, to treat their individual investors like individuals, to know what's important to them, [17:10.120 --> 17:29.480] to be their champion. You face the hassle of lugging your gear through the airport. [17:30.120 --> 17:35.080] With shipskis, you're just a few clicks away. Your skis, snowboard and luggage ship from your [17:35.080 --> 17:40.840] doorstep to your destination. With unrivaled pricing, real-time tracking, shipskis delivers [17:40.840 --> 18:10.680] hassle-free ship ahead and go catch those first tracks on fresh snow. Shipskis, your skis delivered. [18:10.840 --> 18:26.440] Let's get a check on some of the stocks on the move today. SoftBank's third quarter profit was [18:26.440 --> 18:34.840] nearly wiped out by losses of its $100 billion vision fund, I should say. The fund posting [18:34.840 --> 18:44.600] an operating loss of more than $2 billion. The vision fund has gained about $3 billion on its [18:44.600 --> 18:50.120] investments since the beginning of the year. This report did come after the close of Japanese [18:50.120 --> 18:57.720] trading, a lot going on there for SoftBank. Western Union is reporting fourth quarter [18:57.720 --> 19:02.440] earnings and revenue that missed forecasts. The company says the stronger dollar negatively [19:02.440 --> 19:09.640] impacted revenue. You can see shares down more than 6% and shares of Bed Bath and Beyond plunging by [19:09.640 --> 19:15.160] more than 20%, actually down more than 25% after the retailer said fourth quarter sales were hit [19:15.160 --> 19:20.600] by increased promotions. Falling traffic and inventory issues, same-store sales in December [19:20.600 --> 19:26.600] and January, those dropped more than 5% and that was more than expected. The CEO says the company [19:26.600 --> 19:32.600] is experiencing, quote, short-term pain and efforts to stabilize the business. That CEO is still sort [19:32.600 --> 19:36.840] of getting his feet under him, trying to figure out what that business is all about and, frankly, [19:36.840 --> 19:42.440] how to fix it. Well, as we had to break, President Trump giving his MAGA slogan new meaning yesterday. [19:44.040 --> 19:49.080] And we have four trillion dollar companies. One is Microsoft, one is Apple, one is Google, [19:49.080 --> 19:55.320] one is Amazon. So you have Amazon, Google, Apple and Microsoft. And so you have an M, [19:55.320 --> 19:58.600] you have an A, you have a G and you have an A. You have a Mac guy here. [20:00.360 --> 20:06.280] The comments coming just hours after the FTC expanded its antitrust investigation into big tech [20:06.280 --> 20:11.240] over past acquisitions that may have hurt competition, consumers and evaded regulatory [20:11.240 --> 20:24.520] scrutiny. We're back after this. No one likes to feel stuck. [20:24.520 --> 20:28.920] Boxed in or held back, especially by something like your cloud. [20:28.920 --> 20:34.760] It's a problem, but the IBM cloud is different. It's the most open and secure public cloud for [20:34.760 --> 20:40.200] business. It can manage all your apps and data anywhere. So it can help take on anything from [20:40.200 --> 20:45.480] rebooking flights on the fly to restocking shelves on demand without getting in your way. 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[22:01.240 --> 22:05.880] Comcast business security edge updates every 10 minutes to help keep your connected devices [22:05.880 --> 22:09.080] protected against new ransomware, malware and phishing threats. [22:09.080 --> 22:13.080] Every 10 minutes feels pretty good. Comcast business security edge automatically [22:13.080 --> 22:18.520] helps protect all the devices on your network. Call today. Comcast business beyond fast. [22:18.520 --> 22:23.640] Introducing a new kind of home insurance. Insurance that covers the breakdown of appliances [22:23.640 --> 22:29.880] and electronics. That includes coverage for water and sewer backups. [22:29.880 --> 22:36.840] That provides four times the coverage on computers and home office equipment. [22:39.480 --> 22:43.480] And covers the service line connections between your house and the street. [22:43.480 --> 23:01.080] Let's get a check on this morning's other headlines. NBC's Philip Benna is in New York [23:01.080 --> 23:04.600] with the lead. Good morning, Philip. Hey, Courtney. Good morning. And just a moment, [23:04.600 --> 23:09.240] we will tell you why that song was playing. A stunning turn of events in the Roger Stone case. [23:09.240 --> 23:13.480] Attorney General William Barr and his top aides at the Justice Department intervened, [23:13.480 --> 23:17.640] reversing a stiff sentencing recommendation that federal prosecutors had filed. [23:17.640 --> 23:22.440] The decision coming after a tweet from the president called the seven to nine year recommendation, [23:22.440 --> 23:27.720] quote, a miscarriage of justice. All four prosecutors in the case have now dropped out [23:27.720 --> 23:31.160] in protest of the move and one is leaving the Justice Department altogether. [23:31.800 --> 23:36.440] Actor Jesse Smollett is facing new charges this morning. The Empire Star faces a new [23:36.440 --> 23:41.640] six count indictment charging he filed four separate false reports to Chicago police when [23:41.640 --> 23:47.160] he claimed last January that two masked gunmen attacked him, insulted him with homophobic and [23:47.160 --> 23:51.960] racist slurs and then looped a noose around his neck. The special prosecutor says a new [23:51.960 --> 23:56.520] investigation was launched after similar charges were abruptly dropped last year. [23:56.520 --> 24:02.600] Attorneys for Smollett have not yet responded. And it looks like the rhinestone cowboy is [24:02.600 --> 24:08.760] treading in his horse for a Toyota. This man from Crimea covered his car in those tiny gems, [24:08.760 --> 24:14.840] 400,000 to be exact. Took him six months to complete his sparkly project. But he says it [24:14.840 --> 24:19.880] was a labor of love and he now plans to sell that car. He says that it would be a great prop for [24:19.880 --> 24:26.120] photo shoots. Although Courtney, I have no idea how he'd watch that. So Instagram worthy though. [24:26.120 --> 24:31.720] I like it sparkly. I mean, imagine all the photos you could take with that car. Thank you. [24:31.720 --> 24:37.560] You totally bedazzled. Thank you, Phillip. Well, still to come. Why some say lift needs to get [24:37.560 --> 24:44.040] its priorities in order as that stock falls more than 4% this morning. Plus the Carlos Gonesaga [24:44.040 --> 24:50.040] far from over as Nissan takes a new swipe at its ousted former chairman and a programming note. [24:50.040 --> 24:56.120] Don't miss a CBC exclusive, a CVS health CEO Larry Merlot on closing bell today as that company [24:56.120 --> 25:05.320] prepares to release results just after 7 AM Eastern time. Worldwide exchange is back after this. [25:07.320 --> 25:12.600] Rising energy costs are frustrating. Electricity rates continue to increase and there's no relief [25:12.600 --> 25:17.960] in sight. 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Stocks look poised to build on record highs as investors [27:42.040 --> 27:47.320] prep themselves around two of Jay Powell on the Hill. Futures are higher. Bernie Sanders [27:47.320 --> 27:52.520] on top of the 2020 Democratic field following a win in New Hampshire. What his rise could mean [27:52.520 --> 27:57.800] for your money? And speaking of winners, the Westminster Dog Show crowns its champion. [27:57.800 --> 28:02.520] The pup that took best in show as the second half of Worldwide Exchange starts now. [28:12.200 --> 28:16.440] Welcome back to Worldwide Exchange. I'm Courtney Reagan and this morning for Brian Sullivan. Here's [28:16.440 --> 28:21.240] our stock features are looking halfway through the 5 a.m. hour. We gave you a sneak peek. We said [28:21.240 --> 28:25.400] they were higher and the Dow Jones Industrial Average is indicating a higher open to the tune [28:25.400 --> 28:31.960] of 106 points. The S&P 500 higher by 12 and then Azdex said to add about 46 points. Another busy [28:31.960 --> 28:38.040] day though of course ahead with Fed Chairman's testimony again on the Hill. Coronavirus, earnings, [28:38.040 --> 28:42.920] and the New Hampshire primary results. All of that on investors radars. Let's take a look at the bond [28:42.920 --> 28:48.920] market. The yield on the 10 years sitting at 1.614 percent. Taking slightly higher from the yield [28:48.920 --> 28:52.840] yesterday. Let's get a check on the Asian markets. We saw green arrows mostly [28:52.840 --> 28:57.480] around the world and as you can see across the board in Asia with Shanghai, Hangsang, [28:57.480 --> 29:03.960] and the Japanese Nikkei all higher just under 1 percent though. European markets also indicating [29:03.960 --> 29:08.120] or actually I should say they are open right? They're a couple hours ahead of us so they're higher. [29:08.120 --> 29:12.600] We've got the German Zetradax higher by 6 tenths of a percent, FTSE 100 higher by 3 tenths of a [29:12.600 --> 29:17.400] percent, and France is higher by 3 tenths of a percent as well. Let's get a look at some of the [29:17.400 --> 29:22.120] other top stories that we're following this morning. Rahel Solomon is here. Hi Rahel. Hi Courtney. So [29:22.120 --> 29:27.560] the saga between Nissan and Carlos Gone continues. So Nissan has filed a civil lawsuit in Japan against [29:27.560 --> 29:32.920] its former chairman Carlos Gone. The automaker is seeking an initial amount of 90 million dollars [29:32.920 --> 29:38.600] in the suit. The company says it's looking to recover monetary damages inflicted by Gone as a [29:38.600 --> 29:44.520] result of quote years of misconduct and fraudulent activity. Google kicks off a landmark legal case [29:44.520 --> 29:49.000] in Europe today. During the three-day hearing at Europe's second highest court, the company will [29:49.000 --> 29:55.400] seek to overturn three European Union antitrust fines that total roughly nine billion dollars. [29:55.400 --> 30:00.920] Decision is unexpected until next year. And the Federal Aviation Administration is admitting that [30:00.920 --> 30:06.600] it has not effectively overseen systems for managing safety risks at Southwest Airlines. [30:06.600 --> 30:10.360] So this follows a new report from the U.S. Department of Transportation's Office of [30:10.360 --> 30:17.320] Inspector General that blasted the FAA. The agency says that local FAA managers responsible for [30:17.320 --> 30:22.520] monitoring Southwest failed to ensure that the carrier complied with mandatory maintenance [30:22.520 --> 30:28.200] standards while incorporating 88 used jets into its fleet. Shares of Southwest are lower this [30:28.200 --> 30:33.240] morning as we can see down about 1.2 percent in pre-market court. Rahel, thank you very much. [30:33.240 --> 30:37.960] We're going to see you back a little later. Well the 2020 Democrats are turning their attention [30:37.960 --> 30:43.080] to Nevada and South Carolina after Senator Bernie Sanders' victory in the New Hampshire primary. [30:43.080 --> 30:47.720] Sanders' win puts him near the top of the party's fractured presidential field, which is [30:47.720 --> 30:53.640] now smaller after yesterday's contest. CNBC's Kayla Towshey joins us now. Kayla, can you break [30:53.640 --> 30:58.600] down sort of where things stack up after the primary? It hasn't been so clear to all of us [30:58.600 --> 31:05.480] all along the way. Who's really the leader? Well Sanders is victorious in New Hampshire [31:05.480 --> 31:14.200] after a clear victory last night after a chaotic run in Iowa just a week ago, Courtney, with 25.9 [31:14.200 --> 31:20.440] percent of the votes. Sanders can claim victory here, although notably his support in the state [31:20.440 --> 31:25.400] has been significantly eroded by the entrance of South Bend Mayor Pete Buttigieg and Minnesota [31:25.400 --> 31:31.000] Senator Amy Klobuchar, who essentially split the support that Sanders received here in the state [31:31.000 --> 31:38.760] in the 2016 cycles. Pete Buttigieg with 24.4 percent and Klobuchar with just shy of 20 percent [31:38.760 --> 31:43.160] after being largely written off just a week ago because of a lower tier, trying to figure out [31:43.160 --> 31:47.960] whether she can sustain this momentum and how. Here's the senator in New Hampshire last night. [31:49.320 --> 31:58.200] And tonight in New Hampshire, as everyone had counted us out even a week ago, thank you pundits, [31:58.200 --> 32:03.000] I came back and we delivered. [32:06.760 --> 32:11.320] Because of the fractured field, perhaps many were surprised at the low finish of Senator [32:11.320 --> 32:16.760] Elizabeth Warren and former Vice President Joe Biden, who with lower than 15 percent of support [32:16.760 --> 32:22.920] here in New Hampshire did not cross the threshold to get any delegates. Biden has already left New [32:22.920 --> 32:28.600] Hampshire to start campaigning in South Carolina, which is the next presidential state contest [32:28.600 --> 32:34.840] on February 22nd. He acknowledged that he has not been performing well in the race, [32:34.840 --> 32:40.920] but is and Latinos to hopefully improve his numbers. And finally, because of the performance in [32:40.920 --> 32:46.840] New Hampshire, we are seeing some presidential campaigns suspended, both Andrew Yang and [32:46.840 --> 32:51.640] Senator Michael Bennett saying last night that it would be the end of the road for their campaigns. [32:51.640 --> 32:57.240] So we are seeing the race narrow slightly, Courtney, but we still have more than a handful [32:57.240 --> 33:01.080] in the running. Yeah, Kayla. And yesterday, I know you were telling us that at least that [33:01.080 --> 33:06.920] sort of ceremonial first votes, they went to Mayor Bloomberg, but I didn't hear you sort of [33:06.920 --> 33:09.720] mention how it all shook out for him. I guess that was all he got. [33:12.440 --> 33:19.640] Yeah. And certainly that was more of, you know, a novelty vote. Dixville Notch just casting a [33:19.640 --> 33:25.080] handful of votes. Certainly he has been spending ad money here in the state. He has been gaining [33:25.080 --> 33:29.880] traction in national polls. But Courtney, he hasn't really been spending any time in the state. [33:29.880 --> 33:35.880] He may in the future. There are some reports that he is in increasing his staff here in New [33:35.880 --> 33:42.440] Hampshire and opening an office here. But he has not really been campaigning here at all. He will [33:42.440 --> 33:48.680] appear on his first debate stage of the cycle next week in Nevada. That is certainly something [33:48.680 --> 33:53.400] every campaign is preparing for. This is so interesting, Kayla. Thank you very much for [33:53.400 --> 33:58.840] bringing it to us this morning. This is going to continue to unfold in a week. Send them months ahead. [33:58.840 --> 34:02.920] Well, for more on Senator Sanders' victory and what it means for the election and your money, [34:02.920 --> 34:08.280] I'm joined by Jeff Mills, he's chief investment officer at Bryn Maher Trust and Jimmy Pethukukas, [34:08.280 --> 34:13.800] economic analyst at the American Enterprise Institute. Both of these gentlemen are CNBC [34:13.800 --> 34:17.800] contributors. Jimmy, I guess I'm going to start with you just to give us kind of the lay of the [34:17.800 --> 34:22.440] land and how you think everything shook up last night. So I understand Mr. Sanders won, but [34:22.440 --> 34:27.160] by a relatively narrow margin. So what does this mean going forward? Biden's already moved on to [34:27.160 --> 34:31.800] South Carolina. What's happening here? Who's going to be the Democratic frontrunner? Well, [34:31.800 --> 34:36.600] what happened was that we had a frontrunner who, as it turns out, is really bad at running for [34:36.600 --> 34:40.600] president. I don't think Joe Biden's ever done better than about a fourth place finish in a [34:40.600 --> 34:46.120] primary. He looks like he barely has a pulse. And we have a very weak frontrunner in a very [34:46.120 --> 34:52.760] fractured field. And listen, if you were going to come up with a scenario where somebody who [34:52.760 --> 34:59.320] has unlimited money to spend can jump in, shake the whole thing up, maybe win, maybe create a [35:00.360 --> 35:04.920] brokered convention next summer, that's exactly what you're seeing. You mentioned Mike Bloomberg [35:04.920 --> 35:10.760] at the end. I don't know what his scenarios were that he ends up as a Democratic nominee, [35:10.760 --> 35:14.600] but they couldn't look much better than what's happening right now. And so, Jeff, [35:14.600 --> 35:18.040] now that we hear everything Jimmy has to say and he's talking about a fractured field, [35:18.040 --> 35:22.760] I guess it's a little hard for investors to sort of make some of their bets with their money. [35:22.760 --> 35:28.600] But if it is Bernie Sanders, I mean, you couldn't be further different from the situation we have [35:28.600 --> 35:34.200] right now in the White House as far as economic policy is concerned. Yeah, no question. But I [35:34.200 --> 35:40.440] think the market has it about right. It continues to levitate even as Sanders has risen in the polls. [35:40.440 --> 35:45.320] But I think the bottom line is that no president has lost reelection when they've avoided a [35:45.320 --> 35:50.920] recession in the two years prior to that reelection bid. So, you know, in my estimation, [35:50.920 --> 35:55.640] you have a bottoming of global manufacturing. It looks like leading economic indicators [35:55.640 --> 36:01.240] are inflecting higher. If you look at earnings as an example, usually guidance for 2020 at this [36:01.240 --> 36:07.240] point in time would have been down by about 1.4 percent. Guidance is only down by about 4 percent [36:07.240 --> 36:12.280] so far. So fundamentally, things look good, which means we likely avoid a recession leading into [36:12.280 --> 36:17.720] reelection. So I think investors are looking toward another President Trump victory here. [36:17.720 --> 36:22.440] And usually when the incumbent wins, on average, the S&P 500 is up about 10 percent. [36:22.440 --> 36:27.080] When the incumbent loses, usually up about 3 percent. So a big gap there. But if you're playing [36:27.080 --> 36:31.000] the odds, it looks like a reasonably good scenario for markets. And I think that's how investors [36:31.000 --> 36:36.600] are acting at the current time. I mean, polls show that or suggest, you know, that Bernie Sanders [36:36.600 --> 36:41.720] can be President Trump. A lot of investors look at those betting markets. Those betting markets [36:41.720 --> 36:47.000] have Trump the favorite. And even if Trump should lose and you have a President Sanders, [36:47.000 --> 36:50.440] you know, we're not going to get a wealth tax, probably unconstitutional. We're not going to [36:50.440 --> 36:54.280] suddenly, we're not going to, you know, outlaw all private insurance companies. So I think they're [36:54.280 --> 36:59.640] looking at it's an unlikely scenario. The Bernie Sanders wins. It's even more unlikely scenario [36:59.640 --> 37:05.000] that we go hashtag full socialism. And Jeff, as you follow along, you know, you said you gave us [37:05.000 --> 37:10.600] some stats there about what happens when incumbent presidents win. And then if they lose, the S&P [37:10.600 --> 37:18.840] 500 is up about 56 percent since Trump has been in office. I mean, what would market say about [37:18.840 --> 37:23.400] sort of looking at this very fractured field? I guess I'm still just not convinced that the [37:23.400 --> 37:28.760] markets are going to behave the same way if the candidate is Bernie Sanders versus if the Democratic [37:28.760 --> 37:33.880] candidate is, say, Mike Bloomberg. Yeah, look, I mean, Jim mentioned it, right? If you look at the [37:33.880 --> 37:39.320] national polling, I think Sanders is ahead of Trump by something like 4 percent. And that gap has [37:39.320 --> 37:44.920] actually widened a little bit. So I do think that even if it's just for a period of time, investors [37:44.920 --> 37:51.240] may need to react in a way that, you know, supposes that there could possibly be a Bernie Sanders [37:51.240 --> 37:56.280] president. So I think it could cause volatility in the near term. And honestly, I've been surprised [37:56.280 --> 38:00.360] that the catalyst the markets have been given thus far, whether it's coronavirus or Sanders [38:00.360 --> 38:05.080] surging in the polls, hasn't done more to shake the markets. I mean, if you look at what's going [38:05.080 --> 38:11.080] on right now, you've got the top 50 names in the S&P 500, some 13 percent above their long-term [38:11.080 --> 38:15.960] moving average. If you look under the surface, there's some breath deterioration. So we had 80 [38:15.960 --> 38:21.240] percent of names above the 50-day moving average, now only 60. So I think in the near term, whether [38:21.240 --> 38:25.320] it's the coronavirus, whether it's something in popular term prediction, I think if you look out [38:25.320 --> 38:30.200] ahead, it's just difficult to be too negative on a market where the liquidity backdrop is what [38:30.200 --> 38:34.520] it is via what central banks are doing. They continue to stand at the ready. And like I said, [38:34.520 --> 38:38.360] I think fundamentals on balance are actually looking better, not worse. [38:38.920 --> 38:43.560] Jimmy, looking forward as these primary contests roll on, do you think we're going to continue [38:43.560 --> 38:47.160] to see such a fracture field? Or are these campaigns going to start to pull together and [38:47.160 --> 38:51.320] voters start to sort of aggregate towards one candidate? Or is this just the way it's going [38:51.320 --> 38:54.680] to be until we get to, like you said, the possibility of a pro-cred convention? [38:54.680 --> 39:00.600] Yeah, listen, I think if you had, if there wasn't a Mike Bloomberg sort of looming out there, [39:00.600 --> 39:05.720] you'd say at some point, listen, Sanders has, you know, he's won the votes in the caucus [39:05.720 --> 39:11.000] and the primary. The next couple of states look much better than him. I mean, he kind of, [39:11.000 --> 39:15.480] in a normal situation, he kind of should be the Democratic nominee. People don't believe it because [39:15.480 --> 39:21.240] of his age, because of the socialism tag, and because we have this age bomb of money about [39:21.240 --> 39:26.040] to explode in this primary over the next few weeks. That's why I think this is still going [39:26.040 --> 39:29.000] to be a very topsy-turvy field for quite a long time. [39:29.720 --> 39:33.080] Jeff Mills, Jimmy Pethacuchus, thank you both for joining us this morning. You know, [39:33.080 --> 39:36.760] we're going to keep talking to you for the months to come, because we have a lot to figure out, [39:36.760 --> 39:42.440] it seems. Little shares of Lyft tumbling despite the company posting results that beat [39:42.440 --> 39:47.480] analyst estimates, fourth quarter revenue topping $1 billion for the first time ever. [39:47.480 --> 39:52.360] Investors, though, paying closer attention to the stock following Uber's fourth quarter beat [39:52.360 --> 39:58.280] and updated profitability target shares of Lyft down 4%. CEO Logan Green didn't update [39:58.280 --> 40:03.320] Lyft's profitability timeline, but he did make it clear that it was among the key themes the [40:03.320 --> 40:10.760] company is focused on this year. We expect to deliver continued strong top-line growth in 2020 [40:10.760 --> 40:16.120] while also making progress on our path to profitability. As we've discussed on prior calls, [40:16.120 --> 40:22.040] there are three key themes that we're focused on. First is product innovation, second is profitable [40:22.040 --> 40:28.680] growth, and third is operating leverage. Joining me now is Santosh Rao. He is head of research at [40:28.680 --> 40:33.160] Manhattan Venture Partners. His firm was an early investor in Lyft. Okay, so you just heard [40:33.160 --> 40:37.400] Logan Green profitability number two on his list. Should it be number one? [40:38.600 --> 40:44.040] Well, good morning. Thanks for having me again. I think it's no, they're on the right track. [40:44.040 --> 40:48.200] They're not in a rush. They don't want to pull in the timeline. And that's one of the reasons [40:48.200 --> 40:54.200] why we invested right from the beginning. It's a pure play with a focused strategy, very disciplined [40:54.200 --> 40:58.280] strategy. So I think that's what they're doing. They're executing to that strategy. They're not [40:58.280 --> 41:04.440] in a rush. Like he said, profitable growth until the last quarter of 2021. They will be profitable. [41:04.440 --> 41:09.160] So I trust the numbers. I trust the CEO. So I think he's on the right track. [41:09.160 --> 41:14.440] And this quarter was a classic beat and raise. Fourth quarter right off the gate, doing great [41:14.440 --> 41:18.920] with big numbers. So I think this company is on the right track. And our thesis is proving out [41:18.920 --> 41:22.920] that this is the way to go. So you were an early investor. Are you currently an investor in Lyft? [41:22.920 --> 41:28.360] No, we are not. I mean, we distribute the shares after the expiration. But we were early investors, [41:28.360 --> 41:33.080] like I said. Okay, okay. And so you mentioned that Lyft is a pure play. And you mean because they [41:33.080 --> 41:39.000] don't have a Lyft eats like an Uber eats. But some people point to that as actually a really [41:39.000 --> 41:43.000] good thing for Uber. You don't think Lyft needs that? No, they don't need that. I mean, Uber eats [41:43.880 --> 41:47.880] businesses good, but it's competitive. That's the thing about Uber. Uber, it's a different game. [41:47.880 --> 41:52.040] It's a platform. It has a number of other businesses, not all profitable. We don't know [41:52.040 --> 41:58.440] when they'll be profitable. But it's a broad platform. But I think the way to go is the right [41:58.440 --> 42:03.560] sharing business in North America, which has the best unit economics. So this is the right focus [42:03.560 --> 42:09.000] very well with the optionality later on of going into other businesses. I would rather go that way [42:09.000 --> 42:13.480] than go this way because there's a lot more to do here. The market is big. There's a huge [42:14.120 --> 42:18.840] opportunity out there. It's still a lot more to go. Still early stages. So I think they need the [42:18.840 --> 42:24.200] resources and the attention to execute here. And then later on see about try to go into other [42:24.200 --> 42:28.760] businesses if needed, but they don't need to. So really important part of North America is California [42:28.760 --> 42:34.040] because it's a huge state. And we've got this gig worker law on the books that these ride-sharing [42:34.040 --> 42:38.200] companies and a number of others are just not thrilled with, frankly. I mean, how big of a [42:38.200 --> 42:43.160] threat is this? And will this continue to be an overhang for investors? Yeah, I think it's still [42:43.160 --> 42:48.840] playing out. Lyft is banking on a ballot initiative. They're confident that they can win. But let's [42:48.840 --> 42:52.840] see where that plays out. California is not the biggest part of the market. I mean, it's big, [42:52.840 --> 42:57.800] but it's not all the business. And there's a lot of other businesses around. So there'll be some hit [42:57.800 --> 43:05.960] a small percentage of the total earnings, I guess. But overall, I think we'll see. I think the genie [43:05.960 --> 43:10.760] is out of the bag. No one, you cannot take this back. Right sharing is the way to go for the [43:10.760 --> 43:15.000] future. Everyone wants that. There's a ground swell of support from bottom up. So you'll see [43:15.000 --> 43:20.200] at somewhere in between, you will settle. There will be a compromise somewhere. But in the end, [43:20.200 --> 43:26.360] you need gig economy. You need right sharing. That's the way to go. Transportation as a service [43:26.360 --> 43:30.680] is a big part of the future. That's where we invested. That's how that's why we thought this [43:30.680 --> 43:34.520] was the right place to go. So a lot of moving parts, Antosh. Thanks for being here with us this [43:34.520 --> 43:39.320] morning. Thank you. Thanks for having me. Absolutely. Well, coming up, Netflix, making a rare move [43:39.320 --> 43:44.440] with the release of one highly anticipated sequel. Details on that and the other stories you're [43:44.440 --> 43:49.720] going to be talking about that's ahead. And coming up in a CNBC exclusive, Goldman Sachs CEO David [43:49.720 --> 43:55.320] Solomon joins closing bell as the bank's annual internet and technology conference kicks off [43:55.320 --> 43:58.840] at the 4 p.m. Eastern time. Worldwide exchange, though. Back in just a moment. [44:03.560 --> 44:09.800] Racing has taken me all over the world. But when I put on the helmet, I am still in India. [44:10.760 --> 44:19.000] India, where I found yoga. Slow down. Breathe. I have breathed in India's magic. I have felt it's [44:19.000 --> 44:27.720] warm. Yoga has taught me the truth about life and motorcycles. That the more still you are, [44:28.600 --> 44:29.800] the further you can go. [44:33.560 --> 44:37.320] Sometimes the pressures of today's world can make it tough to take care of yourself, [44:37.320 --> 44:42.280] but Nature's Bounty has innovative ways to help you maintain balance and help keep you active [44:42.280 --> 44:47.480] and well rested. 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Gold bond cracked skin relief. [45:33.800 --> 45:38.520] What gives me confidence about investment decisions? Rigorous fundamental research [45:39.160 --> 45:44.680] with portfolio managers focused on the long term who look beyond the spreadsheets to understand [45:44.680 --> 45:51.560] companies from break room to board room who know the only way to get a 360 view is to go around [45:51.560 --> 45:56.520] the world to get it. Can I rely on deep research to help make quality investment decisions? [45:57.400 --> 46:03.080] With Capital Group, I can. Talk to your advisor or consultant for investment risks and information. [46:07.640 --> 46:12.200] Let's find out what else you're going to be talking about today. It is time for this morning's [46:12.200 --> 46:18.120] top stories. What do we have today? Twitter is in an uproar about this next one. The Westminster [46:18.120 --> 46:23.240] dog show wrapped up two days of competition last night and handed out its coveted Best in Show [46:23.240 --> 46:29.880] Award. The winner was this standard poodle named Siba. Siba is the first standard poodle to win [46:29.880 --> 46:35.880] top dog of the show since 1991. Also the fifth to win in Westminster history. Siba, however, [46:35.880 --> 46:41.160] upset crowd favorite Daniel. Let's wait for this. This is a golden retriever who took home first. [46:41.160 --> 46:45.480] This is still Siba, of course, who took home first in the competition's sporting group. Let [46:45.480 --> 46:51.000] me tell you, Daniel. There's Daniel. Very cute. Here's the issue. Apparently, a golden retriever [46:51.000 --> 46:57.560] has never won. It was the underdog, no pun intended. Folks really wanted Daniel to win. They also [46:57.560 --> 47:03.160] thought Daniel was a cuter, more doggy dog. Apparently, so that's not what the judges are [47:03.160 --> 47:09.480] looking for. They're judging to see which dog is closest to the ideal breed. It's breed. [47:09.480 --> 47:15.880] It's own breed. They're not measuring Daniel against Siba. Exactly. They're measuring Siba [47:15.880 --> 47:21.560] against standard poodles and Daniel against golden retrievers. And apparently the judges felt like [47:21.560 --> 47:26.680] Siba was closer to the ideal standard poodle. They're both cute. They can both win. And speaking [47:26.680 --> 47:31.800] as an owner of a golden doodle, I love both breeds. Clearly. Yes. Also Netflix giving [47:31.800 --> 47:37.720] non-subscribers now a freebie amid one highly anticipated release. The company is 2018 original [47:37.720 --> 47:42.200] to all the boys that I've loved before will be available to stream regardless of whether or [47:42.200 --> 47:46.840] not you are a paid user through March 9th. So the move comms as the sequel to the hit [47:46.840 --> 47:51.400] rom-com officially hits the platform today. And this is the first time that Netflix has offered [47:51.400 --> 47:57.160] free streaming for one of its originals in the U.S. Will be very interesting to see if this leads to [47:57.160 --> 48:01.880] more subscribers because think about it. If you watch now the first one and you're into it, [48:01.880 --> 48:07.080] you'd be more willing to pay to see the second one. They say it's a hit and I love rom-coms, [48:07.080 --> 48:12.040] I've not heard of this nor have I seen it. So I've totally missed that boat. We may have aged [48:12.040 --> 48:17.240] out though. You and I. Oh yeah. I mean I'm with you though. I'm with you. Pizza Hut. Serving up [48:17.240 --> 48:22.840] another interesting innovation. The chain announced that it's newest product. The mozzarella poppers [48:22.840 --> 48:27.800] pizza. It comes with 16 mozzarella filled squares baked right into the pizza crust like right on [48:27.800 --> 48:33.880] top. You see there. The restaurant is calling it the cheesiest pizza yet. Both claim considering [48:33.880 --> 48:38.440] that the chain was also behind the stuffed crust pizza. This also comes a week after Papa John's [48:38.440 --> 48:44.040] launched its innovation, the Papa Dia. I do remember all of those innovations and it does [48:44.040 --> 48:48.280] sort of get you interested. I feel like everybody's, I shouldn't say everybody, a lot of people try it [48:48.280 --> 48:52.920] once. I don't know if you keep going back to it. Like does it, does the mozzarella stuff crust become [48:52.920 --> 48:57.080] your go-to pizza? Probably not. Or maybe it's just a novelty, right? Like maybe you just try it once [48:57.080 --> 49:01.000] as you said. Exactly. Like okay it's a lot of mozzarella. But maybe that's all they need. [49:01.000 --> 49:06.200] Interesting. I love cheese. I would definitely be willing to try it. Here, here. Well on deck, [49:06.200 --> 49:11.000] Boeing issues a new warning over the coronavirus and the major economic impact the outbreak will [49:11.000 --> 49:15.720] likely have. Plus what investors should take away from Jake Powell's latest comments before he [49:15.720 --> 49:20.760] testifies to Congress again this morning. We'll talk to former Fed governor Sarah Bloom Raskin. [49:20.760 --> 49:25.640] That's coming up next and a reminder you can always watch or listen to us live on the go on [49:25.640 --> 49:35.640] the CNBC app. Worldwide exchange is back in just a moment. [49:55.640 --> 50:05.640] When it comes to your business internet, which is more important. [50:09.240 --> 50:13.480] Okay, I wish I didn't have to chew. Like the more I think about it, the more I want to jump to each [50:13.480 --> 50:19.160] room. What if I said you can have it all? 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CNBC and Acorns. Go to [51:30.040 --> 51:36.760] CNBC.com slash invest in you. Big views, big price tags and big problems. It's been on the market for [51:36.760 --> 51:45.640] three years with no offers. Tonight 10 Eastern CNBC get yours. It's now time for the exact [51:45.640 --> 52:12.680] time the report starts. OK. It [52:12.680 --> 52:14.560] as the global air cargo industry [52:14.560 --> 52:16.760] is unlikely to grow this year [52:16.760 --> 52:20.120] because of challenges in China stemming from that outbreak. [52:20.120 --> 52:21.960] Boeing is also warning that the virus [52:21.960 --> 52:24.040] will hit airline revenues and profits [52:24.040 --> 52:26.480] shares of Boeing down only fractionally. [52:26.480 --> 52:29.640] And a federal judge has dismissed some of the charges [52:29.640 --> 52:32.000] against Theranos founder, Elizabeth Holmes. [52:32.000 --> 52:34.480] The judge ruled patients were not deprived [52:34.480 --> 52:36.280] of any money or property by using [52:36.280 --> 52:38.240] the company's blood testing services. [52:38.240 --> 52:41.280] And there was no evidence showing Holmes directed doctors [52:41.280 --> 52:44.320] to make misrepresentations to their patients. [52:44.320 --> 52:46.480] The judge did uphold wire fraud charges, [52:46.480 --> 52:48.960] however, against Holmes. [52:48.960 --> 52:50.760] Well, as stock features point to new records [52:50.760 --> 52:52.080] for Wall Street at the open, [52:52.080 --> 52:55.160] investors also looking ahead to a second day of testimony [52:55.160 --> 52:57.640] from Federal Reserve Chairman Jay Powell. [52:57.640 --> 53:00.040] Expected to testify before the Senate Bank Committee [53:00.040 --> 53:01.880] at 9 a.m. Eastern time today, [53:01.880 --> 53:03.720] just one day after he said the central bank [53:03.720 --> 53:06.640] is closely monitoring the coronavirus outbreak. [53:08.720 --> 53:10.440] The question for us really is [53:10.440 --> 53:13.280] what will be the effects on the U.S. economy? [53:13.280 --> 53:15.040] Will they be persistent? [53:15.040 --> 53:16.000] Will they be material? [53:16.000 --> 53:17.080] That's really the question. [53:17.080 --> 53:20.600] I think we know there will be effects on China [53:20.600 --> 53:22.920] through some part of the first half of the year [53:22.920 --> 53:26.680] and China's close neighbors and major trading partners [53:26.680 --> 53:28.640] in Europe as well as Asia. [53:28.640 --> 53:30.240] And we know that there will be some, [53:30.240 --> 53:32.200] very likely be some effects on the United States. [53:32.200 --> 53:33.880] I think it's just too early to say. [53:33.880 --> 53:37.720] We have to resist the temptation to speculate on this. [53:37.720 --> 53:39.960] And so we'll be watching that carefully again. [53:39.960 --> 53:41.360] And the question we'll be asking is, [53:41.360 --> 53:43.440] will these be persistent effects [53:43.440 --> 53:47.160] that could lead to a material reassessment of the outlook? [53:47.160 --> 53:49.120] Joining me now with Morris Federal, [53:49.120 --> 53:51.120] is former Federal Reserve Board Governor [53:51.120 --> 53:53.800] and former Deputy Treasury Secretary Sarah Bloom Raskin. [53:53.800 --> 53:55.520] She's also a CNBC contributor [53:55.520 --> 53:57.480] and Duke University Rubinstein Fellow. [53:57.480 --> 53:58.320] Sarah, good morning. [53:58.320 --> 53:59.920] Thank you for being here with us today. [53:59.920 --> 54:02.200] You, of course, heard Mr. Powell. [54:02.200 --> 54:04.600] I'm sure you heard him say all of those things yesterday [54:04.600 --> 54:07.560] as we're trying to square up really the impact [54:07.560 --> 54:09.480] of the coronavirus saying we have to wait [54:09.480 --> 54:10.640] and see if it's material. [54:10.640 --> 54:13.640] It seems to me that there's no question it will be material. [54:13.640 --> 54:16.840] We just don't know, perhaps, to what degree. [54:16.840 --> 54:18.800] That's right. [54:18.800 --> 54:22.760] This virus actually does have quite the potential [54:22.760 --> 54:26.680] to really have some big knock-on effects. [54:26.680 --> 54:28.840] If you think about certainly the impact, [54:28.840 --> 54:31.720] the economic impact on China itself, [54:31.720 --> 54:35.000] there is now speculation that that will knock off [54:35.000 --> 54:37.560] a couple of points of GDP growth there [54:37.560 --> 54:40.080] in terms of how they measure it. [54:40.080 --> 54:43.760] But the effects on the U.S. and on the trading partners [54:43.760 --> 54:47.360] for China are also really what we have to keep an eye on. [54:47.360 --> 54:49.760] You heard Chairman Powell talk about these effects [54:49.760 --> 54:53.280] being looking to see whether they are persistent [54:53.280 --> 54:54.120] and material. [54:54.120 --> 54:58.960] That is, in fact, what the Fed will look at. [54:58.960 --> 55:03.640] This is, as I see it, really kind of a double whammy [55:03.640 --> 55:06.560] because, of course, we're coming out of a situation [55:06.560 --> 55:10.840] where trade has been affected by the tariff wars. [55:10.840 --> 55:16.360] And now we have this virus to contend with [55:16.360 --> 55:18.160] from an economic growth perspective. [55:18.160 --> 55:22.400] So I think this is actually a serious headwind. [55:22.400 --> 55:23.120] I think so, too. [55:23.120 --> 55:25.160] And I think it's going to be some time before we know [55:25.160 --> 55:26.640] we're so much more interconnected, [55:26.640 --> 55:29.640] it seems now, than even we were during the SARS outbreak, [55:29.640 --> 55:31.080] both the United States and China, [55:31.080 --> 55:33.080] but really China with the rest of the world. [55:33.080 --> 55:34.920] And their economy has certainly swelled [55:34.920 --> 55:36.880] to be much larger than it was then. [55:36.880 --> 55:38.040] But the president, of course, Sarah, [55:38.040 --> 55:40.400] also kept up his attacks against Jay Powell. [55:40.400 --> 55:42.680] He was tweeting during yesterday's testimony, [55:42.680 --> 55:46.080] quote, when Jerome Powell started his testimony today, [55:46.080 --> 55:48.520] the doubt was up 125 and heading higher. [55:48.520 --> 55:50.520] As he spoke, it drifted steadily downward, [55:50.520 --> 55:52.840] as usual, and is now negative 15. [55:52.840 --> 55:55.360] Germany and other countries get paid to borrow money. [55:55.360 --> 55:58.280] We are more prime, but Fed rate is too high. [55:58.280 --> 56:01.120] Dollar, tough on exports. [56:01.120 --> 56:04.320] Oh, Sarah, I don't think he's ever going to escape these tweets. [56:04.320 --> 56:05.920] He's always going to be criticized. [56:05.920 --> 56:09.040] And Trump keeps pushing for this idea of negative rates. [56:09.040 --> 56:10.800] What do you make of it all put together, [56:10.800 --> 56:14.440] I guess, both the president's criticism of Powell [56:14.440 --> 56:16.880] and the idea of negative interest rates? [56:16.880 --> 56:17.200] Right. [56:17.200 --> 56:19.040] And well, the question of negative interest rates [56:19.040 --> 56:24.520] actually got questioned in the context of the hearing yesterday. [56:24.520 --> 56:28.560] And I thought Chairman Powell was particularly articulate [56:28.560 --> 56:31.680] in taking negative interest rates off the table. [56:31.680 --> 56:34.400] I mean, he has made it clear that that is not [56:34.400 --> 56:36.760] going to be a tool in the toolbox [56:36.760 --> 56:39.080] that the Fed is like more ammunition. [56:39.080 --> 56:42.160] He talked about the use of forward guidance, [56:42.160 --> 56:44.840] the use of large-scale asset purchases, [56:44.840 --> 56:47.480] not that these are being contemplated at the moment. [56:47.480 --> 56:49.880] But you see the Fed here starting [56:49.880 --> 56:54.160] to talk about its usual playbook, [56:54.160 --> 56:57.680] should it need it, in terms of more accommodation. [56:57.680 --> 57:00.920] So I think the negative interest rate point [57:00.920 --> 57:05.200] was handled pretty clearly by Chairman Powell. [57:05.200 --> 57:08.040] That is not going to be a tool that he [57:08.040 --> 57:10.520] is contemplating right now. [57:10.520 --> 57:14.320] And I think the president can tweet on and on. [57:14.320 --> 57:17.440] As much as he wants about it, it is a tool that [57:17.440 --> 57:20.760] has mixed results in terms of its use in other countries. [57:20.760 --> 57:23.960] And I think its use in the US is something [57:23.960 --> 57:26.280] that is not considered imminent. [57:26.280 --> 57:28.240] Before we go here, Powell did also highly [57:28.240 --> 57:30.440] what he sees as the biggest risk to US growth, [57:30.440 --> 57:31.240] cyber crime. [57:31.240 --> 57:35.240] If you can just take a minute, we're going to play this for you. [57:35.240 --> 57:39.800] The thing that we worry about a lot is cyber attacks. [57:39.800 --> 57:43.600] I think we have a great game plan for traditional issues [57:43.600 --> 57:45.400] like bad loans and things like that. [57:45.400 --> 57:46.720] It's more cyber attacks. [57:46.720 --> 57:50.920] It's really the frontier where you worry. [57:50.920 --> 57:52.080] Sir, what do you think about that? [57:52.080 --> 57:53.400] How big of an issue is that? [57:53.400 --> 57:56.720] It seems like so many businesses that we talk to at CNBC [57:56.720 --> 57:59.080] say, yeah, we're getting attacked basically every day. [57:59.080 --> 58:02.040] We've just gotten better at sort of thwarting many of them. [58:02.040 --> 58:04.760] But at some point, they're going to break through, [58:04.760 --> 58:05.600] I should say. [58:05.600 --> 58:06.200] That's right. [58:06.200 --> 58:09.320] And the volume and the complexity, [58:09.320 --> 58:11.720] the sophistication of these cyber attacks [58:11.720 --> 58:13.320] continues to increase. [58:13.320 --> 58:14.200] We saw this. [58:14.200 --> 58:16.960] I mean, I saw this back at my time at Treasury. [58:16.960 --> 58:21.040] I mean, this was something that is a mounting concern. [58:21.040 --> 58:24.640] I think that Chairman Powell is correct in noting [58:24.640 --> 58:29.040] that the defensive posture of a lot of financial institutions [58:29.040 --> 58:30.440] is actually increasing. [58:30.440 --> 58:31.800] And that's a good thing. [58:31.800 --> 58:36.480] So from a defensive posture, a lot of the institutions [58:36.480 --> 58:40.360] do have good mechanisms in place to thwart the attacks. [58:40.360 --> 58:43.480] But in terms of their coming, they're coming fast and furious. [58:43.480 --> 58:45.040] And they continue. [58:45.040 --> 58:47.240] This is a serious headwind. [58:47.240 --> 58:51.840] I would have probably answered that question a little differently. [58:51.840 --> 58:55.240] I think that there are other big risks on the horizon. [58:55.240 --> 58:58.720] And maybe they will get explored today from the Senate side. [58:58.720 --> 59:00.880] But in particular, you saw Chairman Powell [59:00.880 --> 59:05.440] dodging around a little bit on questions of climate change [59:05.440 --> 59:10.200] and financial stability and other risk factors. [59:10.200 --> 59:11.600] So many things to consider. [59:11.600 --> 59:14.320] Sarah Bloom-Raskin, thank you so much for being here with us [59:14.320 --> 59:14.880] this morning. [59:14.880 --> 59:16.440] We'll speak to you again very soon. [59:16.440 --> 59:17.720] That's it for Worldwide Exchange. [59:17.720 --> 59:22.040] This morning, Squawk Box begins right now. [59:22.040 --> 59:22.760] Good morning. [59:22.760 --> 59:26.160] The NASDAQ and S&P pushing the new high-speed companies [59:26.160 --> 59:29.760] are now warning of supply disruptions related to the coronavirus [59:29.760 --> 59:31.360] outbreak. [59:31.360 --> 59:33.040] Feeling the burn in New Hampshire, [59:33.040 --> 59:36.040] Senator Sanders edging out Pete Buttigieg. [59:36.040 --> 59:38.600] We're going to take you live to the Granite State for the results [59:38.600 --> 59:40.840] and implications for investors. [59:40.840 --> 59:43.760] And shares of Bed Bath and Beyond are plummeting. [59:43.760 --> 59:47.000] The CEO is describing it as short-term pain. [59:47.000 --> 59:49.240] We've got details on all of this straight ahead. [59:49.240 --> 59:52.080] It's Wednesday, February 12, 2020. [59:52.080 --> 01:00:07.000] Squawk Box begins right now. [01:00:07.000 --> 01:00:08.200] Good morning, everybody. [01:00:08.200 --> 01:00:10.000] Welcome to Squawk Box here on CNBC. [01:00:10.000 --> 01:00:12.360] We're live from the NASDAQ Market site in Times Square. [01:00:12.360 --> 01:00:15.440] I'm Becky Quick, along with Joe Kernan and Andrew Ross Sorkin. [01:00:15.440 --> 01:00:17.800] Let's take a look at the US equity futures at this hour. [01:00:17.800 --> 01:00:20.560] You'll see right now that the futures are indicated higher. [01:00:20.560 --> 01:00:22.560] In fact, the Dow indicated up by triple digits, [01:00:22.560 --> 01:00:24.680] a gain of about 125. [01:00:24.680 --> 01:00:27.680] NASDAQ, up by 51 in the S&P, up by 13. [01:00:27.680 --> 01:00:29.400] And this comes after the S&P 500. [01:00:29.400 --> 01:00:32.560] And the NASDAQ both set new records once again yesterday. [01:00:32.560 --> 01:00:34.600] During the trading session, all three of the major averages [01:00:34.600 --> 01:00:35.160] were higher. [01:00:35.160 --> 01:00:36.920] The Dow gave back most of those gains. [01:00:36.920 --> 01:00:38.040] Ended the day flat. [01:00:38.040 --> 01:00:58.760] But again, you're back.