Delta Air Lines CEO Ed Bastian said Friday that while he does not recline his seat on flights, he believes people should have the right to do so.
"The proper thing to do is, if you're going to recline into somebody, you ask if it's OK first," Bastian said on CNBC's "Squawk Box." "I never recline, because I don't think it's something as CEO I should be doing, and I never say anything if someone reclines into me."
The debate on whether people flying economy should be able to recline their seats was reignited this week after an American Airlines passenger filmed a man punching the back of her seat after she leaned back.
"Here's a great jackhole! He was angry that I reclined my seat and punched it about 9 times — HARD, at which point I began videoing him, and he resigned to this behavior," Wendi Williams tweeted Saturday.
People who weighed in on social media were divided on the question: If someone pays for a seat with a recline button, should they be able to do so?
"As annoying as this is ... those seats recline for a reason so that's his problem," one Twitter user said.
"With the universal decrease in leg space implemented by airlines, I try to never recline more than a smidge. And I'm 6' 2." It's not wrong to recline. Just sucks to have your space taken," another user added.
Airline cabins have become increasingly crowded over the past 40 years, in an attempt by airlines to fit more passengers on board.
Seat pitch, or the distance from one seat back to the next, is about 31 inches for economy seats, though some budget airlines only offer 28 inches.
At Delta, Bastian said, "We haven't reduced our pitch on our aircraft in years. We're going the other way."
Elon Musk, co-founder and chief executive officer of Tesla Inc., speaks during an unveiling event for the Boring Co. Hawthorne test tunnel in Hawthorne, California, U.S., on Tuesday, Dec. 18, 2018.
Robyn Beck | Bloomberg | Getty Images
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9:51 am: Semiconductor stocks hit new all-time highs, pacing for best week since June
Semiconductor ETFs SMH and SOXX rose to record all-time intraday highs on Friday, putting them on track for their best week since June. Nvidia is fueling the games, with that stock up more than 6% following earnings. - Francolla, Stevens
9:34 am: Stocks open little changed, strong earnings boost the S&P 500 and NASDAQ
Stocks opened little changed on Friday. The Dow Jones Industrial Average hovered around the breakeven line, while the S&P 500 gained 0.2%, boosted by earnings from Nvidia and Expedia, among others. The NASDAQ Composite was the top-performer, gaining 0.3%. For the week, the major averages were up at least 1% and were headed for back-to-back weekly increases. The weekly increases come even as the number of coronavirus cases continues to rise. -Stevens
9:11 am: Here are Friday's biggest analyst calls
Bernstein increased its price target on Beyond Meat to $117 from $106
Deutsche Bank downgraded BlackRock to hold from buy
Barclays downgraded Yelp to underweight from equal weight
Evercore ISI raised its price target on Tesla to $550 from $250
9:05 am: China eases refinancing rules to help listed firms fight coronavirus
The China Security Regulatory Commission loosened its refinancing rule to help listed companies resume production and combat the coronavirus outbreak, according to Reuters. The regulator encouraged listed companies to introduce strategic shareholders and said the lighter rules would make it easier to raise additional funding, according to the report. — Pound
9 am: Consumer hits wall, watch for GDP downgrades
The surprise dip to zero in a core number inside the retail sales report surprised traders and could result in downgrades to first quarter GDP. The control group number feeds into GDP calculations, and it was expected to show a 0.3% gain. It includes retail sales excluding autos, gasoline, building materials and food services. To make matters worse, the December control number was revised lower to 0.2% from a gain of 0.5%. The headline retail sales for January gained 0.3%, as expected. Treasury yields moved lower, with the 10-year Treasury yield hitting 1.57% after the report. —Domm
8:59 am: Pinterest under pressure as Facebook releases competing app
Pinterest slid more than 3% after Facebook released a new app that could directly compete with Pinterest, which was first reported by The Information. Called Hobbi, the app has so far been rolled out in Colombia, Belgium, Spain and the Ukraine. In a statement to CNBC, a spokesperson for Pinterest said the company remains "focused on building a visual discovery engine," and that the new app "appears to be a photo saving app that lacks the discoverability, search, and recommendations of Pinterest." —Stevens
8:51 am: Roku surges 8%
Shares of Roku jumped more than 8% during premarket trading on Friday following fourth-quarter results which beat analyst expectations. The company, which makes TVs and other devices to stream various services, reported a loss of 13 cents for the quarter, and $411 million in revenue. Analysts had been expecting a loss of 14 cents and $392 million in revenue, according to estimates from Refinitiv. Roku said that monetized video ad impressions more than doubled over the year, and that streaming hours reached 40.3 billion, which was a 16.3 billion hours year-over-year increase. Shares have gained 172% over the last year. —Stevens
8:43 am: Retail sales report hitting futures?
Retail sales figures may have had something to do with the futures pullback. While the January top line figure came in as expected for January at a 0.3% increase, December's number was revised lower. The report also showed the biggest drop in clothing store sales since 2009. -Melloy
8:41 am: Futures cut gains
Stock futures were pulling back ahead of the open. Dow futures are now negative by a point. - Melloy
8:30 am: Nvidia climbs after strong Q4
Shares of Nvidia rose more than 6% after the company reported fourth-quarter earnings that handily topped analysts' expectations. Additionally, Nvidia's first-quarter revenue forecast of $3 billion was higher than Wall Street anticipated. —Sheetz
8:27 am: Expedia shares jump 11%
Shares of travel booking site Expedia soared more than 11% during Friday's premarket trading on the back of strong fourth-quarter results. Adjusted earnings per share came in at $1.24, which was 5 cents above what the Street was looking for, according to estimates from FactSet. The company reported $2.75 billion in revenue, which was slightly short of the consensus estimate of $2.76 billion. Expedia did not give full-year guidance due to uncertainties surrounding the ongoing coronavirus outbreak, but said that it's targeting between $300 million and $500 million in cost savings across the business. —Stevens
8:22 am: Tesla shares slip after pricing $2 billion offering
Tesla's stock fell about 2% in premarket after the company priced its secondary common stock offering at $767 a share. Tesla will sell 2.65 million shares at that price, just a 4.6% discount to the stock's close on Thursday. Tesla said it plans to use the proceeds "to further strengthen its balance sheet, as well as for general corporate purposes." The stock jumped nearly 5% Thursday on news of the offering. The stock traded higher briefly in the premarket on Friday before turning lower. —Sheetz
8:20 am: Stock futures rise to end the week after strong earnings
Delta Air Lines CEO Ed Bastian told CNBC on Friday the company is going "fully carbon neutral" starting March 1.
"It's a big challenge and it's a big commitment," Bastian said on "Squawk Box."
Delta is committing at least $1 billion over the next decade to reduce environmental impact, focusing on clean technological investments for engines and carbon removal, he added.
"There's no greater challenge that I know of that we need to be investing in and innovating in as environmental sustainability," he said.
"We will continue to use jet fuel for as far as the eye can see," Bastian said. "We'll be investing in technologies to reduce the impact of jet fuel, But I don't ever see a future where we'll eliminate jet fuel from our footprint."
Though Bastian stressed the company won't rely on carbon-offset programs, though it has purchased some in the past.
"Carbon offsets are not the solution, we need to be investing in projects that make a difference," he said. "That's not really helping our planet."
Airlines account for roughly 2% of global carbon dioxide emissions, and many have set plans to achieve carbon-neutral growth from 2020. Delta's announcement on Friday is the largest such commitment.
Delta's move comes at a time when many companies are reducing their environmental footprint to combat climate change.
In January, Microsoft unveiled an ambitious green plan aimed at making the company "carbon negative" this decade. By 2050, the company hopes to have removed as much carbon dioxide from the atmosphere that it's emitted since being founded in 1975.
Also in January, BlackRock co-founder and chief Larry Fink jump-started the discussion about how climate change is shifting the investing landscape.
BlackRock, with more than $7 trillion in assets under management, will put "sustainability at the center of our investment approach," from portfolio construction to launching new investment products that screen fossil fuels, Fink wrote.
ESG investing, which takes environmental, social and corporate governance issues into account, is sweeping Wall Street as younger investors want to put their money into companies they can believe in.
“Stocks are priced expecting, requiring, demanding good news,” says Bob Doll, senior portfolio manager and chief equity strategist at Chicago fund manager Nuveen.
According to FactSet, the forward price-to-earnings ratio on the S&P 500
SPX, -0.16%
is 19. When the forward P/E is above 17.5, the average annual return for the next 10 years is 0.5%. “So I’m not saying stocks are going nowhere for the next 10 years, but I think it’s going to be a whole lot closer to 0.5% than the 16% (average annual return) for the last decade,” Doll says in a phone interview.
Doll, who is also well known from his days as a strategist at BlackRock and Merrill Lynch Investment Managers, doesn’t see how the market can rally meaningfully from here. “The only two things that move stocks up are better earnings, or better multiples on those earnings,” Doll says. Multiples are already high, and he says analyst expectations for 9% earnings growth this year are “a tall order.” At some point, wage pressure may follow from the low unemployment rate, which will increase costs for companies.
But Doll also doesn’t see a downturn looming. “I can’t find big downside either — we can have a big correction at any point, but big, sustained moves down in the U.S. stock market have always been associated with an economic problem called the recession, and the probability of a recession anytime soon, in my view, is pretty low,” Doll says. What he calls “massive” monetary stimulus, and overseas fiscal stimulus, should keep the U.S. economy in solid shape.
“So my view is we’re going to churn — it’s going to be choppy and frustrating,” he says.
Doll likes the health-care sector, which may get roiled by political concerns that ultimately he doesn’t expect to materialize. Cigna
CI, -0.30%,
he says, is one of the cheapest health maintenance organizations, and biopharmaceutical AbbVie
ABBV, -2.50%
is a cheap stock with a decent yield.
He also likes financials, even with a flat yield curve, and suggested Bank of America
BAC, -0.03%
and Citi
C, -0.42%,
or for investors who want higher-quality earnings, JPMorgan Chase
JPM, -0.09%.
In technology, Dell Technologies
DELL, -1.41%
is gaining market share and its price is undemanding, Doll says.
He doesn’t like companies with demanding P/Es and/or negative free cash flow, citing electric vehicle maker Tesla
TSLA, +4.78%
as an example. He also thinks that once the coronavirus concerns fade, interest rates will creep higher, so he doesn’t want stocks that look like bonds, such as utilities and consumer staples.
The U.S. economics calendar includes retail sales, industrial production and consumer sentiment. Economists polled by MarketWatch expect a 0.3% monthly gain in January sales. “A strong labor market, low interest rates, and the unremitting hedonism of American consumers should give a firm number,” said Paul Donovan, chief economist of UBS global wealth management.
Thursday night’s earnings results were well-received. Online travel firm Expedia Group
EXPE, -0.34%
may advance after forecasting double-digit operating profit growth. Streaming device maker Roku
ROKU, +0.55%
topped analyst estimates on fourth-quarter revenue, as well as its forecast for 2020 sales. Chip maker Nvidia
NVDA, -0.65%
topped estimates on both earnings and sales, helped by products for data centers.
Canopy Growth
CGC, -0.66%
rose as the cannabis products firm reported better-than-forecast revenue.
The markets
U.S. stock futures
ES00, +0.19%NQ00, +0.32%
edged higher in pretty calm trade. Crude-oil futures
CL.1, +1.63%
were strong, adding 70 cents a barrel.
The yield on the 10-year Treasury
TMUBMUSD10Y, -1.15%
slipped 3 basis points.
The tweet
South Park was a trending term on Twitter after an author stated the cartoon television show caused cultural damage by portraying “earnestness as the only sin.” Her comment triggered a firestorm of reaction.
In retrospect, it seems impossible to overstate the cultural damage done by SOUTH PARK, the show that portrayed earnestness as the only sin and taught that mockery is the ultimate inoculation against all criticism
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Right before the deadly coronavirus outbreak set in, Germany's economy ground to a halt — setting up the country for a tough 2020 just when it was meant to be kicking into recovery mode.
Germany said Friday that it registered zero growth in the final three months of 2019, driven in part by continued weakness in its manufacturing sector. The country's statisticians had predicted a modest rise.
Now economists are once again talking about the prospect of a recession, or two consecutive quarters of negative growth. Germany relies heavily on exports to China, whose economy has been paralyzed by the virus outbreak. The number of cases has jumped to 64,000 globally.
"The impact from the coronavirus on the Chinese economy is likely to delay any rebound in the manufacturing sector as it at least temporarily disrupts supply chains," Carsten Brzeski, chief German economist at ING, told clients Friday. "Stagnation, with a risk of a technical recession, currently looks like the only dish served," he continued.
The big picture: The world's fourth largest economy, and Europe's biggest, had a feeble 2019 amid weak global auto sales, the US-China trade conflict and the prospect of a disorderly Brexit. The spread of the new coronavirus means that it won't start off 2020 in better shape.
Similar fears spring up when looking elsewhere in Europe. GDP for the eurozone grew by just 0.1% in the last three months of 2019, according to data published Friday.
"The [eurozone] economy should be about to turn a corner, but the coronavirus now means that [the first quarter] could well be a write-off," said Claus Vistesen, chief eurozone economist at Pantheon Macroeconomics.
That's drumming up chatter that the European Central Bank could push interest rates further into negative territory or boost its monthly bond purchases when it meets next month — unconventional policies that President Christine Lagarde just started to review.
Judge blocks Microsoft from starting Pentagon cloud contract
In a victory for Amazon, a US judge has agreed to temporarily block Microsoft from beginning work on the Pentagon's multibillion-dollar cloud computing contract.
Why it's important: The order, issued Thursday, turns up the heat on the US government as it defends against a formal protest filed by Amazon over its handling of the contract process, my CNN Business colleague Brian Fung reports.
Earlier this week, Amazon asked the court for permission to gather testimony from President Donald Trump, Defense Secretary Mark Esper and former Defense Secretary Jim Mattis. A decision on that request is expected within weeks.
The backstory: Amazon alleges that Trump exercised undue influence over the Defense Department as it weighed competing bids from Microsoft and Amazon for the lucrative cloud computing project, known as the Joint Enterprise Defense Infrastructure, or JEDI.
Amazon has cited Trump's tweets as evidence that the president wanted to deny Amazon the contract out of a personal animosity toward CEO Jeff Bezos.
What's at stake: In short, money and clout. The contract, which involves providing cloud storage of sensitive military data and tech such as artificial intelligence, could result in a payout of up to $10 billion for Microsoft over 10 years. It also threatens to undermine Amazon's position as the clear leader in the cloud sector.
The cloud division brings in a relatively small percentage of Amazon's sales, but it's a key segment for the company because its high margins drive a majority of the company's profits. And competition is clearly heating up: Microsoft said in January that its cloud offering, Azure, posted 62% growth last quarter.
The US escalates its crackdown on Huawei
The Trump administration isn't backing down in its fight against China's Huawei.
What happened: The US government charged the company with racketeering and conspiracy to steal trade secrets in a new indictment unsealed Thursday, supplementing charges lodged against the company a year ago. The United States previously alleged that Huawei committed bank fraud and violated economic sanctions against Iran.
Huawei pleaded not guilty to the initial charges, and claimed Thursday that the US government is seeking to "irrevocably damage Huawei's reputation" for competitive reasons.
But the move makes clear that the United States intends to keep the pressure on the Chinese smartphone and telecom equipment giant, despite a "phase one" trade deal with China and the United Kingdom's decision not to bar Huawei from its 5G network.
The takeaway: Despite a US-China truce and present focus on the coronavirus outbreak, the groundwork for tensions between the world's two biggest economies to flare up again has been set.
Canopy Growth(CGC) and Newell Brands(NWL) report earnings before US markets open.
Also today:
US retail sales for January post at 8:30 a.m. ET.
The University of Michigan survey of consumer sentiment follows at 10 a.m. ET.
Coming next week: Walmart(WMT) reports earnings, a key gauge of the health of the US economy.
Elon Musk, chief executive officer of Tesla Inc., speaks during a ceremony at the company's Gigafactory in Shanghai, China, on Tuesday, Jan. 7, 2020.
Qilai Shen | Bloomberg | Getty Images
Tesla priced its secondary common stock offering at $767 a share, the company said Friday, in a move that will likely be seen as a success because it's only a slight discount to its previous closing price.
The electric vehicle maker said it will sell 2.65 million shares at that price to raise more than $2 billion. The price is a 4.6% discount to its close Thursday, when plans for an offering were announced. CEO Elon Musk will buy $10 million and Oracle billionaire Larry Ellison will purchase $1 million worth in the offering, the company said.
Shares of Tesla were down 1.5% in Friday's premarket, a day after gaining nearly 5% on news of the offering. The surprise move higher showed there is continued demand for the Musk-driven stock. The shares are up 92% this year alone through Thursday, raising questions about whether it is a bubble being driven by market factors.
Goldman Sachs and Morgan Stanley, the lead underwriters, have the option to buy an additional 397,500 shares in the offering.
Tesla said it plans to use the proceeds "to further strengthen its balance sheet, as well as for general corporate purposes." Analysts were not expecting the capital raise from Tesla, especially because Musk two weeks ago declared that Tesla did not plan or need to raise any more capital. Musk said that Tesla was spending its money efficiently and suggested raising funds would artificially limit the company's progress.
"It doesn't make sense to raise money because we expect to generate cash despite this growth level," Musk said.
In an investor note Friday, Evercore ISI analyst Chris McNally gave Tesla "applause" for issuing new equity. Evercore raised its target price to $550 a share from $250 a share, although the firm stuck by its underperform rating on Tesla.
"What's changed? More than just fundamentals...Sentiment has and likely will continue to play an integral rolein TSLA's valuation," McNally said.
Tesla also acknowledged in a filing on Thursday that the coronavirus outbreak may cause damage to its business. The company added a mention of "health epidemics" to its risk factors for the first time, noting that the coronavirus may cause Tesla to "incur expenses or delays relating to such events outside of our control."
