Transcripts For CNBC Squawk Box 20240713

Anymore. A lot of Global Markets are closed or for boxing day. Uk, germany, france, australia, italy and hong kong. I say it every year. Boxing day has nothing to do with boxing as a sport as a child, i always thought that u. S. Futures, we have some green arrows dow looks like it would open up about 30 points higher 10year note opening about 1. 97. New this morning, china says it is in close touch with the United States on signing a phase one trade deal both sides are 12i8 going through necessary procedures before signing despite progress on trade, tensions remain. Meantime, saying the phase one trade deal is, quote, an enormous step in the right direction. It is coming. It is coming it is done in your mind what we are going to get is what weve gotten. Phase two, i wouldnt think about it again like ever, ever no. Let it go. Gone for good oregon for the election . I think you need a change in leadership of china before we see anything significant even if trump wins in november of 2020, we are about to be in 2020 you think we would have a conversation about a phase two deal we might but protection of intellectual property. We do have evidence. You see this next piece of news already because of the phase one trade deal here is the impact michelle was eluding to you can still be an official anchor you can. Because i read through the script in advance. I like that you should be an official anchor what she is eluding to is that soy bean shipments continue to soar new data suggesting that imports surged to 2. 5 million tons from 1. 15 million the month earlier score that one up. Brazil got a huge market share from the United States china won because they didnt impose tariffs on u. S. Soybeans. They were much more cost competitive. One of the reasons they wanted to do the tariffs at the time. This will please him can china buy as much as theyve pledged. We are talking the dollar value. Swinging around in place wildly at the time. We are talking about the number of tons. You are talking about the idea when the numbers come out how will you know because theyll buy x number of tons right meantime in hong kong overnight. Police fired tear gas and pepper spray to disperse crowds in nearby shopping malls. Crowds shouted at Police Officers saying a catering restaurant opened a free buffett for residents in support of the residents. It has estimated to serve more than 500 people. Did everybody get some good gifts . Did that work out at the table here beautiful socks beautiful socks too no. But perfectly happy. No returns . Is everybody going to be pleased with mine . Not for any reason. Lets tell you about some early retail numbers out overnight. The total u. S. Retail sales rose 3. 4 between november 1 and Christmas Eve. That is about the midpoint of the range of estimates on line sales prizing nearly 19 compared to growth of 1. 2 of in store sales. Saying digital accounted for 14. 6 of total sales a new high thanksgiving was six days later, which pushed back Holiday Shopping the survey found that half of consumers finished their shopping after the black friday weekend. Amazon said it had a record breaking Holiday Season as customers ordered billions worldwide. The company said the number of items delivered with prime one day and sameday delivery nearly quadrupled most popular categories include toys and games, fashion, home and beauty the second Holiday Season kicks off as consumers make returns. A survey found that 70 of people plan to return some of their gifts. Nearly 20 expect to return more than half. Did you see that number a tough crowd. My wife would tell you im the toughest of the crowd. We dont even do gifts because im so picky i often return the gift and it would upset everybody. I dont really like gift cards i think it is a little thoughtless. So i dont know how i feel about all of this. How high does Online Shopping end up ultimately . 14. 6 to me sounds low but we live in new york city where a lot of stuff gets delivered. If we are counting picking up at the store, which is now growing, the execution of the transaction on an app. A third to 50 will be on line usually this year, usually we have some horror story about how packages didnt get delivered and problems this year, you didnt have those problems very smooth that was the good news. You read about 90,000 packages stolen in new york city because they are out there following the ups guy. I assume that is in theboroughs. How often have you seen a ups truck take over a side walk like a warehouse and reorganize what is going on. I can imagine someone goes to lunch and those packages disappear. And they say people follow around the delivery guy, once you are in the package room. It is not an apartment it is just a package room. Thats where they get stolen big problem. Other news on Christmas Eve boy, is it big in Silicon Valley and the world of uber. Former uber ceo officially stepping down from that board. Effective at the end of the year said he sold all of his stock in the company he founded 10 years ago. Leaving to focus on the new business and endeavors he launched Cloud Kitchens which rents out space to restaurants uber has not said who will fill his board seat look at shoares of that company we saw a little bit of a sign coming we would start to sell down those shares i dont think we necessarily appreciated it at this time. This is part of a larger effort of the company it must be almost devastating for him. It has to feel like a major divorce. This is like giving up the baby it is one thing to be pressed to the side. Another to say, im out. Im really out what may have driven him to do this is to sit in a board room and have perhaps no power nobody listening to you . Whatever you think the strategy is. Clearly so far afield from where he wants it to be. It has been a complicated situation for the management of uber when they first came in. Part of the effort and the purpose of bringing the new Management Team in was to separate themselves from the past you had this complicated dance where hes on the board and yet in public. Ive interviewed him on the program and deal book and other places he has to say that regulators and the public who are upset about how this company used to operate. Not the nicest things. He was always trying to dance this fine line with travis on the board. I would see that entire experience had to be uncomfortable. This is on that very day where he didnt go up on the podium and ring the bell. People could say im going to get laughed out of town for saying this. People saying hes got a billion dollars. What can he be sad about trust me, it doesnt matter how much money you have. Just like us as they say this is as emotionally scarring as anything. When you walk auway with a lot o money, it helps cushion the scar and for the company, the fact that he has sold down his entire stake. He is off the board. A new year for the company to say, we dont have that stock overhanging the market every day. For him, personally look at this chart now. If you are an investor, it is trying maybe to figure out if it is in the bottoming process. That is like a technical thing to say the question im asking is that another component of this is that travis knows something about the potential and prospects where the company is going, right for that, i wouldnt jump to that conclusion because hes got privilege for more information no, no. Not something horrific he probably feels like uber eats is a sinkhole. His new enter prize is to support the uber eats and post mates to be the value edit piece. As opposed to be shuttling it around it is a hard company to make it work. An amazing thing. I think when we talk about 5g, people say whats going to happen under 5g . We have no idea but remember that uber couldnt exist until we had 3g and 4g wait and see what happens with technology think about uber in that context of the changes in telecom and communication and what can be done when data goes and moves much faster than it used to. All right i want to talk more about that in a minute. Okay. When we come back, politics playbook for the new year. Well tell you what to expect with the impeachment of President Trump and what it means for the trade war. Squawk box will be right back. Yes im stuck in the middle with you, no one likes to feel stuck, boxed in, or held back. Especially by Something Like your cloud. Its a problem. But the ibm cloud is different. Its open and flexible enough to manage all your apps and data securely, anywhere, across all your clouds. So it can help take on anything from rebooking flights on the fly, to restocking shelves on demand, without getting in your way. What are you doing back there, junior . Since were obviously lost, im rescheduling my Xfinity Customer Service appointment. Ah, relax. I got this. Which gps are you using anyway . A Little Something called instinct. Been using it for years. Yeah, thats what im afraid of. He knows exactly where were going. My whole body is a compass. Oh boy. The my account app makes todays Xfinity Customer Service simple, easy, awesome. Not my thing. Trade has been a center piece of the agenda this year. Pry oriti pry orities. Here is what to expect in 2020 reporter to paraphrase winston churchill, it is either the beginning of the end or the end of the beginning as the president ramps up his campaign. Three things to watch in 2020. First, the president survives impeachment. Conventional wiz come says an Impeachment Vote in the house will be followed by acquittal in the senate which means the president will stay in office for all of 2020. About everything about the trump era has been wildly unpredictable. Second, legislative let down he began with efforts to repeal obama care which failed. Slashing regulations not much left on his leg slative agenda democrats are not likely to pass the authorities in his Election Year third, all about that base the president will campaign the same way he governs and the same way he won in 2016 with a laser focus on his political base. Hes never topped 46 . He knows he needs every voter he had last time. He doesnt have much chance of converting those hell see an emotional, divisive election talking markets now, joining us, chief Investment Partner and on set, managing partner and chief Investment Officer good morning to you both we are sitting on track for the s p 500 giving you a 30 plus total return i didnt hear a lot of people say it is going up 6 or 7 where do we stand now . Did we do too much this year to leave it for next year sure. The markets wasnt expecting much for the markets everyone was a little concerned about what might happen. It was really a fed driven market we think the fed cutting rates really drove markets a whole higher a lot of the news around the trade negotiations especially here in the last 60 days has helped move markets a whole lot higher we are in a position now where it is a lot of momentum on the back of stocks the high returns are behind us but will close out a strong year jason, that is how the map seems to work in terms of valuations right now we are going to grow from record levels of profits. The market tends to find a way to get higher one way or another. How do you think investors ought to be thinking about next year which is the direction of surprise away from that consensus that would get low singledigit returns the good news is while the fed is unlikely to deliver the rate cuts. We have an economy growing about 2 and corporate earnings where we are down slightly and should pick up. Aswe look at market. Typically stock prices follow earnings if earnings are going to grow somewhere mid to upper Single Digits that is good news the important thing to think about, its really reality versus expectations. Going into 2020, the hurdle is a little higher. We are not going to get the fed cutting Interest Rates the expectations for the economy are fairly balanced. We saw that recession was on everybodys mind right now, people have Higher Expectations for the economy and what is happening in the corporate profits. A higher hurdle. I think the direction looks okay if things come in below current expectations, we might get a little volatility. This year was a great year. It is going to be hard to beat that are there areas will that outperform versus others lower leverage, lower earnings we are focused on some of the less cyclical sectors too. When you look at the last month and a half, most of the year, everything was moved higher. You couldnt lose based on where you were allocated what is moving is that Global Growth will be better than expected we are of the view that is maybe priced in too much right now we are talking a bit more of an approach as it relates and focused on Higher Quality business not necessarily sectors or individual names but just those that are a bit stronger of maybe weathering the volatility next year you are worried about potential rising of the Interest Rates or a general rule of thumb . More a general rule of thumb. We are overdue for a correction of 10 generally happens every 18 months the last time that happened was end of last year, certainly. We think next year with political volatility and expectations that arent necessarily realistic we think we are due for pull backs and adding exposure. From an individual perspective, if somebody came into this year with the asset allocations set, you have a lot more stock now than you probably had in your target allocation. Do you think that will be dominant to trim back and put it somewhere else or are we in a mode where, hey, the market broke out in a year and a half range and the market will ride it until otherwise i think the trend is your friend i think most folks are looking at the allocated assets right now. The market is refocused on what matters. Focused on the economy Interest Rates are still low i think that set up is good for stocks with a medium term view our council to clients is to look a month out looking at the general reaction of the crowd and how they are handling it, people are pretty comfortable where they are starting to unseat wra we have not had much of that recently. Often times history has shown and not in a big end here. Typically with a strong year in the market, the following year is okay. Well see what happens it is true. Things dont usually fall apart after that 20year we had that tough Fourth Quarter last year. Well leave it there thank you both a lot more coming up. Your top water cooler stories. Do we have some including a theater chain exec tispeaking ot against netflix and why the organizers of burning man are suing the government ive never been but id like to. Sort of on my list well talk about that and more and whether i should go or not tweet at us. Well be right back. This is a historic moment. Demand has never been higher for what we do. Creating compelling, engaging, and informative content and experiences. With this merger, viacomcbs will be one of the largest and most influential content creators in the world. I know we can deliver on the full potential of this amazing new company. But where do i even start . To gain muscle i know we can deliver on the maybe ill just go to the gym tomorrow. I work a lot and barely have any time to myself. It takes forever to get to work and come home. I wish personal trainers werent so expensive. Now, with the 30 day fitness app its like having a personal trainer in my pocket. I can work out wherever, whenever and however i want. I gained muscle with fitness plans tailored to me. Try the 30 day fitness app today. Apple card. Is a new kind of credit card, created by apple, so its simple and transparent with a new level of privacy and security. It lives here and here. And it will save you 6 on products at apple; like iphone, apple watch, airpods pro and so much more. Apply in as little as a minute, right in the wallet app. Welcome back right when we were going to break, i was talking about my interest in going to burning man. Trying to talk me out of it. Burning man organizers are suing the federal government to recover millions they say the bureau of Land Management overcharged them in black rock city black rock company that produces the event says it is tired for waiting for the government to provide justification for the nearly 3 million it charges to hold the event in the desert about 100 miles north of reno. Providing Law Enforcement and oversight a the the event. In addition to the fee of 3 of the gross receipts is that unfair . It is not a fixed price they want a piece of the action you think with that they want to be paid for. All kinds of issues out there. It sounds more like the organizers feel that they are not getting a return or it is gouging in some way. It appears they have done better and better. Theyve grown over the years. It may be in the beginning, it went with a percentage it wasnt very big easier than having a flat fee. Now they see, wait a minute. We are giving away the store out west, its a mess when you see the google gods and musk and these people there, that it is too much. If i show up, is that the high sign it is over. In their fancy winnebegos they go in the tents. I want to do the whole desert thing with the mask and the goggles the mad max thing. Not what it is. Where it is going now, im sure very different we should do squaucwk in the desert id love to watch that from my living room like squash from davos. That would be peek burning man. Well talk to the producers. Everyone loves to work the last week of august. Well all go to burning man, right . You have to go to betterly early while everyone is partying and getting high do they do that there piles of drugs. The chief executive of ceneworld says net flex left the group from income from the release of irishman. Netflix said all Major Companies were offered the film. Many, including cineworld declined to show them the release window the underlying premise is that it would have been a Box Office Hit if it had been released in the box office i am not convinced it is extremely long and ive heard mixed reviews. It is not a slam dunk unquestionably there is revenue there that netflix knew it was foregoing. Thats the whole thing about the debate you ask the theater owners what was the down side for them saying theyd rather have it in the customer hands sooner. The question i have is did netflix get bang for their buck. I think you want new meaningful customers that have been there for three or four years. That map has been very hard it doesnt translate into dollars that they otherwise would not be collecting. Thats my question. I think if the word of mouth had been better on it. It wasnt terrific if you have netflix what do they say . They count the view how many people have they said watched it. What percent of their viewers have watched it . Probably relatively High Percentage because netflix stuffs it in every home screen and push it to you. In the theaters, it would have been a narrow audience it was a nice christmas present. You saw it and thought, here is a highquality film. Did you see it in one sitting . I saw it in the theater i watched it in two or three sittings i felt like i had seen it before it was intentionally should i see it sure. Sure is not like er, oh, my gosh not to run out to but if you are sitting home on a saturday afternoon looking for something to watch takes away time from football games. Coming up, a big warning in the New York Times but the looming llnsd of antibiotics and why miio of lives could be at risk thats next. Through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From using feedback to innovate. To introducing products faster. To managing website inventory. And network bandwidth. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. Good morning welcome to squawk box. We are live on cnbc at the Nasdaq Marketsite. Major european markets are closed today we are on a regular trading schedule here in the United States take a look at futures the santa claus rally. Are we calling it a rally. Dow up about 32 points now, three hours still a way to go. S p 500 up about 4 points. Nasdaq looking to open about 15 points higher. If you havent read this story already, you need to a warning in the New York Times about a potential crisis in the making and it is real concerning antibiotics as germs grow more resistant. Losing money and going out of Business Companies have abandoned the sector and at least two startups have gone bankrupt companies have worked to develop the trugs but havent found a way to make money selling them here is the bigger problem the infections kill 35,000 people each year saying the death toll could soar to 20 million. The question is now, okay, im going to go to michelle. I think there is a role for the government to play in this because of the way antibiotics work, the model, if you will the traditional Business Model for drugs cant really apply so the vast majority of polices in the world unlike the United States and as the government decides what they are going to pay it costs millions to develop a drug but most only charge americans more because the rest of the world doesnt pay as much when you read the article, the governments say, gosh, maybe we need to actually pay more and give higher reimbursement rates to these companies there is already tons of government intervention. They have to decide how much they want to pay to save the lives of their p. M in the United States, its Health Insurance company individuals, sk individuals. The problem is, these are things you will only use a week. One shot. And it could save your life. Cancer drugs are expensive. They could save your life. The question is at what level . I talk about how once or twice a year i take a z pak. They cost nothing the question is how much should you really be paying to save your life is one thing thats worth paying for you have universal use of the flu shot every year. By the way, a lot of people dont bother even though it doesnt cost them anything a lot more this morning coming up, grab your popcorn well get your score card ready for the movie season well tell you what to expect at the box office in the new year, maybe some films to watch as well looking at startups after weworks failed o. Ip you are watching squawk on cnbc. Or training for something youve never done before. Thats room for possibility. Welcome back 2019 was the year of the pivot to streaming and disney. Compared to 10 years ago, market share box office has become more weighted between a few studios more about the state of the movie business the managingeditor of fandango we are like family one of the great acquisitions, by the way people dont even know that fandango is a comcast company. I love it i love being able to buy my seats in advance speaking of that we are all family, there is no employee discount is there not . There is not. Do you ever have to pay for a film sometimes, yes. When i take my family i go to a lot of press releases with the critics showing how this share has been reshaped. The question is how you think it will look five years from now. Do you think people will see big films in theaters ever again i think so. 2020 will be a year that doesnt have as much block busters you have a couple. Bond, wonder woman and fast a furious but 2021 is stacked with franchises and the marvel and the dc i think a lot of people are going to be looking at your marvel, dc, star wars. Those are the most successful right now. What is your take on star wars i liked it. It is super entertaining it gives you all the action and a lot of action and the story. I think star wars can stick around i look at the show on disney plus where it is connected to things familiar to you but different. You dont have the skywalkers. You see disney has become so dominant over time look at your screen right now, to the right that big gray spot that is disney with 32 compared to 10 years ago when they had 12 . Have they institutionalized some way . There was one year disney didnt have a single loser which is astounding how go they do that . They were very smart in the last several years not only did they do marvel and lucas films which are marvel and star wars but they also have pixar and disney animation frozen really put them back on the map. Late 90s with the lion king and Little Mermaid they took time off and with frozen, they started resurging they also bought fox. We havent really seen fox play a big role yet because a lot of these films were already done and in the can. I would say in a couple of years, well start to see what disney does with that. If you had literally a weekend or two to watch a couple of films, what do you remember right now . 1917, you have to see it on the big screen uncut gems i think it is awesome. If you want to go with mom, go see little women. A great film with a great cast Merry Christmas, happy holidays coming up, the december jobs report just about a week away. What to expect after last what to expect after last months lo especially by Something Like your cloud. Its a problew outnumib. Its open and flexible enough to manage all your apps and data securely, anywhere, across all your clouds. So it can help take on anything from rebooking flights on the fly, to restocking shelves on demand, without getting in your way. The 30 day fitness app solved my problems i love the fact you can do it anywhere because you dont need equipment. It keeps me going, because the way its set up, i dont want to miss out on my workout days. I recommend it for everyone, whether its to lose weight, get fit or just stay healthy. Try the 30 day fitness app and start working out wherever you want. brakes screeching okay. So, today youre going to leave your phone with a guy named flip. ding but its more than your phone, its your business, your customer data, your sales figures. And who can forget, those happy hour selfies . Not flip. honking, gasping this isnt working. Introducing samsung Business Security solutions, with knox software. With the galaxy note10, you can remotely wipe data or lock phones, so your business is secure even when your phone isnt. Samsung business solutions. Last month featured a blowout of job numbers joining us now to what we can expect tom, good morning. Good to be with you since that pretty good jobs number for november, we did get a couple of weeks of unemployment claims that were higher than inspected. Did that change the overall job market or are we still looking tight . It is a fantastic market. I correct you on one thing it wasnt a pretty good number in november. It was a fantastic number. You are correcting mike there. You dont need to throw me under the bus like that, you are right. It was fantastic and now we have a shortened retail month because of thanksgiving being late in november no reason to think it will be slowing down in 2020 within the job market, youve had this theme for a long time now. Employers and trying to fill positions. There will always be the technology aspect. As everything goes on being on your local network to being up in the cloud, technology is evolving health care, we have the baby boomers and the older population those two are only going to be more in demand the question is, a, do people want to do the job or have the skills because they want to. I was with my kids and nieces and nephews who are college age. Sales continue to be something coming out of high school. The reason they get paid a lot of money is because people dont want to do the job he we have a huge demand which isnt usually going this late in the economy cycle. But for back office, accounting, finance and supply chain when those are being higher together with sales, it is a strong market. Sales in what industries . You pick. It is a cross the board. Obviously health care, technology, financial services, professional services, specialized retail when i say retail, i dont think people ringing the Cash Register people who are selling for wholesale, into retail, there is so much demand right now for good quality labor at all white color levels, not to mention the blue collar level. Stuffing the boxes, doing the quote unquote amazon jobs everybody is talking about as well most products are sold rather than bought in this country. Coming up, only four trading days left for the year, how should investors be planning for 2020 well tell you next. Uber cofounder announcing plans to leave ubers board the end of the year what it means for the company and itros ad ahead we return after this those obstacles that limit a companys growth. I try to find companies that turn these challenges into opportunities. But by going out in the field, and meeting management, suppliers, competitors. In the end, its these unique companies with creative Business Models that will generate value for our investors. Thats why i go beyond the numbers. Record runme stocks rally in the close of 2019 how much money did americans spend this shopping season your money, your vote. Issues playing out on the campaign trail right now as the second hour of squawk box begins right now. Good morning and welcome back to squawk box here. Joe and becky are off today. Our guest host this morning also with us on this post christmas edition of squawk box. Thank you for having me everybody seems happy about the presents they received all got there on time. Any amazon i do a lot on amazon. Did you see the article on the amazon choice thing . Do you know what im talking about. Unbelievable when you go on amazon and it says amazon choice, thats not because theyve approved it. It is alaba garage im s p 500 would open up a little over 4 points, the nasdaq up around 15 points. Some is headlines to bring you as well making news this hour. Mortgage applications fell 5. 3 . Supporting new figures after the Bankers Association both purchased activity fell during the week the average 30year mortgage falls. Initial jobless claims out this morning at 8 30. Looking at 20,000 new claims that would be down about 14,000 from the prior week. Also the final trading day of the year in japan. The nikkei was up 0. 6 today 19. 5 of the year for japan. Japanese stocks have the best here since 2013 but it has been 30 years since the nikkei hit the last record high on the trading day of 1989. Did we have a show then it is a lot higher than that. It is ridiculous. One of the most unbelievable bubbles. There are only four trading days left in 2019. Check out these stats. At this point, the s p is up 6 2. 6 this month. On pace for the best annual performance in six years if the index ends up more than 29. 6 , it will be the best year for the s p since 1997 remember, we are now officially in the santa claus rally period in the five final trading days of the year and first two trading days of the new year, if the market does not go up over that period, it is a potential warning for the new year joining us now, president and chief Investment Officer here on set, the chief equity and derivative manager julian, starting with you. We are talking about these great yeartodate numbers coming from a distress moment 12 months ago nonetheless, youve been bullish. You were saying the fed was likely to cut where it was very much nonconsensus. From where we sit, it is not the differences from last year, it is the similarities for us, the biggest one is no recession. We didnt see one forming last year we dont see one forming in 2020 second, the fed. We felt very strongly the fed was going to pivot, we think the fed is actually supported. We had that pickup in september. The fed is likely going to be there. Expanding the balance sheet. Stephening and fed into confidence being the most important thing this entire year third thing from our point of view the Options Market is sending signals that stocks are going higher this time last year, into the down turn, got less expensive. Weve never seen this before that told us there was buying power below. Now they are very expensive. People are concerned about the election outcome to us, thats the wall of worry. How high is that wall of worry. We read about the consensus around 5 to 8 you almost never have that kind of calendar year it is rare to have that average. So what is the direction in which we all might be surprised . To us, it could be that our target came out at 34. 50, it was a little over 8 , closer to 7 in years following up 20 or more years, they tend to be quite good for us. The yields as a sign of confidence will go higher. We think this is the year the public could be a more active participant. Are we missing something here . No. I think there is so much stimulus now in the domestic economy, we still like the large cap space there is more opportunity as you go down into midcap and small caps one of the ways of looking at it this year is that we got three fed rate cuts. You really have a high price to pay for that a little bit of a slow down for a one or twoquarter basis i guess the question is going into next year, are we going to see yields go higher will something happen in demand for credit in terms of the valuation. We have to watch the credit market we expect rates to creep even higher there is a natural ceiling for how high rates can go. There is enough stimulus the treasury will go above about 2 now technology, it is up more than 40 it has had this strong decade as well can that be something that persists our concern is that coming into an Election Year, particularly when you think about 2016, there is likely to be a regular la tory overhang. Opening up to a greater extent, they are going to be buying technology the public knows technology, they are comfortable if you look at it, it is not only the last decade but the last 25 years or so. Technology is the bull market. We think thats a part of the story. Are sectors or stock in particular going to be knocked around depending on who ends up on top of the democratic ticket . No question about it. When the momentum of the progressives which we would term warren and sanders peeked about a couple of months ago, not saying it is not going to make another run, thats when you started to see health care outperform the market and it is almost counter intuitive given that for the most part, you had more value and cyclicals outperform the market where we sit if we see the resurgence of progressives, health care could come under pressure. It is likely technology could come under pressure. The story is for us looking at this really general undervested sort of health mentality into the election that we are going to do right either way what do you think what will you see as the outcome of the primaries what is concerning us right now is the digital tech. As it relates to home automation this growth in conversation in how that looks, particularly in europe is troublesome. Well leave it there. Thank you. Coming up, troubling new numbers this morning from some retailers closing their doors for good well talk about that but first, make sure to subscribe to our podcast. Get interviews and behind the scenes access. Get it wherever you subscribe to podcasts announcer todays big number 1 million. Thats how many return packages ups expects to receive per day through the beginning of january. [ dramatic music ] this holiday. Ahhhhh ahhhhh a distant friend returns. Elliott. You came back and while lots of things have changed. Wooooah woah its called the internet. Some things havent. Get ready for a reunion 3 million light years in the making. Woohoo yeah welcome back to squawk box this morning a couple of headlines for you. Retail, the big sector a new report from master card saying total holiday sales up 3. 4 e commerce sales up 18. 8 over a year ago i dont know if that is higher or lower than expected tiffany putting out its numbers. The retailer estimating holiday sales rose between 1 and 3 an say china grew in double digit growth good news for lvmh they say the rise in chinese main land sales brought a struggle to hong kong. Also japan and the consumption tax. A new owner you were thinking the new store. The new owner of the little blue box 2019 was a record year for store closures retailers have announced plans to close some 9,300 locations up 50 from total announced clo closures in 2018 huge implication for real estate for so many years, wed stat the Square Footage of retail did you notice tiffany is going to shut down the Flagship Store for major renovation midjanuary. Sounds like they are moving to east 57th street around the corner still that iconic street i have a Doctors Office there and there is always people taking pictures there. Im sure that impacted business. Speaking of retail, American Consumers return hundreds of billions of merchandize to stores and a good chunk takes place the day after christmas. More people will exchange this year seems like a headache but also an excuse for people to get into the stores again earlier, we talked about gift cards today is a big one for redemptions. Shoppers be wear of con artists going into major retailers engaging in gift card scams. Thieves have figured out how to steal information and tamper with the cards inside the store before you buy the card. Be sure to look at the decal that is covering the pin number. Scammers can get enough information on the card still on line once activated at the register, thieves can encode that data on to any card with a strip and use that to counterfeit at the retailer ive also heard about ways certain scammers you know not the scratch and any of but you scratch off the number that there are ways now that scamme scammers have figured out a way to get that number under it without scraping or that i think they are scraping it off and trying to put something on top of it so it looks like it was never scraped off. Little news you can use the day after christmas. Innovation on both sides. Today marks the first day kaunza todays principal is unity other principals are collective economy and purpose. First observed more than 50 years ago. Continues through new years day with a feast and gift giving crowds are gathering across asia with the last solar eclips of t of the year. Transforming a ring of light the entire eclipse lasted about three hours. Coming up, uber founder cutting all ties with the cup. Well debate the future of the hide railing giant that is next announcer time now for todays aflac trivia question. In 1966, the first kwanzaa was celebrated in los angeles. Who was the holidays creator . After surgery we had extra bills followed up visits, deductibles. We thought Health Insurance had us covered up for everything, but it didnt. Aflac gives you money directly to help you with those things. I want to thank my wife, my mom, the duck. Get help with expenses Health Insurance doesnt cover. Get to know us at aflac. Com theres room for more than just the business you came for. Whether thats taking in every moment. Or capturing a moment worth bringing back. Thats room for possibility. How far we can go, oh oh joining us now to discuss this and so much more in tech talk joann is here. And the executive editor and head of cnet news. Okay so, why do we think this happened and what does this mean a couple of possibilities there could be possibility that travis knows that the rest of us dont. I think it is an interesting possibility. The other is that he is so furious at how badly he has been treated. He was humiliated that he was not up there on the day. Possibly, he just wants to walk away it is not exactly the best stock to hold right now. Cutting ties with the company and sort of walking away, its still billions of dollars for him is probably the best bet especially given the challenges uber will face in the coming year it lost a billion two in the last quarter it doesnt come up very often. I saw a survey recently. It looked at uber versus lyft. It only asked women about their preferences. There was a striking difference in women who said they felt that they had been harassed or abused in uber cars versus lyft, which i think is not do you think that is real or a perception i think some of it is real in that we know they had over 3,000 incidents of sexual abuse in their cars but the fact that it got so much publicity because of that that it makes people more aware and more hery and likely to report. One question for both of you. What do you think the chances are that an activist gets involved in stock. The only Silicon Valley startup that is one for one. No duelclass shares and ill make it a sexier story for you they bring him back they try to bring travis back you wouldnt sell your shares. If you thought you were coming backwith the stock, youd want leverage and the benefit of the stock going up what are the chance that they would choose the stock i will say, the problem with the theory is that it is not clear what you would do. Most investors would say, lets run the company for cash a lot of investors would make money. If you do that, you get rid of the growth component that would be a travis kind of thing. That seems out of favor at the moment my theory may be off another point is travis look at the culture under him. The reason he was kicked out is because of this toxic culture. There is no indication, no sign that has changed unlikely. The upside would be minimal there too. Would you belong other business cloud kitchen it is an interesting business. I dont know that i would want to stake a claim it is interesting. Lets switch gears to netflix. Chief executive of cineworld saying it left the box office with less income because they streamed it days before releasing it they said netflix prevented it from being a Box Office Hit saying if it had been released properly, it would have generated a nice income. All true but besides the point im not 100 sure it is true. If you look at how many people who were streaming and got all the way through it in one sitting. I think it is now up to 18 . Most people are watching it in bits and pieces. The reviews are that it would be a Box Office Hit and im not convinced. The reviews are not glowing if you like these films, its a retret retread of his films he should be happy with the way things worked out. More people watched it than would have in thetheaters. You saw it in the theaters i did he got the Theatrical Release that was brief it points out the difference in math when netflix presents viewership 18 got all the way through. 10 Million People. 10 Million People werent going to go to the theater that would have been a massive hit. Are you surprised i would have thought some studio would have given him the funding. And the length. He was able to do what he wanted and get paid for it. Hes a master i would of cut it down a little bit. Tech stocks have performed well theyve come under increasing fire what should investors expect in 2020 here is what we have in store. Reporter big tech was a big target on both sides of the political aisle. The scrutiniy will only grow watch out for a capitol hill crack down the house will ramp up the antitrust next year democrats still want top ce os to testify and working on legislation to ban mergers and working on support for federal privacy law. Both are raising red flag over Companies Like huawei and tiktok and federal trade commission and Justice Department looking into facebook and google. Texas and other states with their own cases. California stricter privacy law could go into effect big tech faces an Election Year test after the fallout of 2016 all the platforms are under pressure to prove they are safe from misinformation and hacking. They need to show they learned the lesson from the last election you want to agree or disagree with that assessment 100 agree. Agree what is really going to happen . This is what ive been focusing on. All of these emerging companies arent even out yet im going to ask you. Here is my Technology Question for you. We complain about these issues we go back to the scene of the crime as consumers every day occasionally you will hear hes dropped his facebook account hes the exception to the rule why . We are addicted to these things the conversation has been changed. This is sort of how ive done things in the past with all those shares, a lot of folks arent necessarily affected i thinks that why. It has been slow to come in with crappier laws. I think there is regulation. Something has to happen. We have seen its going to ripple out to the National Level its going to take awhile. These regulators move slow the two really overarching issues team to be one is on the privacy and data side. Is the other is on the content side im really curious to see what will happen. We talked a million times about how facebook and google are not seen as content providers, as publishers it is increasingly clear that they are indeed publishers and they are, they are editing and making decisions at what point do they become is there further regulation to make them responsible for the content that they are running. Thank you, guys for conversation Merry Christmas. Appreciate it. Merry christmas Merry Christmas still to come, jeff lewis joins us on set. The decision to go private or public in the new year stay tuned youre watching squawk box on cnbc good morning welcome back to squawk box right here on cnbc were live from the Nasdaq Market site at times square. Take a look at u. S. Equity futures. We are about, call it two hours away from the opening bell that looks like it will open up 26 1 2 points higher s p 500 looking to open 4 points higher and the nasdaq up 13 points now to one of the Big Questions of 2019, stay private or go public deirdre bosa reports on the outlook for unicorns in the new year after a year that saw some unicorns fly and others get their wings clipped, whats in store for 2020 first, the path to profitability. The Silicon Valley growth that all cost mentality, thats going to have to take a back seat to better unit economics. Consumer might have to pay more for things like rideshare and food delivery. As those platforms try to stem their cash burn. Second, look for more diverse exits for the vcs behind unicorns we could see more direct listings, hybrid listings and m a from nontech companies. Some of the biggest unicorns of the world will face more scrutiny in 2020 door dash, airbnb and juul will be under pressure as lawmakers try to regulate the big economy and vaping as concerns point over the chinese governments access to over tiktok, it will come under pressure joining us now to talk about this and so much more, geoff lewis, bed rock capital founder and managing partner before we get to all of that, you were listening to the conversation we were having about Travis Kalanick and uber you have a take on this. This is an epic to sons of art of war battle, redemption for travis due think hes coming back . You like the idea this is not over it has just begun he is doing the classic sons who play book. Traviss new business Cloud Kitchens, people arent talking about it, its not on the radar at all its not hyped and thats by design travis is actually building a business that is focused on capturing the differentiated supply for uber eats, actually producing the food for uber eats, which is the fastestgrowing part of the uber business uber really called out the uber eats business as being a bright spot its about 22 of their bookings today, growing extremely fast. I think over ten years travis could actually own the one differentiated value layer of the entire delivery states youre not buying into my more conspiratorial view that somehow travis is going to come back to eventually run uber . He might do both. Theyre not mutually exclusive one thing you always want, you have exceptionally talented entrepreneur who has a lot of vengeance. You always want to bet on that person vengeance is just a phenomenal motivator in business. I will invest in someone with tremendous vengeance any day of the week what youre saying is he realizes uber eats is essentially this capitalburning tool for the kitchens to essentially make margin. Absolutely. Look at dominos pizza, 11 billion market cap, mcdonalds 120 billion market cap. It could be a Bigger Company than that. 3 x the market cap of uber he might also do this activist crazy thing, do both let me ask you a question you were an early investor in lyft how do you just even look at both of these companies, uber and lyft right now oh, im just thrilled with what lyft is doing lyft, very different from uber, has just stayed laser focused on their core rides business. In the u. S they havent done any of this international stuff other than a few test markets they havent done any of the food delivery stuff. Uber gave this huge narrative about taking over the world, taking over logistics, taking over food delivery lyft stayed focus. Theyre getting toward profitability lets get lyft stock up as well you cant be thrilled about where things are do you own the whole amount . Im still shareholder in the company. Again, i invested in 2012 at a, you know, sub 100 million valuation. Im quite happy with it. Our folks are investing early in these businesses its unfortunate the public cant invest as early as we do as vcs do you think things change in that regard . Lets just ask is on valuations, do you think the world is going to change at all in terms of how they perceive a lyft or uber or frankly any of these unicorns which is how we began the segment . Every one of these unicorns is somewhat unique i will say as a general rule, because theres just so much capital in this low Interest Rate environment, the private markets at the growth stage we talked about softbank before. Youve got lots of these huge Global Growth stage funds. The companies are very over valued before they ipo if im a retail investor, i would stay away as a general rule from, quite honestly, any technology ipo in 2020 would you advocate i dont know if you saw jay clayton the chair of the sec, the sec more broadly trying to make it easier for what are noncredited investors, people without the typical net income or net worth really, being allowed to get into these things . Do you think thats a good idea, bad idea i think its a great idea i think the government telling people that they cant invest in a set of potentially highly lucrative investments is just wrong. I think we should completely get rid of the idea of an accredited investor people should be free to invest in whatever they want to invest in i dont like the accredited investor thing at all. Its so interesting to hear you say, going back to investing in someone who wants and feels vengeance. Thats very interesting because sitting right before you is john litman talking about the toxic masculinity at uber that we heard so much about. And you highlight this whole we sit here and we talk numbers and profitability, et cetera but business is full of human nature and things that motivate people in very different ways. How do you just thinking, how do you square that with people who say, oh, its so terrible at uber, yet youre willing to go right back at it because you know that attitude is what drives innovation and profitability . Well, you know, its a very complicated nuanced question i will say that i think the toxic masculinity stuff, i dont have any insight into the inner workings at uber but more often than not, the stories are more nuanced than the headlines. And so i imagine that the travis has learned from the experience and i do think from a business standpoint he is a extraordinarily talented human being with a lot of vengeance. I think hes going to do very well over the next decade. By the way, do you think a lot of investors will get behind him . Oh, yeah, absolutely. Theres no fund that would say, you know what, we didnt like how that other thing went i think that i think it was more nuanced than someone like Joanne Joanne thinks i strongly disagree with the accusation there is not a lot of intro specs in t introspection about technology its a big topic i bet if you run an esg fund, you would ask that question. Other than that i was thinking of a big pension fund, big Public Pension Fund thats involved with a Venture Capital fund wlrks they would say, you know what actually, were not so happy about this look what exactly did he do that was toxic masculinity . What is the toxic masculinity thing specifically can anyone at the table answer that she left and wrote the blog post, the culture. It wasnt about him specifically the broader culture look, im not going to make the argument either way. I dont know enough about what was going on internally at the time clearly there was a view among not just employees, but also regulators and the public that there was a culture problem at that company it was a toxic horrible culture. Im the first to admit that. Having been on the board of lyft, it was a very toxic culture. I think people can change and grow and i think he is a talented entrepreneur nonetheless. Geoff, thank you. Merry christmas. Merry christmas, everyone thanks. A coming up, the big sector stories of 2019. Well talk tech and energy when squawk box comes back. Apps are used everywhere. Except work. Why is that . Is it because people love filling out forms . Maybe they like checking with their supervisor to see how much Vacation Time they have. Or sending corporate their expense reports. Ill let you in on a little secret. They dont. By empowering employees to manage their own tasks, paycom frees you to focus on the business of business. To learn more, visit paycom. Com welcome back to squawk box. Im dominic chru. Check out whats happening with sectors that have led the way Higher Technology communications, financial, those cyclicals doing heavy lifting to the up side take a look at one sector that is not performing. Its still positive, but the Energy Sector is the biggest laggard so far in the s p 500 this year. Well see if it can turn things around oil prices have been hitting threemonth highs as we talk about this one particular trade. One picture to look at stock wise in the s p, a couple of as to mention, take a look at the russell 2000 versus the s p 500. Small caps, you can see on or about here starting to difficult verge a little bit that gap still performing here well see if that carries into 2020 of course, well say whether or not amd and a biomed, the best and worst performing stocks in the s p 500 so far this year today well take a look at that gap. Move big one over here, guys well have more market coverage coming up. Keep it right here on squawk box. Well be back after this break johnsbut were also a cancer fighting, hiv controlling, joint replacing, and depression relieving company. From the day youre born we never stop taking care of you. Welcome back to squawk. We are just ten months away from the president ial election. Joining us right now is aaron klein of brookings and adam brandon of freedom works, president. Good morning to both of you. Ten months, i cant believe how close this is all getting. Aaron, weve been talking a lot about how the markets may or may not react to this election as you see it setting itself up, if you were to gamble right now, where do you think the pairings look like . Well, look, its very early to tell. I remember in this cycle in 2004 john kerry was polling in the Single Digits in iowa. There are a couple twists and turns left to go in the road but i think reelections of sitting president s are just referenda on the incumbent really, america is going to go to the ballot box in 11 months and decide do we want four more years of donald trump as president. And that will be the determining question of the election and is that a referendum on the economy . You know, often it plays a large role, but i think trump is different. I think his personality, i think his politics of divisiveness are such that it will be a little less focus on the economy. Not every election is like that. In 2002, despite a weak economy, the republicans won the midterms bucking historical trends. In 2000, despite a strong economy, the democrats lost control of the white house right similarly in 2016 i think this time may be a little bit different adam, the question that weve all been grappling with is the most popular person on the democratic side or is the most popular person on the democratic side going to be the best person to compete against the president . Well, thats up to the Democratic Base. And certainly iowa is going to begin here very shortly at the beginning of february. But in about four weeks later you start having super tuesday you start having california come in so this race is going to start shaking out pretty quickly and i think its very significant that the Democratic Party move the california primary up there were several changes in the way that theyre going about how theyre electing picking their nominee this year. So if you do well in california, that means probably a more liberal member or candidate is going to do a little bit better than the crowd you can start seeing someone like an Elizabeth Warren start to surge again coming to california im hearing predictions of a brokered convention. Do you believe that . It seems like joe biden has kind of hit his top mark hes kind of steady there. And Elizabeth Warren and Bernie Sanders are kind of holding where they are and if thats the case, no one is going to have 50 you become a brokered convention i believe after super tuesday, if we see that no one is breaking out, i think the chance of a brokered convention are highly likely. And remember that the super delegates on the Democratic Party dont vote until the second vote in that brokered convention youre looking at shots right now of Elizabeth Warren, Bernie Sanders. One of the shots you havent seen at least not yet is of Michael Bloomberg. And we talk about him a lot, in part, because of his business background, in part because he was the mayor of new york. In part, i think there is a view, maybe even a hope that he catches fire what do you think the chances are that he does look, youre talking about Democratic Party thats main issues are things like the wealth tax right now so Michael Bloomberg kind of really doesnt fit into that narrative. I think he has two strong issues to appeal to the Democratic Base one would be climate issues and the second is going to be gun control. These are two issues that the Democratic Party these are key issues for the Democratic Party and he is going to take a lot of money and he is going to do a lot of micro targeting to try and find who in that Democratic Base on those two issues he can move but again, from my perspective as someone who works with grassroots conservatives, i see and understand why Elizabeth Warren can work with grassroots on the left. Shes talking their language so i still feel from this vantage point, im curious it doesnt matter how she does in iowa if she does well in california, this could be her race if she doesnt break out, you go back to the brokered convention. Im not sure how mayor bloomberg would do in that scenario. Aaron, we have 20 seconds what do you think . I think Climate Change and gun control are issues for everybody since we all live on the same planet. I think bloomberg is going to struggle with the narrative because why him. I think youve seen a lot of people spend a lot of money in president ial campaigns and not get many votes thats true aaron and adam, thank you guys Merry Christmas and happy holidays thank you money drove elections, Hillary Clinton wouldnt have been president and so would mitt romney thats why this is an interesting issue. Coming up when we return, were going to talk trade and how soon the u. S. And china could sign that phase one deal eaa g ur returns with biho ahd. Gest fear was losing my independence. Mmm. Good. So ive spent my life developing technology to help the visually impaired. We are so good. We built a guide that uses ibm watson. To help the blind. It is already working in cities like tokyo. My dream is to help millions more people like me. The trade war has been one of the biggest Market Drivers of the year were going to talk about the impact of a phase one deal with china and whether a phase two deal could ever happen plus, the next big streaming battle ground. Well tell you where netflix, amazon and disney are deploying hundreds of millions of dollars to win new customers plus, many happy returns. Were going to talk about the next big challenge for retailers. Returns and exchanges. The final hour of squawk box begins right now good morning. Welcome back to squawk box right here on cnbc were live at the Nasdaq Market site in times Square Andrew ross sorkin with mike santoli and Michelle Carusocabrera joe and becky are off post christmas. Good morning. Thank you guys for being here and hanging outs the futures are an hour and a half away from the open. Dow in the green 25 points s p close to 4 points higher the nasdaq 14 points higher. We have a full day of trading. A number of other countries markets remain closed. The ten year looks like its Holding Steady at 1. 908. And early retail numbers are out overnight. Mastercard says total u. S. Retail sales rose 3. 4 between november 1st and Christmas Eve thats about the mid point of the range of estimates online sales rose nearly 19 during the period compared to 1. 2 for instore sales. Mastercard says digital accounted for 14. 6 of total sales. That is a new high more on the holiday winners and losers in a few minutes, including the kickoff of return season and also new this morning, china says it is in close touch with the United States on signing a phase one trade deal according to the countrys Commerce Ministry both sides are going through necessary procedures before signing. The Ministry Said despite progress on trade, tensions remain on other issues like a defense bill that aims to restrict access of chinese firms to d. O. D. Contracts. And in some other chinese news this morning, soybean shipments from u. S. To china soar as they ease. Imports surge to 2. 5 million tons in november thats from just 1. 15 million tons a month earlier and on Christmas Eve, President Trump said a meeting with chinas president xi will happen in the new year to formalize that phase one of the trade deal we will be having a signing ceremony, yes. Will you sign it . You and xi jinping we will ultimately, yes, we will do you know where when we get together, well have a quick signing because we want to get it done. The deal is done its just being translated right now. And for more on that and so much more, we want to welcome dean pinkert with International Trade practice thank you for joining us hap holidays to you. We are still awaiting this signing ceremony do you believe its done completely well, thank you and happy holidays to you. I think that theyre still working on the details of the language the agreement is, in principle, fixed. There are still a lot of details that need to be worked out and im in particular looking forward to seeing the provisions on intellectual property and technology transfer, the socalled structural reform issues, because they are of immense importance to Companies Seeking to do business in china. Are you convinced theyre going to be meaningful i think that theyre a beginning. The headline here about u. S. china is that the United States and china have opted for engagement rather than continued escalation yes, tariffs will continue to be high, not as high as theyve been, but theyll continue to be high and there are commitments on structural reform that need to be worked out and worked through over time. So its a process. And i think were on a much better trajectory right now. The process of engagement, though, with this sort of baseline of tariffs remaining in place indefinitely, so that just becomes pretty much part of the relationship i think that if you describe it as the new normal, that may be going a little too far because the process will continue and eventually, probably after the election, phase two will begin to take shape. But its certainly a higher level than historical levels i think the average goes under this agreement, the phase one agreement, the average goes from 21 down to about 19 overall. Is it possible that this is just all window dressing, both sides said enough of this, lets window dress this thing up lets say we have a phase one deal and after that you talk about doing a phase two deal, but everybody is kind of dug in, everybody is living with the tariffs and thats it, and nothing happens after that well, that would be a missed opportunity. And i dont expect that thats the way its going to happen i heard ambassador lighthizer speak about the phase one deal and say that a lot depends on how china chooses to implement some of the provisions i would say that thats true on both sides it depends on continued dialogue, continued working through these issues as ive said on the structural reform agenda, its not like china just changes a law and thats it. Its got to be a process where some of the informal understandings and some of the informal practices that have taken shape over the years begin to change. So i dont, i dont think that its window dressing, but i do think its a slower process than has been understood, at least the last year or so. Isnt part of the problem xi jinping and is it clear that his attitude toward stateowned enterprises, to intellectual property, to all the things that were so concerned about when it comes to Structural Reforms there is no indication to me he actually believes in those things and so to your point about implementation, im not convinced anything happens until whatever happens after xi jinping finally happens. Well, i dont have a direct answer to his state of mind about this, but what i will say is that its in chinas interest to move forward on these issues. Its not just in the u. S. s interest for china to move forward on these issues. And they want to encourage, over time, Foreign Investment in china to provide greater security to Foreign Investment so that Foreign Investment is treated more like domestic investment and so i expect that its a long process. Its a process where were going to have to measure progress in increments but that the long view is that reform will occur and it may occur over the next, lets say, two, three years if, in fact, lets say china over time does move in that direction of actually treating Foreign Investment more like domestic investment and all the rest of it what are the implications for u. S. Business . You said its very important for u. S. Business. Does this just make doing more business in china safer and more lucrative . And how does that alter the longterm trade relationship well, safer and more lucrative is part of it. I think that, that one of the elements here is that u. S. Companies have to be concerned about the regulatory climate, both in the United States and in china. And have to make sure that theyre not running afoul of any of the provisions on either side so, reduction in tensions is the first step toward making that happen i understand theres some important defense issues here, but if you engage in a constructive dialogue, i think over time its in the interest of both countries to to, find ways to facilitate investment, to find ways to facilitate trade. I noticed that over the past year and a half or so, china had been importing much less than it had been before. And that that level of importation is beginning to tick up again and i think thats in the interest of all. Okay. Were going to leave the conversation there thank you. Nice to see you. Nice to see you happy holidays. And coming up, let the returns begin. Retailers bracing for an onslaught of returned gifts. Well tell you what to expect. Plus, well break down the big winners and losers in the sector this year stay tuned youre watching squawk box on cnbc announcer todays big number, 1 million. Thats how many returned cee r y u. P. S. Expects to reivpedathrough the beginning of january turn on my tv and boom, its got all my favorite shows right there. I wish my Trading Platform worked like that. Well have you tried thinkorswim . This is totally customizable, so you focus only on what you want. Okay, its got screeners and watchlists. And you can even see how your predictions might affect the value of the stocks youre interested in. Now this is what im talking about. Yeah, itll free up more time for your. Uh, true crime shows . British baking competitions. Hm. Didnt peg you for a crumpet guy. Focus on what matters to you with thinkorswim. Welcome back to squawk box. It is return season for retailers. Frank joins us now with the forecast for returns, what kind of items are coming back to the stores and maybe to the home, yeah we were just talking during the break. I think a lot of people here had some returns to do guess what, holiday returns are projected to be a record 95 billion this year with nearly half of those coming from ecommerce sales major retailers like amazon, best buy, walmart and target expect to see their returns increase according to b stock. Com, a company that acsesz liquidated products. Appliances and toys, it is the Holiday Season for kids. According to a new survey from xpo logistics, 83 of Online Shoppers consider the return policy before they buy and 30 of them will make a return compared to just 9 of brick and mortar shoppers. U. P. S. Says it handled 1. 6 million ecommerce returns a day last week and projects that returns will actually spike even higher on january 2nd, a 1. 9 million excuse me, 1. 9 billion. 26 increase over the busiest return day last year with more Companies Offering free options for delivery and returns, cbre estimates retailers lose about 50 billion a year in profits because of inefficient logistics. However, ecommerce trend shippers provide a boost for companies that handle those returns. Ups and fedex, robinson expect to see elevated volumes. When somebody returns by shipping Something Back, that seems like a lost opportunity for the retailer it should be going into the store and be looking around, maybe youre going to add to what you purchased i think its a Value Proposition for some of the researchers. According to beast. Com, its a way to increase customer loyalty. The easier you make it to send Something Back the more likely people are to buy. Amazon is offering free returns on millions of items the prime usage has grown and people are using free one day and same day what is the cost of the return to the retailer it really depends on the retailer and what youre sending back if you buy a big screen tv obviously theres more cost. If you buy a tv and send it back compared to socks, its an increase in cost does it make someone more likely to buy from you if they can send it back free or easy before you go, i want to talk about one store. We mentioned it briefly, i love amazon in case you missed the story earlier, you can find it online, the wall street journal had a piece about products that amazon labels as amazons choice. Youve probably seen this. Its a badge they attach to search results its the companys version of what i thought was a seal of approval i thought this was the good House Keeping seal of approval amazon saying they checked it out, the wire cutter, somebody said weve reviewed this and this is the one that we think is the best of the best but guess what the products arent selected for quality at all, meaning theres no human being involved in saying they tried the product, they like it, they think its the better version, whatever its not that. Its picked by an algorithm in a bid to boost sales the label is valuable to sellers, as you can imagine, who have said getting that endorsement can juice numbers 25 or more. But the most alarming part about the whole thing is alarming, but the most alarming part is the journal piece said some of the products with the label have actually been flagged by regulators over safety concerns or overfalse claims some of amazon choice products violated amazons own seller rules. One was a sexual enhancement drink they said contained the Prescription Drug viagra in the product. You have sellers trying to game the algorithm. I love amazon. Im there every day. But i bought a lot of things because of that amazon choice badge, and clearly its not what they say it is im much more cynical than you are. I assume the amazon choice was the one they got the highest margin, that they really wanted you to buy that one because thats where they made the most money on that particular line. You never thought it had anything to do with them saying, we actually approve of this . I would have thought it was a combination of popularity and ratings some screen, it doesnt violate something. You didnt think it was selected you always thought it was an algorithm. A im with you. I thought it was an aggregated user rating. It sounds like someone is thinking about it. Im choosing this as perhaps the best amazon, the store is choosing it, the company is choosing this you have to keep in mind be amazon gets more than half of its profits from thirdparty sellers. Anything you can do to help juice their sales or increase confidence in their goods, its in amazons best to do it. They put out a press release this morning saying 100 million of those thirdparty sellers shipped items with free one day. So for them its all about increasing that capacity and i get it. Increasing sales. I think its misrepresentation. Dont you think they should change the name of this . User choice, customers choice. Id say remember, its always buyer beware did you ever google what amazons choice means . I trust this people its charming, andrew what do you think it should be called . I was thinking we should come up with an idea and wed give it away to free for mr. Bezos on this Holiday Season. Season of giving simple change, amazon chose amazon chose . It has to be Something Like Rotten Tomatoes, a combination of User Experience and critics even if its scientific its not really amazons choice well, its sons choice. Everything is peoples Choice Community choice. Do you trust crowd source reviews more than Something Else is that something you rely on . I dont think it would help crowd source on Rotten Tomatoes when you see that number a lot of people have weighed in. If its user choice versus amazon choice, do you think theyd sell as many of the products umhmm. You do . I do. Really . Yeah. Okay. Maybe we should do testing to figure that out. Well, joining us to keep talking about this, but bring in charlie oshae, senior retail analyst and vicepresident at moodys to talk about the general picture for retail this season charlie, can we make an assessment at this point just in terms of characterizing how good a year this might have been or not . Yeah, through a very narrow lens its still early youve got the return cycle as we were talking about. Its a win for retailer if they get you in the store to return something. Because then they get another bite at the apple. So we think retailers need to really leverage that opportunity. Youve got the superbowl coming up and depending on what teams are in the superbowl, youre going to see huge tv sales in those markets. The superbowl, the lead up to the superbowl is a Huge Consumer electronics period you know, it can be bigger than what we saw during the holiday so weve got to keep an eye on that as well also, all anybody is talking about now are sales. You know, michelle and i were talking earlier, im a fixed income analyst i care about the bottom line not the top line and we saw heavy promotions, amazon was promoting heavily, the Free Shipping promotions, and we know what amazon does when it invests heavily. It focuses on the top line because it admits the bottom line is not going to be there, so we have to drive sales. Do retailers chase those sales and thats something we wont see for a while. Across the entire region of the sector very different metric than everybody else everybody else has to be profitable exactly the amazon shareholder still does president se doesnt seem to mind no profits on the retail side if you look at what amazon is guided for q4, its highly possible amazon wont make money as a retailer but theyre going to keep churning the top line. Go ahead. I was going to say the market outside of amazon, the only company that seems to be equipped to play the game are the huge ones, walmart, home depot. Is it going to become time to think beyond that in the coming year, is that just a default a sngs i still think youre going to see the bifurcation expanding. Its getting wider and wider the guys at the top of the food chain, you know, the walmarts, targets, best buys, amazons, costco, the out price guys, they have huge advantages because theyve got money and they can spend the money to grow tech to improve their technology, logistics, keep the stores looking fresh. And thats the play book right now. How much Square Footage closes this year oh, my god, michelle. Youre still going to see store closures i dont doubt that. The number this year is going to approach 10,000 stores or Square Footage . Stores. Wow ill focus on the store number i think it will be somewhere i dont know, im throwing you said 300 earlier. That was one report. That makes a lot of sense youre going to see thousands, and im not going to get into amazontype speak. But there is still a lot of capacity that has to come out of the sector charlie, theyre playing us out. However, i want you to know we have some very smart viewers and im still, you know, fascinated by this topic of the amazon schoi choice they already have a best seller label. Amazon choice is something different. Special of the day. Do you think its misrepresentation . Boy, its marketing and ill leave it at that its marketing [ laughter ] good answer, charlie. Trying to be a good one here. Its marketing and when you look at amazon, when you get put something in your cart, what shows up below other, other sure, but they dont tell me its their choice. To me its an extension of that all right charlie, thank you thanks. Good to see you i dont agree with you there. Coming up, new data out from yelp and a surprising restaurant trend to tell you about. Were going to talk about the decline. Chinese restaurants in the United States. Fascinating story. Were back in a moment is it a trade war no. I know its not inotestg. Rein kw. Im joking welcome back to squawk box. New data from yelp suggesting the shares of chinese restaurants in top cities has been consistently falling. Over the last five years, the number of restaurants has dropped by about 1 which works out to roughly 1200 fewer restaurants. That may not seem like too much, but it comes as shares of indian, korean and vietnamese restaurants have been Holding Steady or increasing nationwide. And then that report from the New York Times suggesting one reason for the decline may be economic mobility. So, some parents would rather close shop so their children can go on to follow their own pursuits rather than taking over the family restaurant. So maybe the closing of these restaurants is a good thing in a sort of macro in terms of economic fascinating its not the trade war. It has nothing to do with the trade war. I know, i was joking. Coming up, breaking news on jobs, plus will the state of the economy determine the outcome of next years president ial election that debate is straight ahead. Stay tuned youre wchg quk xn atinsawbo o cnbc d by apple, so its simple and transparent with a new level of privacy and security. It lives here and here. And it will save you 6 on products at apple; like iphone, apple watch, airpods pro and so much more. Apply in as little as a minute, right in the wallet app. Welcome back to squawk box right here live on cnbc. We are at the Nasdaq Market site in times square. Couple stories investors are going to be watching post christmas today, Mortgage Applications falling 5. 3 last week with both new purchase applications and refinancing activity declining now, the Mortgage Bank ersers association saying the average 30 year Mortgage Rate edged slightly higher to 3. 99 also amazon says it had a record Holiday Season helped by the sorkin family and others no the Online Retail giant said billions of items were ordered worldwide as you might imagine putting tens of millions of alexa devices. Amazon a key factor in the 18. 8 increase in online sales this Holiday Season compared to a year ago i helped my mother get her alexa up and running yesterday and sometimes, tech support in our family takes a longer time for an investment to payoff. The journal this morning reporting the store ill of an investor named steven bierce, he bought 100 shares of bear stearns at 30 each in march of 2008 the firms value evaporated you might remember in the heart of the financial crisis it was bought out by j. P. Morgan chase. This month he finally broke even on that investment with j. P. Morgan shares up about 40 this year and hitting an alltime high more than ten years he was betting on a buyout. It happened. He was betting you remember, it was originally 2 2 and went to 10. But ill never forget how people pasted a 2 bill on the bear stearns door and there was a famous glass door, famous picture of it. By the way, theyre lucky they got anything. Could have been zero could have been zero. Weekly jobless claims just hitting the tape reporting it fell 13,000 last week to 222,000. That was just about in line with economist forecasts and probably a bit of a relief two weeks in a row where claims came in higher than expected. Andrew okay. Lets talk jobs. The trump economy, what it means for the 2020 election. Joining us right now is jared bernstein, center on budget and policy priorities. Senior fellow and former chief economist to vicepresident biden. And john silva, dynamic Economic Strategy president , former wells fargo chief economist. Good morning to both of you. Good morning. Good morning. Jared, weve been trying to figure out who who is going to be the front runner in the Democratic Party oh, boy and who will ultimately be the nominee. This was the conversation i imagine at a lot of peoples homes even yesterday i know it happened in my home. We were having a big debate. Does bloomberg really get into this, does it work, does it happen and can the democrats really run on the economy thats where i want to start the conversation with you, jared can they well, the economy is clearly a tail wind for the president , and especially the Macro Economy, gdp, moderate, but unemployment not only low now, but possibly lower by the time the election comes around. Ive seen forecasts for the Unemployment Rate to be in the even lower threes than it is now. So what youre going to see democrats do, and you saw this in the last debate, is really emphasize and uplift this issue of inequality. The idea that its not enough to look at aggregate indicators when theres so much dispersion across the land, there are lots of people in places left behind. Now, thats true and even if you can show that theres been some positive gains even in those leftbehind places, their paychecks are still quite low relative to their needs. In fact thats exactly what you heard from the stage, i think it was last week. I look for that type of an emphasis no question, of course the economy tail wind for trump. I think the question is how much does it matter for trump who is such a suigenerist candidate swanky 5 word. Hey, john, who do you think go back to the economic question can is there an argument to be made that you can run on the economy, rather . I think jared has a macro story right. The Macro Economy basically is real personal income has been solid the last two years Household Net Worth is at an alltime high. And for the lowest 25 of the wage distribution, their wage gains have exceeded the rest of the distribution for the last three years. So thats the macro story. I think when you look at the micro story, the question remains questions of inequality, how do you deal with that. Questions of, you know, to what extent we want to focus on Climate Change, to the extent we want it to focus on student loans. So i think its more these micro questions that will probably be the base of the Democratic Program. But the macro story remains remarkably well. Jared mentioned Unemployment Rates. The Unemployment Rates for blacks and hispanics are being at record lows is just a Huge Positive but by region, by certain cities, those problems of inequality remain. Jared, you used to work for joe biden. You were his chief economist when he was vicepresident how would you feel about a bernie or an Elizabeth Warren ticket selfdescribed socialist like Bernie Sanders on the ticket would that be good for the party, is it a win thats a good question. One of the things i walk around trying to remind myself many times a day is that twitter is not the electorate the twitter left is not the primary electorate i think the democrat electorate is a lot more of the debates you hear that said, there is a real demand to push further in terms of policy, getting to some of the areas that john was just talking about. I think the candidate, whoever he or she is, whether theyre a moderate or further left is going to have to weigh in on Climate Change in ways this administration has left behind college debt, certainly eye more progressive tax program. Thats important on the revenue side, but also on the inequality side i think at the end of the day, theres actually less difference between the policy agendas than a lot of the rhetoric would have that is, for example, everybody on the democratic side wants to get to universal coverage, someone to get there a lot more quickly than others. What do you think bidens chances are . Are you asking me we talk constantly, constantly as you know, about Elizabeth Warren good point. We talk constantly about Bernie Sanders we talk constantly about bloomberg. We dont talk about the front runner i get told we dont talk about andrew yang. Biden, given hes the front runner, why isnt this a rodney danger field first, i totally agree. Its a great question. I have been really struck. Theres not that much that has surprised me this year its just been so off the charts in so many ways. But this next no matter what biden seems to do, his numbers stay strong. You guys were just talking about this a little while ago. I mean, he has a great debate. His numbers dont seem to budge. He has a lousy debate they dont seem to budge. I think that tells you something about his durability and i think i understand why their camp might be feeling a little confident john if i may Say Something here i think jareds point about the moderate democrats is really key here because thats biden and perhaps bloomberg as well. Its great to create headlines and big stories as senator warren or senator sanders will but the moderate democrats are saying what can actually get done in an administration . And i think that does favor biden and bloomberg a little bit more than the headline candidates that are out there. John, also those headline candidates, if were talking about warren and sanders, so much of it is about these detailed programs and how they would pay for these tremendously ambitious programs at a time when weve just actually done a lot of things like cut taxes and raise defense spending and nobody even questioned how to pay for them so if you can go forward and say, here are our priorities, but dont worry about raising taxes by a whole lot to pay for them is that viable right now no, its not viable at all. I think its pretty much clear that no matter what side youre on, both democrats and republicans, theres a great willingness to spend and worry about the bills coming down the road three to five or 20 years from now i think thats a real challenge in terms of fiscal policy. I think there are ways to attempt to pay for,again, moderate Democratic Programs that do deal with Health Care Issues and Climate Change. But the grandiose programs are clearly not viable in terms of financing. And also ill pick on senator sanders comment eventually the middle income and lower middle income people will end up paying. Its not just the rich that will pay. So im sort of in line with jared. I think a more moderate Democratic Program candidate who wants to make advances in critical areas can do so with well thought out programs. Jared, i was reading the editorials about the usmca deal. Obviously the wall street journal said about it, they were pretty scathing i thought it was a big gift to the unions, et cetera. I looked at that and thought, this is President Trump still trying to hold all those midwestern states. That was a clear base for the democrats for so long. Does that deal help him hold onto those voters . You know, it doesnt hurt and i think youre making a really critical point. Its the next election just like the last one is all about the geography of the electoral college. And not only do i guarantee you and its obvious this was in trumps mind on the usmca but the democrats are going to argue, and some validity actually, that they really got a lot out of trump that deal ended up much more democratic than it started i wi which is why the wall street journal opined against it i think the other thing trump is going to do in this space is wind down the trade war. For all these good statistics, our Manufacturing Sector has looked pretty recessionary lately and thats going to hurt him geographically hey, one quick fiscal point. Heres my prediction and its not a particularly bold one, but it goes a little bit against what john was saying about viability. I think that democrats in congress and republicans will agree to keep putting everything on the National Credit card until Interest Rates go up and i dont mean tick up a little bit i mean go up and stay up i expect the deficit to keep growing as long as Interest Rates remain as low as theyve been youre right, its not bold probably correct i think its probably right thank you, guys by the way thank you i didnt say andrew yang, i said andrew chang. I apologize for that hes not the front runner hes not the front runner he has some interesting ideas and doesnt get enough attention. And clearly i just have done a disservice to him as well. So my apologies there, mike. Taken care of coming up well talk about a stock that is up nearly 4,000 in the last ten years and could be poised for even more growth the big reveal right after the break. We teased it before the break. Our mystery chart, you guessed it did you guess it i dont know netflix has been a hot stock for investors, up nearly 4,000 over the last decade. This morning were going to talk about what could drive the next leg of growth for streaming services battle ground, which is india. Seema mody joins us with more. Thats right. Netflix is increasingly growing overseas looking at india, its streaming market is set to reach 5 billion in the next four years. Netflix reese erntly launching a number of series including sacred games which features bollywood stars. They recently said at a conference in new delhi earlier this month hes investing over 400 million by the end of 2020 on original content in the country. Netflix, though, isnt alone amazon is shelling out a lot of carbon localized content all in an effort to compete with disneys hot star which has 300 million monthly users. Experts say the key to winning india may not be content, but pricing. Netflix has been testing discounted plans including a 3 mobile only subscription that also decreases the amount of revenue collected peruser. They found netflixs monthly profit per u. S. Subscriber is 2. 9 times higher than the International Subscriber which, guys, does raise questions as to how long this International Bet will payoff. I want to continue the streaming conversation if we could with our own Julia Boorstin she is at the u. S. Stock exchange this goes to the india issue, the International Component issue. Netflix has tried to refocus everybodys attention away from the United States. Whether that is not a hide the ball kind of situation, but whether investors are not thinking about this company in the right way, julia well, look, i think youre absolutely right, andrew there is no question that netflixs u. S. Growth has, if not hit a wall, at least hit a slowing down point i mean, this past year was the first time in eight years that netflix ever recorded a decline in u. S. Subscribers. And i think the expectation Going Forward is that the u. S. Is not going to be a Growth Market for netflix, full stop. The real growth is going to come from overseas. And in anticipation of that, netflix announced theyre going to start breaking out all these international numbers. The Fourth Quarter which will be reported in january will be the first one where netflix breaks out new numbers about where the actual subscriber growth and the revenue per subscriber is coming from there is no surprise that the u. S. And canada provides higher revenue per subscriber, is dramatically lower internationally and is particularly lower in markets like india where there is an expectation of a lower cost. But i think one thing thats interesting is netflix is going to start grouping the u. S. Together with canada which should show a little more growth in this region, which is the most profitable. But i think everyone is expecting all of the future growth for this company to be coming from overseas do we think, by the way, that in different markets and different cultures there is going to be a different approach not just in terms of pricing, but churn, meaning right now in the u. S. , i mean theres churn, but it hasnt gotten to a crazy point. But people talk about how, for example, in asia and certain places churn is crazy. Meaning they watch it, they turn it off, they go to the next one. Do you think that is something i think youre absolutely right. There is so much content already in india and in india, core cutting is happening, but it is not at as fast a rate as here in the u. S there is so much to chew on for the user the customer can be fickle in india for the most part, netflix is going for a subscriber who is already paying something for tv its not like some of these other emerging market places they never had a land line phone so to sell them mobile phone service is an easier one that is exactly right plus they have hotstar which is 2 to 3 a year already. Its very cheap to get good content in india thats why if youre a foreign player like netflix, you have to think about pricing. It ultimately becomes a pricing war. Do indian consumers like bollywood is famous. If anyone had a competitor its bollywood for so long. What do Consumers Want to see, game of thrones or whatever the local bollywood i think it depends what type of customer youre looking at. The middle class want localized content. They want to see their bollywood stars, but playing a different role in a series, not your typical bollywood film thats why netflix has to acquire talent and producers who know that market well so they can make interesting content for that indian customer some of them them want to watch game of thrones. Maybe the expat the reason netflix is investing hundreds of millions of dollars if local content, not just in india but other markets around the world, is it doesnt want to seem like a Foreign Company offering foreign content. Yes, there will always business these shows that do phenomenally well around the world, oftentimes surprising fet flicks i think what netflix is hoping to do is to seem like a local player with local content players and also have the added been of shows elsewhere around the world that happen to do well i think the key for success is having a product in the same price range as other products, also with similar content that doesnt seem like an outsider. That would be challenging for netflix. Thank you, appreciate it, guys and coming up, todays biggest movers on wall street what to watch ahead of the open. That is next. Plus, if you havent listened to our podcast, squawk pod, we have a special easy to digest discussion squawk box will be right back. M a 30 day fitness app user. I love home workouts and the ability to work out at my own pace. The 30day fitness app is perfect for that. I love the fact that you can do it anywhere because you dont need equipment. My clothes even fit better. Because you dont need equipment. Robinwithout the commission fees. So, you can start investing today wherever you are even hanging with your dog. So, what are you waiting for . Download now and get your first stock on us. Robinhood. Squawk box, stocks are on the move already this morning if you can believe it we will go over to dom chu with some names to watch this morning. Dom. Reporter there are stocks on the move, a number of names you guy versus mentioned so i thought id take this opportunity to look at the macroor big themes that could diverge in 2020. The coming year 2020 will be on Interest Rates, their trajectory, not just here but abroad, one of them especially that difference in yield, Interest Rates between shorter and longerterm bonds known as that yield curve or that spread in terms of the overall move now, take a look at this on a yeartodate basis, at one point we were negative in ten year treasury notes we have risen almost in a Straight Line at that point. Will this benefit sectors . Third best this year, we will continue watch that. Commodities, first of all take a look at whats happening with crude oil prices, they have been steadily moving. Anybody paying for fuel at the pump knows that gasoline price have been rising as of late. Will energy break out of this slump it has been in, well see if oil prices can change that. Then well end here on whats happening with gold prices because this year has seen a whole lot of nothing and explode into a whole lot of something. Remember, gold prices shot up some 23 a mix of things there, between safety trades, between whats happening with trade and Everything Else and all of a sudden the drip is lower right now by that 1,600 level. Next year, thats something mike santoli well be watching closely in 2020. It was two markets, through august and since september have been a real difference in tone across asset classes, thank you very much, dom chu joining us now to talk more on what to expect, the president and chief Investment Officer good morning, scott, good to see you. So just talk tactically where we sit . We have this upward drift. Pretty typical of year end around the holidays. Where does that take us the next few days and beyond . I think dom was right to focus first on Interest Rates. You dont have to be a genius to be a bull. Tenyear yield is more than 100 basis points tan it was this time a year ago at 1. 9 . As long as its below 2, you dont have to be that brave to buy stocks so as long as Interest Rates remain low and the yield curve remains uninverted, then i would continue to be a bull. There is one thing that is worrisome, though, that is the Options Market is saying something thats a little bit ominous. If you look at the money implied volatility in the s p space, its low thats what you would expect in the highs and in the middle of the Holiday Season but crash protection has gotten very expensive and that relationship is at an extreme for the last 52 weeks. So what does that say . It says if you look at the money at fly volatility, nobody expects movement you look at crash protection theyre saying we dont expect much movement. If we get some, it will be the down side and it will be ugly. Do you take that on face value and say smart money is positioning to be downside movers things look like the trend is strong maybe ill take out some insurance in case something gets out of hand to the down side thats a great protection the money options are so cheap that really if all you wanted to do is buy insurance with the s p up nearly 40 if you include dividends, then you would buy those really cheap at the money puts and you get complete protection with no deductible. So this is something very different. I think this is people who realize that Interest Rates are low and thats been great, but maybe weve gotten into a little of a bubble. I think this is more of a trading thing than a protection thing. You say if Interest Rates remain low do you expect them to remain contained here oh, that is that theyre going to we dont expect the fed to do much of anything in 2020 i think that they should be raising rates because there is a bit of an act up bubble. It doesnt mean if its equities or fixed income. The Federal Reserve has said, no, were not going to do anything in 2020 unless something changes dramatically. Thats from the fed side. You dont think the bond market will see things otherwise . Well, the fed is going to call the tune. Interest rates probably should be a little bit higher but given what the fed has said, i dont know why anybody would go crazy thinking we will get back 3 in the ten year. Probably whether or not we will see Wage Inflation. That was the question that was long and will force the shortened. Wouldnt we love a little Wage Inflation right now that would be a greatening. We got a little i guess you probably want more the point is you dont think the bond market is about to start sniffing out an inflation issue . No i dont think so not at all i think part of the problem is the fed is probably using a really antequated measure of inflation and arent taking into account amazon and Everything Else but the fed is just not going anywhere, unfortunately. All right scott, thanks, very much, scott. Thanks for having me. Its been fun. Thanks for hanging out with us you will be here tomorrow . Maybe no, no i will be lone some and with our fabulous viewers thank you, make sure you join us tomorrow squawk on the street begins right now. Rawrap it up < musical notes ill take it good thursday morning we hope you had a a great christmas holiday. Cramer has the morning off futures are steady retailer report cards are pouring in from amazon, tiffany, mastercard, china with comments on phase 1 and more. Europe is cl