Transcripts For CNBC Squawk Box 20240713

Cade it is like this big with pack man. You have a minigalago my best present was an hour off for a nap. We dont Exchange Gifts for the adults we dont either it is for the kids we do under 35 or under 25 exchange for the adults. I lost mine at davos a few years ago. My little fur hat. I got a new one of those with the flaps i remember yours was like really big like a russian style. Yes i lost it. He looks like a cool kid wearing it so cool brian williams, ill never forget, i was walking into 30 rock years ago wearing the hat he said, you know, they make those for men too. There you have it. Lets talk about the u. S. Equity futures this morning, if you think this is a quiet holiday week, you would be mistaken looking at big gains again dow futures indicated up by triple digits this morning after all three of the major averages set new records seems to be happening on a regular basis. Dow indicated up by 106 points s p futures up by over 10 points nasdaq up by 36 and the nasdaq closed above 9,000 for the First Time Ever yesterday. All three look like theyll open at new interaday highs at these levels well continue to monitor closely. Just lots of good news out there. You are hearing from amazon and other retailers about how strong the Holiday Season was amazon was the best performer on the s p 500 yesterday. The other thing we are watching is treasury yields the consumer looking strong, the economy looking very strong. The 10year just below 1. 9 . Twoyear right now at 1. 625. This morning, the south china post reporting the u. S. And china are working to finalize the text of the phase one agreement which will run up to 85 pages in english and cover issues from ip protection and agricultural agreements. Down from the 150page draft maybe they have a good editor. More maybe they dont know how much they are going to agree on the concern is how to word the agreement and whether the country can achieve the figure touted by the Trump Administration we reported soybean purchases are still on the rise. The other story really interesting on china talking about chinas corporate debt have risen to record levels 18. 6 in 2019. That gives you a little more insight on the pressure of china. The question is what happens next year. Theyve been trying to transition more to a consumer based economy. No longer backing everything out there. If you are pulling the leavers you are juggling all these balls. They will start falling. It has been happening already. Shares of amazon are up after a 4 gain yesterday. The company is out from the Holiday Shopping season describing it as record breaking 10s of millions of devices were purchased worldwide. Some of the best selling products were the echo dot, Fire Tv Stick and echo show five. Also the rumba vacuum cleaners it is mostly amazon products. I always wanted a roomba. The idea of them is great they are really expensive. That stock was up 80 yesterday. Some soft bank news. Longtomorrow board member will step down at the end of the month after 18 years on the job. He is the founder and ceo of the retailer unique glow the richest man in japan one of only three external members on the board analysts have been critical of softbanks governing back in november, massa son had said being among members critical of his wework investment they have said a replacement has not been selected. Some say hes stepping down because hes been there as long as he has and his age. Timing automatically makes you look at it and question. The question of how related this is to wework. Him being critical of masason. His independent voice, this is what you are supposed to have on a board. Thats the question obviously hes a very powerful person in his own right. The richest man in japan. How do you find a voice like that in the meantime, we should also mention, japan display is reportedly considering selling a major factory to apple for somewhere between 730 million to 820 million in a bid to boost the balance sheet. The demand from apple for display began to slow. Sharp was also in on the talks and sources say parties hope to reach a deal by march next year. Boeings top lawyer is stepping down. Boeing announcing he will retire amid a reshuffle there i think we can say, i think youve mentioned this before he was muilenburgs greatest champion inside the board. I think him stepping down sends a clear message about the direction of where this Company Wants to go . A regime change it is not just that theyve had these problems with the max. It is their reaction to how they are trying to fix it he was one of those people who was in the muilenburg camp with regard to dates the dates for what the max would be brought back. Even when the faa wasnt ready to get that far with it either that was a big part of it. I think the faa felt like it was getting bullied. He also defended the Communications Practices early on what practices . To the extent people were critical to the way boeing was communicating whether the company was coming out publicly talking about the issues around mcas and talking about the families how much information they were releasing and putting this gloss over it like everything is fine we are fixing it especially early on, he was one of the biggest defenders privately and publicly. I saw a picture of him. He looks very young but he is 65 years old. He looks 45 but he is 65 years old. The new cstar wars movie. The rise of skywalker pulled in 32 million only star wars the force awakens had a better christmas showing in 2015. The global haul for the rise of skywalker passed 500 million in just eight days. The movie was panned by critics that gave it a 55 on the rating of Rotten Tomatoes it was great if you were a star wars fan, it gave you everything you have been looking for we are all going to see it whether it is good or bad or what the rotten tomato rating are. The fact that it is the last in the franchise. Theyve said this will be the last big story for the foreseeable future coming up, well talk about the road to nasdaq 9,000 looking at the Top Performing stocks over the last 10 years including netflix and broad come we return right after this announcer todays big number, 123,145 thats how much amazon is up since its ipo in 1997. One of the stocks that has helped the nasdaq hit 9,000. Robinhood believes now is the time to do money. Without 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. Welcome back china trade news has dominated headlines this year. Lets get to eunice yoon with a look at what to expect from china in the new year. Announcer investors will have a lot to watch for in china in 2020. First, while a phase one deal is expected to be signed in january, trade negotiations will continue as the election approaches there will likely be uncertainty on what major American Tech Companies are allowed to sell to the china ease and chinese Tech Companies will be blocked from the u. S. Secondly, remaining in focus as the chinese look for ways to manage the lowest growth in decades. They prefer to stabilize rather than use policy to reverse it. Third, unrest in hong kong looks set to stay a sore point for leaders in 2020. How beijing handles that relationship will continue to impact chinas standing in the world and the attractiveness of hong kong as a Global Financial Center Getting back to the big market milestone, the nasdaq crossing above 9,000 for the first time check out the long road the nasdaq trhas traveled over 20 years. Moving steadily higher rising over 600 . Joining us now and from florida, founder and cio of capital we e wealth planning. What were you doing in march of 2009 were you buying with both hands . There were clients that were worried at that time anybody that had mispositioned themselves we were arguing i think it actually started a lot earlier, maybe december of 2008 going into march we were arguing that investors needed a rebalance in. We were seeing a very big move and yet the fed was stepping in. The question i ask you now, basically 10 years later is whether you would think you would rebalance again. Is 9,000 a continue. It is a stop along the train ride here to much more or do you think there is a pull back coming they do need to pull in their equity weighting we dont see a recession as something that will happen with a high probability within the next 12 months investors have to be yeary of putting in a Risk Management game plan in this position and moving forward all week, our guests have said, things are rosie full steam ahead there is a sense to take a little bit of cash off the table. Where are you at andrew, we are very, very positive i think we are in the mist of the santa claus rally. Markets were grade traders almanac tells us we have two days left in 2019 and two days in 2020 to be able to enjoy it i was on with you on black friday, we werent sure if because thanksgiving was so late, they came through with waves. On line sales up 19 year over year i can attempt to it. I cant think of a day that i have not been climbing over boxes from amazon and walmart just to get in the house we are very positive i think the head wins will continue and the tail winds will push us to 2020. If you are right. If we are having this conversation a year from now, where is the nasdaq for example . I dont think the nasdaq should be the baro meter we look at the s p 500 if you see it at 3,500 next year, that is 8 from here i think getting back to back years of 20 returns might be a little more than we can hope for. If we get to 3,500, maybe 3,600, well have a lot to celebrate and champaign to pop again next year you are saying people should rebalance. More into fixed income or . Fixed income or cash is part of that. Fixed income, you have to play very differently you have to play higher yielding fixed income as opposed to the traditional fixed income and treasuries that will be a portion but i would weight the other ones a little higher to be able to carry that better return Going Forward. Ever time we sit down here this time at year end, at the bad years, everybody is worried and then interest and the next year tends to be really good. The really good years are the 20plus years. Thats the question i would argue more likely we are going to see lighter returns next year because of the strength of the return this year things do have to normalize out. We thought they were headed into a recession earlier this year we did. That is not in the cards nor does it look like at all i would agree with that our recession indicator is pointing to the likelihood somewhere around 9, 10 . The majority of economic expansion, we have seen zero there is something going on in the background of build up of some debt within the corporate sector and overspending by individuals and some extension of the expansion or economy that could snap back in at some point given the wrong head wind. Thank you happy new year, guys thanks for having us on when we come back, deploying capital in the fight against cancer a new fund putting money to work backing startups with new treatments that story is next i used to say i want to gain muscle but where do i even start . 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. Liberty mutual customizes your car insurance, so you only pay for what you need. I wish i could shake your hand. Granted. Only pay for what you need. Liberty. Liberty. Liberty. Liberty. Welcome back, everybody. The American Cancer Society has formed a venture fund called brightedge ventures. Joining us now to talk more about the fund and the new strategies for giving back is bob crutchfield. He is managing director. Thanks for being here today. Thanks for having me. This is a new way of tackling research how does the fund work the American Cancer Society has been active in funding Transitional Research brands over 100 million a year to date we invest the biggest problems facing Cancer Patients today for the future we have no equity, no return pure Grant Funding we look at if you are a cancer patient today and im a cancer survivor if you are a cancer patient today, you dont really want Tomorrows Solutions you want todays solutions there are opportunities for us to invest in near market or in market diagnostics, devices and technologies we want to push those into the market in the way that patients are being treated sooner rather than later we see a really Good Opportunity to invest for mission and at the same time invest for returns we take the returns we make on investments and recycle those. We reinvest them to more lifesaving models you you are looking to raise 100 million but you have to donate a million to qualify for the fund the face of philanthropy is changing people find it surprising that the annual donation for the Cancer Society was under 100. In order for us to create sustainable new revenue streams, this looks like an opportunity to invest on both mission and return for us to be able to invest on equity size, with he need at least 150 million or greater size fund. A lot of these diagnostics are very large we are looking for an opportunity to create a fund model that allows us to donate fund money to see where those dollars have been invested and boosted through liquidity and see where they have been reinvested the life cycle has been much longer 250 a year over four years is where we are looking at. Cancer society has committed 50 million to get us started. For tax benefits, how does that work . Is. They get a tax deduction. Thats it. But they can track where their money is going and what is happening. What is your best investment so far . The first was castle sciences that has been a good investment. We are in our first year of full operations weve made four investments this year it made an investment in fund to funds in 2018. So five investments to date. We feel good about where we are. Weve invested in castle buy sciences another company and a Company Called navigating cancer i realize it is early days, you are probably eagler to see what kind of results you are getting for patients that are getting new therapies. Every investment we make, there is an impact equation we develop for that investment. We also invest for the financial return financially, we are doing really well first year, our capital is one and a half as of the 24th of december, our irr was 67. 9 it is a good start. What has been the most exciting scientific advance or is it too soon to even tell us no. I think all the investments weve made so far are advanced science tifficly the work going on in t cells, immuno oncology we are tracking closely. There are a lot of great things going on another interesting thing is the combination of technology interacting with science as it creates such a rapid rate. We think ai and Machine Learning will play a larger roll. What kind of cancer did you survive . Testicular. We are very happy to have you here we hope youll come back a lot more on squawk ahead, tale winds for tesla in china. Imagine if your secret santa was a billionaire. Well show you what bill gates bought her you head to a break, a look at yesterdays s p 500 winners and losers that was wonderful, i loved that it was great. It was pretty good. Not so bad. Parts that werent really good though. It was terrible iwas bad. Awful boo. Through the at t network, edgetoedge intelligence gives you the power to see every corner of your growing business. From managing inventory. To detecting and preventing threats. To scaling up your production. Giving you a nice big edge over your competition. Thats the power of edgetoedge intelligence. Good morning welcome back to squawk box here on cnbc we are live at the Nasdaq Marketsite in tims square. Taking a look at things this morning. Dow looking to open about 96 points higher. Nasdaq about 32 points higher and the s p 500 about nine points higher. This might be my favorite phrase whats it a 2019 or 18 event. The phrase is funding secured. Tesla has enter an agreement you can buy mugs now that says funding secured. The two loans total roughly 1. 6 billion marking the First Factory outside of the u. S. And they won a taxfree exempt for the model 3. Announcing that the vehicle is included in the list of autos that will avoid the 10 purchase tax. Thats a big deal. A new year means a new look for the feds committee. New voting members will be clevelands mester, philadelphia, harker, dallass kaplan and those rotating off are from boston, chicago, kansas city and st. Louis analysts can see kind of an even swap both have been strong advocates for lower rates and seen as having more consensus this time around it has become more clear they dont really have to do anything does it change Going Forward what we are looking for in terms of rate cuts probably not. Theyve already done the hard stuff. They dont want to paint themselves in the corner look, if the one coming in and you still had bullard there but the two to have one serious dove and bring in another one. You know, swap them out. Meantime, Sports Betting providing a big boost to casinos, they are now on pace to bring in revenue up 66 from a year ago we know a guy that might be helping with that. Joe cant do it right now. Hes taking bets is he running a book he only had 500. Sports betting was seen as a way for sports media to really cash in especially as the decline in general Television Viewing and media all together the espns of the world is great for advertising. They are not running sports books themselves that is the next potential move. Potentially from a case study, joe loves it because hes trying to watch the games. Now he has something riding on it the in game betting is where the real money comes in. From touch down to touchdown, you can make a trade basically thats the next thing to look for. The Media Company will look to run books as well. We should tell you about another story. Bill gates sent an 81pound package to his secret santa. Hosting a secret santa platform where users get matched with others across the globe. This year, he was matched with a michigan woman who received a big box of gifts all tailored to information on her profile some included a hammock, oreos and toys for her cats. He made a donation to the American Heart Association in honor of her mother who died earlier this year. It does make me want to sign up for next year. That is really cool he did this tailored to her interest particularly making a donation it is not like here is a list of what i want they are taking the time to look at their profile. Coming up when we return, christmas has come and gone. Which stocks benefitted from the busiest shopping time of the year we have the winners, the losers and more next. New reports say huawei received huge tax breaks from the Chinese Government well talk to the chief securities officer about this and more stay tuned for more on cnbc. The holidays have helped amazon stock but some shipping stocks havent fared so well i should say shopping and shipping stocks. After the holiday binge. The managing partner good morning to you. Good morning, andrew. This is the first holiday that amazon has not just made it through but made it through with flying colors without the help of Federal Express what does that say about the future of the shipping industry . Well, it says a number of things one of the things i would note is that fedex didnt make that decision lightly to fire amazon as a customer. We can get into that a little more later what is also very interesting is that while amazon is out there making these statements about record volumes a lot of the malls were lighter in volume than you would expect and lets note for the first time in five, six plus years we had no announcements by ups, the post office or fedex for that matter that they had Service Issues they are helped by the milder weather. That said, they had fewer days to get everything delivered and still we had no announcements. There for, the takeaway is . If we look at the broader picture, we put out our retail sales predictor based on a number of factors. In bound container volume. Looking at the west coast long beach, l. A. Point, over a third of containers that come through to the United States, whether retail or e tail that was down. It is possible to have a marketplace in which amazon is doing well and other retailers and e tailers hurting. Im sure you saw yesterday mast ter card was out with the stat that sales at Department Stores were down. They were down but isnt it just going more towards e commerce that is the belief. I just think there is more at work here than just e tail wills, brick and Mortar Retail loses. It is possible amazon outdistanced the competitors while many others in total lost. The Consumer Spending was less aggressive, less promising than what everyone was assuming it could be i keep going round and round with this. Do you think fed exmade the right decision about parting ways with amazon absolutely. Lets face it, fred smith is the quintessential entrepreneur. They didnt make the decision to fire a billion dollar a year customer they werent making anything on the margin if you look at what is happening here, we have two things to an lieft. One thing is who will it hurt the most the highest cost provider, thats the post office and then it will hurt ups they to decide whether it is going to hurt the post office first and ups long before it hurts us as amazon tries to Grow Market Share in that space so gee, should i let them hurt my two competitors okay, if i must. One and two, theyve formed partnerships look at the partnerships theyve formed with walmart, which is still five times bigger than amazon not on line shipping. Im sorry is. They are not five times bigger shipping on line . They are not. But they are a behemoth looking to expand on line. Amazon has been clear in saying bezos has put out the edict that, hey, 80 of the u. S. Population lives 20 minutes from a walmart. If we want to take market share from them, we need to provide an hour delivery. We need to beat that to take market share away from them. Walmart sees that as a threat and sees fedex as a partner to address that what about ups, are they doing the right thing by sticking with amazon i dont think they have a choice you have a little higher cost structure there per package. Their service is a little less flexible and the unionized work force. You dont have the same flexibility to deal with it. There is other completely different parts of the market that are being ignored and addressed by those like xpo and lastmile delivery somebody else comes in and helps you with the big screen tv or refrige rater that you bought on line thank you nice to see you. Always a pleasure happy holidays. Still to come, nasdaq 9,000. The index closing above that key mark for the First Time Ever well talk about what it means for some of the biggest tech stocks next. Squawk box will be right back. vo the flock blindly falls into formation. Flying south for the winter. They never stray from their predetermined path. But this season, a more thrilling journey is calling. Defy the laws of human nature. At the season of audi sales event. Most people think as a reliable phone company. But to businesses, were a reliable partner. We Keep Companies ready for whats next. man we weave security into their business. second man virtualize their operations. woman and build ai customer experiences. second woman we also keep them ready for the next big opportunity. Like 5g. Almost all of the fortune 500 partner with us. woman when it comes to digital transformation. Verizon keeps business ready. Welcome back, everybody. The nasdaq hitting and closing above the 9,000 point level for the First Time Ever. The index getting a push over the milestone ever on some positive news from amazon, but its been quite a road that included the. Com bubble in 2000, the financial crisis and bull run that brings us to where we are. Joining us for a look at the holiday tech sector is joan salsman and paul meeks paul, im going to start with you because we just closed above 9,000 yesterday. Obviously thats a huge moment huge thing people have been watching with this huge run up weve seen in technology stocks, how are you feeling about next year im feeling fairly good about the fundamentals because Technology Growth is typically more cyclical than people know and as long as you dont believe that the u. S. And other Major Economies are going to tumble in the recession, we should grow not at a great pace but at a modest pace. What i worry about as far as the stock picking is most of my favorite names have come so far so fast in 2019 that im more cautious about their prices. I dont expect to have near as good of gains in 20 as 19. What are your favorite names . My favorite names in the tech sector are semiconductor related. I think even though theyre not undiscovered stories, you have decent up side 10 to 20 applied appreciation in Applied Materials amat and micron technology. Well get back to some of these names in a moment. I want to turn to joan for her thoughts on what is the best performing stock that weve seen for the decade in this sector, thats netflix which i think is up 3820 for the decade which is really hard to imagine the gains that weve seen. How are things going in streaming land right now with this new competition thats coming on. Right the oft discussed streaming wars are upon us. We saw the launch of disney plus and apple tv this year were going to see a number of others, peacock universal and we have hbo max and what weve seen from the launches of disney plus and apple tv plus that, you know, netflix is going to continue to dominate for a long time theyre miles ahead of everybody, but were also seeing with disney plus at least in terms of the launch has dominated this initial element of the streaming war cycle. Does that make it more difficult for netflix from here, do you think it will be more challenging something that ive noticed is that theres things that netflix can steal. Like . Ive started to notice people on twitter it would be great if netflix had this on. Holiday season, collections around every episode of some Television Show that they havent done do you know how netflix has categories on the fly because you watch this i was scrolling through it the other day and noticed disney they have a category of disney which included things like solo which is a Star Wars Film that disney owns thats on netflix. I agree with what youre saying. Im curious what you say about what sets netflix apart besides the fact that they have a long head start with disney max and hbo and others it seems to me theyll rely on other platforms for distribution disney got 10 million new subscribers in the first day we figure a lot of that comes from the verizon deal where youre a verizon customer with a certain data plan you get that for free for the first year. Netflix was probably the only one that doesnt necessarily rely as much on other platforms for distribution. Right they dont have to rely on the u. S. Theyre the most global. It will take time for the others to go global hbo max is focusing on the launch scattered International Markets at launch. Apple is global because they own the distribution and thats whats working in their favor. I know you dont have netflix in your holdings but you do have disney, facebook, amazon, apple. How do you pick those and do you feel good about those stocks as we head into next year too well, all of them i probably am most bullish on disney because remember i see a more bearish outlook for tech so i want to play more defense self techish rather than pure tech names for 2020 and i think that disney, ive taken a look at the streaming landscape very carefully, is going to be a big winner im actually much more bullish not just on acceleration of revenue earnings and cash flow but the whole momentum in streaming with disney than i am with netflix netflix, despite the incumbency, despite the lead, i still think that stock has to come down a hell of a lot more to get me reinterested. Paul, thank you so much joan, thank you. Good to see you. Thank you. Coming up when we return, it is a squawk tradition. I think weve turned it into a tradition. This is a two or three year tradition and hes bearing gifts which i like hes going to work his magic you dont want to miss this. Everybody knows i love magic becky loves magic too, i hope . I not as much as i do ghafetnsitmac ur wh gi rit ter this what i love most about being a scientist at 3m is that im part of a community of problem solvers. We make ideas grow. From an everyday solution. To one that can take on a bigger challenge. We are solving problems that improve lives. 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. I didnt know what to get the guy with everything. Wonder woman, everybody. The second hour of squawk box begins right now. Good morning and welcome to squawk box right here on cnbc. Im Andrew Ross Sorkin along with becky quick joe is off today ed lee is our guest. Cnbc contributor thrilled to have you sarat sephi is hanging out with us thank you. Happy holidays well get to you in a second and a great Christmas Gift you got i want a full review in a moment u. S. Equities at this hour, we do have some green as we have a nice little santa claus rally going on here. Dow jones looks like it would open up close to 100 points higher s p up 10 points and nasdaq up about 35 points. Here are some of our top headlines at this hour boeings general counsel Michael Lettig is going to be retiring this year. Hes also been at the head of boeings legal defenses following the two fatal crashes. Obviously with the departure of the ceo just earlier this week earlier this week, yeah. Just earlier this week obviously this is the rest of that regime kind of getting washed out with some of these things, too. Tesla says that its going to be delivering its first cars from the shanghai factory on monday construction on teslas first plant outside the United States began in january with production starting in october. The automaker aims to produce 250,000 vehicles per year at that factory well be keeping an eye on Oil Prices Today prices are already at their highest level in more than three months later well be getting the holiday delayed weekly numbers from the Energy Department this is a key driver behind the recent crude rally you can look at wti up about 20 krin cents to 61. 88. The market rally, it continues. Dom chu joins us from cnbc headquarters hes got a look at how we got here dom. Reporter andrew, it wasnt that long ago during the beginning of my wall street career when i remember the nasdaq at 5,000 because that was where it peaked out at just around march of 2000 that look there at 5,000 puts into perspective where we are at 9,000. As we kind of walk this wall, after 9 11 the recession we hit was 1114 only to rally back to the lows that we saw during the great financial crisis of 1269 fast forward to where we are here, 8,000 was just back in august of last year and here we are at 9,000 that move has been not without bumps along the way. Two parts of a market, guys, that have helped lead the market higher in the march to 9,000 for the nasdaq composite computer chip stocks, vaneck is up 31 just since the nasdaq hit 8,000. Among them amd up 82 . Universal display up 71 and lam up 67 the second one out there is the software industry. Take a look at this one. The Ishares Tech Software etf is up 18 coupa up 116 . The tradedesk almost a double there and avalara up 90 well see if those are Leadership Group when it goes from 9 to 10,000 at some point did you get anything good for christmas . I did i got an led head lamp. What . Heres what it is. I like those. You know exactly. Right. In the city when youre lit up, you have street lights i live in the suburbs. Its right up here bingo. My wife gave me one so i can walk out of my driveway when its dark, get to my car. Really cool 2 30 in the morning, 3 in the morning tough to go outside. Are you going to wear the head lamp on the way to the office i have i have well, i dont need it on the way to the office because were well lit in Englewood Cliffs but when i go home at night. He needs it for the golf course. Playing golf in the dark, i heard that, sarat. Can you wear it in the office one time so we could see it . I will. Ill tell you what ill do im coming back to you guys in the next hour. Well go through some of the big themes. You have it i have it with me. Oh, yes because i wore it to work i had to get out to my car i will wear it at 8 45, whenever it is i come back. You wear it out of the house to the car yeah. Because its dark outside. I wear it out. I go down the walkway. You need space for your hands . Hands free. Yeah. Exactly. Its a head band i know what it is i can see you walking and jogging. For anybody who didnt know it already, doms a father that was from my daughter. Promises, promises. Thanks, guys. Joining us right now is lewis alexander. Hes u. S. Chief economist. Weve mentioned sarat is here, too. Sarat, i want to ask what you think about where the market stands weve had a huge run up. Were setting records every single day does that make you nervous it does a year ago we bottomed at christmas eve. The market is crawling, crawling, crawling were a little ahead of the stocks everybody is expecting next years earnings to be really good i think were setting ourselves up for a little bit of disappointment dom mentioned semiconductors, faangs, growthy stocks that are selling on price to sales again. Here we go like momentum stocks leading the way. The fundamentals of the economy are sound but theyre not great. So i think what we have to see is earnings really come up and i think this overhang of global uncertainty, political uncertainty, there are some negatives that could pull this market for a correction. So i wouldnt chase this rally were not selling out on the rally. Im using cash on the sidelines to wait. For a pull back. When you say pull back, you think this is a 3 pull back, 5 pull back, what are we talking about here youre up over 30 . I would expect a 5 to 10 correction at this point we havent had one weve had people waiting to do this. Dont you think for better or worse, i think theres a lot of people waiting. Theyve been waiting for five years. No, that too, but my worry is that they may be waiting much longer because any time we can get to, you know, a pull back of 1, 2, 3 people will just, you know, put some cash to work because they missed it before. Right. Youll never get your 5 or 10 . I hope, by the way well, i hope youre wrong because generally it would be better if youre wrong. When you do get to 5 to 10. It was last year around this time, oh, its coming down wait, its going much worse. So you really have to set. You have to be disciplined in your approach and say, okay, its down 10 . I know it can go down another 5 to 10. At that point everything is negative maybe the 10 year is back to 1. 5. At that point you have to say, if im a longterm investor right now, im sticking to my allocation if i have extra cash, ill wait to dive in. Louis, if the key factor is allocation, whats in your crystal ball the economy slowed to 1. 5 to 2 we didnt have a recession last year so people are expecting some sort of acceleration. I think the economy will stay in this zone. We have continued uncertainty around trade we have a china deal, but that doesnt settle everything. I think you heard theres questions about how strong the Christmas Season has been but, look, i dont think were headed for a recession but i dont think were going to get the pickup in growth that at some points justifies that. What questions do we have about the Christmas Season in terms of the consumer . Looks like it was very strong. Depends who you talk to if you look at say, for example, going through the stores, it was clearly down. I dont think consumers were spending less, they were spending it in different places. One of the things thats a challenge is whenever you see changes in patterns of sales its hard to track the changes from one year to the next. Its clear online is doing well. Online is part of the story. If you look at master cards numbers or visas numbers, that would be a good indicator. Thats hardly a booming season so in some sense if you add in inflation is running around 2 , thats consistent with pce growth at 1. 5 its not a bad season. Its not suggesting a recession but its not suggesting a pickup either sarat, what would change your mind or make you think, okay, things are looking better than we had anticipated and i should put some of this money to work. I think the indicators the u. S. Has been the best house in a bad neighborhood we need europe to pick up. If germany, you get brexit settled, once that happens and you get another part of the world picking up the slack, i think you can get the u. S. To have another run Something Like 50 of the earnings from the u. S. Multinationals come from overseas if you look at the s p, its been a domestic rally within our own consumers. We need the rest of the world to pick up. The rest of the world will do really great and we wont. Everything is so connected that i think we will pick up at the same time. By that time youll see commodities rise energy which has been the negative play is a potential value play, at least a lot of investors are looking at that to see if that could pick up. So a lot of the value things will pick up at that point because youll get growth in stocks that are trading at 10, 20 the market multiple. Not Something Like 50 . How likely is that . Thats certainly one of the options. I think one of the things thats very important for our outlook is how does europe do . How does china do . We think china has another six months before you see a sustained pickup i think in europe it has been a little more disappointing. I think thats a possibility but thats not our central scenario. Thank you for joining us. Sarat and tom will be with us. Before you go he got the new apple watch. Review good so far. Consistent with the clock does that change anything . I like it a lot the setup is easy. Im still learning to use it i like the band better than andrews. Thanks. Its nice thanks. Looks like a real watch by the way, note if tim cook is watching, max sorkin got a watch as well. We thought you could sync it with an ipad you cant, you have to have an iphone. Hes not getting a phone. Hes 9 years old im not sure i should have gotten him the watch we found out using an old phone how to do it tim, i think theres a huge market for you if you create a kids watch. There you have it in case hes listening or watching coming up when we return, the changing face in the board room Julia Boorstin joins us with a very special report. Julia. We are seeing the makeup of boards across the uny cotr change well tell you why and how coming up after the break. 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. Classical Music playing throughout happy veterans day. Happy veterans day. Happy veterans day. Happy veterans day. Student veterans of america champions those who have served and also prepares them for their next chapter in life. Please take a moment this this veterans day to remember service members, who put their education and careers onhold to give back to all of us. We thank you. Feliz dia de servicio. Happy veterans day. Happy veterans day. Please visit studentveterans. Org welcome back, everybody. There is a New California law that says every board must have at least one female on it. Julia boorstin joins us. Are there more companies that were scrambling . There were some companies in california scrambling. The smaller ones were rushing more than the big ones which had time to plan and work this out whats interesting is were seeing Companies Across the country to make Corporate Board rooms more diverse the companies with female Board Members perform better and the face of the board room is indeed changing this year the percentage of firsttime directors that are female is 57 . Thats up from 42 in 2017 according to Spencer Stewart now theres one organization helping female directors, helping place female directors the board list matches companies with qualified female board candidates that organization tells us its got corporate searches for female Board Members more than triple to 300 in 2019 from the prior year its not just in california. The board list saying it sees the California Law having what it calls a halo effect across the country. And that halo is extending beyond gender diversity. The percentage of firsttime directors that are minorities is 30 up from 10 in 2017. Now thanks to new appointments, women now comprise 26 of all directors up from 16 back in 2009 and while some analysts and some folks have raised questions and concerns about the idea of over boarding, the idea that directors might be stretched too thin with too many board seats, we are seeing the risk be mi mitigated by proxy advisers and theyre placing limits on the number of placements any one director can have. S p 500 companies who serve on two boards on average, and that number is unchanged over the last five years. So, becky, guys, its really interesting. Were seeing a broader definition of what qualifies someone for a board and the days of boards filled with former ceos and sitting ceos seem to be over. Broader definition, that means weve relaxed the standards or looking at new places were looking for people in new places or people with different kinds of experience. So there actually is a statistic from Spencer Stewart showing were seeing more people who have experience within companies themselves running a division or serving sort of running a certain part of a company, being appointed to a board and bringing that expertise. One thing that does seem consistent is boards are looking for people with financial expertise. They did this, though, because you cant find enough qualified former ceos . If youre going to look for a former ceo the s p 500 then, yeah, you need to be looking in other directions. I think part of it is time. Some of these boards are requiring four meetings a year and a lot of the sitting ceos cant do that. How Many Companies there arent many former ceos if you can only serve on two boards. How Many Companies do you think will ultimately have to pay the fine its interesting. There are amazing statistics a year ago hundreds of companies needed to hire a female board member and then we found maybe eight companies earlier this week and then one or another they were in the process of hiring. Theres a mad dash because i talked to some of the the hirers talked to female Board Members getting selected for this im all for this, however, i will say i talked to two female Board Members who are being hired to be Board Members who have their own misgiving about their decision to be hired, meaning they didnt think they were qualified. No. Its the appearance, im sure. Look, im not sure im getting the job for the right reasons and im worried once i get on the board there are other people who will look at me and say, there was a requirement that you were put on the board and we dont value you the way it is a nuanced situation. It is being challenged in the courts there are lawsuits about this. The question is when it will start being enforced there are a handful of companies that wont comply in time. They thought it was cheaper. 100,000 fine yeah, than going through the process of hiring someone. Well see what happens its definitely started a conversation whether or not it holds up in court, well see. Youll see Companies Wanting to change it regardless of the law. History in progress, something good is happening. Thank you for that, julia. Meantime, coming up, my favorite segment of the year i love magic the wall street mentalist is here pearlman joins us on the set with more than a few tricks up his sleeve stay tuned for the big magic show right here on squawk. Coach saban convinced us. We are committing to aflac. Why aflac . Because Health Insurance doesnt always pay it all. Aflac 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 rowithout the Commission Fees and account minimums. So, you can start investing wherever you are even on the bus. Download now and get your first stock on us. Robinhood. But were also a company that controls hiv, fights cancer, repairs shattered bones, relieves depression, restores heart rhythms, helps you back from strokes, and keeps you healthy your whole life. From the day youre born we never stop taking care of you. Its a squawk tradition, my favorite. We are joined now by the wall street mentalist this morning. Os pearlman. Former wall streeter. Mentalist is more like a mind reader i do magic but magic of the mind. Did the mentalist thing, did that work in your role on wall street it definitely did oh, absolutely how you satisfy clients, you have to know what theyre thinking. You didnt know what the market was going to do i wish. The market was not rational and neither are people so you know how much i love magic. I love magic, too i want to give you a gift you didnt realize i miss out on things every year, secret santa i heard you mention it i cant play that game you reach in, pick a game, buy a present. No fun for me, hear me out the moment in this room, the moment that you look down at the gift, i know who bought it for me before i unwrap it, i know what they bought me i can read minds you see these four boxes i bought something for everyone. tis better than receiving. Good, because youre not receiving. Becky lays it out which one are you going with purple. Now thats the one i wanted. Want to trade there are debates you thought about it in advance. You went with it do you see how everyone reacted. The one before what was the first one you thought of tell me. What was the first one you thought of. Do you want me to tell you whats on the piece of paper you asked me to write down which one is it . White. White now thats the beautiful moment, the gametime switch you thought white, switched to purple is there any way i could have known you would do that. No. Theres no way. White is the first thing you thought of im going to open this up. Are you sure you want to go with this im switching to purple. Everyone can switch im going with whatever jumped in your mind first is that the first one you thought of i circled white. This is like lets make a deal i want be to go to purple i went purple. You went purple so you actually went with white. Take a look. I want to show you i went in here sorry about those. And i had a feeling you would go white. Wow where did you get that terrible picture . Good shot sarat hats me down werent there other photos i planned ahead for you and i decided to go with another one does he not look good . I thought i knew the trick i brought it strong. This is why i made you pick in advance. I went for purple i told you each pick one if you both go for the same one, you have to duke it out. Im sweetening the deal for you. Take a look. I did not put you up to this. You did not put me up to this i never met sarat inside of here, for ed i went more black and white kept it scintillating. When i say sweeten the deal, i mean it. I have some candy. I knew what you would do before you did it very nice. Before you do that. I have starbursts. Can we get a shot of those ed, im turning my back. Sarat. Reach in, you can do one hand, two hands, tell me youve got candies in your hands right now. Did you all see what he did is there any way i could have seen i was watching you. I dont want you to shake them because if you shake youll think ill hear them one question for you, do you know how many candies you have i do know. The reason he knows is because its not a big amount. If it was 25 that he took. I knew you would pick purple and i knew he wouldnt be overly greedy you have four candies. Yes. How did you know that one, two, three, four. How did you know that didnt go for pinks he didnt want the yellow, he wanted the red, thats what he likes. Becky, youre going to make a choice for you. Its different ladies first we have whats left. Red and blue but your choice is actually not just choosing for you, its choosing for is a rat, right . Whatever you do, thats how it happens. You cant reach over so ill do it for you hes not sure go back and forth 20 times but youre not picking for you. Which one for you i dont know. You tell me first. I want the blue box and i want sarat to have the red box. Let me ask you a question before we do this. How were your gifts this year so far the gifts i gave people no, the gifts you got tis better we dont trade with adults in our house. No trading with adults. Sarat, which one were you eyeing im curious. I wanted the blue. Interesting do a quick rock, paper, scissors she can have it. Chivalry is dead in this world. Oh, we tied one, two, three, go i win Luxury Brands how many could you name off the top of your head if i were to tell you to name some. Maybe eight. Focus on one, what luxury brand were you thinking. Tiffany. Good choice eight different ones. If you waited you could name another 20, 30, 40 what you would want to get from there. Sarat, you won, you lost i think this one is for you. If i get it right every time whampt would you like from tiffanys. The world is your oyster what would you like . A blue box. All oftive new and you want a blue box yes she dreams big hold on. You know what . Inside just for you, any brand, anything you wanted, i got you just the box, thats a cheap date. That is literally what i wrote down. Wow i said it tis better to give than receive. The blue box you got it. Im a giver. You have to do well. She wanted a gift. Youre going to give a gift. Close your eyes and imagine end of the year youre writing a check. So if youre writing a check to a charity. Now at this moment in time i need to be 100 clear. You thought of something you knew, you changed in the moment you do not know which exact charity you are going to say, is that true . That is true. Nasdaq, had you ever met me, spoken to me no. Hes like, stay out of my head, mentalist. Open your eyes dont say it dont say it you still dont know which charity. You can go back and forth. Back and forth this ones for you have a Little Something here, sarat. Thats for you hold on. Hold this. Id like you to do a little bit of rolling the dice. I got back from vegas. Rolling the dice what did we get before they fall roll them again. Tell me what number you get. 14. Oh, no, dont add them up the cubes. Lets make a three digit number. Pick them up yourself. You want to know the number i want you to do it all over again. Im going to put that. Is a rat, roll them in front of you. Cover them up with your hands and i want you to create the biggest threedigit number out of them. Lets say you rolled i dont know if you rolled a 653, then you make 653 really important. Cover them up you got it yeah. Right now lock it in in your mind on a charity in your mind right now for the first time chosen which one youre thinking of. I have. Watch his eyes. Its all about the eyes. Im watching his eyes skip beats. What i mean is its more than one word lets grab this out. This is for you. This is for you. You could have rolled that any number your eyes jumped like this, boom, boom, boom am i right that this was three different words that you were thinking of . Or is it two words two words right at the last moment mess me up. Change because you could have changed. I didnt give you the chance dont go to that charity go to the other one. Theres no way i could have known. This is locked in stone. Tell us all how much money are we donating to this charity . Whats that biggest number you made. 521. To what charity. 521 to save the children. How did you get 521 i can figure out how you get save the children. Look at the dice too. Get the dice. People, do you understand whats happening here. Were making that donation today in sarats name in honor of cnbc squawk box. That is crazy. Dont go with your alma mater. He went lehigh initially i know. I know children need it more how you figured out the number. Thats insane. He could have done anything how did this happen . Rolled that three different times . Yeah. Wow i have no idea how that happened because i have them yeah, im telling ya. This is incredible. I like how can i feel the check . The check is yours. See if its invisible ink its real ink. Hold that up. Thats a novelty check we dont mess around here. Wow thank you, sir thank you Merry Christmas enjoy the tiffanys box, becky anything at tiffanys. She doesnt want the china, the box. She wants the box. You could have thought of any store and anything there i love it. All right. Welcome back, everybody. Emerging markets falling behind this year trailing to get the dows gain of almost 23 with a gain of just 15 year to date. Our next guest says they are set up for nor growth in the new year joining us is Theresa Barger cofounder and senior managing director at cardaga capital. Thank you. What are you thinking for 2020 how is that going to match up . Same sort of year . Different year expecting up down . When i look at 2020 i see really kind of three trends but one to answer your first question is stability with a positive trajectory. I also see Investment Opportunities maybe seemingly contradictorily and i also see it as the year of impact. In terms of stability, i guess youre probably looking at the trade war thats been taking place between the United States and china. Do you think were reaching more solid ground at this point or at least less disruption than weve seen to this point i think so. Phase one is settling out. The chinese export import situation has also settled back to where it was so pretty good import and exports and thats good for all the emerging markets. So i see that as prettygood. In terms of disruption, why is that an investing opportunity . Investing in the disrupters or those who are being disrupted . Obviously theres negative disruptions that we will see in the air, such as more noise on trade war, on local demonstrations, populist up rising people wanting to change the constitution would be the negative side. The Positive Side i would say would be things like 5g. Sure. Disruption in the Financial Services area and then of course in retailing which we see all over the world, but with its own characteristics in the emerging markets. So theres three areas. Very quickly, tell us about impact impact. You know, at cardaca management we are an esg Improvement Firm so we go to companies to improve theirenvironmental social governments practices you make money very often on the governance side with better capitol allocation, but in the last six months youd be shocked at the number of conversations that ive had with ceos of emerging markets companies that want to actually do what is squarely in the impact space as we would define it in the u. S. They want their Business Model or their product to have positive impact on either the environment or the society that theyre in okay. And its amazing how fast theyre moving in that direction. Theresa, thank you for joining us today thank you coming up on squawk box, the changing relationship between the u. S. And saudi arabia and what it means for investors. Stay tuned youre watching squawk box right here on cnbc welcome back to squawk box, everybody. A little later this morning the Energy Departments going to be releasing holiday delayed weekly inventory numbers. Speaking of oil prices, check out the story in the New York Times this morning. Its on the front page titled with u. S. Help no longer assured, saudis try a new strategy, talks. Whats happening since a missile and drone attack on the Saudi Oil Fields the Saudi Crown Prince has changed his strategy and is trying to use diplomacy to cool tensions this all comes as the kingdom thinks it can no longer count on america for constantly defending it there has been a lot of bluster thats come from the white house. The president has certainly talked and spoken a lot of rhetoric about how he is on saudis side and not on irans side in any of these issues. Youll notice there werent attacks on iran that took place after that i think that was a bit eye opening. For decades and decades theyve been able to rely on the americans coming to their defense because we needed the oil so badly as the oil that weve been pumping here in the United States has increased it doesnt put us in the same position. I hadnt thought of that if it changes things in the region, thats a great thing. What does he have to do to gain the trust and credibility of the western world to do more and more business there . While the u. S. Is still doing business there, there are ceos that still go to the conferences and things like that, a lot of that was driven by the fact that saudi aramco . The Financial Services companies are frankly the prince is their client in many ways thats why theyre going the question is in terms of getting bigger investments, investments in the actual country on the ground, what is it going to take well, i think i was more struck just by the idea that they cant be the brash players theyve been to this point they need capital in flow and capital in flow needs to be global at this point they need to be partners with a lot of other countries other than just the United States and i think this is one, kind of like an olive branch to say, hey, were open country, can you guys come in here can you invest whether its france, germany, asia, whole countries over there, too they want their economy not to be dependent on oil. As the price of oil gets lower and lower, it maybe gets to 100 at some point. If it stays in this band of 50 to 80, that barely keeps their economy going. So you need some selfsufficiency there and its going to be other industries that have to come in. To be continued when we return, well talk more trade deals and tech stocks. Stay tuned for that. Md a lot more weay try to figure out that magic trick, too, if you hang on long enough. Squawk returns in a minute [ 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 but similar to the one we have it would give Companies Legal immunity from the content of user posts and House Speaker nancy pelosi initially approved it but initially she did back down tech won a narrow victory there. Broadly speaking, theyre looking for certainty for businesses they know the rules wont change that is one of the main reasons that usmca is expected to boost the economy. That piece alone could raise gdp by as much as 1. 2 and create 589,000 jobs there is wide spreedspread agret ylan, thank you for that. New report out from the wall street journal saying huawei had access to 75 billion including loans, grants, tax breaks. Huawei responding calling it based on false information a company thats probably been one of the biggest stories in the News Business world at least and geo politically over the past few years andy purdy chief Security Officer from huawei the fact that the company has been subsidized by the government you say its false why when you say the kind of information that the government gave to the wall street journal for the story, you understand why some of the politicians in this country have a negative view of huawei we have to make sure that we base things on the facts and one of the reasons is we want to talk about the facts they said cisco has 45 billion in assistance. The number 75 billion for us is drastically overstated the fact is there are lines of credit issued between 2005 and 2011 we gave this information to the House Intelligence Committee a tiny fraction of that was ever used from loans from customers to take the credit lines is not fair to talk about that as being assistance from the government. Why should the credit lines not be considered assistance from the government . I get that cisco and others get tax subsidies and they dont get lines of credit from the government. Lines of credit were made available by the banks to customers. Then the question was, are customers going to take advantage of the lines of credit to buy our equipment what were saying is a tiny fraction of the 40 some billion theyre talking about was used to buy our equipment but its youre give lent of the xm bank. If your customers are able to take outlines of credit and its there, why did it obvioexist ifu didnt need it the point is its a tiny amount over that period of time it was less than like 3 billion was used to purchase our products. When you are looking at 175 billion purchases, 3 billion in purchases is supported by credit is a minor issue let me ask you about the larger issue were in the midst of this trade deal first of all, do you have any insight, directly or indirectly, into what is in the phase one trade deal when it comes to i. P. Protection and Security Issues that may very well relate to your company no, but i think in terms of everything that matters to our country, those kinds of provisions have to be in there as i discussed at the United Nations earlier, having objective ways that folks can see if theres theft of property, i hope those are going to be in the agreement. Andy, you realize you work for huawei and they have blatantly ripped off and stolen all kinds of products. The existing companys information on that. It sounds nice for you to say these things but huawei has been one of the worst transgressors of stealing intellectual property so it sounds hollow coming from a huawei representative. Thats not true. It is true. When you look at the facts of the decades of litigation, Numerous Companies have been involved in the issues. Your point is other people are really bad at this too, but huawei has been a prime offender of ripping off intellectual property. I understand thats your position i understand thats the position of the u. S. Government thats not the facts when you look at the objective information and you analyze the cases. Wall street journal has written articles some of them mou, there was no settlement. There was no money paid. The wall street journal has gone through and chronicled where you guys have completely ripped off stuff and it still has the company you ripped it off from in the stuff that youre selling like it still has their information and their headers in it there are instances are you saying that that hasnt happened . There are instances of wrongdoing by us and other companies. Any instance of that is wrong. Im saying when you conflate it to be a gigantic thing, thats not true. I disagree based on what ive read and based on what ive seen your idea of whats wrong, okay, you quantify it for me if you tell me im wrong, explain to me when its happened and when it hasnt well, im saying that theres a record of litigation around the world and involving Numerous Companies where there have been settlements. The our action in filing for patents and weve spent 6 billion in purchasing the rights of other peoples patents around the world across licensing deals, we are invested in the patent protection. So theres two issues. At this point. One is the intellectual property issue which you guys sparred about, and then theres the National Security issue. First just to end the conversation on intellectual property for a moment, what are the things you think the company has explicitly done, lets say in the past three years because i recognize a lot of the stuff that was accounted for in the wall street journal took place oftentimes three or four or five years ago but where you implemented significant changes in the way the company even operates. Well, we have implemented very dramatic programs for Cyber Security assurance across our entire im not talking Cyber Security, im talking intellectual property. One of the rieeasons why i to se degree side with becky, theres a problem, maybe some other companies have a problem theres a problem, we want to fix it, we think its wrong, were going to do x, y, z. Internally we have put x, y, z into place in our company to explain what we are doing. Thats a great suggestion what weve seen with the internal compliance that weve talked about before, the ethics and compliance program, were doing those things internally. We have the internal publication, training, testing, sanctioning of employees we see the example of eriksson there are a lot of companies that have to tighten up. You make a good point were going to run out of time is there anything you think do you ever say to yourself, if i could just do this either with my boss or with the Chinese Government, i could persuade the world that were not a National Security threat, what would that be it would be to get the European Union and germany to sign on to standards and testing to demonstrate that no products have been tainted. No products have back doors implanted. That needs to be done for all products. Andy, it is a larger conversation we do hope to have you back. We always appreciate your candor and your interest in having this dialog dialogue thank you. Happy holidays youre welcome. When we come back, keeping america competitive. Michael porter will join us with his latest teachings from Harvard Business school. 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. Nasdaq 9,000 what will it take to reach 10,000 a new report says the u. S. Has squandered the recovery after the Great Recession because of politics. The authors are here to sound the alarm. And well tell you which companies could face billions in fines thanks to a strict new privacy law. Its about to take effect. Well tell you whos at risk and whos fighting back as the final hour of squawk box begins right now. Good morning, everybody. Welcome back to squawk box here on cnbc we are live from the Nasdaq Market site in times square. Im becky quick along with Andrew Ross Sorkin joe is off today our guest host this morning, New York Times Corporate Media reporter ed lee who is a cnbc contributor and sarat sethi. Youre going to see things are on a tear once again even after all of the major averages were at new highs the nasdaq closing above 9,000 for the First Time Ever. We are looking at additional gains this morning dow futures indicated up almost triple digits today. Up 95 points s p futures up 9. 5, nasdaq up by 33 if we open at these levels that would be new interday highs for each of these major averages treasury markets looks like the ten year is yielding at 1. 893 a couple of big stories that investors are talking about today. Shares of tesla, theyre rising this morning we have a pair of headlines out on the electric car maker. Tesla planning to deliver the first 15 model 3 cars made in the shanghai factory that will come on monday tesla has entered into agreements with lenders in china, this is important, for a lo Loan Facility of 1. 3 billion. Boeing general counsel Michael Luttig will retire at the end of 2019 Christmas Day was once again valuable for the Star Wars Franchise thanks in part to becky quicks family the newest film in the series the rise of skywalker 32 million in sales. Take a look at the shares of disney this morning. Theyre trading marginally higher in the premarket. How many tickets did the quick quail family. 13 tickets. Pay for it again. Meaningful contribution. Theyll sign up for it again when they sign up for disney plus. Well see. We were on disney plus watching sound of music which is where you can find it now good for the kids. Good for the kids. Holiday movie. Absolutely. Part of the rationale between striking a trade deal was evening the Playing Field in the worldwide commerce, but a new report from Harvard Business school is showing some pessimism about the United Statess ability to compete globally. Joining us are the authors of that report. Michael porter is here from Harvard Business school. We have not seen mr. Porter for quite some time. Katherine gell is here from gell foods. Good morning. Supposed to be the holidays its a downer report, mike, isnt it very downer report. Why are you so down first of all, its our alumni, thousands of our alumni who filled out its not your opinion but the its a shared opinion. Shared opinion. The stock market is up. Its been up for a lot but our o economy is eroding competitiveness. We are weakening in terms of our ability to compete, we cant get infrastructure built we cant fix the Health Care System our Public Education continues to decline weve been relaxing regulation that would help Climate Change as part of a policy of this administration we have these growing competitive weaknesses but no progress gets made we cant pass any legislation. We cant get together. We cant fix immigration theres another critical area. Tearing the country apart. Were not working on the real problems facing our economy, and our alumnae are quite concerned that over the coming years after this nice recovery has happened were not going to see sustained progress. Are you in the same camp . The reason i ask is this you look at the economy today, you would say this is the greatest its been in quite some time you may say its a shortterm blip, a sugar high. It depends on who also as our report points out, we havent used this period of recovery to invest in the future so thats why the title is the recovery squandered we didnt do things the previous administrations have done in recoveries, prepare for the future the reason we dont do that, this is the core of our report, is because we have structural problems in politics washington isnt broken, its actually designed by and for the benefit of what we call the political Industrial Complex and theyre doing great and yet the country is not, as ive said, investing for the future thats what were really looking at now which is why this report is slightly different from the past with a focus on the political system. Go ahead. Do you see us when you look at different countries, what are they doing differently is it command control elsewhere . What can we do to start this process . Just to get things going yeah. So we have two key problems in our political system that drive the incentives we have party primaries. They create when youre a democratic primary and republican primary, that creates an eye of the needle to which no problem solving politician can pass essentially when a Congress Person has an opportunity to sign Bipartisan Legislation or any of these biggest issues, the questions they ask are not is this the right policy, is this good for the country, they ask one question, and that is will i make it back to my partisan primary. They push it this way so until we address that structural problem in the system, none of the drama that we see is going to end up happening. They seem like theyre interested in doing Something Like that because it would have to be the parties who say, look, were killing ourselves by not making ourselves electable to the middle part of the country i certainly hope youre right about that the public wants to do something about it we can do that in each state every state can change the rules. We can get rid of in the primary. One of the things you talk about in your report is ranked choice as a way to stem the partisanship i can see how that would work better in the primary. Youre recommending for a general as well. Im curious where some states have started to adopt it new york city has it now this is where you rank one, two, three choices and whoever ends up with 51 as you redistribute second and third place votes is there evidence of that working in terms of stemming partisanship so heres whats really important. The benefit of ranked Choice Voting is not necessarily to stem partisanship, its to allow for new competition. In any business industry we know that new competition creates incentives for innovation and progress and so right now without rank Choice Voting we have whats called a spoiler problem. You remember when Howard Schultz considered running and yet the democrats were upset they believed hed spoil the election. As an independent third party. As long as we have the spoiler problem, even though 90 of the americans are dissatisfied with both parties, we never see any new competition because we dont want ranked Choice Voting because its more fair, more representative, we want it because it allows for new competition which forces accountability in the system so partisan primaries, get rid of those, youll have more votes. Get rid of plurality voting. Results, accountability. Will you have more parties coming in . How do you get a party thats in position of power be willing to do this were probably going to have to go directly to the voters in various states and thats starting to happen we have a ranked Choice Voting referendum on our ballot in massachusetts. This is spreading now across the country. Were finally figuring out that actually the biggest problem we have we have a great country, we have great citizens, we have a lot of opportunity we cant get anything done everythings gridlocked. We dont solve anything. We cant fix the things we know we have to fix we know we have to fix them, we just cant do it weve had four bipartisan immigration bills. How much will it cost to get ranked Choice Voting in all 50 states. Super interesting first of all, we have 50 states. You change these rules individually because the constitution delegates those rules to the states. Right. Any state could pass legislation so there are governors and legislatures in the country who could do this in their next legislative session and that would the asperatus. They have been elected under the party asperatus. Thats what im saying, if youre in power, the rational choice is not to do this thats true, which is also why we looked to the 26 states that have a form of citizens referendums. So you put it on the ballot right. Then the citizens vote for that and by pass the elected officials. Having said that, i actually believe we will see legislative movement because there is widespread agreement across republicans and democrats and independents certainly that washington is broken so the state legislators and governors may want to take action on the congressional elections. And that is the key and heres the other thing. You asked about costs. We dont need to have this in all 50 states to begin to make a difference in the result. You just need enough to kind of get right the reason i ask is im against big money in politics, however, i think i may be for big money in trying to support efforts like this. Political philanthropy. Im sure theres another side to this. People will say its a bad idea. Lets be honest. There are people who are going to think its not probably only in the parties who like the current systems the parties are designed to serve their partisans, the left partisans and the right partisans. Thats who they deliver value for. Thats what legislation they want to pass they wont compromise. Its better to do nothing than compromise and have a bipartisan bill the history of this country with wework together, people in washington were friendly together, whats the best solution to this complicated issue. Its never the right and left. Those are never the right answer weve lost our ability to play that game. Andrew, can i answer that question about costs yes. This is fascinating so if we had ten states and we ran Ballot Initiatives and legislative and the other. Lets say it could cost 10 million per state. Okay. So now that amount is a fraction of the billions spent in elections. 10 million a state is the cost. Approximately. 100 million to get 10 million. Where can viewers read the report this is available through hunter Business School and our website. Wed be happy to share it with everybody. Thank you thank you. When we come back, the biggest risks to social media stocks that investors need to know about before the calendar turns. How do they feel about a strict new privacy law that could cost them all told billions of dollars starting in the new year well tell you about it. Stay tuned, youre watching squawk box on cnbc woman friction points, 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. Welcome back to squawk box. Take a look at futures right now. We do have some green arrows on the board. Nasdaq crossing that 9,000 mark. Looks like it will continue. Nasdaq up 36 points. S p 500 up 10 points and the dow jones will open up 100 points. 2019 turned out to be a very volatile year for social media companies. The industry has been getting a lot more attention from lawmakers on capitol hill. Julia boorstin has the social playbook for 2020. Reporter in 2020 social media giants will navigate regulatory scrutiny. Social platforms will limit ad targeting to comply with laws and to get ahead of more regulations. With californias new privacy law and concerns about foreign interference ahead of the election, they will take dramatic steps to show regulators theyre pro ticketing consumers and that will affect facebooks bottom line second, facebook will look to grow its position in e. Commerce, gaming and other positions. Facebook will be blocked from using 52 billion in cash for major acquisitions but it will do smaller aqua hire looking to diversify away from ads in the news feed third, tiktok and snap will continue to grow and distance themselves from facebook and new social startups will take off. As in filters push to connect with fans, in addition to ticktock and snap, niche apps like Ashton Kutchers community could gain traction. One thing thats really interesting reflecting back on 2019 is despite all of the challenges that facebook was up against especially when it came to regulation, it really managed to shrug everything off and have really remarkable Financial Performance and stock performance. It will be interesting to see whether the company can shrug off those challenges next. Yeah. You think this is the year that we actually see federal legislation concerning privacy for any of these companies its not just privacy youre talking content its privacy legislation its also the question of data portability. Theyre trying to make it easier to move the data around. I think privacy is one piece of this pie theres Election Security and well have to see how everything goes out of this election. Theyre doing everything they can to make sure there are no issues like there were. With all of this controversy that facebook has been facing in the past year, i see on my time line, delete facebook. Facebook is evil but then you see them record earnings, their maus are as high as theyve ever been they have been able to shrug it off this year will be another test not because there is a president ial election. The california privacy law is going into effect in january probably another six months before it will be enforced that will help push things along in terms of federal regulation. I wonder if you get to the point where Companies Want federal regulations because otherwise youre dealing with state by state. They do joining us right now to talk about more of all of this, stay right here, julia, is brent bill managing director at jeffries. Thank you for being here. Good morning. Is this the year we see federal regulation over these companies . I think there will be more regulation i dont think it will have a big impact on the platforms. Regulation will help it will be difficult bringing startups to take the share away. We continue to believe that facebook you see 10 to 12 dollars of earnings power. Theres a number of new initiatives, julia, with shopping, virtual reality, a handful of new initiatives that we think theyll continue to push shopping is the big one for 2020 so we remain fundamentally bullish and believe that everyone of the platforms is under regulatory overhang. Its an industry wide issue. Weve lived through this with Microsoft Company for over 15 years. We advise investors to see through it i think that was the same advice were saying the same thing. Facebook is up 59 year to date and all the concern that was generated at the beginning of the year were sticking to our core playbook which is the fundamentals are still very, very healthy and a big tailwind. Sarat, youre concerned with the big runup. Yeah, its more that theyre such a big part of the index we own facebook, we own google, we think theyre great companies. As a percentage of the s p and the nasdaq, whats happening is that investors are investing in passive investments now and thats becoming more and more. I still like the companies but i worry that now weve gotten so far into this that theres a whole part of the other market that is just being ignored. The pendulum swings. History tells you you go back to 1999, 2007, Companies Make up too much of the market and what the s ps done thats different now and people kind of dont understand this is a lot of these companies are no longer technology companies, theyre Communication Services you start putting them all together and youre still over 30 when i look at peoples portfolios, not professionally balanced portfolios, more than 40 to 50 have a handful of stocks that people never think are going to come down thats what i wore bring about brett, what do you say to that criticism i think thats right. I mean, look, you have a huge riff in these stocks our view is that theyre running higher, flying higher and have massive amounts of moves across the market and it continues to end of year. Typically weve said watch out for q1 black ice well see that next year given how big of a run weve had some of the expectations are too high right now short term tactically theres a little air to come out of some of these names when you point to a 12 earning number and say facebook 20 times is 240 in stock so we still see a much higher stock over time. Yeah, short term tactically id be a little more cautious. I think one thing thats interesting, if you look at Companies Like facebook and google in light of the larger trends, facebook and google dominate a majority of digital advertising. Now were at a place where theres actually more ad revenue going to digital than to traditional advertising meth thosds next year whether some of these other players figure out how to tap into the demand for digital dollars. If you want to reach them on digital theres no better place to do it than on facebook or google. Thank you for joining juice what wellknown companies could be on the hook for millions in penalties thanks to a strict new privacy law about to come into effect well tell you which states and how companies are fighting back. This morning, were taking a look back at the nasdaq road to 9,000 hitting that milestone yesterday from a level of 325 in 1990 to the highs and the lows and then the Great Recession its been an impressive run for the tech heavy index well show it to you when we return welcome back to squawk box, everybody. Even after setting new records at the close, you are looking at green arrows once again this morning. Dow futures up by 94 points. The nasdaq indicated up by 34 points the s p futures up by 10 right now all of the major averages would open at new interday trading highs as well if we open at these levels. Starting january 1st a new privacy law in california could cost businesses 55 billion. You did hear that right. It starts with a b as in billion. Jane wells joins us right now with the details jane reporter hi, andrew. That is one estimate and you dont have to be based in california to be forced to comply take a look at this. Any business with at least 25 million in revenues or has collects data on at least 50,000 customers or at least makes half of its money from selling customer data, if you only have just one customer in california you have to obey this law. Not talking just google, any business with a rewards program. These companies will have to be clear who they share your data with, if they share, give you a button to prevent that if that but the to be isnt there, you can sue californians like me have been bombarded with emails about the changes but the Attorney Says Many Companies will not be ready. So these are new principles, new requirements, new business processes, new technologies and new conversations that are happening all the way up and down the hierarchy of the organization now the state attorney general tells us that there will be a little bit of a grace period before they start enforcement but you better have a plan what if the federal government weighs in . What we hope though is that the federal government will at least as they say in medicine with the hippocratic oath, do no harm do not undermine the rights that californians will have to protect their privacy. The National Policy, the National Policy says facebook wants to argue that it sends information to third parties, it doesnt sell it under the language of the law. Stay tuned. I thought it was an or not an and. They definitely have that much revenue and they definitely have data on it reporter yeah. Well, you would think the entire law was based on facebook but facebook is arguing that its technically, under the wording of the law, not selling information. This reminds me, jane, of another California Company when uber and lyft decided that they would turn their drivers into employees somehow were exempt from the law. Uber in particular they were arguing that theyre not really a ride sharing company, theyre a Technology Company so, therefore, this doesnt apply to them but its like right now its really not raining outside but its like if i just said its raining outside. What facebook is saying, youre coming to our restaurant, were selling you food but were giving you utensils. They want to get in court, they think theyll have a better shot in court. Were not selling you food, were sending you food and somehow miracle miraculously we make money. Not buying it, hey, jane . Reporter in the end its all about you know, in the end its all going to end up in the courts if the Trump Administration does what its done with the auto emissions and tries to yeah, the Trump Administration could say this is overreach again just because he hates california so much. Could happen. Could happen also facebook he hates facebook. Jane, good to see you reporter happy new year. I wont be here next week. When we come back, what does the next chapter of a u. S. Trade dealing with china look like any chance they can look forward to one in 2020 next, lending tree joins us with what you can expect as they pped mke long into an under suliart. Stay tuned, youre watching squawk box on cnbc welcome back to squawk box, everybody. This is cnbc we are live from the Nasdaq Market site in times square. In the news this morning as weve been telling you, the futures are pointing to a continuation and stock markets rally at the open with a set of new record highs interday record highs. Dow is up triple digits even after setting new record highs with a close for the s p, dow and nasdaq nasdaq crossing 9,000 for the First Time Ever yesterday. By the way, the s p 500 would achieve its largest annual percentage gain since 1997 if we stay on this track apple and sharp may be teaming up to buy japanese smartphone screening company. That plant is owned by a display company. The Rolling Stones continue to generate revenue even after 50 plus years together trade magazine poll star says the stones had the highest grossing tour taking in almost 178 enveloped just 16 shows. As 2019 wraps up, Mortgage Rates are sitting about a percentage point lower than they were at the end of 2018. Thats good news for homeowners. A few troubling signs ahead that we want to talk about right now. Joining us to tell us what we need to be watching is tend tendai kapezi. Did i get that yeah. Close yeah. Chief economist at lending tree mortgages. How do you think housing prices across the country are going to land in 2020 i think we still see prices decelerating this year we were at 3. 4 . We might be down to 3 affordability challenges are making it hard to get into these homes. Its unsustainable if you go back to 2012, it was the bottom of home prices. They have accelerated three times income i think it slows down in 2020. Whats the reason for rise in home prices, lack of inventory, people moving . Whats causing the uncertainty inventory is a big part of it home prices are rising faster at the lower end than the higher end. The lower end is where we have most of the inventory challenges for various reasons. I keep hearing the inventory supply bracket is going to change in 2020 is that the case or not . I dont think so. I do think we get an acceleration in Housing Starts more new homes on the market the new homes market is only 10 at most of the total home Housing Market so what we need is more people moving out and moving up thats not happening as much as it used to happen. Why people are staying much more put than they used to in the past. Why do you think that is . Theres not as much labor market mobility and some of it is you dont necessarily have to move so much to get a new job. A lot of jobs you can do remotely kind of that impetus for moving which used to be work related has slowed with the digitization of the economy. What about Mortgage Rates so the rates picture rates will be the big story. It was the big story this year they fell a lot which gave a boost to the Housing Market. What we do for rates, weve had a 100 point decline, its difficult to see them declining by some of the magnitude i think we get a slight increase in rates. We showed a chart of the 30 year fixed what percent are 30 year fixed im assuming its a very low number your fixed mortgage upwards of 99. 90, 95 i have this view because there are no longer people hes talking aboutpeople in high end were trying to do these crazy were still doing 5 and 7 years on and all of these ideas. Were trying to arbitrage them its a fixed rate mortgage. Its 250,000. The average loan size for an arm is 700,000. If you are in new york you get a sample. Hanging around with the wrong people thats the low end. That requires a whole lot of effort buffet has said thats the best you can get. You can call, the bank cant you can pay the association. Anything additional charges. Charges on the early prepayments. What about credit what are the banks still tight on in lending . Are you seeing any of that change or is it still pretty tight . I think its i wouldnt necessarily say its tight its tight compared to to 09 . The precrisis we saw all of that banks are being much more stringent around who gets loans. Even the arms that he was speaking about, you still get, you know, underwriting standards are much higher than they used to be. Thank you this is fascinating. I feel like i learned a lot. Also. I learned a lot about the market but then i learned a lot that im hanging out with the wrong people. Different people. Also that the internet is disrupting yet again the thing about how people arent moving as much because you can work from home, work remotely, thats a fascinating dynamic that i hadnt thought about. Thank you, appreciate it. Thank you guys. And good luck. Yes with Everything Else you have going on at home. Thank you coming up, phase 2 and beyond is an expanded trade deal with china in the cards next year or will the United States trade strategy in 2020 come down to a bit of an Election Year calculus with President Trump . That is next stay tuned, squawk box will be right back dont forget to subscribe to our podcast. Youll get interviews, original content and behindthescenes access look for us on apple podcasts or on your favorite pcaodst app and subscribe to squawk pod today. The markets are open and things looking higher. Again, weve got some more records on wall street dow looks like it would open 91 points higher. Nasdaq 37 points higher and reaching over 9,000 in history the s p 500 over 10 points higher following the announcement of a phase one u. S. China trade deal, china announced it will be slashing tariffs on several Global Imports joining us right now for what this means for some key american businesses is bill reisch. Hes from the center for strategic and international studies. Hes president of the International Trade council. Thanks for being with us. Glad to be back with you. What are we talking about with the new tariffs theyre slashing, theyre doing this because why . Because its in their interest to do it. Theyre mostly on things that they want, things that they need pork being a good example. They always do things that are in their interests so if you have to import the stuff, you might as well make it cheaper. This is good news for the chinese. It helps them and us too. Sure. Good news for our farmers. Good food news for everybody offended by the tariffs. Ive seen articles over the last couple of days talking about how farmers are in dire straits at this point. Whats the real situation . What are you hearing its not all because of china and tariffs. Theres been a lot of bad weather and it depends on the commodity. In some cases bad weather caused problems youve had generally lower prices for the last seven or eight years. Farmers have had a tough time for several years. Tariffs have made it worse farm bankruptcies have been going up whether that continues into the new year remains to be seen. Bill, what do you think in terms of the phase 1 deal and what were getting and whether well see a phase 2 . Well, classic case, the more things change, the more they stay the same. I think what weve got, we dont have the fine print of course, but i think what weve got is recycled promises that they made before with a footnote that says this time we mean it on intellectual property, on Technology Transfer and theyre going to buy a bunch of stuff. Thats good, no question about it theyre probably going to buy it anyway you know, thats good. I think its not as good as the president says it is that will come out eventually. It does lead to phase 2. Youre going to see what we saw last year, a long conversation the chinese will drag it out drama along the way. Sarat, if thats how it plays out, what does that mean is this the all clear signal or should we be worried about whats coming next you should be worried about whats coming next especially companies with china markets will sell off. The bond market will start signaling. Hes right the chinese are going to do what hes going to do i would be watching to see if youre an investor, i think along the way youre fine but you will get pockets where its cheap. Sounds like if there is a phase 2, it wont be happening before the election. If there is even a phase 2. If there is a phase 2 lets get phase 1 signed that could be kick the can and there could be a disagreement. Bill, one story on the front of the Financial Times says that chinas corporate defaults have climbed they have climbed to 18. 6 billion. Thats a record. It speaks to some of the pressures facing china they may do what they want but this may be a motivating factor, too. I think youre right about that one of the ironies of this whole thing is what President Trump is demanding that they do in terms of opening up their economy and putting it on more of a market base, that would be good for them that would promote more growth for them at the same time, it would reduce the partys control over the economy which is why they wont do it. Their Growth Continues to decline. They continue to have the stories that youre pointing to. Things are going to get worse there but, you know, for xi jinping its about party control. Its not so much about Economic Growth unfortunately bill, thanks for your time. Good to see you. Thank you okay. Coming up when we return, what to watch ahead of the open on wall street. Just three full trading days ahead in 2019 with its projected gains, the s p 500 tracking its best year since late 90s. Well bring you all the premarket action on the final friday of the decade when squawk returns. Ive been a caregiver for 20 years. No two patients are the same. Predicting the next step for them can be challenging. Today were using the ibm cloud to run new analytics tools that help us better predict and plan a patients recovery. Ultimately, its helping thousands of patients return home. And who doesnt love going home. Welcome back to squawk box. The futures right now are in the green. We get ready to celebrate the end of a decade, if you can believe it dow would open up about 86 points higher, nasdaq looking to open up 36 points higher s p 500 looking to open about ten points higher. A little under 40 minutes away from the opening bell on wall street and the moment we have all been waiting for hes not wearing it. Where is it come on, dom youre supposed to have this on. It is very bright tell the lighting guy turn the lights down so we can see it on. Okay, ready you got to turn it on oh, my god. This is brilliant okay. You didnt believe me this is like the big thing, what i got for christmas. You can this is great you have to wear this all the time. The best part is, it is not just like one beam, it is like this band of l. E. D. S so i can it is lit up all over the place. That is cooler than the one i thought it was, which is the minor looking, you know the one with the little yeah. This is much cooler. I got one of those too. You should wear this all day long dom is here to spread some light on some of the biggest premarket movers go ahead, take it away wear that the whole time. Ill wear this if it is not messing with the cameras lets shed some light on the big themes happening in 2019, that may carry over to 2020 first of all, the russell 1,000 growth versus the russell 1,000 value etf, just thematic of the difference in performance between Growth Stocks and value stocks you see here, that gap has gotten a little bit wider as the year progressed. Still a 35 growth rate for Growth Stocks generally speaking versus value at 23 well see if that growth versus value split continues into next year lets shed some light on another big theme that is happening in 2019, and thats whats happening with regard to one sector in particular, thats the Home Building or Home Construction side of things. Year to date, 48 , thats how much the Ishares Dow Jones Home Construction etf is up steady through 2019, well see if that trend holds again in 2020 and the last thing well shed some light on for this segment is what is happening overall with one place in particular, the transportation stocks. Again, year to date, 19 gains for this particular etf, tracks ticker iyt however, that lags the overall market i will highlight the place youre seeing outperformance in transportation right now is in road and rail stocks the place youre seeing the underperformance generally is in Airline Stocks and some of the Package Delivery companies, so when we watch transportation, lets see if those two things industry wide play out ill send things back over to you. I should turn off the light now, right . Just walk around the office like that all day, if i were you. Like this bosses wont care . Embrace it, own it. I dont think the bosses are around i think the bosses will be emailing and calling me shortly. This is definitely going to be on a special highlight reel this is going to be on a highlight reel. Thank you for coming in retirement. I make a fool out of myself here just for you guys. Thank you we appreciate it since thats from your daughter, it is a great gift. Thank you very much ill let her know. Okay. Joining us right now to talk about whats working in the markets as we have seen a string of all time highs, jim yurio of tjm institute services, cnbc contributor. He doesnt have any props though, i dont think. Jim . I feel bad about that i want some props. Im jealous. Youre jealous. On this final day of the week as we get close to the end of the decade here, what is the trade . Well, okay, so in the very, very shortterm, i thought what happened yesterday in amazon and then apple is very, very interesting too. It brought back kind of a memory of when faang led us and i thought that was positive. I said this to you guys for weeks. When i heard jay powell talk about inflation a couple of weeks ago, he sounded look a man frustrated that he couldnt control inflation. Not to the level of james bullard, he sounds like hes very frustrated. When they say they want to see it, that made it seem like theyre going to be dovish for a little longer. A lot of people say the low rates are what is fueling the stock market i think it is a two thing. Low rates, coupled with the belief that rates are probably lower than where they should be. In the past, for the last three months, thats because there is unknown of the china thing going. As that is becoming more known, it is less of a crutch for the fed to stay dovish i still im still bullish if im im nervous right now, we have come far fast, if youre not nervous, youre not paying attention. I think for me personally it was a time to rebalance, put in more put protection to me, the fact that jay powell wants to see inflation, hes willing to let things run is very bullish. I was surprised to see the tenyear at 1. 877 given everything that the market seems to think is happening with the economy, looking at all the numbers that have been coming in, it is shocking that the 10 hasnt pushed above 2 funny thing the ten year, push pull. He talked about inflation, you think he would see the curve steepen. You look at germany, ten year yields are negative, switzerland negative it is hard for them to become untethered those as well i think it will be difficult for the tenyear to go over 2 , despite the fact i didnt say i think the fed will be able to spur inflation, i think theyll try their darnedest to the way they look at inflation is different than how inflation shows up now theyre looking at prices of wonder bread inflation starts to show itself in odd places like bananas if youre jay powell in 2020, when and if are you capable, can touch the dial, touch the wheel . Im hoping that jay powell doesnt care about politics, but thats probably a big ask and i understand that. And i know that going into elections, theyre probably a little more cautious i think what ive seen of jay powell and when he speaks, he seems so measured, but i see a guy who is scared of things falling apart. I dont think hes going to touch it very, very soon and obviously if things heat up a lot, they may start to talk about raising rates again. But theyre going to couch it and the bubble wrap of a promise that there is dovishness if everything starts to fall apart. Do you think there is a political pressure on jay powell not to touch the wheel. I think in an Election Year, hes not going to touch rates. Hes absolutely right with the ten year not moving because as we talked about before, unless europe wakes up, there is too much arbitrage going on. Your ten year is stuck in this 1. 8 to 2 range and the fed is going to keep rates low because as soon as they start raising rates and, by the way, if inflation does pick up, those rates move, not controlled by the fed anymore. That could be an interesting kind of and i want to throw Something Else in, if some campaigns start to gather steam, that the market feels will be very business unfriendly, i think jay powell has no choice at that point in time but to start to talk more dovish that seems like something in the far distance right now, but it could happen bernie sanders, Elizabeth Warren emerges, he has to put his he has to put his foot on the pedal, you think, but then dont you think there will be allegations it is all political . But it is not it is not all political. One side of raising rates, youre also saying, we could lower rates depending politically where we go. That uncertainty to me will cause some people after this window dressing youre seeing now all window dressing now total momentum, i got to finish the year, i got to own apple, google, everything going up when i go to my investors in the first quarter, i look at my stocks. Jay powell will be looking for either signs of flation, not the price of wonder bread or bananas or who knows what the next thing might be. No one wants to pick up the slack. No one else around the world wants to we need fiscal stimulation. Jim, thank you for join us today. Sarat, thank you for being with us all morning that does it for us today. Andrew, have a wonderful new year. Yes, you too. I wont see you until next year. Merry and happy new year. The rest of you, ill see you back here next week. Right now it is time for squawk on the street. See ya. Good friday morning. Welcome to squawk on the street. Im Carl Quintanilla with david faber, mike santoli at the new york stock exchange. Cramer has the morning off it is a familiar picture by now. Futures up, s p set, not only for a record high, but should open above 3249. Europes book to work. Ftse up, best run in three years. And oil and gold continue to catch bids as well road map begins with records on a roll