And joining us now to see what 2020 has in store is managing director, victor anthony, and Portfolio Manager at needham growth fund, Chris Retzler good morning. I look at the tech stocks that did the best this year, a lot of them were kind of underdogs, roku, top of the list coming into the year, people talked about netflix would beat up on them this year, the narrative seems to have shifted. Apple is another one people thought apple would have a bad year not only trend wise in tech whats important in 2020, are there underdog names you particularly have in mind . Victor well, mostly on small cap large cap, i see amazon, alphabet, google, facebook continue to outperform those arent underdogs. Are they no. Angies Home Services which underperformed significantly in 2019, i think another one, comscore, unforeseen event, management departures, outperformed significantly Online Dating app, the meet group, meet glad it is spelled that way different kind of stock if spelled another way. Up about 10 last year. There were short sellers that attacked the stock, put some pressure on the stock. I think com score and meet are under acquisition rumors. Chris what you need to Pay Attention to is semiconductors, but what is that telling you looking forward. It is telling you that designs are going in and what are they making them for . We see 5g build out continuing, devices as well have more content thats being prepared right now. We have been watching that in the fall the other thing we saw delayed this year, had an inventory work off was data centers were going to see more build out there that will be moving a lot of content around, processing it, storing it. Those would be themes we would be looking for within technology we expect rotation wouldnt surprise is in the First Quarter to see 10 pull back at some point, im not going to say from where it starts clearly theres momentum in the market we have to watch in january how much tax selling of deferred gains will occur as people rebalance in technology. You know, technology is a great area, has good technological moats, can defend on a global basis on revenue and margins, dont think that story is over we think there will be rebalancing in tech. An opportunity to buy, especially 5g, it is expansive quite a number of names that would be potential players in 5g as we see that come to fruition. What are names you like specifically some names that we are looking at, pure storage where it can help manage data behind the scenes we also like one that moves the data around. A lot of security, akamy is a security play. You have to dig deep in some semis, had a good move could see some of them going, but wait to see rebalance. We saw some of the most Disruptive Companies in the last decade go public, jon talked about underdogs, werent always underdogs, but finishing looking like that, uber, lyft, pinterest, wework. Where do they go in the next decade, specifically ones that are now public is uber ever going to be a mega cap . Is this the next year, next decade that we see investors understand their story i think it is yet to be seen on uber. It has a great product, we all use it it is easily build outable does uber have a moat i think it has yet to be determined where, it is a Global Company unlike others that are more local the selling going on with travis had pressure on it also, it is a tax loss for investors year end as opposed to a gain, you could have some of that pressure also from ipo. Longer term, i think the future is yet to be seen. It is like facebook. It sold off when it went public, sat down there awhile, ultimately came through. Victor, whats the defining strategic ability for the Tech Companies starting off in 2020 is it being a Cloud Platform that attracts the most developers is it the highest ai capability . Is it the most international reach, actually having functional data centers around the globe to be able to grow what do you think it is . All of the above. You captured some of the secular trends at play also the fact that they have massive ecosystems, users are captivated, theyre getting more users. There are areas outside of eastern europe, i think it is a huge Growth Market for faang names. Africa is coming into play following indias path i think thats over the next decade, one of the biggest growth engines. What should investors do . Should we be looking at call transcripts to see who is moving in there following jack Dorsey Africa in particular . Sure. Opportunity for payments. Theres opportunity for Internet Access theres opportunity for commerce and ultimately advertising follows. Who is best positioned globally to do that jack dorsey sees the vision there. Facebook, definitely google, alibaba, not forget chinese counterparts, and tencent. They have the best path forward in capitalizing a trend in that continent. Chris, back to the semis, the idea of rotation, it has been a big year in terms of the way the stocks have moved, and by the way, moved in the face of a number of head winds is your expectation that were going to see semis come off in 2020 in the midst of rotation . I think you could see them come off early in the year i think the overall longer term trends are there i think one area hasnt done well is automotive if that came back on a global basis, these are massive computers with wheels. It will be a good area. What does that mean, victor, for 5g this is supposed to be the year after a year of false starts to see it take off. I dont cover Semiconductor Stocks snapchat, i think it is a huge play on 5g next year i think user growth, that benefits advertising as well and ai and Development Capability between the two companies. Thats one stock no one talks about as a 5g play, i think it becomes apparent moving into 2020 cant help but think well talk about gaming stocks as well snap is up 176 this yeare interesting. Thanks thank you thank you. Turning focus to apple, the best performing stock, losing steam. The 300 mark in sight next guest says theres room to one, wall street is underappreciating the strength of the wearable segment. Here to explain, senior tech analyst jim suva joins us. Great to have you. Breakdown your bull case heading into 2020 for apple. Well, happy holidays to you for apple, it definitely is also because importantly some of their products are selling out and you have to wait to get them air pods pro are selling out, youre on a several week delay to get them. It is not due to manufacturing issues it is due to Strong Demand where the company cant keep up. If there were manufacturing issues and they couldnt produce them, that would be terrible theyre producing them, running as many shifts as they can with manufacturing partners, still not able to meet demand. The second item on wearables, apple watch series 3 for 199. Not talking series five, which is the newest for 399, but series three for a lot of teenagers, becoming one of the hottest talked about, wanted desired products apple wearables, we see that as the big surprise for apple when they report earnings in the next month or so. Yeah, definitely one to watch. Mike santoli put up a really smart chart friday afternoon, it basically showed the pe ratio doubled from the lows in january of 2019, speaking to the valuation weve seen take place in this name this year, is it getting expensive now . Well, it used to be in the value camp you look at the index owners, it has shifted out of value, more back into growth we see the valuation catching up to the stock the target price is 300 as you correctly stated, but it is rerated higher investors will look at revenues and earnings growth, the core fundamentals of the company, revenues and earnings growth, and less about valuation expansion. The whole market with Interest Rates being so low, a lot of investors dont value putting money into cash. Youre not earning interest on the savings account in the bank. The equity markets overall have seen a boost into valuation and apple participated in it, but yes, you are indeed correct with your statement which is smart about the valuation has materially appreciated, and target price is 300 jim, give me your analysis here when i look at it, i want to know what it means that apple has been able to do this with wearables, talking specifically about watch and air pods as you mention, theyre huge products apple is selling out yet theres practically no competitor thats got anything close to it. Look at google, samsung, they have a wide open landscape in android compatible wearables, but theres nothing. How can that be . Are they technologically blind google is buying fitbit, trying to catch up. How could none of them fill this void well, your comments are spot on and so accurate, it is amazing but it is important to note when apple comes to market, its really about a Premium Experience all of the other competing products and companies out there came to market before apple. However, they failed to generate mass adoption. So when you think about air pods and air pods pro, they work very well for a Consumer Experience thats premium people are willing to pay up for it they dont want calls to drop. They dont want the battery to give out dont want the screen to have broken pixels, dont want a foldable screen that stops working after several hundred folds. They want a product that works with quality apple is so focused on a premium Consumer Experience, thats why theyre gaining so much market share. What im getting at, jim, what if apple pulled an ipod with the products and made an android compatible version of air pods and of apple watch . I havent seen anybody factor in that possibility, but wouldnt that crush that would be a fascinating thing if it did happen, but so far the companys culture has been to support their own operating system so were sticking with them, continuing to have products in the apple ecosystem, not going to android. That being said, the focus has mostly been on iphone. Now wearables are taking off 10 billion in one quarter, just one quarter, what wearables would do what happened in 2020 with 5g coming out, big year of connectivity when apple comes out with more new products, we believe theyll stick with supporting apple ios ecosystem rather than venture to android at this point. Certainly will get updated numbers the next couple weeks with earnings. Jim suva, thanks for joining us, buy rating on apple. Jon, i used air pods with an Android Phone and they work pretty well. I bought someone a pair this year that uses an Android Phone and it was so easy to set up maybe youre onto something. Maybe enhance the software. Lean into it. When we come back, tesla shares under pressure, but up more than 20 in 2019. Well breakdown the companys Growth Strategy and china play, heading into the new year with kara swisher squawk alley is back after this beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Welcome back teslas china play, the automaker rolling out its first china made model 3 sedan from the new shanghai factory, tesla shares on a run, jumping 93 in the second half of this year you can see today it is off a bit, almost 4 joining us, recode cofounder, cnbc contributor, kara swisher kara, happy old year new year is right around the corner. Thank you this is something elon musk was talking about for a long time, ramping up in china, the importance of that market. Does this signal a new era for tesla you think . It is interesting the stock is up. Obviously he has wind in his back with the trial being over that sort of dragged him down a little bit i think he is not tweeting as much, he is tweeting a little about space towers, i dont know if you saw that earlier this week, but i think he is trying hard to focus on tesla and spacex, which i think are his two principal businesses you know, it is still a challenging business, any car business is challenging business, but people love the product. The stock market, i cant comment on, it is quite a high price for that company but at the same time, it is a product people love, like a lot of other things elon does, it is exciting in that regard. I think hes still going to have doubters no matter what he does, what he is trying to pull off is really difficult hes probably going to face challenges in the next year about that, but i think delivery of more trucks, not trucks, cars in more markets is critically important for teslas future. I wonder, has tesla reached a sort of apple stratosphere, people wondered about the fundamentals, underpinning of the business, but it could sort of get through tough times because of the strength of the brand, loyalty of users. I was just in Southern California last week around laguna area, saw a lot of teslas, driven by a lot of rich people probably a good sign well, yeah. If they can get more Affordable Cars out there, it is critical they can stay at the top end of the market, but more Affordable Cars, when people consider buying them, theyre not affordable by affordable standards, but in terms of reaching down to a larger market is really important to them, and getting cars to other places, people using them is very important. My brother bought one and loves it, never stops talking about it they have this fan base thats very loyal in a similar way to apple. But it is a lot harder to make cars than computers and phones and things like that, although it is difficult to make those, too, but it is a massive level of difference in terms of selling and servicing them after. Execution is so much a part of this i think creativity is huge, but execution will still be the most important for tesla. This is great that theyre manufacturing, that they reached this milestone i cant help but wonder if in 2020 a bigger piece of the conversation around tesla will finally be competition because it would seem that in terms of electric vehicles in general, youve got Something Like ten new models from different auto manufacturers poised to launch it seems like it will be a Tipping Point for the ev market. I wonder what it means for tesla longer term. You can almost compare it to netflix. Netflix made nine laps around the track before anybody else caught up finally this year. And well see what happens you dont think of any other car when you think of buying an ev i dont think when my brother bought at the thought of buying others, he moved immediately to tesla. Thats where competitors have to figure out what could compel people to buy it over a tesla. In that regard from a brand point of view, people that are interested in it, tesla is at the top of the line for most of those people. At the same time, one of the biggest complaints i hear from tesla owners is in some ways the operating system you have the apple car play and other vehicles that work well, do you think that works as competition ramps up, tesla has to bring other software into its vehicles i dont know about that i think it works beautifully i have been in many cars, i have not heard complaints about the software i think it is quite i dont want to say beautiful, but it works beautifully compared to other cars i rented a car this week and i cant get it to work you know what i mean i think it does well on the software it is like an apple product in that regard, you dont think about it, it works beautifully, but i think the competition is going to be the one thing that people should be watching out for. That said, it is still the brand to beat in terms of consumers mind of what an electric vehicle should be, what kind of service it should deliver. Thats table steak to be as good as tesla. Speaking of competition, the new year bringing major battles between some of the biggest names in tech. Josh lipton joins us now with one of those josh reporter so jon, one of the big fights in 2019, and it continues in 2020, the battle over jedi. Remember, in october, microsoft secured the new massive Cloud Computing contract with the pentagon, and it certainly surprised some Amazon Web Services was a frontrunner. It is worth up to 10 billion over ten years microsoft is already now recruiting people with security clearances to work on jedi, according to sources amazon is contesting the pentagon decision, saying in a lawsuit that President Trump launched repeated attacks to steer jedi away from aws in order to harm jeff bezos amazon pulling no punches in the lawsuit, jon, saying basic justice requires revaluation of proposals and new award decision the pentagon counters the dod is confident in the award question is more about money on the line after all, aws generated revenue last quarter of 9 billion, and microsoft azure business, estimated 4 billion. So it is more about bragging rights securing jedi is a potentialwa to secure more cloud contracts, both through the u. S. Government and other industries and companies that host Sensitive Data the winner can tell the companies from banks to hospitals that if our tech is good enough for the u. S. Military, it should be good enough for you as well guys, back to you. Thanks, josh. Kara, look at this battle, the cloud battle between amazon and microsoft. Right. Does it get nastier from here does marketing ramp up after a moment like jedi when the underdog scores a big one . Well, you know, in this case i dont think it is miekds versus amazon, it is amazon versus President Trump, you know, in terms of President Trump in terms of what he said about jeff bezos i would be surprised if they didnt fight it. It seemed as if there was putting a thumb on the scale against amazon not to say microsoft wont deliver a great contract, but if i were amazon, this is precisely what i would do. In general, government contracts around Cloud Computing and extending not just into our governments but other governments and other businesses as josh said where Sensitive Data is, theres going to be a fight between the two companies. They have to keep up if i were amazon, this is exactly what i would do, challenging this and it gets a lot of attention, doesnt hurt them to do so and it is clear that there was something amiss here, and at the least through discovery they can find out who the process worked, and i dont think thats negative at all for them to do i think to that point, i think the expectation was always that amazon would file some sort of protest the bigger potential upset would be if the court actually moves in favor of amazon, which i think now is seen as something of a long shot well see how it plays out in the court system kara, i wonder, if it isnt just jedi, there are future cloud contracts put out for competition within the pentagon, the cia looking to dole out more contract work, the fbi, go down the list in general. I wonder if modernization within it infrastructure, if this is a bigger opportunity for Cloud Companies than is being realized now. It is a massive opportunity the government used to have contractors called beltway bandits, they would be around the beltway serving government contracts. Whats happening now is more sophisticated competition between Companies Like amazon and microsoft. You have this expertise. It is critical that the government do the upgrades and sort of have trusted vendors to be able to do this, especially in this time of questions about Cyber Security and things like that, you really do need to be very careful in terms of picking. I think it is great to have lots of people doing it rather than one company. So youre going to see competition across a lot of agencies as long as theyre intraoperable, thats critical a lot of old technology, the reason it has taken long to upgrade, people were ensconced in various contracts with large Information Service providers on the beltway far too long kara, a lot of the street is optimistic on amazon, to underperform the broader markets this year, First Time Since 2014, socalled investment year. If its cloud growth is slowing, facing antitrust scrutiny, and theres a lot of questions raised about the quality on the platform do you think it is so straightforward . Do you think there could be a reckoning in store for amazon next year . I dont ever bet against amazon, im sorry. I think it is a mistake. Theyve got some complex businesses, but theyre dominating ecommerce, no question there will be scrutiny of them in terms of antitrust. Same with facebook look, all of the Tech Companies are roaring in terms of the stock market, despite all of the attention they got this year again, im not a stock picker, im talking about businesses and how they conduct themselves in other ways, but i think in terms of cloud services, i think aws is at the top of the heap. No question. Even by itself, would be one of the most valuable companies on earth. So i think having it within amazon is a powerhouse for the company. Yeah. A lot of crabs in the cloud barrel well see them try to claw their way to the top in 2020 kara, always good to have you. Thank you. As we head to a quick break, lets get a check on the markets. Off lows of the session, major averages are in the red, the dow and s p are down a half percent more squawk alley after this welcome back, everyone i am sue herera. Heres whats happening at this hour Irans Nuclear deal with world powers is in danger of falling apart without compliance of the u. S. And the european union. That according to Russian Foreign minister Sergei Lavrov he spoke with his iranian counter part a Turkish Military cargo plane arriving in somalia capital to evacuate people wounded in a truck bombing turkey is a leading aid provider to the country saturdays blast the deadliest in the country in more than two years. Chinese forces in hong kong carrying out a joint drill to kpes defense capacity. Soldiers also conducted a mock rescue operation. Here at home, next time youre sitting in that, a traffic jam, think about this. A new study found the average urban commuter spends 54 hours each year sitting in traffic it also costs the u. S. Economy a staggering 179 billion. Yep. Billion. Each year. You are up to date thats the news update this hour back downtown to you guys. Those numbers hurt my head. It is also building the podcast industry factor that in always look at the bright side, jon. I guess theres a Silver Lining to be had sue herera, thank you. European markets are closing for the day, meantime. A down session for all of the five major they nochd a fresh record high friday, across the board in general, but seeing underperformance in cyclical groups like tech, auto, health care and retail. Looking ahead, latest eurozone pmi reading is thursday after the holiday. Manufacturing sector contracted for 11 straight months well see if that streak breaks amid signs the slowdown could be bottoming out, which has become a dominant investor theme in recent weeks amid the broader melt in the markets. The best performing stock of the decade, guys, will netflix continue to outpace competitors in the next ten years . We debate next squawk alley is back after this stocks having the worst day in four weeks, with two trading days left for the year bob pisani is looking at todays market action. Bob, what do you see given the momentum weve had this month and this quarter, it is not surprising we are slowing down stuff thats slower is big momentum stuff with great moves up you want to watch stuff with strong momentum, last several weeks. Tesla down 3 , microsoft had a good run, master card, an amazing run. Stock of the year, master card and visa, even proctor, amazon, all of these make sense, these are momentum names here. Elsewhere, semiconductors, you look at stocks with a great year but may not necessarily be strong the last couple of weeks, strong momentum stock. Semis had an amazing year, theyre all down a little more than 1 . All of this makes sense, taking profits, had great years, not necessarily up, some momentum names. How about the underperforming, the mean reversion thing we keep talking about. It makes sense oil service names, halliburton, horrible for one year. Steel stocks have not had a good year on Global Growth. They had a great year in fourth quarter, most of the time they have been struggling due to the fact we havent had a lot in the way of yields moving to the up side so far it has been a classic santa claus rally. Quiet, low liquidity, leveraging the up trend in the market that traditionally happens in december, hopeful macro backdrop means no recession in the u. S. , hopes for a bottoming in Global Growth thats the problem, getting that bottom in Global Growth. Dont know where it is yet and the bad news, we are overbought this is rsi, relative strength index, how much individual sectors and markets moved. When youre over 80, way overbought highest in two years for the s p 500. What does it mean . It means it is tough when you move this much in a short period of time to move the market forward consistently, thats what were seeing today, seeing resistance in the market it all makes sense china had agreat run on trade talk hope. What are we dealing with we are dealing with macro data the next few days and weeks, and thats going to determine a lot of attitude. Japans retail sales, Industrial Production was disappointing china, pmi, were getting that tonight. See what happens there eurozone pmi, and ism manufacturing, thats been below 50 since october want to see a little improvement there. Yes, we had a great run, but now it may not be enough to see some vague bottoming. Want to see a lift in Global Economic numbers guys, back to you. Day and a half left of trading in 2019. Thanks for that. Meantime, disney dominating the box office for 2019, making up more than onethird of u. S. Box office sales the company had six movies, surpass the 1 billion mark, a seventh title on the way, as the media giant holds strong in streaming wars joining us to discuss, sgp global principal, and gentlemen, thanks for being here. Simon, first question to you we were talking about amazon and it diversified Revenue Streams cloud is an engine of profit for the company. Is it time that netflix needs to start looking at other Revenue Streams . Can it compete on content alone when you have all of the new players come in . Are they already looking at another type of business to keep cash going i dont think so. As i said on the show before, i think netflix benefits because theyre so laser focused, theyre not distracted by selling phones and by selling subscriptions for shipping theyre laser focused. Theyre all about how can we find the best shows and films and deliver to subscribers. Alex, do you agree with that view, is that enough in a changing Competitive Landscape it is enough from a consumer standpoint, consumers will be happy with netflix in coming years, it will continue to be a good company wont be enough from a Stock Performance standpoint as kara swisher mentioned, netflix has taken nine laps around the pool i think she said at this point, everyone has caught up. When you run a single business, a low margin business, continuing to execute on that, you can continue running a good business, but when amazon did that with books, it took aws to push it over the line. I think if netflix continues only doing one thing, make hbo style shows and sell it for a single price, reality is the stock will not continue growth trajectory it had in the last ten years. Simon, safe to say that in the u. S. Subscriber growth for netflix topped out it seems to be at least the wall street expectation now sure. I think another 55 Million People will cancel cable between now and 2022 i think theres up side available from people moving over, trying new Subscription Services first one most try is netflix. I still think theres up side. It is not dramatic growth of the past few years, but theres still room to grow. Alex, these things arent binary, you say the pc is dead, it is not dead netflix isnt dead certainly, but i wonder how much of its success is already priced in when youve got disney plus doing pretty nicely it seems, youve got hulu, of course, and my kids dont care about passionately about anything on netflix, theyre looking at other places is churn going to be more an issue for netflix moving forward, is the valuation at risk not sure about the churn part i think netflix manages churn very, very well. But the point of the kids, itch three kids myself, fundamentally theyre attached to individual shows and specific shows they want to watch, so netflix may or may not be in position to continue being dominant. While i think netflix will continue to be able to manage churn, i agree with simon, netflix is the default subscription that people subscribe to, i think growth will be significantly impacted i think the final 55 million start to unsubscribe from cable, theyre likely to enter the market with free ad supported service like the forthcoming peacock. Potentially ahead of what netflix has to offer there are a lot of options, not to mention disney and the brand disney brings to the table i think churn will be okay, but when it comes to user acquisition, it will slow down in the u. S simon, last word to you how does netflix deal with churn. A prime example, one of my kids loved little einstein, off netflix onto disney plus do you think netflix can create enough content when it loses distribution to some of the most popular shows . Absolutely. Theyre good at creating their own shows, sourcing and working with producers i think theyll create new brands moving forward. Thanks very much for being with us. Thank you thank you. Still to come. Fully operational in 2020. Thats what elon musk is hinting at for the first commercial boring project well fill you in next when squawk alley returns elon musk has been on a tunnel tweeting binge when not tweeting about space, praising the power of tunnels to eliminate traffic problems in cities worldwide, and tweeting about the first commercial project. A story Contessa Brewer followed from the beginning jon, elon musk tweeted the Boring Company first commercial project should be fully operational by 2020. End of quote thats the plan for the Las Vegas Convention and Visitors Bureau we looked at the construction site where the 52 million project will move people across 200 acres of the Convention Facility the massive tunneling machine broke ground last month. This morning i am told it bored 1,000 feet on the first tunnel so far lvcba hope it will launch at the same time they unveil the 1. 5 billion expansion and renovation in january, 2021. Musk tweeted he is going to tackle other Boring Company projects after the las vegas project is complete. Other projects are in various stages of planning outside washington, d. C. , chicago, San Francisco bay area in defense of his plans, he tweeted these would be road tunnels for zero emissions vehicles no toxic fumes is the key. Really just an underground road. But limited to evs from all auto companies. And he also tweeted his own nonscientific survey showing 65 of those that responded would support, quote, super safe earthquake proof tunnels under cities to solve traffic. These are people that want to respond to elon musk the las vegas project is seen as superior proof of concept than the hawthorne test facility. Las vegas leaders are gauging whether the tunnels might be expanded to avoid congestion on the strip or connect las vegas to the l. A. Area a lot of hopes are riding on the first project, guys. I think that unscientific survey had 1. 4 million votes something to be said about that. Contessa, do you know what the pricing will be for this they say about 55 million for the two tunnels. Remember, the Boring Company spent 10 million on one mile test tunnel in hawthorne, clearly there are other expenses when you consider there will be three stations for people to get onto the people movers, and to get on the peoplemovers and then two tunnels going back and forth. So 55 million and that is just a fraction of what it would cost for aboveground tunnels or other competing bids came in at for the Las Vegas Convention and visitors facility. A lot more down to earth than hyperloop, remember that yeah, i wonder what this does to your podcast listening . Yeah, takes it down many. Trips. Contessa, thanks for that what we come back, a takeover at toms shoes, well explain when squawk alley returns. [narrator] at Southern New Hampshire university, were committed to making college more affordable. Thats why were keeping our tuition the same through the year 2021. [woman] i knew snhu was the place for me when i saw how affordable it was. [narrator] find your degree at snhu. Edu. Lots of cool gadgets on display at the Consumer Health show in veg fashion. You want to watch deals. The revenues at thirst quarter as well. Squawk box is live in davos. The countdown is on for the federal reserves next best decision for rates some things are too important to do yourself. Get customized security with 24 7 monitoring from xfinity home. Awarded the best professionally installed system by cnet. Simple. Easy. Awesome. Call, click or visit a store today. Welcome back to squawk alley. As we get ready to wrap up 2019, cnbc is taking a closer look at what investors can expect in the new year its time for the 2020 playbook on the defense sector. 2019 was defined by more military modernization, more mergers and more tech talk, as cloud took center stage and google faced ai blowback 2020 will be the year those technologies are adopted and the year the militaries might officially send to the final frontier first, peak defense dollars. The 2020 u. S. Budget increased defense spending by 3 but dont be surprised if that begins to flat line. Thanks to pentagon reforms and the upcoming election. Still, National Demand will keep growing and the u. S. Will keep buying more aircraft, ships and missiles including hypersonics which continue to get attention as more prototypes are developed. Second, space force launches the sixth Military BranchScience Fiction to reality the next over seven years will receive a tiny increase in the budget with headquarters and collaboration with reinstated space demacommand on the manife. And third, consolidation continues. Or dealmaking. Expect united technologists and ratheon to get deals improved. And takeover targets of aerojet. Were already seeing some of that continuing saying theyre going to acquire privately held company. 2020 is expected to be much busier and actually, we already essentially know the outcome of one of the biggest awards in expected in 2020 thats the Ground Based Strategic Deterrent contract, that is part of a Nuclear Triad modernization. The knew icbms to replace the middle man upwards of 85 billion after boeing dropped out of bidding, its Northrop Grumman that the sole bidder, a big get this for stocks in 2020 as well. Lets get a check on major averages, all lower by 0. 5 . Squawk alley is back in less than three yeah, and he wanted someone to help out with chores. So, we got jeanpierre. But one thing we could both agree on was getting geico to help with renters insurance. Yeah, geico did make it easy to switch and save. Oh no. Theres a wall there now. Thats too bad. Visit geico. Com and see how easy saving on renters insurance can be. In case you missed it, toms shoes creditors have agreed to take over the casual footwear maker in exchange for restructuring its debt that is according to a Company Letter sent to employees on friday and the people familiar with the matter. Credit ratings agencies have warned that toms which is known for its Charitable Giving would not have been able to repay a 300 million loan due next year. Its on tenuous footing, pardon the pun. It got wellknown for giving away a pair of shoes for every pair of shoes bought i think thats whats going on here as well, as youve had other competitors from this market cut their costs, their prices the whole idea give away a pair of shoes every time a pair is bought is interesting. Toms with a more than 1 billion valuation, they have that sort of giving back philosophy, Recycled Materials and you can see maybe theyve taken that direct to consumer model and deployed it very successfully yeah, capitalism tends to work pretty well, and people feeling good about buying a pair of shoes because somebody else gets one, doesnt always extend long term. Unfortunately unfortunately, yeah that will do it for squawk alley. Lets get to the judge and half. All right, jon, appreciate it im scott wapner front and center the year ahead for your money as stocks could post the best performances in more than went years but how far can that momentum go . It is 12 00 noon and this is the halftime report. Stocks are poised to make impressive returns but under pressure today as the market makes its final push to year end. Your next money moves are coming up plus, the big targeted increase for one faang stock one is poised for a