A u. S. Air strike killing an Iranian Military leader in baghdad causing oil prices to spike this morning stocks dropping. Eamon javers has the latest on that from washington reporter good morning, jon now getting red siran and aroun wormd. The supreme leaders saying harsh vengeance awaits criminals behind the killing of Qassem Soleimani, that was outside the baghdad airport. In france, president macron says he discussed the situation with russian president Vladimir Putin and state department in washington, jon, saying that secretary of state mike pompeo is speaking with a number of World Leaders this morning, briefing them on the situation, including a statement suggesting he has been speaking with high ranking Pakistani Military officials. For his part, the president of the United States offered his explanation for justification for the attack on twitter, also kept a relatively muted presence on twitter you see his statement, explaining that Qassem Soleimani got caught planning additional attacks, thats why the president felt he needed to take this action last night that he took outside Baghdad International airport. The president here also returning to business as usual in many ways on twitter, promoting books he likes on twitter, tweeting about impeachment and other topics this morning, in addition to comments on iran and retweeting a number of people in favor of his action in iran the president offering a bit of a muted response, perhaps different from october with the strike on ahe will baghdadi well see what happens through the afternoon in terms of white house response relatively muted response from the president of the United States, the world awaits iranian reaction to the strike last night by u. S. Forces eamon javers, thank you for bringing us the latest. New york times calls our next guest one of the most respected and accomplished oil men in the world lets bring him in, Sadad Al Husseini the move in crude prices, how sustainable is this . Good morning, morgan. I think the current prices havent moved that much, they moved a little bit i think the markets are saturated with supply. We have to wait and see how the situation unfolds. I wouldnt say weve had a strong move. It is a fair move. Couple dollars see what happens next. In terms of the potential for what happens next and what that could mean in terms of the energy market, ihs market came out with a note awhile ago and they say that the absence of soleimani will risk iran becoming far less subtle in actions, raising risk of miscalculation, leading to an all out war. How high is the risk that counter reaction from iran now could be on oil fields or other assets related to oil in the region i believe the problem is between the u. S. And iran at this point it is not about the oil fields or other countries in the gulf i think iran has been overplaying its hand, attempts to enter the u. S. Embassy in iraq and other attacks on u. S. Military in iraq, this is a problem between the u. S. And the iranians i dont think that they would want to do anything with the other countries in the region, that wouldnt advance or effect their issue with the u. S i think the focus will be on the u. S. And given that iran is working so hard to gain influence in iraq and given what youve just said about probably the likelihood that they wont put oil assets at risk, do you think theyre then unlikely to damage iraqs infrastructure in response to this yes, i doubt very much they will go after iraq installations as well. At the end of the day, iraq has been a close supporter of the Iranian Regime that wouldnt do them any good i believe the situation now is one of the iranians needing to confront the reality their Foreign Policy is not working. Soleimani was a problem, he was an extreme element in the iranian leadership may be others like them. This is opportunity for moderates to calm down the events, to try to pull back some of the interference that theyre having with other countries. Iraq is their ally i dont believe they want to alienate iraq. Thats a key point, especially given the fact that within the country itself, we have seen this political and social unrest within iran, thanks to sanctions and impact on the economy, protests, deadly reactions to it. How likely that longer term this could lead to more productive negotiations between the u. S. And iran iran has a serious economic problem. They have domestic unrest, issues with their neighbors, theres hardly any country in the world wants to deal with current leadership if they look at their own outlook for the long term, they need to negotiate, they do need to climb back down from the confrontational approach they have been taking if they dont, their situation will get worse domestically. And the iranian people are showing theyre not very happy with this regime so in the long term, they have to moderate their approach, whether theyll do it now is unlikely now they feel they have to show some kind of reaction. Hopefully it will be a moderate one. So we look at the sharp but fairly contained reaction in oil markets to todays news. Theres some commentary that saudi arabia has Spare Capacity, could increase production if needed how is that calculus made and what price level do you think that supply response may come from i dont believe there has been a call on saudi arabia to do anything, to add any production or additional capacity Spare Capacity is definitely there, has been demonstrated many times the markets are very steady. Supply is more than adequate the long term, i believe iran will not have an opportunity to come back into the export markets the way theyre going, their production will remain domestic the same thing applies to other countries. Recent opec meeting, certainly underlying the need to be prudent in terms of supply so prices are probably going to be quite stable, supply will be quite abundant by year end 2020 i think there will be a stronger market, but theres no shortage of supply, thats for sure. So sadad, do you see economic risk for u. S. Interests in the region right now because of this or no . No, absolutely not. The u. S. Interests have not been in iran or in iraq, theyve been in all of the other countries that are major producers, major consumers of u. S. Exports and i think the u. S. Has shown its hand now that it is not going to tolerate any more interference by the iranians in the rest of the region, so if anything, i would say it is probably strengthened the relationships between the u. S. And the other countries. Iran was a foregone conclusion iraq has been so unstable, wasnt much of a market. The thing with syria and others. As far as u. S. Interests, i think theyre well protected as it stands. I know youre an oil guy, given the fact that energy and security and defense are so inter linked, interconnected, i wonder if you think this will increase demand for weapon systems, for defenses, especially if you look at not just these strikes over the last couple of days but also attacks on aramco a few months ago i think what were seeing is the u. S. Has shifted Foreign Policy in the region from one of passive observer, continuous kind of warnings to one of a more active, proactive player perhaps this means that the u. S. Has far more resources and military capabilities than any of the countries of the region, and it will call on countries locally more than already, it will call on the u. S. To deploy forces, make them more visible hopefully that will defer more aggressive activities. Finally, i want your thoughts on the actual cost to ship oil and move oil in and out of the region now, between all of the different activities in the past year with tankers, seizures, heightened tensions on the heels of the strike overnight, is the cost going to continue to rise and what does that mean in terms of the Global Dynamics for trade flows of oil well, morgan, i think the delivered cost of oil to the foreign consumers has not significantly changed. The oil shipping per barrel is a couple of dollars. The u. S. Is importing less oil in any case. No, i dont think there will be much change in prices. Great to get your insights. Thank you so much for phoning in. Thank you still to come, apple shares crossing the 300 mark for the first time we debate where the stock goes from here next stay with us legendary terrain in telluride, the unparalleled landscape of park city, or the famed peaks of whistler, youve faced the hassle of lugging your gear through the airport. With ship skis, youre just a few clicks away from having your skis, snowboard and luggage shipped from your doorstep to your destination. With unrivaled pricing, real time tracking ship skis delivers, hassle free. Ship ahead and go catch those first tracks on fresh snow. Ship skis. Your skis. Delivered. Looking to get your business off to a fast start in the new year . Its go time switch to comcast business and get fast internet on the nations largest gigspeed network. Plus, complete reliability with 4g lte backup. And, cloudbased security to help protect the devices on your network. Greenlight your business in 2020 with fast internet and voice for 64. 90 per month. Switch now and get a 100 prepaid card when you add comcast business securityedge. Call today. Comcast business. Beyond fast. Apple crossed the 300 mark the First Time Ever this week, hitting a fresh alltime high, closing at a new record. Whats next for the stock. Guys, good morning tom, this is sort of rare air for apple in terms of valuation, right . I mean, it is well over 20 in the pe territory is this a place where weve got to look for earnings to grow into that throughout 2020 or is this a premium that you think investors will continue to give because of wearables and services. Great question, jon i would agree with the earning intuit the story last year is apple was able to perform amazingly well, despite a mature smart phone market and weak iphone versus the rest of the portfolio. With 2020, with the emergence of 5g, this could be a multi year cycle, depending on the state of build out on a global basis. Theres opportunity for apple to grow into that valuation on the strength of iphones and 5g this year and next. So do you agree, is this a show me story or a love me story . I agree with the sense that multiple is definitely uncharted territory. The multiple has expanded by four turns since they launched iphone 11 in september thats a credit to them executing more crisply on the 11 than we would have thought i think the next question becomes whats the next leg for the story, and yes, i think most people assume 5g is it, and the multiple has expanded because theres a bit of a clear path into the 5g cycle. I do differ a little, im not as optimistic that 5g will be an enormous catalyst for unit sales. We did not see a dramatic increase in unit sales during the 3 g to 4g migration. I would say there are similar dynamics in play, 5g phones ar more expensive than 4g equivalent, it is not sure who is assuming the burden for added cost tom, all of the virtues you can recite on apple, long term durability of franchises, pushing to services, position of its ecosystem were almost equally true a year ago, perhaps there was less clarity, but the stock traded 142 a year ago today, and most of that was also true i wonder where we are in the revaluation, massive perception shift in terms of your clients, how much they feel they need to own, how confident they are in the long term picture that theyre durable cash flows were all on alert for the moment when people are overexcited about apple as it happened in 2012, where it created a top in the stock, but not a perpetual top in stock some great points, mike the way i think about it is the story in 2019 was apples ability to show investors that they can diversify their revenue stream away from smart phones, away from iphone you look at that and efforts in financial services, both on the payment front and apple pay, credit card front with apple card, starting to see signs on health care and other areas. I think to the extent they showed us last year that theyre able to grow that business which i believe grew in the high teens next to iphone, to the extent you can layer on, rebound iphone sales, that could result in further up side in shares from here jeffrey, what would it take to change stance on this stock, given that youre neutral, price target is 225, what do you see as i guess up side risk to your rating well, up side risk to the rating, that wasnt a question i was expecting, morgan. I will put it this way, i think apple has done a number of things much better than we would have expected starting 2019, and we talked about the iphone 11 bit a moment ago i guess i would say the Services Growth trajectory is plus or minus what we expected the wearables business is much stronger than we thought, partly on the watch and partly on the air pod, mostly on the air pod primarily. So i think apple has in fact made a number of steps forward in 2019 that we were not looking for at the beginning of the year i am not certain theyll be able to recreate that success in 2020 thats why we have been on the sidelines, look to remain so for the year all right risky call as im sure you feel at this level. Tom, finally, wearables or 5g, whats the stock going to respond to this year, i mean, because 5g, were not going to know whether thats a big winner are you 5g, given the potential to change connectivity, change use cases for mobile devices i agree it is a late 2020 story, but i think 5g can push the stock farther forward. Well see thanks thats where i disagree thank you very much. Up next, the implications for defense stocks is a new conflict in the middle east develops todays biggest movers after the break. There are some big ones. Stay with us tom my mom always told me actions speak louder than words. She was a school teacher. My dad joined the navy and helped prosecute the nazis in nuremberg. Their values are why i walked away from my business, took the giving pledge to give my money to good causes, and why i spent the last ten years fighting corporate insiders who put profits over people. Im tom steyer, and i approve this message. Because, right now, America Needs more than words. We need action. Welcome back to squawk alley. Tesla releasing q4 delivery numbers this morning phil lebeau is live in chicago with details for us. Morgan, these numbers are better than many expected. Most expected 104, 105,000 for Fourth Quarter you look at tesla deliveries, the bulk were model three and more of model 3 than expected. Total is 112,000 for the full year of 2019, tesla did meet its minimum guidance of 360,000 vehicles delivered the total coming in at 367,000 vehicles delivered in 2019 well get the 2020 guidance when the Company Reports earnings in the next four to five weeks. In terms of how much impact china played in 2019, very little but they have opened the plant, built about a thousand vehicles, what they call saleable vehicles public deliveries, already delivered some to tesla employees there, but public deliveries start in china next week as you look at shares of tesla, the stock getting a bit of a move higher today on news that it did exceed expectations but really, whats pushed the stock higher, mike, has been the expectation that china along with the model y and margin potential, ability to grow margins with model y, thats pushing the stock higher in addition to analysts pushing up their price targets. No doubt, phil. This one moves on the next big thing, thats china now. We will watch. Thank you. European markets are set to close. Dom chu has a breakdown of the action all right, mike, we have european stocks slipping from record high levels on the back of the u. S. Air strike killing irans top military commander. You can see more red than green. The stock 600 is closing off lows of the session after down as much as a percent earlier in the day. European Energy Companies are very much in focus today like american counterparts. Check out british petroleum, royal dutch shell, all up 1 to 2 there different story for European Airlines oil rallies weighing on shares of those Companies Easy jet down 4 expected to pose worst day of trading since june for lufthansa. Putting the moves in context, the price of brent crude, global bench mark trading 60, below the peak of 75 bucks a barrel back in april. Well watch that oil trade through the course of the day and reaction from european leaders. France president macron is urging iran to refrain from provocation in talks with the russian president putin. Back to you. Thank you, dom. Time for a news update sue herera has it at hq. Indeed i do thank you, jon heres whats happening at this hour hezbollah officials gathered at the Iranian Embassy in beirut to offer condolences following a u. S. Strike that killed irans top military general Qassem Soleimani led the expedition ari forces in the middle east. Hamas spokesman said the crime reflects the american recklessness in the region and violation of state sovereignty. Elsewhere, one of the largest evacuations in australias history is under way, ahead of hot weather and strong winds, forecast to worsen the wildfires across the country. More than 200 fires are burning, warnings of extreme danger to come saturday prompted mass evacuations. And a much coveted christmas present. Take a look at that, lands a georgia boy in the hospital after he accidentally swallowed an air pod you can see that xray shows the device inside the sevenyearold doctors assure his mom it will be fine after the device makes its way through. Seven years old with an air pod. Might be a little too young. Thats the news update this hour back downtown to you guys. Morgan were glad he will make recovery from that sue herera thank you. Oil surging and stocks following, following the u. S. Strike that killed irans top military commander in baghdad. Look at major averages, off lows of the session, still well into the red. Worst day for major averages in a month, dow down 239, s p 500 down seventenths of a . Back after a quick break you leave it to me. Ill get your taxes in an ok place. What . Just as soon as my audits over, this gets my undivided attention. You take a lot of trips to the caymans, phil . Pretty great, right . Oh phils legally dead. Fell off a boat. Going by denis now. Celery. Long story. What do we got here. Oh. Not going to want to see this. I dont think this is going to work. Just ok is not ok. At t has americas best network, now with our best plans, at our best prices, starting at 35 a line for 4 lines. New from at t Oil Prices Surging after a u. S. Strike killed a top iranian commander overnight. Questions over potential retaliation putting pressure on the global oil supply, perceptions of it. Seema mody has more. Hi, mike. The Supreme Court commander vowing to head back, saying harsh retaliation is waiting the rise in oil prices we are seeing this hour reflects concern among investors that irans response to u. S. Air strike could possibly disrupt transportation or production of oil through the strait of hormuz, managing 20 of global supply, would be a particular challenge for dozens of countries that import middle eastern crude in large quantities analysts point to india, turkey, china. Another way experts say iran could retaliate is taking aim at iraq, fifth largest producer of oil. Iran has been building presence on the ground over the past few weeks. Analysts say oil prices could run up to 80 if the conflict spreads to oil fields of southern iraq or if iranian harassment of commercial shipping intensifies either way, most say iraq will quickly become a battleground as tensions rise. Steven cook says the confrontation could result in options that go beyond energy, attacks in syria, hezbollah strikes in israel, all of which could increase risk of instability across the middle east thats probably why we see safe haven trade, japanese yen and gold Prices Higher at this hour. Back to you. A lot to consider thank you. For more, bring in paul sanke who joins us on the phone, and scott nations, cnbc contributor in chicago how do we put the move in crude oil into the longer term context . Obviously adding back geopolitical risk premium into the price, but is it going to be sustainable . As you know, iraq is producing a lot of oil, and you know exactly where that goes is going to be a key point. Iraq is fifth Biggest Oil Producer in the world right now, and you know, i think that significant unrest which is obviously potential is going to be a major issue, and additionally as you know, iran and iraq combine to be essentially the fourth biggest producer in the world, so you have u. S. , russia, saudi, and then if you think about the shia, youve got a massive producer here with a major geopolitical scott, this comes at a time when crude oil was already kind of bumping up against the top end of its range how do you see the trading dynamics now obviously you have the supply demand picture which has mostly been about ample supply, then you have the trading dynamics. The trading dynamic is what is interesting, why is that . Because crude oil has come back since news got out the high for the fed contract was about 64 even we spent a fair amount of time at 63. 40, which was up 3. 6 , but thats also the high we saw in september after the drone attack against aramco once they saw we werent spending time above 63. 40, it came back. As far as the dynamic, i dont think anybody should be hurt why . Even at this level of 63, were in the middle of the 52 week range. If you broaden out a bit, were in the middle of the larger two year range so add the fact that russia has plenty of additional capacity, russia has been chafing at the limits by opec plus, they want to produce and sell more crude oil and more distillates saudis have additional capacity theyre not using, thats good for oil prices, keeps volatility low, and remember, aramco got back online by end of november from middle of september strike. Theres plenty of supply i would be surprised if we saw extraordinary volatility well see plenty of volatility, but no reason to think it will be a shock paul, lets talk stocks a minute heaven forbid you see escalation in terms of tensions in terms of this conflict, maybe you see some Energy Infrastructure embroiled in that. Which are the companies, integrated oil majors with the most exposure to the region, could be effected most well, oxy, exxon, the different between 50 and 60 is enormous for cash flow we want to own these oils going into 2020. You want to own the oils across the board interesting, the sector is down slightly, a lot of refiners in there are not well positioned for this move, exploration and Production Companies are up. At this point would you bake in price levels to your expectations i absolutely love the players here, eog, pxd, faang, these are really Good Companies now. You know, this is just a reminder we want to own u. S. Oil. And thats it basically. Scott, we had sasad on earlier and said he didnt think u. S. Interests in the area were harmed or threatened much. Do you think the price of oil in near to medium term will eventually reflect that or is that one mans opinion we have to see what happens in the next week as far as crude oil prices, ill point out that saudi, aramco was attacked september 14th. Our market opened the end of the weekend september 16th by end of september, crude oil prices had given back the gain, back where they were when it comes to economic point of view, i dont think our interests have been substantially harmed geo politically, we have to see. As far as crude oil prices and supply, what it means for consumers of crude oil, i dont think the geo economic issue, i dont think it is a big geo economic issue for the United States scott, we can certainly hope for that scott and paul, thank you very much thanks. And when we come back, geopolitical risk rattling Broader Markets in todays session, but whats the verdict for tech we break it down with two of the streets top strategists next. Stay with us legendary terrain in telluride, the unparalleled landscape of park city, or the famed peaks of whistler, youve faced the hassle of lugging your gear through the airport. With ship skis, youre just a few clicks away from having your skis, snowboard and luggage shipped from your doorstep to your destination. With unrivaled pricing, real time tracking ship skis delivers, hassle free. Ship ahead and go catch those first tracks on fresh snow. Ship skis. Your skis. Delivered. The nasdaq is still above 9,000 as todays stock selloff continues. Frank holland has more on todays big movers. The nasdaq off a fresh record high on first trading day of 2020, falling more than a half percent. In the red on the iraq strike news today, tesla, biggest gainer, up around 4 , after beating delivery estimates benefitting from concerns about higher fuel prices, elon mus has repeatedly said cheap oil is bad if youre an electric car maker. Energy names are moving higher, xcel and exelon moving higher, along with Charter Communications and jd. Com. All the faang names in the red amazon down more than a percent, facing negative headlines, it allegedly threatens to fire Climate Change activist. Airlines are hardesthit on fuel concerns american falling more than 3 . The company warned about impact of fuel costs on margins Ceo Doug Parker says oil is the second largest expense low cost provider allegiant, jetblue and united down with fuel cost concerns frank, thank you. Does todays market drop offer some buying opportunities in tech . Joining us with the best picks for 2020, maybe names to stay away from, steve milanvich and gene munster steve, you put out a report talking about Investor Survey and some of your own calls you dont think investors should look for deals with pinterest, trip adviser, grub hub, slack, why not . Tech may be due for a correction Love Technology longer term, things have gotten a bit frothy. You had mostly pe expansion driving 42 increase in tech stocks the last 12 months. Were at a point the economy is continuing to be weak, more ism numbers out today were fairly poor tech earnings are down year over year, thats normal. Whats not normal, pe is up 21 times. It hasnt corrected the way you see. As a result, we would be careful, from strategy perspective, underweight semis, hardware, overweight services and internet we put out a list of 30 longs and shorts, it is momentum based. Has semi names, more concerned about internet and legacy names. We would be careful coming into the new year if trying to be strategic, how do you separate the weak from that this year . Go back to undeniable truth jon, you talked about big trends for the next decade. If you anchor the investments in what are undenial truths, i think it frees you up not to be as concerned about where some of the Current Trading ranges are those truths, four of them, wearables, 5g, electrification of vehicles, and autonomy. I think if you would agree those trends are a function of time before it has a significant larger impact on our lives, the two easiest plays are apple and tesla. Very different stories, different cultures between the businesses, but i think despite moves in both stocks, i think theres still significant up side to those. I would also agree with steve some Smaller Companies and some companies that have what would be more competitive environment not rooted in undeniable truth, for example, netflix, streaming to me is not undeniable truth, social media is not undeniable truth. Those are stories that i would be more concerned about. Gene, back to tesla, the stock is trading below 450 a share. Another high today we have delivery numbers as well how much higher can it go . So it is an 81 billion market cap today, and the reason i hesitate to answer the question is you dont have hard gap earnings and eps to root yourself into. The exercise is really about what should a Transformative Company be valued at i think it is higher than 80 billion. For example, netflix thats overvalued, netflix is currently 145 billion i think something thats having as profound an impact as electrification autonomy which tesla is doing should be at base case of 158 billion company kind of putting that together, you can build a case for a 900 stock here and i think it will take, i want to be clear, this is a good day for tesla, it is not the day not where they have escape velocity, you can market as Successful Company forever they still have to get model y out, elon needs to behave, need to get more production from china, germany, still moving parts. What i think about up side to the market cap of tesla, over the next three quarters will be a telling piece, if they deliver on that, you could see measurable movement higher on the stock. A lot of good news out of them lately though steve, i wonder, you talked about this report and screen that you put for stocks based on momentum does momentum mean Something Different coming into a year like this when you have such dramatic moves higher in 2019 . Just because something has been moving higher, shouldnt that mean Something Different in 2020 it could. We like to say in tech Momentum Matters 80 of the time, valuation only matters when youre at an extreme i think we could argue were at an extreme having lived through 2008 and 2000, seeing the total market cap, 150 of gdp, amd 30 times earnings, apple which is a fantastic company, i was looking and apple 2020 consensus number is lower than a year ago, yet the stock doubled. Were getting into turf where it is not just about momentum we still have Central Banks printing money short term, it helps them create investment and we want to be in tech over time to be sure, momentum might mean Something Different this year. Yeah. I think of momentum, sometimes i think about wiley coyote thank you. Still to come, Airlines Getting slammed as Oil Prices Surge and geopolitical risks rise delta, southwest, united falling, taking the average down 1. 2 in trading. More squawk alley still ahd. St wh ayitusea so what are you working on . Im searching for info on options trading, and look, it feels like im just wasting time. Wasted time is wasted opportunity. Exactly. Thats why Td Ameritrade designed a firstofitskind, personalized education center. See, you just oh, this is easy. Yeah, and thats oh, just what i need. Courses on options trading, webcasts, tutorials. Yeah. Their awardwinning content is tailored to fit your investing goals and interests. And it learns with you, so as you become smarter, so do its recommendations. So its like my streaming service. Well exactly. Well except now, youre binge learning. Oh, i like that. Thank you, i just came up with that. Youre funny. Learn fast with the Td Ameritrade education center. Call 8662967451 or visit tdameritrade. Com learn. Get started today, and for a limited time, get up to 800 when you open and fund an account. Thats 8662967451, or tdameritrade. Com learn. Welcome back to squawk alley. Defense stocks on the Broader Market soaring following a usair strike that killed a top Iranian Military commander overnight new 52week highs for Lockheed Martin also military dronemakers like aero environment some of the big movers today it Service Contractors like leidds and booz allen. As with crude and the price jump, can the gains be sustained. The implications for the u. S. Defense picture. Roman, great to see you today. Thanks, morgan. Happy new year happy new year. You put out a note on this strike and implications this morning. Break that down for us sure. Well, i mean, first off, i think its important to note that this is really unprecedented. Clearly, there was a level given at the president ial denlevel. This was not the number one recommendation on the things to do and i think the recent attacks and demonstrations near the u. S. Embassy sort of brought those shutters of benghazi and certainly nothing like that was going to happen on this president s watch or certainly his belief and as we look forward into the year you know, i know there is a lot of people giving their opinions and things like that i dont necessarily agree that the iranian response is going to be wide or something as drastic as closing the straits i think something targeted at u. S. Interests specifically. Perhaps getting the u. S. Ejected from iraq. Perhaps striking other u. S. Interests globally or we do have a president that has personal financial interest that are global and perhaps not as hard target protected as some of the other areas within the u. S. Or externally i dont believe that iranians would attack the u. S. Mainland because that would bring retaliatory strikes. Regionally its important to note that dod has been trying to essentially try to get out of the middle east or reposition or reposture towards asia and europe this certainly complicates that from a policy perspective. Planning perspective and also from a budgetary perspective we had been anticipating a decline in overseas Contingency Operation spending and i would imagine the Defense Department would submit a supplemental request for spending in fiscal 20 for enhanced middle east presence and that presence could stay for greater part of the year i dont think there is a timetable on the iranian response yeah, that budget piece of this is certainly key for some of the moves were seeing in the stocks, today, as well given the fact that were expecting the budget 2021 Defense Budget request from the administration as soon as next month and there had been this expectation that were going to see this perhaps even flatlining in terms of top line growth. Do you think this changes the narrative . I do. I do you know, certainly the budget is kind of baked in terms of this Fiscal Year Congress has appropriated the president sign those bills the trajectory at least short term is kind of baked in i think there will be an elevated request for fiscal 21 and that does bump out that sort of flattish to even down scenario a year or perhaps even two. And, really, its going to be, its going to be an interesting balance between how dod prepares for this sort of more challenging peer threat that is proposed by china and russia back to sort of the middle east Contingency Operation kind of threat we faced for the last 20 years. Foreign military sales have been growing the notifications for Foreign Military sales last year were up, i think, 38 year on year to almost 68 billion. A lot of that has helped fuel the contractors and actually a lot of that demand has come from the middle east, as well would you expect to tip to see more of these types of sales happening to our allies in the region, especially given the fact that these tensions are continuing to increase well, look, i mean, certainly there is steady demand from countries in the gcc saudi arabia has, of course, been in the penalty box and congress has not been willing to entertain additional sales to saudis certainly in the offensive category i really think the response here by the iranians will be a huge factor in what those countries do clearly the u. S. Stepping up and taking this action in such an overt way really does recalibrate a lot of the calculations in the region this morning and today. And, you know, really next move is for the iranians. Roman, what about the threat of cyberattacks. The role of cyberattacks as retaliation . Are those not visible enough or do you think thats on the table . No. Absolutely i think thats a great point and that is a way to go after specific u. S. Interests both military and commercial. Iran has demonstrated a capability and wherewith all to do that. Is that high profile enough . Obviously, taking a tier one personality off the street like this a guy who, you know, kind ofimpn than hacking a bank or opm or Something Like that. So, again, i think actually the iranians will be pretty measured and targeted in their response but i would imagine cyber will be a piece of that roman, great to get your thoughts thank you for joining us today squawk alley is back in less than three minutes. In the world, and tie it all together with a worldclass software experience. We ended up creating, as you all know, so much more. Peloton is truly a category of one and were just getting started. Now, lets do this. Together, we are going further than we ever thought possible. As we head towards noon major indices in the red and battle back for much of this hour in tech ill point out enterprise names are doing the worst. Hewlettpackard all down more than 2 . Finished at a high momentum point yesterday at an alltime high the market was looking for a little excuse to back off. A resilient response in giving back more than half of yesterdays gains. Defense stocks higher, bucking the trend, giving everything were seeing in terms a geopolitical context right now. With that, happy weekend. Lets get to scott and the half. All right, john, thanks so much im scott wapner front and center this hour, your money and the market stocks remain lower after a u. S. Air strike kills the commander in iran. The Investment Committee is here with me, joe, john, megan. Good to have you all with us joe, you get the first crack do what you guys do best and that is look at the markets. You take these kind of events into account and try to advise people on how to view it
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