Transcripts For CNBC Squawk On The Street 20240713

Road map begins with records, records and more records the dow within striking distance of 29k for the first time. Plus hiring did cool in december but unemployment is at a 50year low and job gains extended for a record ten straight years, so whats it going to mean for the growth in 2020 plus these damning documents newly revealed boeing messages reveal efforts to manipulate 737 max regulators todays december payrolls number means 2. 1 million jobs were added last year, a slowdown from about 2. 7 million in 2018, coming in at 2. 9 year on year threemonth average, jim, 184 now and we got some milder visions down to october and november one of the things thats missing that makes this difficult for me is boeing boeing is such a big part of the gdp and i dont know which part, manufacturing little changed in december, how much that is boeing because everything has to be asterisked i think thats how big boeing is for the economy. It doesnt reflect this. I mean, youve got the wrong areas getting more just dont Want Health Care to go the way it used to be. And construction good but little changed. Where is boeing . Well talk about boeing because i think its the biggest story out there. Its freezing a lot of manufacturing. Transportation down ten all of the gains were from services in this thats not what you want if youre this administration, in the sense youre trying to create manufacturing jobs, but i think that boeing explains that, manufacturing is actually doing well but you cant tell because geez, anyone who is part of the max and the max is just giant jobs program that makes profits for boeing is shut down, and you have transportation is no longer what it used to be, going up its a number that i think is mass the actual strength of the economy if boeing was able to go to work. All right, well ill pay more attention to it. Going into the print we should note it was not expected to have much impact on the fed commentary and really jobs have not been a worry for the market overall. Wages are actually sub par. If im j. Pal jay powell, what would happen if i hadnt changed direction. To put it in context were talking about a threemonth job growth average of 184,000. Six months 189,000 and for last year 176,000 a month not bad at all, ten years into an economic expansion. Nine years youre kidding with saying its not that bad . No, you cant say its not bad. Its good. Its just the slowest since 2011 yes but its slowing as you might anticipate. However, could you get a little more concerned about wage growth lack of it i think if you, exboeing it would be good and i like the air look, were starting to see december be good, all the housing numbers are very good. Weve got increasing prices in chemicals, in boxes, and then four price increases in steel. Its not enough to be worried about inflation, but it says that the industrial economy is good, but once again, morons and clowns no, clowns and monkee monkeeys suboptimal the tenyear is sitting where it was perfect, though perfect for stocks its not really having much of a reaction which is not atypical no but the tenyear note just sitting there 1. 85 if youre a guy who likes or a gal who likes stocks and you read this stuff, you say okay, listen, its still clear sailing. We can continue to buy apple, which is pretty amazing. Keep buying apple. Yep, were going to get to some of that Credit Suisse going to 275 looks conservative some of the people were doubters they want to trade it. Stock is 309. They were at 221. Yes theyre playing a little catchup. Theyre talking about dont think its going to fall 40 points they still want to see a greater still want to see a little bit better numbers before they really get constructive constructive, david. Were a week and a half into the year, facebook is up over 6 alphabet is up over 6 and apple is up over 5 . Those used to be years did you read mark zuckerberg, soul searching on his post what are you making faces . Remember we have a podcast does that face indicate that you are doubtful yes, that is correct. Call me dubious. Really . Yes you dont think hes trying no. No. No. 216 argues otherwise, right . Remember we were trying to crack 200 and theyre past that. Can i just say before we go on, im going to take my tie off and give it to david, because im mortified. This shirt you cant put a tie on with. This is a morning show, david. You cant wear a tie with this shirt its beautiful this is a morning show about money, its an important day and what are you, like playing golf . What is that like a vineyard vine shirt are you wearing a sport coat casual rich uncle a sport coat. Yeah, im wandering into the club very west coast youre speechless again. One day youre going to get accustomed to this. Did a clown talk to a monkey to cress yo to dress you not everyone has to wear a tie in washington. I wear it to sleep. I take it off. I wear cuff links when i sleep today is the American Flag very nice im going to try not to look at him so im not thrown off and focus im trying. Focusing more a little something, casual friday david, here say piece by bernstein, softbank still the berkshire hath away of tech. Reads like war and peace. Come back at 10 00 and get a tie. Jim references clowns and monkeys and brings us to boeing releasing hundreds of internal messages that detail employees essentially mocking the faa and others in the notes, workers boasted about bullying regulators into approving the max without requiring pilots to undergo training, concerns raised about the plane and a message from 2017, one employee said this airplane is designed by clowns who are supervised by monkeys. Boeing says the messages are unacceptable and dont represent the company we are and need to be others say would you put your family on a max . I wouldnt i still havent been forgiven by god for the coverup i did last year, we think thats referencing this regulation. I think that could be as bad as it gets with boeing and maybe defazio, who is angry at them, representative from oregon, where steve prefontaiupofontains from a lot of their fate is in his hands. I will point out they have said the pilots should use simulators and it was is imlators they say, theres obvious ly people were making comments that indicated the culture got it wrong the culture was rotten can you switch culture on a dime Dennis Muilenberg was less, was didnt necessarily favor everyone having to do the simulation it looks like the simulator was right. Theres a number of Different Things that if you had told me before this crisis began, i would have been very surprised at, and that weve learned since then number one was the lack of the faas actual Regulatory Authority here and the fact that they were selfcertifying essentially so much of this, they seemed to have a lack of any respect for their regulator. Number two was this push at the company to continue to try to save money at any cost, even at the cost potentially of safety despite the fact that theyre in this duopoly its clear their shareholders are willing to look to out years no matter what, because you know that the orders are going to come jim, why they felt this internal need to push, push, push, to avoid simulator time, anywhere they saw it . All right, you want heres in some ways you could argue their Shareholder Base was more than anybody elses weve learned. I dont get it if you had a pilot flown 3,000 hours, that person didnt want to be on a simulator. But other people who had flown 300 hours and needed the simulator and boeing is saying listen, everyone should be on it im sure that annoys some pilots but boeing has to do that. I think what was disturbing to a lot of us, we thought boeings culture had been one of the best turns out it wasnt and they have to make it the best how quickly can you do it . Do you have to have someone from outside . Greg smith has taken actions that are so different from what Dennis Muilenberg favored, in just a very brief period of time calhoun starts monday the 13th. All the messages by the way have already been disclosed to congress it was known. Theyve also said people at work, blowing off steam. Right and yeah, okay, we all know we should not be putting things in writing in the sense that people do, but no, but theyre talking about the culture being not great and a lot of us felt that it was the pristine that it was maybe, to use a phrase that unfortunately is ill advised but it was like the new england patriots, ill advised because theyre not in, didnt make it i thought it was belichick and the patriots, probably the best there is and we discover that theyre not and they want to be, and i think its hard to get our arms around that they werent, and now we know that they werent and how quickly can you change things . I know, thats what the shock is you would have thought safety first. You sat here for how many years talking about an incredible culture. I feel like a clown and a monkey, defending everything i was defending them more than they were. Many people assumed the faa had a much greater role in sort of making decisions or at least being involved with them, than it actually is is there anything they could do that would make it so youd not be worried about flying, even though theyve done a lot to make it better . I dont typically two ary about flying so im probably not the person to ask. Really. Yes, im still one of those who thinks if you have a bigger chance of something happening on the ride to the airport. I think thats true the American Public needs to have all of these things happen. The question is how quickly can we forget. We have to have certification around and the pilots saying i dont really need this but ill take the simulation and then we have to, dont want anyone who is i want to know how many hours a pilot has flown or is there a copilot who is 300. This tehran crash sounds horrific, the way its beginning to get pieced together, but for boeings sake, for the sake of the shares, specifically, its important that that is separated from the 737 it wouldnt surprise me if boeings stock went up people who have been buying boeing say they knew this, its six months away or five months away and you just have to go buy the stock. The stock has tremendous support. I do think that calhoun, if it comes in, comes in with a very good series of this is not the old boeing which he already has in terms of opening up lines of communication in a different way than his predecessor with the faa, with the customers of the company. There was tremendous stonewalling going on at that company, and call it as it is. Dennis was not only a communicat communicator, when he went in front of congress and he did not talk about this, did not say im going to take a pay cut, i dont want to get paid, im going to change, have everyone simulate that was maybe the single worst moment for boeing was his testimony. He was so tone deaf. He lost his job that quote in the journal his optimism was his strength and his optimism was his downfall that sums a lot of this up we talk about an ego system, david. Yes Dennis Muilenberg was i think he was in favor of cutting corners at boeing. Boeing yep and i think that that did not represent boeing i think thats important i do not think the messages represent boeing i do not think the ceo represented boeing and i know you could say ceo always represents i dont think he did okay. Okay . Meaning like okay . Yeah, okay. Okay. Put a tie on. Were going to get kramers mad dash countdown to the opening bell plenty of corporate news, theres grubhub, lilly, you got news on home builders, more retail tape bombs and well set up banks for next week when we come back. At fidelity, online u. S. Stocks and etfs are commissionfree. And when you open a new brokerage account, your cash is automatically invested at a great rate. Thats why fidelity leads the industry in value while our competition continues to talk. Talk, talk all right, time for a mad dash, as we end the week of trading here at the New York Stock Exchange well get started with trading, of course. Its about 13 minutes from now amazon is a feature today . I think theres a fabulous report out by bernstein that rates everything, all the internet and i thought that one stood out, because it has not performed as well as the rest of faang is amazon. There are headwinds here that oneday shopping by the other guys, by big box retailers, thinking of watch, is a problem. David, get this. Shopify could be a problem and basically talking about the revenue forecast is below for them consensus by 2022 there are a lot of people worried about amazon and feel microsoft with azure, google with thomas curry and the lebron james of the cloud we are cloud, aws you have competition from very Good Companies when it comes to retail and cloud is no longer owned by them jedi, by the way, that contract that went to microsoft was very important. Dont forget, they are contesting that. Yes amazon is saying that it was unfairly awarded as a result of peoples belief that the president favored somebody other than amazon well, i dont agree with it but im pointing out its new. Amazon is choosing to dominate today there is a story in the journal about the growing ad business. Its still called other on the income statement but the fire, the amazon fire stick and the ability there to direct advertisers there. You have it, right . I dont, no you dont have a tie . You dont have a firestick no. I dont know what to do with pu smarttvs, you dont need them the shoes, what are they hushpuppies . What are you like a hush puppy these are nice. Talking about boeing and amazon, you got hush puppies i like these. Who is talking about those shoes . Rockport, i used to be a spokesperson who wears black shoes with an olive suit. First its brioni suit, worth a lot more than you, i mean your whatever outfit. I dont want to get too lets not get too far away. Fine, i have to wear a tie on fridays, great what are you like, got todays man, whatever it is . Pri pricewaterhouse. Enough, enough. Reminder you can always watch us live oh, god, you dont want to. On the cnbc app you want to be on xsirius xm or else you cant take us seriously. I love the new myww program, because its tailored to you . Take the personal assessment and get matched with a proven weight loss plan. Find out which customized plan can make losing weight easier for you myww join today with the ww triple play apps except work. Rywhere. Why is that . Is it because people love filling out forms . Maybe they like checking with their supervisor to see how much Vacation Time they have. Or sending corporate their expense reports. Ill let you in on a little secret. They dont. By empowering employees to manage their own tasks, paycom frees you to focus on the business of business. To learn more, visit paycom. Com jobs number comes in just shy of estimates but not doing much to derail the hunt for dow 29k. Well look for that when the opening bell rings in just under eight minutes. Our Retirement Plan with voya gives us confidence. So we can spend a bit today, knowing were prepared for tomorrow. Wow, do you think you overdid it maybe . Overdid what . Well planned, well invested, well protected. Voya. Be confident to and through retirement. Okay, guys, the bus is down, but weve got a spot follow coach kevin. Lets go, guys. Sorry again that were fully booked. This is the best we could do on such short notice. This is amazing. Thank you so much. announcer treating others like wed like to be treated has always been our guiding principle. When i lost my sight, my biggest fear was losing my independence. Mmm. Good. So ive spent my life developing technology to help the visually impaired. We are so good. We built a guide that uses ibm watson. To help the blind. It is already working in cities like tokyo. My dream is to help millions more people like me. The opening bell is brought to you by nuveen, a leader in income, alternatives and responsible investing. Youre watching cnbcs squawk on the street, live from the Financial Capital of the world, the opening bell in just under five minutes. Busy day, jobs number comes in at 145k. They were looking for something closer to 160. Wages 29 is the first year on year print without a handle since september of 2018. I wonder if this gives the president a chance to say, listen, chief, to the fed chief, you got to cut it, because of wage growth is not what we think it shoulden. Its totally within reason to do this you want a fed cut. Yes i think yes, because the cuts have worked, and i look at the areas that arent doing well exboeing and they could all use further boost if you go read most of the housing numbers, of the companies that report housing, they need still lower rates to get things moving but i think that the president would do it, and i think that he can justify it, lets put it that way. I think these numbers are still fine but i know how much he wants to have any ammo to say they have to you would admit its unlikely in an election year, when theyre on a timeout. Established were in a timeout and to reverse that at this point would be confusing i agree with you. I think the president is, has got a chance to be able to say to the American People, look, there will be more jobs created if i didnt have a fed chief who doesnt Pay Attention to how little youre making versus what i think you should make. Its a very compelling argument. He has not tweeted at him for a little bit, i dont believe he has. After this summer hes a little jammed. Extraordinarily busy attacking mr. Powell hes jammed, got some things on his mind there yes but youre also talking about, i mean we have ahadhad qe since october. They cant get out of qe. Choosing to expand, perhaps at its highest level ever if this continues by the spring rates are, how many cuts did we have a bunch, but yeah. Three last year look, i think that they put in the last, like the december rate increase was so ill advised, and i do think look, i think the president looks at wage growth and thinks that he doesnt think wow its not that inflationary so stock markets okay i think he thinks why dont they cut and the stock market will go up anyway. I think that the china deal is going to be a moment to be able to grow but i think this is not a grow number. This is a number which says to the president , why cant we cut one more time. He said in ohio the signing might happen on a wednesday, might happen shortly thereafter. We dont know schedule wise. I think its going to be signed i generally think it will be signed wednesday people looking at the large china purchases from gra brazil in recent weeks people wondering are they going to double u. S. Buys taking deliveries from elsewhere . I recommended tyson last night because i think they have to buy our pork but thats pie yo security. We have it i think thats a flash point is china going to put its best foot forward switching soy to brazil, no china bought a lot of pork last month. Theyre out of pork after they used a frozen. Pork is a staple people have to eat, even the communist party in russia recognized the people have to eat, if you want to keep them happy. The collective organization of farming you mean skarvtarving of ukre didnt work out particularly well no, look, im being very straightforward here they need to come in with more than just a signing the chinese. They have to come in with a buy and i dont know if theyre going to, but i think its going to be sign what was that all about what was that year and a half and all the tariffs about thats it the u. S. Keeps a lot of tariffs and now they have the chinese coming in. I need to see a big push were looking to that are next week when that delegation arrives monday the opening bell s p 500 at the cnbc real time exchange, Wyndham Destinations and rci at the big board. [ bell ringing ] first year of operations at the nasdaq Caseys General stores and convenience retailer in 16 states a couple retail touches. They have to push newly more, the runway option. They got to really go and put that thing out there, because the wrong way stalled because they have so much demand newly is a good option the Flagship Store is not that good the fashion wasnt right some people got the fashion wrong. Who got things right walmart, amazon, target, costco, home depot anybody in the mall, by the way, if youre in a c mall or b mall, youre just forgotten. People are trying to compile jcpenney, urban, kohls, even six flags and the warning about lower attendance and china not getting that china thing. That was going to be the hope, the upside cedar fair doesnt have that problem, the simple fund theyre doing better you dont buy the consumer under pressure, weak data points no, i dont think consume is under pressure i think the consumer doesnt like whatever mall is not that great including a strip mall i want to reiterate kohls is embarrassing their press releases read as if it was dynamite. David, ill take you to kohls do you have to, kohls . Just to get you a tie you and i talked about it for years, were not ever going shopping go online and shop and buy clothes. Kohls is having trouble particularly with they dont have traffic apparel they dont have traffic, womens apparel they got wrong the amazon deal was supposed to be a savior. I dont want to dwell too much on kohls. When macys has an in line number you would expect kohls would be a little bit better you would theyre not theyre the outlier. Theyre what i would call bad. Bad bad, okay theyre bad and thats a way to put it. Im trying to be sutmebtle theyre bad. They could be irrelevant like jcpenney has gotten irrelevant sears. Sears, too. Jcpenney shel shelf its former Self Department stores are out of style. I bet nordstrom is still good, its changing its stripes and has a lot of other businesses. Chips are working nvidia gets added to citis catalyst watch list and baml to 300, street high can i say sometimes these are embarrassing the cfo just gave, at nvidia gave a talk gaming and data centers are better the analysts talking about how gaming and data center is better hello, colette crass told us this sam researched lrcx, bam recommended lrcx, second best performing stock and they say its time to buy lam you know, bah, bah, bah. Poor little lam. You were a lam fan. When tim archer came n he was the disciple of rick hill, uncle rick as we call him at home. Of course did you see Norton Lifelock no. Special dividends rick hill in three months created more value in symantec than was created in 20 years splitting the company up. Remember hes the chairman of marbel and starboards there and people dont like it, dont realize it sold wifi to nxp. People like nxp much lower margin than this incredible stuff theyve gotten 5g. Asxw people finally realizing, liam griffin is finally getting his due, in massachusetts, if he was in the valley, the stock would be up another ten points grubhub is a name thats in the news this week its been an odd road for the company. Its down about 7 this morning, shares of grubhub, this after you had a wall street journal story a couple of days ago that indicated the company was exploring alternatives, including potentially putting itself or had been up for sale, stock soared on that then it took over 36 hours for them to sort of get into the market, the fact that, and this is a statement that came to us as well, that there is unequivocunequi unequifically no process in place to sell the company and currently no plans to do so. This is unbelievable. Its unbelievable. They indicate given whats going on in the sector, that theyre very excited about their year and longterm opportunities and confident in their organic Growth Strategy and think theyre going to be strategic opportunities to acquire share now you brought up in a tweet monday this idea of uber eats and grubhub together absolutely. I thought that would be an interesting reverse mars trust, you spin out uber eats, rmt, tax free, put a value on it. Combine it with grubhub. Thats whats going to happen uber seems committed to eats. First theyre backing away a little bit, that theyre not going to buy, theyre not going to stay in things that are not that proper, its part of the reason why they like uber and one reason why i like uber david you should get a banking fee right now. Right now theyre saying yeah, i told you so, even faber says it. Faber will bless this. Im not kidding. A lot of investors think both stocks would rise on that. It would. A, im not saying theres any chance of it, it simply is pure thoughts thats all it is. Pure thoughts is worth about half of what the bargers do. Easy to say rmt. Uber eats and grubhub together make sense to you . Absolutely. Why because the competition in that business is horrendous. As someone who owns a restaurant and a bar, let me tell you, theyll give this stuff away, in terms of our gross margin. Pricing needs to be rationalized you can only do that by having a slaphappy oligopoly. Youd rather not see walmart or kroger some other grocers google apparently has something they may be working on as well. Another entrant into this area id be careful if i were google theyre under scrutiny what is the fitbit deal, when is it going to close . I dont know. What do you think thats about . Antitrust is fairly thank you stringent. Thank you so i think google has to be careful. They do, but im not talking about them buying something, im talking about them organically starting something i think it would be good. Ever since Elizabeth Warren peaked, senator warren the scrutiny of breaking these guys up went away and mayor pete raises money and starts getting some momentum. Wow youre going to be talking about bio pharma and drug stocks next week oh, geez. On a day where lilly buys a chronic skin condition pharma. Hyperhydrosis, the sweating problem, something that botox. Allergen is merging with abv. It sounds like another great move by lilly. Lillys stock is up 135. There is your lineup for next week. Holy cow . I better do so much work kristin peck thats bio pharma, bio security thats the story shes related to bob peck, frequent guest closery related. Yes and dr. Cafaroio, cell jen. Emma walmsley is interested in the future of immunotherapy and offloading the typical Consumer Products you use, david, if you use everything and larry merleau. Theyre not like walgreens at all. Theranos is what i call wal yee walgreens. I would back off from that. Thats rough thats not really fear they may not exactly how they want their business to go right, choosing a different path. Ill take that one back july bow chill takes that one back the walgreens quarter was horrendous when you read the Conference Calls like oh, hi, samantha. You look more like a heather. Ver get that . Its nice to finally meet you in person. Youre pete nocchio . Oh, the pic . That was actually a professional headshot. Im sure thats it, yeah. I, uh, i think ive lost a few pounds recently too. Im actually doing a juice cleanse. Wait you dont. glass breaking gasp ah oh. with geico, the savings keep on going. Just like this sequel. 15 minutes could save you 15 or more on car insurance. I can. The two words whispered at the start of every race. Every new job. And attempt to parallel park. electrical current buzzing each new draft of every novel. typing clicks the finishing touch on every masterpiece. Apologize for the brief technical interruption, we lost some mics but back now and better than ever before. Kudlow is on the tape saying the translation of the china deal has been authenticated and everything is completely in place. I think it will be a big day. Today theres kind of enough is enough feel to some of these stocks the facebook pushes are remarkable and not working the alphabet pushes are remarkable, not working. Maybe people are saying you know what its friday and ive had enough. I cant just keep buying these things, which would be welcome we didnt mention ge, david, something about ge and boeing. Ge not making the numbers. Right toussa. Im not doctrine toussa has been negative for too long hes now an asterisk . No, not an asts reerisk. Something i wanted to Pay Attention to xerox no. It was a joke music live nation it was interesting with the doj and ticketmaster and Consent Decree and seem to be still strongarming arenas. Im talking about nielsen numbers on streaming, the Music Industry has become more and more profitable again after years when it was a horrible business remember of course it was a period of time when it was people were stealing remember the first steve jobs, the first ads rip it, and remember, how the Music Industry he rolled them. All the people who were using those sharing sites, steal music. That ended with streaming and the numbers from nielsen are interesting. Total album equivalent consumption up 15 total album sales digitally down, im sorry, total album sales down 20 , on demand streaming up 29. 3 thats amazing. People dont know that they thought the only real money made was in content. You know whats up, which is funn funny. Lps. Down 15 . Vinyl up 14 thank you. When we come back from our commercial break jbl, harmon has people like their old records. Harmon has a new term table p david, im going to get you a new im going to get i have a turntable. I bought it a few years ago and i like listening to my old records on it. Also new vinyl on it theres more amplitude and the sound. To take this to the stock market, lets not forget at the end of the year, acquired University Music group owned by vivendi, they have the ability to go up in 2021 huge company ten cent buying in a. Warner music is private, sony music, part of sony but these are good times to a certain extent for the Music Industry once again vivendi stock prices moved up. There was expectations that they sell more of universal music group. Some thought perhaps even the whole thing but they did do the tencent deal to lock in an overall price. Just wanted to get on the record on music i think its spotify is of course the leader in streaming. We can look at that, the direct listing of some time back now has fared to o ive listbeen to lunch a bunf times with lars ulrich from metalli metallica. I like metallica he was saying for years the only money that could be made was in concert, and of course he does a lot of concerts. This is a change, david. Im glad you brought this up, because lars has told me the industrys dead. The industrys not dead. No. Lars is a Visionary People stopped stealing, subscribing and streaming is by far the oft listened to albums everybodys streaming. Somebody made a list last night of the artists on tour this year, elton, ozzy, chicago, Lynard Skynard, aerosmith, ea e eagles, styx i covered the plane crash where Lynard Skynard died and back its Science Fiction the latest is representations of the artists, digital. The hologram. Thats jenson wong you can create mozart if you want to. The queen concert they had Freddy Mercury really . Yes, and it was better than the actual concert black mirror. Obviously a little choppy action here at the open but were up 7 points on the dow et lets get to bob pisani reporter well be living in the Digital Future epgs representations of it. The dow faltered a little bit and come back. The risk on trade is still out there. Emerging markets still strong, china. These have been strong throughout 2020 so far, semis on the upside banks, yields have faltered in 2020 were not going up anymore on the yields and oil is below 60 again. These two trades the banks and energy showing signs of aging getting a little long in the tooth. The question is, weve moved up a lot. Is this peak bullishness or not . Its not clear we have narrow Equity Leadership weve been talking about this whole week ill show you examples, that makes me nervous 18. 5 times forward earnings on the s p multiple, the highest level in 20 years, maybe not the peak but near 20year highs thats an issue for the markets overall. Just take a look here, i know were not at 29,000, but theres a very narrow group of stocks moving the markets forward apple of the last thousand points, apple is 308 182 for United Health and goldman. Put it together here, and youve got an enormous number, twothirds of the gains in the dow in the last thousand points is three stocks. You throw in mcdonalds and visa, four other ones and seven stocks are essentially all 1,000 points of the game thats narrow leadership overall and even worse in the s p 500. Remember were up 1. 2 , so far this year. Well, look at whats going on with some of the other stocks in the s p 500. Amazon, apple for example is up 5 so far this year. Put up the next one, apple, microsoft is up 3 google is up 6 amazon is up 3 . Facebook is up 6 . The top five stocks in the s p 500 are killing it theyre killing it theyre way outperforming the overall s p and this is why the s p is getting pushed up so much you want to be careful this is what narrow leadership looks like when the market gets frothy at the top. What is next what happens now weve got the jobs report. Maybe a little bit disappointing on the terms of the wage growth, but overall it was roughly in line the 90 confidence level on the jobs report is 110,000, plus or minus. You could drive a truck through these estimates. This is roughly an inline report good enough for the markets. The question is, is the decent information really enough to move the market forward with this level of frothiness january 15th the president said well have the trade deal, the 29th the fed meeting its going to be difficult to move forward and Spark Investment enthusiasm with this basically good news, at this point, because the market is so expensive right now. Thats the issue what will it get my opinion is its going to be the earnings revisions, positive or negative thats going to be the market mover in the next several weeks. David, back to you bob, thank you. Bob pisani, over there at our pod. Guys, you know what was 20 years ago today . Any guesses . I think it was time warner aol. Youre not going to surprise us on this one yeah, i know. It was in fact, the announcement of aols acquisition of time warner 20 years ago of course it was the largest acquisition of alltime and stunning in so many ways in terms of an upstart of buying the assets of an old style media company, the merging of the two. We kind of know how it ended up but this was the day in question, when we had jerry levine, the ceo of time warner and steve case, the ceo of aol join us on air do you have film . 80 of the cash flow come from your company and your shareholders will only own 45 why were you willing to sign off on the deal . Clearly if you looked at last friday the market cap of aol was twice the size of time warner. I have made a judgment, which i believe to be correct, that going forward, the time warner shareholders will be much better off owning 45 of aoltime warner than 100 of time warner. It was poor judgment on the part of mr. Levine it was only three years later we day bebuted our first documentaa cnbc i called it the big heist the reporting we had done on the end of the bigtest deal of alltime, only three years old later. It was billed as the deal of the century. Now it may be remembered as the steal of the century and the only thing still left standing tall may be this new fixture of the new york city skyline. Good evening, im david faber. Welcome to the big heist. Its been three years since America Online stunned the Business World by announcing it was buying time warner in that short time, aol time warner has lost nearly 200 billion of itsaoltime warner has lost nearly 200 billion of its shareholders money. When this building is completed, few believe the letters above the sign will read aol theyre not even there anymore time warner is part of at t. Aol is gone. Its a part of verizon and theyve all moved to the hudson yards thats by far not the biggest thing either you were spot on. Its interesting to remember that was the peak of that particular year. It was. It was in fact, it was only a couple of months later that the nasdaq hit its thenalltime high after that incredible deal amazing to think it is 20 years ago. Levin didnt have a tie on then. And case did i actually made i remember making note of that. It was like, Silicon Valley guy got the tie on buyer monsanto one of the worst of all time. This has still got to go at the top. In terms of the destruction of older value. Nextel and oh sprint . Yeah. Sprint and nextel. It was a horrible deal horrible you could do a book or special on that. On all the bad deals i mean, people would love it i know. But youre right the latest entrant is definitely buyer monsanto terrible, terrible deal in terms of destruction of value. But this one was this one stands alone because it was the largest and it was a shock but you dont see that level of hubris anymore. There just isnt people dont do like i think this is unblooebl. They dont take the kind of risks that jerry levin took here maybe in part because of what happened because of youtube. We can play it and say, look what a chump, what a monkey that clown is he actually he justified that market value that we all know now was one that should not have been. Yeah. Im looking at a list of other candidates kmart sears news corps myspace t nothing of that scale. The home depot property got that sears up to 170 never figured out a way to get anything really done in terms of molding their cultures. Three years later, it was over they were moving on. Parsons was taking over, starting to get rid of things. And bewkes accelerated it. He is one great american. Yes, he is. By the way, check out our podcast. Jim reminds you every day we have one listen to the opening bill wherever you listen to podcasts. Dow up 19. 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. Lets get to jim. They say so big its good upgrade to buy this is maybe to recognize you got to make one more big move. I think its bottoming i think bed bath is bottoming. So youre starting to get l brands bed bath, its so bad its good. Its going to be a next theme for the next three months. So bad its good upgrades of macys. So bad its good. Now, kohls is so bad, its bad. So im trying to rationalize that but this is an important piece because l brands has dropped 50 points and its horrendous. Are you interested at all in 29k, what that means 30 points away here. I think the president is going to be able to crow about it because he loves the dow. I think we feel that the dow is old fashioned. But i know it still makes the headlines. We used to be on the front page of like the new york times. Were never going to be on the front page they just dont talk about it. The stock market is a we . Yeah. 99 we were as a financial network. Now we dont even wear ties its unbelievable how the mighty have fallen. I have big guests tonight. Im sure you do going to outline the jpmorgan ive got Matt Gallagher of parsley. And what ever happened to autonomous driving what happened . We got to talk about that. Its still a problem. Jim, well see you tonight ahead of a big week next week. Wow resting up for that were going to keep an eye on the march to 29k 25 points away back in a nu mite we made usaa insurance for members like martin. An air force veteran made of doing whats right, not whats easy. So when a hailstorm hit, usaa reached out before he could even inspect the damage. Thats how you do it right. Usaa insurance is made just the way martins family needs it with hasslefree claims, he got paid before his neighbor even got started. Because doing right by our members, thats whats right. Usaa. What youre made of, were made for. Usaa welcome back to squawk on the street. Rick santelli with the last data points of a big week our wholesale inventories read, down 0. 1 . A little light we were looking for unchanged. But heres an interesting number on the trade sales side, it is up 1. 5 . This is multiples of the up 0. 1 to 0. 2 we were expecting. Weve been down as low as 182. Of course well continue to wrap up a big week. Good friday morning, everybody. Welcome back to squawk on the street. The countdown to 2019 on the dow remains in place as were fewer than 20 points away. Were going to watch that closely. Very close. Our road map today starts with more records for wall street but stocks losing gains after hitting those new highs. Well get exclusive insights from the white house on todays numbers. And boeings documents, newly revealed messages show efforts to manipulate the regulators for the 737 max. Well start with the markets and todays jobs numbers Steve Liesman joins us hes got some of the highlights from the number which is now an hour and a half away from having been reported. Roughly in line, closes the books on 2019 payroll shows a modest cooling here are the numbers. Up 145,000 the skimt was 160. Wages up just 0. 1 could have been linked to the manufacturing numbers. Unemployment rate unchanged 3. 5 so is the Participation Rate at 63. 2 . Were going to close the books on 2019. Well show you 2. 4 million jobs created. Up from 2017 look at whos hiring and who is not. Thats the wrong screen right there, but we can tell you that essentially you had there it is retail up 41,000 that was a bounceback from a couple of months of decline. Construction did well. But manufacturing did not. And when you lose manufacturing jobs, that could also bring down the overall wage number. Transportation and wear housing, thats where some of the retail jobs are you got to take that retail number together with the transportation because were delivering a lot of packages, not selling them at the counter store there. Heres some of the early commentary weve had since the 8 30 number came in. Hfe writes these data remain supportive of an on hold fed assistance though we would have to see. At jeffreiejeffries, the impact phase one trade deal starts to go after signed next week. That could take time snapback from the strong november number. You have to wait to see if job growth levels go out ahead the big question is what is trend here north of 200,000 numbers weve been doing or as many economists think its at the 150,000 number that theyve been waiting to be trend but hasnt happened yet. Also some interesting commentary about how the timing of seasonal Holiday Hiring has migrated a bit, right . Yeah. It used to be december but i think it was lou who wrote a piece yesterday that said not since 199 have we had a net positive unadjusted number for december retailers and other folks who hire for the Christmas Season is doing that hire in october and november where it comes off or december is soft has now become common place which is not what most people think your people are in place by november or theyre not going to be hired i guess is the general rule now steve, thanks for that. Steve liesman back at hq as we are about five points away from 29k. Well keep you honest on that. The jobs market for last year ended in some disappointment with payroll and wage growth missing expectations lets check in this morning for Charles Schwab and omar aguilar and diane swak happy friday, good to talk to you. Good to be here happy friday. The wage growth is getting a lot of attention how concerning is it it is certainly worrisome although it is important to note wages were excelling at this point last year. Because of that acceleration we saw late in 2018 and early 2019. Thats something that the fed will take with a bit of a grain of salt, but it is something that theyre going to be watching that closes because the economy that delivers jobs but doesnt deliver wage gains is not what they want. They want some heat in wage gains. And were still seeing wage gains not pick up. Dianna, as youre talking, dow 29,000 for the very first time coming after dow 28,000 back in november very quick turn of another thousandpoint milestone and well just use this as another flag post in the in the ongoing market rally yeah. Its pretty unbelievable the run weve had here and really technology continues to lead the way with a lot of these momentum names nams like apple, microsoft, facebook continuing to gain some steam here technology is the Strongest Group of the s p sectors as we hit dow 29,000 well, percentagewise as we all know, it doesnt take much to go up thousands from here its different than when we were at 5,000 or 6,000. Certainly we a met many milestones the s p up year to date led by the largest companies. Apple facebook and alphabet. Dow components that have performed best since that last thousandpoint sign post apple, up 16plus. Goldman, unh, nike, microsoft, mcdonalds the laggards would include nams like boeing, depot, and Walgreens Boots Alliance interesting to see what has contributed to this latest milestone as we said dow 29k. Omar mentions a nice start o the year Stock Traders almanac would say you get the s p up within the first five sessions. Tends to say good things about the year in total. Whats your view right now well, i think we just have a continuation of the rally last year and a lot of you know, the strength that we have seen in the economy seems to be well portrayed in the market. If you compare the beginning of this year when we had a year ago, most of the risks we we had a year ago are potential hire rates. Trade that was not there a significant amount of deceleration we almost see the opposite as we begin this year. So where we see at least the beginning of a phase one trade deal with china, we see that the economy continues to be well supported by, you know, the labor market as well as by the very strong consumer and we dont necessarily see that earnings actually are going to continue to go down in fact, expectations out of earnings will peak up in 2020. So when you look at the picture, its not very surprising that we see a continuation of that i do think what is surprising is that we see the level of volatility not going hire despite all the geopolitical headlines we have had lately omar, as we look at some of the data, were seeing an awful lot of inflows into taxable bond funds including the taxable bond etf. Weve spoken a bit about a broader equity when youre looking at the taxable bond funds, something youre interested in i think in eneral, investors always look at taxes and particularly as we go through the season with so much in Capital Gains that have been gone through the last decade the opportunity to have investments where you can actually have a better more efficient and i would actually even say that that includes some etfs that are efficient in terms of taxes, you know, that scenario that we always suggest for our clients to look at so being efficient on taxes, low tracking errors. Thats always an area that should be beneficial some of the commentary out of the fed officials was interesting. Cap win saying that hes thinking about the increase in the Balance Sheet and the degree to which that creates imbalances and risk assets. A welcoming inflation. Run above target i mean, what does asset inflation and the lack of increasing wage growth in jobs mean at the fed right now . This is a really good this is at the heart of their debate which is are they stoking additional bubbles by the pivot they did last year taking back three quarters of what they took in terms of rate hikes in 2018 and 2019 also important is the delineation between the stock Market Indices and the broader economy. A hundred economies for profits back in the 1970s. Now only 30 Major Companies of the most profitable account for 30 . So the stock market is even less reflective of the overall economy. So there is a bias in the broader stock Market Indices that its not reflecting in the broader economy as much as it has in the past. I think thats really important. But clearly thats where the tension is do we risk stoking stock market bubbles . As they cut rates. And almost all of the fed stimulus show up in things like asset prices we have seen also the spillover going forward. Thats a sector that had been dormant. Unfortunately not enough in activity to alleviate the pressure there the one place appreciation has been picking up more generally one last point, omar. To dianes point about how much the market reflects the economy, how does that explain how much of it explains the lack of small caps to keep pace with the large cap equities well, you know, i think its a really great point because of the construction of the indices, you tend to have a high level in the megacaps that contribute a significant portion. The overall economy. What i think the levels of the market, have a good reflection on where we are economically and the fact, you know, megacaps and Large Cap Companies also reflect the place we are in the cycle. Its natural for the cycle outperforming. I think in a way, that is very consistent even though at 30 return like what we had last year is clearly not a reflection of how, you know, growth of the economy. Obviously the small caps reflect a very good opportunity. Especially when you have a credit market that is actually pretty accommodating so i think that gap between large gap will potentially be as we continue to go in through the last cycle thats a key point. Thanks so much for that on an important day. Well, clowns and monkeys. Phil lebeau is taking a look at the latest problems from boeing as the 737 max concerns continue what do we mean by that . These documents that were released by boeing last night, more than a hundred pages worth of emails from people at boeing between 2013 and 2018. Really the criticism boeing was going to do anything it could to have Simulator Training for people who bought the max. Heres one from a technical pilot. I want to stress the importance of holding firm that there will not be any training required to transition from the older model of the 737 to max. Beau willing not allow that to happen well go facetoface with any regulator who tries to make that a requirement. And then there is this memo or message. This airplane is designed by clowns who are in turn supervised by monkeys. Thats getting passed around a lot on social media today. We should point out the faa makes a point of saying there are no new safety risks exposed because of these documents in fact, people at the faa have had these documents since september. All of the maxim later questions brought up in these documents, all of those are now functioning effectively. As you look at shares of boeing, the company is issuing a Statement Last night saying, look what you see in these emails and documents, the language involved is not consistent with the values of boeing remember, ceo or the new Ceo Dave Calhoun starts on monday. He has been clear. Even though he hasnt taken over the job, hes been clear about sending a message within the company that he wants to change the culture at boeing. This is one way the company saying flush out all the bad news because we have to turn the page thats going to be a primary focus of dave calhouns. This seems like a bit more cultural black eye for boeing. Embarrassing to have some of these come out with this language but it doesnt really change things from a safety standpoint or where they are in that part of this story. No. And thats why we heard from the faa within 45 minutes of the document coming out saying nothing new in terms of coming out. Boeing felt these pressures internally wherever they were coming from to cut costs, to continue to push in terms of getting things to market more quickly in order to perhaps save money, obviously. But despite the fact theyre in this duopoly where their shareholders didnt seem to care that much if we at least look at the way the stock has performed since we learned about all of these problems but look at it in the dollars and cents term if you go back to 2011 and 2012 when you had airbus with the a3 and boeing was losing customers. They said, look. Weve got to come up with a solution the 727 is becoming too old. If we dont require Simulator Training, thats a Million Dollars per plane that is potentially saved for the customers. Thats a nice incentive to tell customers and helps you rack up orders which ultimately as the order book grew was a big part of when boeing stook took off between 2016 and 2019. Of course i guess we all believe safety came first and to the point youre making, its unclear that that really was the case ipg safety came first, but i also think from reading these documents and others, its pretty clear within the culture that there are many who felt like do we need this element of training i think thats clear as well look, thats not excusing whats happened with the max and mcas i think youre looking at there was an element that felt, come on do we really need new Simulator Training what if we tweak things and make things work so we say to the customers, theyve thrown the 737, theyre good. Theyre good to go phil, thank you you bet bob pisani watched us cross 2k a few moments ago a thousand points isnt much anymore. Now a thousand point move is 3 . We like to point out the simple mathematics of this. David, you do, because you know how to do math people seem astonished by this what bothers me is how we got to the 29k points thats usually science of market peaks at least shortterm. So apple three stocks were twothirds of the gain 650 points was apple, United Health and Goldman Sachs its not the percentage gains that matter. Its point gains because its a dow is a price weighted index if you add in other stocks, you throw in mcdonalds, johnson johnson. Thats the other 350 points of the thousand points. There you get seven stocks are the thousand points gained in the dow. And its even worse in the s p 500. Were up 1. 3 on the year and the big five, look at this, are up three times better than the overall s p. When you have that kind of concentrated leadership, the good news is you can pull indexes forward. The bad news, it gets kind of narrow we should have this problem. Weve got a neutral fed. Weve got decent jobs growth not as fabulous as we thought, but decent job growth. The trade truce. And some kinds of hopes for a bottoming in the Global Economy. And were worrying about narrow leadership but thats what its down to and the question is the president s going to be next week with the deal signing the trade deal were going to have the fed meeting in two weeks theyre going to be neutral. All this is good news. And yet it may not be enough to move the market forward. Because its already sort of assumed that this is going to happen now what are we going to do . How are we going to keep moving the market up . I was going to say earnings was around the corner. Is it going to be a sell on the news if we get good Earnings Results . Are they going to have to move these names higher what worries me is earnings typically come down, the estimates as we get into the go into the quarter. Thats typical it doesnt come down when you have a 12 , 13 rally in the Fourth Quarter in anticipation that everythings going to be better because we got rid of all these concerns like the fed being aggressive and trade wars. All that went away that was supposed to improve earnings overall i think youre right it is earnings that are going to make or break the rally in the next several weeks apple, facebook, and alphabet all up over 6. 5 for the year right now. And the largest three amongst the five largest market Cap Companies in the country are moving the s p i mean, they are sort of the engine here. Those are enormous moves for, what a week into the year thats right. Now as we got a situation where were at 18. 5 times forward earnings you know, its important to point out that generally the s p stays in a forward multiple. Earnings just between 14 and 17 is a typical number. When you get up 18. 5, thats the higher in the range in the last 20 years that was a terrific thing you showed this morning we the aol time warner thing. It was great to see the pictures of you back then any of us back then. Thank you, bob. We were at 26 before forward multiple and at that moment in 99, 26, 27 but we never saw those numbers before a couple years ago we were up around 18, 1 but its unusual to soo this kind of multiple stocks are very pricey they have to justify at this point with prices up, earnings down thats how you get these kinds of high multiples. We better have really good, really continually good Economic Growth we better have good job growth to justify that multiple its hard to do that at this point. So like i said, we should have this problem this is a good situation were in a very, very good situation for the markets. But i have a hard time figuring out how were going to keep advancing it and i think the numbers are going to come down on earnings in the next few weeks. Theres going to be some disappointments. We already saw that fed exwas youre not saying bubble yet. No. Thats the problem you get on the Everybody Knows that we can knock on the door of high multiples and frothiness and stay there for awhile but the numbers have to keep staying up there the economic numbers have to stay up there. Weve got to get a bottoming in the Global Economy the Global Manufacturing numbers have to not just bottom but kind of come up above 50 on all those numbers. Weve got to its not enough to say the fed is neutral and that moves them forward. We need a little bit more than that at this point so theres a lot sort of riding on it. Expectations are very, very high to keep things we cleared the deck on trade disputes and those three fed cuts are going to kick in which they do with a delay and here we are but heres the numbers its already in the market thats the question right now. So again, ultimately, theres got to be a relationship between earnings and the multiple. At some point. You cant stretch the multiple too far. It just pulls back historically. Unless were going into unchartered territory weve never seen before. We saw that in 199 we saw what happened so at some point, weve got to get better, better numbers here. I dont know if 5 Earnings Growth which is sort of where the consensus is is moving around is going to be sufficient if its not earnings, maybe fed liquidity is enough. Talk about unchartered territory. Yes it is not an accident on october 11th, they announced this and the market began rising at that point. I think that was a major factor in the rally of the Fourth Quarter. Buying is separate from the equity market ts you just think its crowding out. I think the perception that liquidity matters is absolutely critical, number one and number two, the perception that it illustrates going low for a long time is the other critical factor. Its not its hard to quantify, but when you go out and talk to hedge fund guys, they say what are we supposed to do, bob . If you think the 10year treasury is going to be on either side of 2 for the next two, three, four years and thats going to be it, its still not crazy to stay in the stock market its not a stupid idea and i kind of agree with that idea its hard. Bob, the Energy Market obviously has been in focus after all of the middle east tensions but largely the markets sort of washed it away, washed away those worries. And energy is one sector that remains lower in an up market. Can anything really trigger growth in some of these . How you change the supply demand equation we have supply among the highest its ever been the United States is energy selfsufficient. We have demand thats a little bit lower. We forget how Energy Efficient cars are compared to the last 20 years. Thats hard to change that equation that is all good news. I would gladly give up energy gains in the stock market for the Energy Independence that we have in the United States today. I would give that up any time. And im perfectly happy with that unfortunately for exxonmobil but look at what weve gained. Energy independence in the United States. I think its a tremendous achievement for us and its saved us from a lot of crises if this iranian thing would have happened 15, 20 years ago, oil would have gone to 90 immediately. Thats generally when recession happens when oil goes close to triple digits its hard to argue were in a good position. And what the United States has been doing in the last ten years has revolutionized and maybe changed the nature of recessions recessions are associated with higher oil prices. That is very common. You cant say theyre always correlated to each other but High Energy Prices are often shown to go along with high recessions mike santoli joins us at the table. What do you think of this at the world leading to growth valuation increases. Energy independence is more secure were immune from flash bombs all around the world and thats why were here. Yeah, theres a sturdier corporate sector for all those reasons. I dont even know if its just whats been happening for years and we know its happening for years. But the market is laser focused on hunting for longlasting cash flows. Right . It sound boring. I go to the Corporate Bond market, okay its a 3 to 4 yield world even in lower grade Investment Grade bonds. You price the rest of the world according to that and stocks make sense here. Not that theyre cheap not that theyre going to give you wonderful returns for ten years from here for this price, but they make sense. I think thats what apple is apple is at a Free Cash Flow yield that is the same s p 500 it is that 20 times free cash poi flow apple has almost doubled. Its up at 17. 5 this is just apple the largest market cap in the country. 17. 5 since the middle of november when we were 28,000 on the dow and its a new high for essentially the decade, right . Its a new high for the postinitial mania after the first iphone but i think the question you have to ask is, does it make sense that apple is going to basically have the same valuation as the broad eer s p 500 . Kind of what it is we sat there for a long time talking about how it was not undervalued necessarily but multiples. So are we in a different range right now . Thats the question we have to ask. Or sustainably in a different range. Is apple now because of perception of how durable its profitability is, can it sustain . Thats the whole deal. Whats interesting is along the way, the Cash Holdings are almost irrelevant right now. Relative to the market cap whereas before it was like a huge buffer for the story, the buyback. Sure theyre still going to buyback the the stock. But does it still make sense to be buying much stock back . Thats the question that gets asked i think across megacap tech and growth and nasdaq i dont know if its the overall market tells you that. Sentiment has to calm down people are loving the optimism thats why were not at crazy levels the last time we were in this zone was late 2017 to 2018 what did it mean market had a sharp correction and you were sideways for six months so apples at 23 times forward earnings somewhere around there thats the very high end of its last range in the last 20 years. It was not long ago it was at 12 or 13 as if theyre going, yeah. Theyre going to become a service company, perhaps deserving of a higher multiple maybe itll get to 15 or 16. And you know the game, right . The game now is its at 30 but alphabet has a much higher no, im saying thats the game you talk about all these analysts coming into the new year saying now its the Decision Point do i raise the target, do i decide the valuation can expand beyond what i said before . And were seeing both a lot of both, yeah although im not seeing Warren Buffett take any profits. We thought he might have been late here. Largest single investment at berkshire. And its also the answer to a lot of dry thats kept him exposed. In a big way i agree. Thats been the story. The agate price target very few firms have had multiple expansions like apple dow to 29,000 in a short amount of time only 3. 5 gain from 28 to 29 let me ask you about what kaplan said yesterday. Quote, i think the growth in the Balance Sheet is having some impact on the Financial Markets and risk assets. So how big of a factor is this if it basically wiped away a potential dislocation in the shortterm funding market and gave confidence this was going to be a high liquidity market with low growth, then i think thats the effect. But i have a very, very hard time and nobody really draws the direct line. Okay all these reserves are out of the Banking System they stay there. What else is happening are banks ramping up what theyre lending to hedge funds its unclear and so theres a lot of links in this story liquidity is the magic pixie dust but its also in your head. Exactly look what happened when china lowered the reserve rate in theory that frees up money for the banks to lend out to people but can we directly show thats happening immediately . No, the Chinese Market rallied on that. High liquidity, low rates that the market will keep things going. And thats why were here. I mean, but your point about corporate spreads, middle of last year you were talking about triples. Its hard to envision that right now. Krae. And it certainly can change quickly. Whats interesting is issuance is of new corporate debt is healthy and its been a new years rush. But it might not even be up. So its kind of forcing everybody. Its huge inflows into bond funds in the past week by retail people want it and the spreads are narrow. High yield etf, twoyear high today. Money flowing in spreads very narrow here 5. 5 on a High Yield Fund . There is still some reticence when you look at Corporate Executives and their confidence in the market. So whats it going to take so sort of bring some of that money to the table to invest in a real way that says, look, growth is here to stay we want to be part of it i wonder about that i think its going to be hard to wipe away this sort of late cycle psychology i think everybody got themselves convinced were in the latter part of the cycle. I also think that a lot of the surveys were looking at for ceo and cfo confidence, were still pretrade deal prethis last ramp in the s p 500. I also think you have to have the market reward. And in fact, Goldman Sachs was pointing out that has been more current. So thats probably the way you have to reinforce that theres a lot to discuss. Well work on that today as we got dow 29k settling back. Dominic choo has a closer look at some of todays action. We want to frame those discussions you were having with regard to what was happening at these levels at 29,000 in the dow industrials. Because as you guys pointed out, it was midnovember, november 15th, 2019, that was the first time we closed above the 28,000 mark since then, apple a key move to this market cap higher of that thousand points or thereabouts that were moving in terms of 29,000, apple shares have been the biggest driver by far out of all the dow stocks there. Because that move has contributed over 300some points so almost a third of that move was apple alone. Goldman sachs, however, getting a nice healthy boost up about 10 , 11 in that span now. That happened about 150some points to the dow. Then youve got United Health group. That 9 gain has propelled that crew to add about 7 0 points to. If you take a look at the laggards, the ones that have been the biggest weights on there, oil and gas has been a part of that story chevron has been down in that span since november 15 dow down 5 . Now, home depot down 5 and boeing down 10 . We know boeing is the biggest weight in the dow. That 10 or so drop in boeing has shifted up 250 points from the dow. The biggest weight in terms of getting that move to the upside down home depot is now down so as we talk about whats going to power the it higher well soo if these are as well back over to you yeah. Thank you, dom dom chu. Lets bring in jan now, chief economist. In the month of december, the dow as weve been pointing out, statistically relevant lets go back to the jobs number this morning anything in there concerning you . No. I dont think there was anything concerning it was definitely a big weaker than consensus weaker than we had expected. A couple of major upside surprises. If you look at the average three to six months, still in the 150 to 200 range thats what you need to stabilize the Unemployment Rate. I think still a very solid labor market you saw that in the household serve as well. Unemployment rate came down. Its broader underemployment measure. On trend in the labor market hours down a bit. Average earnings down. No concerns there in terms of what that makes it making sure in the rate there is, however, if you look at the other measures of wages that have some wait on. A different picture. Look for example at the cost index at the household wage measure. We summarize all of these different indicators in an overall measure of the wage trend and thats continued to be in a how do you think the fed is interpreting this number largely still in line. I dont think its going to have any Significant Impact on how the fed thinks about the economy. I think theyre pretty comfortable that the growth momentum seems to have stabilized in High Frequency indicators after a deceleration in 2019 so were probably in a 2 plus range that was consistent with the forecast but at the same time, inflation is 1. 6 if you look look at the index. So theyre very far away from really doing anything. And expect to do nothing probably through 2019. And i think through 2020 so i think thats what well hear in the meeting in a couple weeks. Next week were going to get a phase one signing. Kudlow today saez its been translated and everythings on track. Are you expecting an inflection in either confidence, capex, earnings what is going to come of this detaunt . Assuming everything basically happens the way we think, that there is a phase one agreement but its going to be difficult to reach a broader, more comprehensive deal then i would view that as, you know, effectively stabilization in the trade tensions. Which means that the negative impact on growth that we saw in 2019 as we went to a higher level of trade barriers, that that should abate gradually. Sort of a subtraction of negatives. The impact of growth should become less negative through 2020 and that i think is consistent with some acceleration and growth momentum which is what were expecting. By the way, in a few moments, were going to hear from mnuchin and pompeo we think theyre going to talk about iranian sanctions. Are you surprised that i mean, not that youre here to comment on markets specifically, but how much of these events around the world that used to rattle markets are now seemingly helpless in doing so shortterm effects for sure in the bond market you did see fairly meaningful moves in the shortterm. That said, if the escalation is on hold for the time being, then markets also put that relatively quickly into the Rearview Mirror whether thats ultimately going to be the right call or the wrong call, were going to have to see but it does tend to be a very shortterm mover and we had some fairly sizable moves. They dont necessarily persist. This administration has been focused on creating manufacturing jobs thats one area that has been weak for some time 12,000 fewer jobs in december. And over the last six months really no job creation there is that a bad sign or is that simply a reflection of the economy as it currently stands and will in the future . Well, it is a reflection of what we saw in 2019 which was a fairly sizable slowdown in growth as we went from 2018 where you have the positive impact of the tax cuts and you didnt have the trade war and you generally had still the easy financial conditions to a much tougher environment in late 2018, early 2019. And into the summer as far as the trade news was concerned so, you know, we did see a slowdown in gdp growth to some degree and in the higher frequency indicators, especially the manufacturing service, a greater degree so i think its a reflection of that my expectation would be that if manufacturing output growth gets a little bit better, you know, as we maybe see less of an impact from trade, maybe see a bit more positive impact from global improvement europe also looking a little bit better that the manufacturing numbers in the labor market might get a little bit better from here. I dont think that were going to have the same kind of acceleration that we had in 2016, 2017 also because were much further advanced in the labor market, theres less slack in the economy. Fewer people to hire but i do think things at the margin are going to get a little bit stronger jan, always appreciate your time thank you were getting some more news on boeing. Lets get over to phil lebeau. He has the latest for us whats the update . This has to do with the supplier of the fuselages for the 737 max. Spirit aerosystems spr has been moving lower. The Company Announcing it will be laying off 2800 workers has about 13,000 workers in the country. Those layoffs will begin on january 22nd keep in mind spirit is leveraged to the max probably more than any other company. Gets more than half of its revenue from production of 737 max fuselages. In a note to employees, remember theyve suspended production already. So this was expected that they would announce layoffs the ceo says reducie ining emplt is a necessary step given the uncertainty of when the production of the max will resume and the expected lower levels when it does resume he goes on to say dont be surprised if they have to take future actions when it comes to the labor force for spirit aerosystems. Again, the stock under pressure as the Company Announces it will begin laying off 2800 workers. They actually begin with those layoffs on january 22nd. Guys, back to you. Phil, thank you our phil lebeau on some of that. Heres a live picture from inside the White House Briefing room we are awaiting comments from the treasury secretary and the secretary of state in a few moments. As we do wait, lets head outside, get the administrations reaction to the jobs number today. Obviously the calendar for next weeks phase one signing mark shore joins us. Mark, good to have you back. Good morning good morning. Thanks for having me on. Well get to the jobs number in a second, but can you establish a calendar for next week on the signing . Is it going to be wednesday . And whats going to be in the fact sheet we have full expectation its going to be wednesday. Were making plans for that. And we think it will be a significant signing. I think that as you know and as youve commented on your show, in some cases its a detaunt which is positive for markets. But also theres pledges from china for significant commodity purchases in the United States and in addition some commitments theyve made to continue working on currency manipulation as well as transfer ownership. Which are probably behind the story on the commodity purchasing but perhaps even bigger stories and will be laying the foundation for a phase two deal as well. And speaking of that fass two deal, marc, the president of course mentioning that the timing could get pushed out until after the election is that what youre expecting as well for phase two courtney, i dont think we know i think were anxious to get started right away were not looking to delay it until after that i think the question is that obviously the election of the United States impacts a lot of peoples thinking. What we dont know, is china believing theyll get more favorable terms if it was a Different Administration but at the same time, we believe these are important changes that need to be made for the American People we believe that the tariffs that President Trump has put on china showed them the era of economic surrender is over. And we think it brings china to the table. So were hopeful it happens sooner, but we dont know. The naysayers still argue that chinas already complained about making Firm Commitments that runs afoul of wto rules that their own companies dont need it. And then they keep buying from the brazilians that creates doubts to whether they can double u. S. Buys. What do you make of that well, i think we saw actually the last couple of months, the last year significant additional purchases from china wuch i think was a good indication of their commitment to live up to agreements they made but the president s leverage hes applied has brought china to the table and i think weve seen decades of believing just because we allow china and the wto that they would make all these other concessions that would change the nature of their communist regime it hasnt happened its actually been the forcing putting tariffs on and bringing them to the table that the economic pressure has begun to change their ways. And we think again, its an important first step its significant but we think it also paves the way for the phase two deal marc, you know, mark to todays jobs number which wisconswas strong relative to the overall trend. Were still talking about an average of 176,000 jobs added each month last year but manufacturing remains weak when this trade war began, in part it was i thought to bring manufacturing jobs back to the United States. Is that something that you still believe could happen absolutely. I think that overall theres been significant increase in manufacturing jobs youre right its been weaker the last few months but what we hear from manufacturers, a lot of that has been tied to uncertainty about trade. Look at last year not only completing one of the trade deal, but to the usmca getting to the desk by the end of january. I think thats giving manufacturers a lot more assurances so we hear a lot of optimism coming out of manufacturers. I think youre right as to where the concerns were at the end of last year. But we feel theyre far more encouraged the overall number, look at the state of this. Its 3. 5 is the lowest Unemployment Rate since 1969 and weve been under 4 for 12 months its been decades since thats been the economic strengthening of the United States of america. Were excited about where it stands which is why its all the more confusing that wages are up 2. 9 our colleague said that creates some runway for the president to once again start jawboning jay powell to say its to let the economy run a little hotter. Is that going to happen . Well, we certainly think inflation is not a threat. 2. 9 , we had been at 3 . 2. is still significant when you consider the actual as your last guest said core cpi is at 1. 6 looking forward to the China Signing marc, our apologies lets go to the treasury secretary. We are announcing additional sanctions against the Iranian Regime as a result of the attack on u. S. And allied troops first the president is issuing an executive order authorizing the imposition of additional sanctions against any individual owning, operating, trading with, or assisting sectors of the iranian economy including construction, manufacturing, textiles, and mining let me be clear. These will be both primary and secondary sanctions. The eo also allows us to designate other sectors in the future as secretary. Pompeo and me think is appropriate. Second, we are announcing 17 specific sanctions against irans largest steel and iron manufacturers set three seychelles entities and products we will cut off billions of dollars of support to the Iranian Regime and continue our enforcement of other entities. Third, we are taking action against eight Senior Iranian officials who advance the regimes destabilizing activity and were involved in tuesdays Ballistic Missile strike secretary pompeo will comment more on this todays sanctions are part of our commitment to stop the Iranian Regimes global terrorist activities the president has been very clear. We will continue to apply economic sanctions until iran stops its terrorist activities and commit that it will never have Nuclear Weapons ill now turn it over to secretary pompeo thank you, steven good morning, everyone today President Trump is delivering on the pledge that he made the day after iran attacked American Forces in iraq. There will be a series of new sanctions. Secretary mnuchin just mentioned eight Senior Iranian officials that are responsible for the regimes violence both at home and abroad while striking at the heart of the islamic republics inner Security Apparatus these sanctions include the secretary of the supreme supremn the commander of the forces. Thats their regimes brute squad which killed 1,500 iranians simply demanding freed freedom. Our actions target other Senior Leaders close to the ayatollah they had destabilization campaigns across the world they have employed soldiers across the battlefields and trained militias in iraq, syria, and elsewhere in the arts of domestic repression. Today theyre accountable for murder and mayhem. The goal of our campaign is to deny the regime the resources to conduct its destructive Foreign Policy we want iran to simply behave like a normal nation we believe the sanctions we impose today further that strategic objective. Our campaign is composed of diplomatic, economic components that deprive the regime of billions in revenue theyve used to fuel death and destruction across the middle east and all across the world sadly, the Previous Administration had opened up Revenue Streams for iran but under our administration, oil revenues are down by 80 and iran cannot access roughly 90 of its foreign currency reserves not even two weeks ago, president rouhani of iran admitted our sanctions have cost iran over 200 billion in lost foreign income and investment. As long as irans outlaws ways continue, we will continue to impose sanctions finally, i want to reiterate President Trumps concerns for dual National Citizens detained inside iran. Iran knows these individuals have committed no crime and the charges against them will fake we will do all we can to get each of them returned home safely to their families with that, well take a few questions. Yes, maam the administration said this strike was based on an imminent threat but this morning you said we didnt know presis lly know when and where. Thats not the definition of imminent the president suggested there was an attacking plan against an embassy or several e mss can you clarify you had specific information about an imminent threat and anything to do with our embassies . We had specific information on an imminent threat, and those threats included attacks on u. S. Embassies. Period full stop. You said you detective know precisely when or where. Those are completely consistent thoughts. We dont know exactly which day it would have been executed but it was very clear, Qassem Soleimani was planning attacks against americans american e american facilities including american embassies, military bases, throughout the region. Yes, sir, john mr. Secretary, in the initial hours after the missile attacks on al asad, it was believered that iran may have taken steps to avoid u. S. Casualties but then the chairman of the joint chiefs came out, the secretary of defense came out, other officials came out to say these his l missiles were intended to kill americans. If that was the truth, does not that deserve a response . Somebody takes a hot at you and dont hit you simply because you duck theres no doubt in my judgment as i observed the iranian activity in the region that night, they had the full intention of killing u. S. Forces, whether that was our military folks or diplomatic folks in the region. Im confident that the response the president mass taken is appropriate. The president said we dont want war, we want iran to behave like a normal nation. We want to continue this campaign, the strategic effort to get iran to behave in a way that doesnt continue their 40year long effort to terrorize the world. Mr. Secretary, do you believe the iranians shot down the Ukrainian International Airways Plane . And if they shot that plane down, will there be consequences we do believe its likely that plane was shot down by an iranian missile. Were going to let the investigation play out before we make a final determination i was on the phone with president zelensky bfsh i came here and on the phone with my ka ukrainian count part well learn more about what happened to that aircraft. And when we get the results of that investigation, i am confident we and the world will take appropriate actions in response will you allow the ntsb to work with the iranians the treasury will issue waivers for anybody, americans or others, that can help facilitate the investigation you both joined us in this room back in september you were announcing initial sanctions and secretary mnuchin at that point said i think weve done more sanctions on iran than anybody and its absolutely working. Since then weve seen an escalation in violence from iran, shooting down the drone, attacking the embassy, contractor who was killed, u. S. Troops how are answers keeping the United States sbrers as bestae if we didnt have these sanctions in place, literally iran would have tens of billions of dollars they would be using that for terrorist activities throughout the region and enable them to do more bad things. And theres no question by cutting off the economics to the regime we are having an impact as the president has said, the fact that the Obama Administration turned over 150 billion to the regime, we think we wouldnt be in this situation had that not been the case may i just add, its important to keep in mind whats taking place in iran today this countrys never been in the place that it is today big challenging problems their budget, theyll fail by tens of billions of dollars. Theyve got real challenges figuring out how to make different decisions. Do you underwrite hezbollah, hamas, or allow your people to have the opportunity to live the life they want and grow your economy . Those are the difficult choices that the regime is facing. And you can see the protests, protests that we expect will continue, that will demand from the Iranian Regime they begin to treat the iranian people in the way they so richly deserve and this administration will continue to support those efforts as well. In the back thank you, mr. Secretary. You mentioned secondary sanctions here what is your message to our european allies who continue to do business with the iranians . And specifically, if you can, will this impact the mechanism set up by a number of European Countries to avoid u. S. Sanctions and continue to do business without using the u. S. Dollar i think those are both very important questions. Let me first comment on insects. I dont believe tlfhere have ben any transactions we are working on a swiss channel we have approved for humanitarian transactions. Well continue to allow those. Weve warned them and others that they will most likely be subject to secondary sanctions depending on how they use that so thats absolutely the case. As it relates to the europeans, both the secretary and i have spoken to our counterparts in europe several times over the last few days. Weve emphasized the impact and the issue of iran has announced they are no longer part of the jcpoa and weve had direct conversations with our counterparts about that. Secretary pompeo, what is your definition of imminent . This was going to happen and american lives were at risk, and we would have been culpably negligent as the chairman of the joint chiefs of staff said, culpably negligent had we not recommended he take this action against Qassem Soleimani america is safer as a result of that secretary pompeo, why go ahead. Were going to try to do one question for everybody so you can all get questions. I dont mean to cut you off. Go ahead six months argue, secretary pompeo, the president said that u. S. Intelligence agencies had been running amok. He spent most of the past three years hes been in office denigrating and attacking the Intelligence Community and disputing findings, where its on russia or north korea, or really any area that contradicts things that he has said. Why, then, should americans suddenly believe your assertions that you had good intelligence on this when the head of the executive branch has been casting asperingses on the Intelligence Community for most of his time in office . Look, i served as director for the first year and a half of this administration. I watched the president rely on the work that the Intelligence Community did for the entire time i served as the head of the Central Intelligence agency, watched him rely on the capable men and women who are delivering exquisite information to the executive branch, watch him have confidence in that we all challenge their work. We have to make sure we get it right. The Intelligence Community is not flawless we get it wrong. In this case, the Intelligence Community got it fundamentally right, even the reflections weve seen after the strike, demonstrating we were quite right. There was an imminent attack, active plotting, and we took an action we thought was likely to create less risk for the American People and were confident that we did that in the back thank you this question is for secretary pompeo reports that the iraqi Prime Minister has asked you to start negotiating the withdrawal of u. S. Top