A shortened session tomorrow and were going to watch this news, whatever it is, as it is halted, currently for news pending comes on the heels of front page story in the times today, which says a couple of different things, one, he was dressed down by the faa chief earlier in the year told not to ask for any favors and says the halt of production of the max in their words is one of most consequential decisions in the companys 103year history. We dont know what this news is, jim, probably wouldnt surprise many people if it involved mull muilenburgs tenure. His top priority has got to be getting along with charming and sharing and being transparent with the regulators. I would have thought that would be Crystal Clear the day of the first crash. How did it reach that juncture shocking one thing he says is dont ask for any favors was he expecting him to ask favors that is not a good situation to be in. Thats just one small way, part of the way, this crisis has been handled for the last year, which will be a Business School textbook study one thing that always struck me about this, it surprises management, the mantra i always heard was underpromise and overdeliver. And what has boeing and muilenburg done, they have done the opposite from the very beginning, overpromising and underdelivering, more times than i absolutely. Striking the comments by gary kelly, southwest ceo, who has been on our air, critical of the process here, talked about perhaps looking at airbus airplanes in the future, but says that the promises boeing made in the spring, going back to april, the return of the max was not a matter of months, but weeks and said that that overconfidence on the manufacturers part really created havoc within his airline and him going on the record is probably not a mistake no, it is not and as you said, we talked directly to mr. Kelly about his frustration at this point and you had as you again, carl, these stories both in the journal and the times sort of detailing the journal story very, very specific in all the different ins and outs of what has happened at boeing, you know, i think it is safe to assume that mr. Muilenburg will no longer be the ceo of this company. I guess ill keep that in the realm of speculation based on what i know at this point. I would say it is very much informed speculation, but lets wait and see what the news actually is, we will get it, my question would be certainly who would take a from muilenburg, will mr. Calhoun, who has been running the company, lack of a better term, certainly very much involved in the day to day at this point as the chairman of the board, will he just add that or are they going to have somebody else but i think it is safe to say that we can expect mr. Muilenburg will no longer be the ceo of the company. One thing that surprised me about this is not just that thats thetha there was a political failure. I heard him described as a technocrat, you can imagine he wouldnt be that savvy to the politics of this, the Public Relations part of it, but what about the engineering this is what baffled me. The old 737 flew for decades without any significant problems so they put this software thing on there, i guess it is supposed to be a safety feature, it causes two crashes they say no big deal, well fix the software why didnt we get a better understanding of what was this device to begin with, how did it change the old system, how valuable is it we never got any explanation of this and waving it off like it is a big deal, that is a huge engineering failure. The starliner botched mission to the iss, just landed in new mexico, from what they called a bulls islanding, do you think that was compounding the problems from muilenburg they have already let go of the head of the commercial aircraft division, david says calhoun is in there running things operationally as a chairman. Havent they made enough management moves or not . I cant speak to the space thing. It certainly is terrible optics. The timing is terrible but i wouldnt read too much into it. I dont know what the technical challenges were again. There was a lot of confidence expressed, overconfidence, people were expressing something really good and saying theyre skrut ncrutinizing this to make it goes well and it didnt thats embarrassing. It is not as big a part of the company. Im not enough of a technician to know how technically sophisticated these things are but could be a problem. It is a microstory from a news stand point in a way, very much a macro story because of the impact of the overall economy, 600 suppliers for the plane and the market itself, we know what a heavy price foot that boeing brings to the industry. The dow, price weighted index as well, something we point out a lot. No other company with the impact on the economy on the way boeing does, given the number of the number in terms of the exports and everything else. So there is no doubt, i mean,. 3 now in gdp, but were getting the news now, carl, my understanding is, so lets yeah, hes stepping down dont have any specifics beyond that im looking right now. I dont know that you do in terms of who is taking over. Thats been really one of the key questions, could you possibly look outside, will calhoun take over in the time being . What have you got . Calhoun will be named president and ceo. This is according to release out of boeing right now. Yeah. Board of directors named the current chairman, David Calhoun as ceo and president effective january 13th of next year. Will remain on the board and lawrence kellner, you see it by now. As anticipated, listen, we have been talking about mr. Muilenburg and what seemed to be the element impossibility of him staying at the company, some have wondered why hes been there already through this this long. At the same time, you sort of always wonder when the best time for a transition like this would occur. The idea of going outside many people said seemed to be something that would not necessarily be in the best interests of the Company Calhoun has been in there. Very much strong hand of late. And so not a surprise that he would be the one to step in at this point in terms of the companys ceo. One thing we dont really know is what muilenburg has been telling the board all along. If he was telling the board the same things he was telling the public, you can understand that at least initially they would have thought, well, obviously we should stay with him, this is such a big deal, well solve the problem. But i find somewhat surprising is it took so long for the credibility gaps to begin to appear between the board and him. There have been a lot of misstatements, overpromises, underdelivering. Almost over an entire year so doesnt surprise me that the board would have, you know, come to this conclusion again, i agree, it is surprising they didnt do it sooner we should make clear that muilenburg is out effective now. Immediately. Theyre not going to wait the cfo greg smith will serve as interim ceo during transition. We look between the lines on these news releases, but there is no well wishing of muilenburg in terms of quotations from calhoun. No, yeah. All theyre talking about is being pleased that mr. Calhoun agreed to lead boeing and that they look forward to working they look forward to working with him yeah, your point is well taken, carl, there is no usually there is that paragraph thanking somebody for their service and wishing them well, that does not that is not the case. So muilenburg is no longer the ceo of boeing. Mr. Calhoun will take over on the 13th not sure about that why they need three weeks there and mr. Smith will be the interim. I think another point that you made is that boeing sits at the center of a huge economic ecosystem. You can imagine the calls they have been getting from the suppliers, the fuselagemake, now sitting in wichita with a field for of undelivered and looking at 50 of their revenue going down the drain or commercial airlines who have been critical, loyal customers. And if i was any of those, i would be on the phone to the board with some pretty pointed comments it takes news like this to bring jim cramer to the phone on vacation jim, it is good to talk to you this morning along with your friend jim and david and me. What do you think of this . Lets start there. I think that there may have been one of those situations where it was impossible with all these different amenities as long as he was there he presided over what happened i dont think that someone has to be held accountable will be the top guy. Boeing is an honest, great company. They wont let other people. They did have underlings that left many of us felt like wait a second, how about the top guy . I know david has been id say insistent, and i said, no comment. But in fact, someone had to pay the price. And it has to be him im glad that greg is hanging on, greg was the guy who was running it day to day, running the investigation part and hes a terrific guy and he has a lot more loyalty, more loyalty to him than there is to dennis. Calhoun is taking over, jim which again i dont think is that much of a surprise given what, you know, ive been hearing of late, i assume you have as well it is not an interim role either mr. Smith, who is going to be the interim ceo for three weeks for whatever reason calhoun is not actually taking over as ceo until the 13th of january and kellner will become chairman. I think calhoun as we all know we thought very difficult to imagine him not being ceo. And this will be very good you simply had to get muilenburg out to get this process going. I dont think anyone wanted to deal with him. That first day he appeared in front of congress was a disaster people will never forget that. He had they asked him about his pay package, and he said it was up to the board, come on it is up to you. Be human and i think this was an actual response and i think now the process that we have i think it is going to accelerate whatever was going to happen people realize this plane is going to be on the air some day. I dont think that dennis was going to get to the promised land. Yeah, jim, to your point, calhouns quote here i strongly believe in the future of boeing and the 737 max. It zmdoes not look like they hae any questions longterm about the viability of the model notwithstanding whatever engineering changes they need to make no, absolutely. I think that there is that vast i think that the look, all the everyone has a lot invested in this you have to reinvent the plane another thing that really bothered me about what dennis was doing. Why not ever just come out and say, you know what, we didnt make enough redundancies in this plane. We screwed up. It was bad we thought it was safe it is safer than any other plane, but we should have had a and thats what people say, why is it taking so long . You are rebuilding a plane they keep making software changes, they have to rebuild this plane the plane did not have enough. We mentioned the times piece this morning, jim, at the top of the hour, and the quotes from gary kelly who as you know talked to us repeatedly about this process by the time april rolled around, boeing was telling us next week. Next month we were a week away, weeks away, three weeks away it was really creating havoc thats about as granular a look as we have gotten in terms of the relationship between boeing and its customers. I went back to the april release, you go back to the april release, they were pretty certain this thing was going to be in the air momentarily. I dont know how they got that they were dreaming i do not know how they got that. You have to believe it was dennis telling everybody it was going to be fine even at the end, they based the projection for 2020, you think, say, listen, dont worry, dont worry. Everyone was worried except for dennis so we do we think the dividend question answered or that changes with this news . I think that the they got to get this in the air the cash flow wasnt bad in the last quarter that wasnt really emblematic. I think they have look, i want to hear what calhoun says and i want to hear what someone someone who does not have anything to do with what occurred because i think we all know that cash flow is not a prudent person would not necessarily let that dividend stay at this level. Jim, stay right there lets bring in phil lebeau phil, were all im at least reminded of your interview with muilenburg in the halls of Congress Just prior to his testimony. And although he wasnt expecting to take questions at the time, you did ask him about his ten e tenure did you see this coming . I was not surprised when i heard the news this morning, when my producer im on vacation like jim and my producer called me and said news pending. I said i bet you dennis not being ceo anymore. This was the decision of the board. This was not Dennis Muilenburg saying, look, things are rough, im maybe not the person to lead this, he was fired this is the board saying enough, we have to move in a new direction. They deliberated over the weekend before they reached the decision last night, there was a phone call the board held to reach that consensus last night when they decided they were going to go in a different direction with David Calhoun, coming in as president and ceo, starting effective january 1st some people say why doesnt he start right now . Thats one of the things were trying to figure out, it is not like three weeks are going to kill anybody, but at the same time this is a company that thats one of the questions that will be asked along with the dividend question. Were not expecting to hear from David Calhoun or from greg smith or any of the other boeing executives or Board Members today. My sense is that is going to be happening in rell of in relatir though we hear from David Calhoun in the release from the company in answer to your first question, i was not surprised. This was increasingly a company where were not managing this crisis, the crisis was managing them at some point the accountability has to go to the ceo and i know some people will say this is way too long in coming, should have happened sooner, this was a crisis that was poorly handled, poorly managed from the beginning and ultimately Dennis Muilenburg has to take the fall for that. Phil, it is david tell us a bit about calhoun. You conducted a long interview with him not that long ago. Ive been hearing and i know you are much closer to it as well that he certainly has been very much hands on as the companys chairman what can we expect here in terms of his leadership, hes taking over january 13th, and obviously it is not an interim designat n designation. Hes going to be the companys ceo and president. I would say that the biggest thing youll notice and influence has already seen in the decision that was made after Dennis Muilenburg met with the head of the faa last week, where they withdrew any kind of a timeline for getting the max back in the air, thats going to be the influence of David Calhoun. I think hes watched this. And he has said, no, no, you cannot continually say were going to have it up by this date were getting there. Were making steady progress i think his approach is going to be get it fixed, get it right and when it is ready, then we go until then, nothing is served by continually giving the street, your customers, the airlines, this sense that, hey, the plane is going to be flying. You will hear airlines set these dates and continue moving back some of that is based on discussions with boeing. The other part of that is they have continually moved these back and two months, three month increments because they have got to set their pilot schedules you cant go open that yo cant say, well, im never we dont know what the schedule is going to be for this plane you got to set that schedule two or three months down the road. I suspect that will continue until we get some definitive word from David Calhoun and the rest of the leadership at boeing this is what were going to do by the way, stan deal who runs commercial airplanes and has for some time since Kevin Mccallister was fired, hes in lockstep with calhoun in terms of style and approach. Very much a detailed oriented im not here for the conversations or for the public statements im here to get this done. So i think theyll work well together phil, i got i want to get to jim, the stock has now resumed trading up 2 here one question for you, phil, do you have an answer as to why they seem to overpromise repeatedly the return to service . Do we know internally what theyre did they honestly believe this, were they trying to cover for Something Else because we have talked so long about the value of underpromising and overdelivering i think they were overconfident in their ability as engineers to engineer their way out of this problem. And one of the things im reminded of, carl, is very early on there was a briefing out in renten of here is the problem, and were going to explain what were doing, but we dont want the cameras rolling during the explanation. A little odd, but all the reporters that were there accepted it, you had to accept it and immediately questions started coming im not an aerospace engineer, but i was asking questions as were other reporters that were basic questions and it was clear, they were, like, well, well get an answer for that and we think we any what were doing and that was the very first instance you sat there and said, no, no, no you cant just engineer your way out of this. You have got to handle some of the most basic questions on this and i think that it is to the broader issue, the culture great company, great engineers, but in this case, they over they rely too much on their belief that their engineering could work their way out of this problem. Jim, how about the price action here . 336. I think that it makes sense phil is so right anybody trying to follow this period, you never knew they were always one step up, one step behind the policy you never, ever you pick up the paper, and there would be something. No matter what you did, they just they never they were very unprofessional about it and the only thing i can say is that i was the stock is worth more without dennis than with. Maybe the headline surprise factor is over this can be it is a crisis. There is Crisis Management to be done there are professionals who know how to handle crises, particularly with journalism and the analysts and these guys didnt have it it was really unbelievable you wake up and say, hey, guys, why didnt you tell me this . Why didnt you tell me the why didnt you tell me the journal . Why didnt you tell me this . Why didnt you tell me that . They had no control. It was just it was embarrassing it was embarrassing. Phil, youre still there, right . The only feedback im getting thus far on terms of why the little bit of a gap between now and the 13th apparently calhoun has some other nonboeing related commitments he needs to fulfill and make sure he sort of squares away before he takes over as full time as the companys ceo and president. But, phil, you know, there also is a sense that ive been hearing and i know you have as well that muilenburg has been focused on the return to service, the suspension from last week was a big deal on something he had been focused on, but the board felt like, okay, hes dealt with that, and calhouns feedback from customers and regulators was he cannot continue as the ceo i assume you sort of heard similar. Yes yes. And this feeds into what i know you and i and jim and i and we discussed this before, whether or not there is a residual impact of the prices you bet there is take a look at what happened with the 777 x look at what happened with the newest plane that has been essentially shelved for a while. What they call the middle of the market airplane. They were supposed to introduce it in paris. They didnt because theyre focused on the max what happens airbus comes out with the a321 xlr. They start racking up orders not little orders, substantial orders the most recent of note, three weeks ago, United Airlines says we want that airplane. We want 50 of the a321 xlr. Boeings middle of the market airplane remains on the who knows if well see it by the time that the air show comes up in july. But one thing is clear, they were not in the process of saying, what is on the horizon they are one step behind the competition right now. And that is something that is completely unacceptable in boeing, completely unacceptable. I think the board finally said, we have got to it is time to move forward and become much more aggressive in terms of our planning, working our way out of this crisis, working our way back into the better standing with our customers. Jim stewart, i wonder if you think there will be a revisitation of discussion of mu muilenburgs comp. After performance like this, i think jim cramer mentioned these crises are not a new thing. It is not like boeing really had to reinvent the wheel here the specific facts maybe, but the kind of problem, there are experts, many people dealt with it im stunned the model they seem to have followed was the wells fargo model. Again, a great company, a great brand name, had the Warren Buffett stamp on it, like the state of the art banking thing, and suddenly, i mean, after a horrible performance in front of congress, and after, you know, revealing all the customer problems, it dawned on people that the culture had significantly changed without any realizing it and the rot had spread from the top way down i think boeing is a great company. I have to wonder what are we going to find out now. The maybe it is not just this one software thing again, this delays on the new plane implementing, in the background of all this has been this disturbing idea to me anyway that they were managing boeing like any other company, like how can we squeeze more profit, how can we speed this stuff up, how can we cut costs boeing is a unique company it is a consumer facing company, an industry facing company, a public regulatory issues, peoples lives are at stake every time one of those thins takes off. It cant be about profit first t has got to be about quality. Not to mention it is part of a duopoly where you think the pressures are not as great on it, it is not going to lose market share conceivably not over any short period of time that was a surprise i think thats extraordinary that they should be taking the longterm view it is a duopoly. They can afford to let the Profit Margins go down in the longterm interest of shareholders and the health of the company. And i dont i am astonished that they lost that fundamental outlook on muilenburg. Jim cramer, if jim stewart is right and new facts get shaken loose by muilenburgs exit, do you think there will be longterm implications or pricing . I think there will be one of the things that dish know phil is talking about this too, one thing that gets past, you pick up the paper and very high level engineer, who would have sent something to muilenburg saying, look, we cannot cut costs like this, we cannot do this, and then you have a call at boeing and theyre, like then another one we have decided to cut back, save, i dont want to work here anymore. Dont worry about it i never have been told dont worry about it more in my life than from boeing and i got to tell you, im really worried about it. These guys are saying dont worry about it yeah. Phil, i know you have to leave in just a couple of moments here do you want to put a coat on this and tell us what we should be looking for in the weeks ahead . I bet you have a relatively quiet week or two here from david kelly. Doesnt mean hes not engaged. He clearly is engaged. Hell be even more engaged but in terms of a public statement, i think that he at some point maybe early january will say, okay, let me give you some sense of where were going. We will not get a timeline from him when he sits and talks with us or me or other reporters, but you will see a definitive shift, definitive shift in how boeing approaches not only this crisis, but how the company is going to be operated going forward. It will be much more clear that there is going to be accountability, that there is going to be a much greater rigor if that makes sense when it comes to not only engineering, but decisions, working with customers, et cetera. Phil lebeau who is vacation i think might be cut a little bit short this morning phil, i think well see you later on today thank you. Jim will stick around as we get closer to the opening bell more broadly, jim, is this a signal that we should be on the lookout for some tape bombs in this holiday shortened week . This was certainly lets put it this way, cant be we had the bear market, centered around wont feel like that cant be as bad as last year this is probably welcome by a lot of people who have been buying boeing stock. I think knowing there was going to be a i think we just didnt know the time frame you wanted someone that was like phil lebeau said, someone who said, look, whatever we were doing here, we have to have an actual investigation, internally about what went on a lot of us were shocked that boeing never said, all right, lets find out what happened. Shut down everyone it is going to cost us, i dont know, 5 billion and if we have to, well spend the dividends. But were not going to sacrifice anything, no sacrifice safety, tired of hearing were taking short cuts thats what people felt they were doing never did the never hide the prices never gave us any sense of about what was going to happen jim, thanks to you. Jim cramer, if you missed the news about half an hour ago, Dennis Muilenburg of boeing is out. David calhoun is ceo and president effective january 13th muilenburgs exit Effective Immediately as the fallout from the 737 max continues. There is the opening bell. And the s p 500 at the cnbc real Time Exchange and the big board, it is the new york chapter of the National Childrens chorus, might have heard them singing in the background as we were talking some boeing at the nasdaq the National Womens hockey league. David, on monday morning, got started with a bang. Yes, yes. We got some significant news and, again, as i think phil and jim and i had indicated, it is not a surprise the timing really was the only question many of us had in termsof when muilenburg would exit, not necessarily whether or not it would happen it has turned resignation, he was dismissed as phil said decision they reached last night, though one that they had certainly been moving towards for quite some time it would appear in part, the timing im told was due to the fact they feel as though muilenburgs sort of checklist of things in terms of the dealing with the return to service as his focus and the suspension of manufacturing of the airplane, those were the key things that he had been dealing with they have been dealt with at least to some extent and mr. Calhouns discussions with regulators and customers made it clear to the board at least and remember he was the chairman of that board that muilenburg had to go so hes gone, calhoun is in, you heard phil discussing what we can expect from him when he he takes over january 13th. And boeing shares are starting the day higher it is interesting you mentioned the chairman and the ceo role taken away from him this was healthy from the company, you have an independent chairman, you have an independent information flow when there is a combined ceo and chairman, you dont have that. The same person is hearing from everyone why a lot of ceos do not want to give up the chairman job this is a case study why you have it. Thats a great point as well. Wasnt that long ago that was the case, of course, and calhoun was as you say another sort of set of eyes and ears and very much focused and in recent weeks ive been told also, really involved in the nuts and bolts of the Company Beyond what you typically see for a chairman would it surprise you if were assessing this as a clean slate, right calhoun has a tabula rassia to come back in would you expect further delays to return to service, man a second half story . Would that surprise you . I wouldnt be at all surprised. I mean, i think, again, hes got a shift to this, we got to start beating expectations as opposed to disappointing them. If it was me, i would want breathing room and the time and to make sure we really do it right, boeing does it right. And i would say no more additional delays, once i say it is going to happen, it has got to happen. A lot of that is contingent on regulators and so forth. And make sure theyre on board with whatever theyre going to say sounds like the regulators were surprised and shocked by some things that mulan bure muilenbug said. Boeing given the price action now is adding 70 points. Thats the Top Performing dow component on this morning followed by 3m, we get to other stories here, does get up to jpmorgan to neutral. They go 143 to 150 one of those names that has disappointed pretty much all year long amid pruessures on global trade 2020 will feel different from a trade standpoint look, were getting promising signs out of china thats been thats been the big news and the past year and china, all the trading partners revealing what is the biggest one. The problem now is expectations have shifted so much that there is risk of down a big surprise on the downside we got some kind of trade war going on with latin america. I dont know how significant that is go to be i think people didnt pay much attention, but a couple of weeks ago, the u. S. Threatened to drastically lift tariffs on europe again like 100 on a lot of the products trump on the one hand is saying they want this glorious free trade deal were saying were going to, like, ratchet up all these things, especially france and uk and the talking about airbus, that is related to that. Work getting some more friction in the europe area im not at all confident that at least for the first half of the year these trade things are going to go away losers this morning at the open, at least, are centered around media as disneys rise of skywalker is the lowest grossing open among the last three star wars films, 20 down from last jedi on a day where we learned that 34 of total box office, 39 maybe, is the top ten films, like it is becoming the faang as someone said of the box office one thing that worries me having written about disney over many years and also watching Entertainment Industry for so many years is that, you know, everybody thinks disney has the silver bullet, the big tent pole, high budget franchise film and has worked fantastically well for them. I can remember other cycles where people thought they had the silver bullet. There was the eisner that was the formula. They had like 19 profitable movies in a row. Okay, they solved the mystery. They got it all down it just makes me nervous that none of these formulas last forever. And a lot of this intellectual property, lets face it, it is it is aging. How many star wars things can you squeeze out of this . A lot, i dont mean to take away from it, still made a lot of money. But i think thats what investors are getting nervous about. Yeah, it is worth noting netflix is also down this morning. Neither one is down a great deal disney does have so many of those tent pole franchises marvel has endless they have endless stories to mind there and they had the highest grossing films of all time amongst any number of their new entrants or entrants in last year or two. And disney plus, hard to find somebody who doesnt think that it is going to be and hasnt already become a success given the numbers they have gotten early on. I agree with that what remains to be seen are where the Profit Margins going to set unttle in this streaming universe you look at netflix and dont see the pot of gold at the end of that particular rainbow yet and in theory, there is going to be a finite number of these and theyll have enough market power they can begin to raise prices and come up with some pretty good margins but is it ever going to replicate the cable model . That thing, those margins were so phenomenally great. I dont think anyone thinks thats not to criticize disney for making the move. The cable model is not going to last. It is not that was a domestic model. I talked to the likes of john malone about that, hell admit as we all know, that was a unique thing for 20, 25 years, you basically have people paying for you and not actually watching and youre also benefitting from advertising. However, the only off set is the global scale that you can have with streaming that you didnt have in the domestic cable distribution we all lived with for so long and netflix is all about foreign subscriptions. No longer about their domestic growth the question is whether disney is going to hurt market share for them here. But it is not about whether or not theyre going to grow significantly domestically in england. I do think if youre a longterm investor, you bet on this that it is going to take time the way amazon has taken time. There will some day be a world of finite number of streaming programmers, the entry is quite high once you got these things, youre used to going on to them, however many it is going to be, five, six, dont know what it will be. We dont know but then, you know, then you got, you know, finite number of providers here and they can start raising prices a little bit, seeing the Price Sensitivity and the markets could get up there to be fairly healthy. Yeah. But you got to take a longterm view people seem to be giving netflix the benefit of the doubt disney has been really smart to start trying to get that multiple on their stock. Lets face it, it is going to take a long time without a doubt and iger will no longer be the ceo when the answers start to come in. He could go out on his white horse. Yes we are going to hop from story to story tesla, fresh all time high this morning. 416, 415 as reuters says they are getting a loan from chinese banks, 1. 4 billion to finance their shanghai factory wonder what you think of the turn this stock has done in the last six months. It is phenomenal. Im happy about it i think the tesla is a great product and it is beautiful, it is innovative, quality seems to be extraordinarily high. But what we had for a period were antics if thats what you want to call it of the chief executive and again were talking about splitting the ceo chairman, they got a separate chairman and i dont know if this is the answer but somebody has kept elon musk off the front pages for his behavior and on the front pages for the achievements of the company. Hes back on his game. He hasnt been sending out crazy tweets there havent been, you know, ridiculous stories about his personal life. I dont know what accounts for it but it is healthy. Again, i just hope it can continue. When you wrote you sort of were right in there he seemed to be a man on the edge, when you were doing a lot of your reporting and he was a man on the edge. Got pulled back. Yeah. I dont know what it took. And good for him, because sometimes those things personally very challenging. And he was in a situation where nobody ever said anything he didnt want to hear. And yet the company and he in particular seemed to be going off the rails. It is not an aircraft company. But a car too. It is something that your safety is at stake in there you dont want to feel some crazy person is rung the operation. You want somebody i love his flair. He tells a great story, those are all strengths. But to koppel that with behavior that left everybody scratching their heads and worrying he was losing control, that was terrible for the company it affects consumer attitudes. But good for him stabilized hes come up with some great sales numbers. Product quality has been very, very high. The stock would it has been if you bought it at that that low. It is almost the returns of the s p over the course of the year and there was a point at which it was down so sharply still cant keep a general counsel for whatever reason. That is beyond his abilities. His ability would be a big plus there well see. Hes never been an easy person to work for. Not sure thats going to change. Were joined for some more color this morning on boeing by leslie josephs, our cnbc Airline Reporter what do you think we can add to the story we already know . I think a big question is kind of what took so long because muilenburg has been under pressure for a very long time the question was when are you going to resign, and i think now we finally have our answer hes been under fire from Airline Executives whose compensation from this crisis is growing every day and now seems it is going to continue into a well into 2020, possibly into next summer. The victims of the families, i was down in washington a few weeks ago, they have wanted him out for a really long time and it is a question of how does boeing best regain trust of the actual public who could be flying these planes. Do we have a read as to how theyre going to market it would you be surprised if there say name change in the model or i dont know anything that the market is not started to price in thats been talked about before it is not even clear what theyre going to go through with, because they dont have the faas approval yet even if they do that, it will be boeings bestselling aircraft, not something you can hide with a name change. The plane will be coming back and airlines will be very transparent as they told us with passengers that this is the plane. So even if you were to change those three little letters, the max, people will know what theyre flying. Any idea about calhoun, what we can expect from him he has some aircraft experience before, the former ge executive on the aviation side he has plenty of experience with crises before. So the market should probably like this because this is someone who is essentially being sent in to clean up a mess yeah, long time blackstone as well, worked closely with Steve Schwartzman over there, as well. A lot of good things to say about calhoun. I think hes got a good resume i think one reason the stock is up is that investors will be happy with that. Hes got enough of the technical expertise, very sophisticated financial background i think what is most important to him is being able to communicate. Being able to kind of sell the idea that quality is our most important thing that were going to do everything we can to make sure we adhere to that. Really quickly, calhoun spoke to squawk box in november about this very issue. Listen to that piece of tape and ask leslie something really quick. From the Vantage Point of our board, dennis has done everything right f from the beginning, dennis didnt create this problem but from the beginning, he knew that mcas should and could be done better. And hes led a program to rewrite mcas, to alleviate all of those conditions that ultimately beset two unfortunate crews and the families and victims. All right, so i guess, leslie, impact on suppliers, how closely are you watching that and if this is delayed further, i wonder how much damage what their strategy is whether or not there is a story out today about ge trying to make some headway on the airbus front if theyre going to be facing longer delays on the boeing side. Ge has that advantage it is a supplier also to airbus. We already have seen a fallout from suppliers spirit aerosystems, which makes fus launl fuselages for 737s continued to make fuselages even though they halted deliveries. Now theyre going to have to do something similar. There is going to be an impact pretty much throughout the entire economy the bigger impact is on some of the smaller suppliers, maybe they dont have the same cash cushion that a big supplier like spirit has so as you go further and further down the chain, thats what you see a bit more pain. I think thats right. No accident, President Trump called muilenburg last week and talked about the shutdown and what it meant. The fact that this problem penetrated the oval office i think is a measure of how significant it is to the broad economy. And the threat that a prolonged shutdown would pose for it. And the times piece again, referencing that this morning, talks about the call the reassurance that muilenburg gave to the president in the early innings of this whole saga, it would be fine and not last long. I dont care what he told him. It is never a good sign when the president calls you after you had to announce bad news like that, that is not a positive so well see how the gains are sustained here today regarding boeing and as we said adding 75 points to the dow overall. Leslie, one more chance to add anything else you think we need to watch, whether it involves muilenburg and his future, or any further shakeout in details that may come now that his exit is announced i think we need to see what calhoun does and whether hes able to calm down suppliers and very important Airline Customers and they want those planes, we saw united pull the planes until june and thats a really long time, the second and third quarter, thats when airlines, peak revenue period. They want the planes and want them soon and want some reassurance from calhoun and see how calhoun interacts with the faa. Muilenburg has been dressed down by federal officials and a think they want to smooth that over now. Leslie, thank you great stuff. Leslie josephs covering boeing for us alongside our own phil lebeau jd. Com, rallying a bit here on this report out of reuters that the Logistics Unit is in talks for another overseas ipo perhaps. See that i did, yeah which would be interesting of course sometimes we forget, we focus on alibaba, there have been any number of other Chinese Companies and this is one of them that have done very well. Of course, ten cent is not a stock that trades here still one of the largest if not the largest single giant in china. And then there also has been properties are fight dance, t o headquarters out of china. Unclear whether that will help, but it is interesting. That is not a public company, but it is a value at least of im told at least 75 billion if not more the daily users that they have, carl, keep growing and theyre in the billions over a billion i think a billion and a half some crazy numbers for tiktok. Times had this great special section on the decade in tech over the weekend and one of the milestones really of the decade was tiktoks creation along with youtubes first billion hour day and the day walt first laid eyes on the ipad, tim cook taking over for steve jobs, interesting look at where tech has been. It has been a phenomenal decade, a great one for tech investors too. These innovations have come with a lot of Wealth Creation and Value Creation speaking, it is not too early to Start Talking about the big moves of the year. Or stories of the year and apples performance in the stock market is one of them. It is approaching an 80 gain year to date its market value is 1. 25 trillion, excuse me. And it is really fairly stunning with the stock up another 1 and then even facebook, which i would argue the story really has been is this year has gone on, a more negative one, with each passing month, and yet the stock has done extraordinarily well because the business continues to hang in there despite the concerns i think that facebook is raising and whether it comes to privacy or whether it comes to political discourse in the country. It was about a year ago the stock plunged. Facebook in particular and i believe it was primarily over the Regulatory Environment and regulatory concerns and legitimate concerns that, you know, the way it was affecting elections, privacy issues, could they fix it, but i think what we have seen this year is that none of those concerns really hit the bottom line. And that, you know, maybe facebook users are worried about the things, but still using facebook the numbers are incredible the Revenue Streams are incredible and so there is that huge selloff and then there has been an equally large recovery this year. And i think apple was not so caught up in the regulatory isss it was dragged down by all of that concerns that it was tapping out the growth rate of the ishgs phone. I think where apple succeeded, its grated an ecosystem of products once you have the laptop, the phone, you will be drawn increasingly into this ithink theres a lot of potential there. A remarkable chart. 282 and change. Web bush today, you saw dan eaves on the air earlier, going to 350 from 325. Remarkable after having been doubted by many. Dow is up 98 i want to mention, s p is enjoying its best year since 2013 if we can get to 3249, you have to go back to 97 as we said the other day. 22, 23 years ago how could it be . Ive been wondering ive seen 97, 2010, 2013, strong years were in there few expected we would see a 28 gain at this point here we are. I think last year, the worst Christmas Eve ever if you were hard, it was hard to be super cheerful. We have a lot to celebrate this year this time last year, there were four sessions where the s p dropped 8 leading into Christmas Eve, which was a shortened session. It we mireminded me again, w stocks are down, cheap, people come to me and say should i be selling . When theyre high, expensive, they want to buy last christmas especially, getting together with family, everybody was saying, my god, i feel like maybe i should sell. I kept saying, this is the time, take a deep breath you always have that advice stick with your plan and dont deviate frnlt absolutely. 80 of the dows gain is boeing look at the sectors. Looks like the Fourth Quarter today. Semiconductors, sector of the year moving up 60 . China shares had a great rally optimism on the trade talks from a couple weeks ago boeing up about 3 all rallies in the boeing stocks this started on december 5th, last year, the president said he was tariff man markets drifted lower. Then december 19th, thats when the fed hiked rates, three, four days in a row we moved by that time we were down close to 15 for the month we did close off of the lows worst december 24th ever jim is right about that. The last couple of years, we have gone nowhere since january of 2018. The markets have been flat thats not the case anymore here this started in the Fourth Quarter here the beginning of october thats when the fed started injecting liquidity into the system dont call it qe, but october 11th, the markets started moving here its clear if you think of the factors that have led to this Fourth Quarter rally, moving to new highs, the fed injecting liquidity is one part of that whole question we have more liquidity from the fed. We have tariff trade war truce hopes, we have some hopes on the bottom of the Global Economy a little bit more clarity, not a lot, but more clarity and you put that together, you have a powerful stew that moves the markets up you can argue for a higher multiple on a Global Market bottom s p 500 for the year up 28 . I keep arguing this is very much a super cap rally. The biggest stocks have moved the market top ten up 40 the top ten is 23 of the s p 500. Thats on the high side. Its not unusual to be over 20 . Take a look. You were talking about apple your biggest stocks in the year, apple, these are the top five. Apple up 77 microsoft, 55 alphabet, up 30 amazon up 19 . Facebook up 57 . Guys, back to you. Thank you lets get a check on the fixed income markets and hid over to Rick Santelli at the cme in chicago good morning, david lets look at a 24hour of ten it was hit coming into the time zone looking at one week, you see how we stall we have real tough ceiling to get through in the mid 190s. If you look at intraday of bunds, it looks like it was firming up a twoday gives you the reality, similar to our long maturity treasury that particular global sovereign like many is also running up against nearterm resistance but its been trading quite firm finally if we look at the dollar index, its up a bit now the oneweek chart shows a nice, steady climb hovering below 97. 75 right now for 2019 thus far, dollar index up 1. 5 . At one point it was up double that it did have a nasty november carl, back to you. All right thank you very much. Jim, that was great. Fun, right yeah. Enjoyed it joining us for the first time on the nine and no commercial breaks it will be an interesting week well be here for it coming up, more on the big news this morning. Dennis muhlenberg is out as ceo of boeing. Shares are up. So is the market dow up 104 ever since we downloaded the 30 day fitness app, weve been working out every day. Together weve already lost 15 pounds. Didnt you say you gained a few . Yeah of muscle. The point is were doing it together. This whole process has really made me realise how much extra weight ive been carrying around. I might just want to drop another 180 pounds. Thats almost how much i weigh hun. Exactly. The experience i brought from my aviation days, and what i think is the significance overhauls that have to go on inside of our company to increase visibility on the subject of safety, straight up to the board and right down to the bottom of the organization and create more independence in the functions that represent safety joining us now on the phone line is former ceo of continental airlines, gordon bethune. The news today, the change in leadership your reaction. Well, inevitable, so to speak, given the current changes or lack of changes at boeing and the lack of progress and getting the airplane back down maybe a new chairman, Larry Calhoun is well known to me. Perfect choice for the job and i believe that the new ceo role will add some value i think it shows mostly that boeing is committed to get this worked out and get it fixed. And lost patience with the status quo those comments from calhoun we just played, the fact there needs to be changes that basically take place throughout the organization, what do you think that will entail how quickly can that be implemented given everything that is going on right now well, mr. Calhoun has a terrific resume. Grand reputation of being a steady handson manager, he was for years at ge. Im sure he will take that same approach within boeing and get whatever needs straightening out straightened it l. Go quicklwill go quickly. It wont take a long time. There had been an expectation, at least on wall street, that muilenburg would be the guy that would continue to run this company until return to service happened obviously with the news today, no longer the case is there another shoe to drop here it may be given that they didnt specifically say that this was a permanent change as ceo. I believe personally that hell go in and be such an effective leader, theyll leave him in that spot and he would be a wonderful ceo permanently. Thats just my two cents gordon, in terms of what its going to take to fix this system, and to see return to service actually happen, the timeline continues to push back. We had more Airlines Push back their timeline as well whats a realistic expectation i think weve gotten mired down with too many voices, too many people with different agendas in the middle of this. And thats what i think mr. Muilenburg lost control of, the way forward but being pulled in too many directions with too many new critics with their own agend agendas. I think the faa will respect this move as a positive step in not only restoring good relations with them and committing the max to get certified in spite of the political opposition that its been encountering. Gordon, what does an airbus narrow body sales pitch sound light right now . Do they reference the max . How do they leverage it . How do carriers respond . Will it make a difference . I think theyll use the standard comparative on fuel burn, other issues, but theyll talk about reliability, stability of the airplane and of course the availability, which is what is crucial you cut off about half of the worlds supply of airplanes when you drop the max from production, airbus couldnt make enough airplanes to replace that capacity so the max has got to be done, but airbus will tout theyll get theirs delivered to you on time, thats a hell of a sales pitch do you see, like, can you imagine a world in which gary kelly does have multiple brands of carriers or models . Well, i dont look, the 737 max is a good airplane it will fly. It will get back its a torturous task that has been taken its a necessary step to get that jump started again. Theres not enough capacity, im talking about manufacturing capacity to replace boeing boeing is too vital to our economy and the supply chain just growing population of people who travel year after year, cant keep up. So boeing has got to survive they will. Its just how much torture will it be until they get back up and running at 100 , which they used to be and can be again gordon, its david, calhoun has taken over january 13th, the permanent ceo and president , has already been dealing with the regulators and customers whats that conversation between him and the head of an airline like at this point how do you sort of try to make that work . You can trade on one, his track record, which is a good one. Mr. Calhoun is well respected, and a personal representation to a company like united that i am here, we will fix it, heres what weve done, heres what were going to do. He has a lot of credibility. Thats what they need. One of the failures that occurred in muilenburgs reputation is lack of credibility. The necessary adjustment, like mr. Muilenburg, hes a nice man, but boeing needs to act, act now and the country needs boeing to get back up on its feet. I wonder if enough attention is being paid to the hundreds of planes that are sitting there parked waiting for certification when return to service happens the fact that the faa is now going to be doing that, rather than boeing. How big or i guess howe far out could this backlog extend and how could that effect production once you see that facility brought back to work s th s thathats a good point. Once you shut a production line down, its hard to get restarted. Its another couple months at least just to get back up and get the momentum of getting in production cycles. Dont forget, the supply chain for the airplane goes down to ge for engines, seat manufacturing, you just name it they need all of those parts theyre going to be kind of predicated on the slowest supplier is going to set the pace thats going to be, you know, expensive and long what do you think it will take for pilots to feel comfortable flying this plane again . I think the pilots are. I know a lot of pilots, im a pilot. I would feel comfortable in the airplane today its not an airplane problem the airplane is fine theyve got whats wrong fixed i think they were right to address it maybe wrong to do it in the manner they did it the airplane is fine its an airworthy airplane, you have a lot of factionalism between criticism of pilots and training and different country standards. So everybody is weighing in on who is the real problem. It is an airmenship issue when you look around the world. In america, you know, we have pretty high standards for pilots in this country and in europe. The pilots will not be afraid of the airplane gordon, are you arguing that the crashes could have never happened with a u. S. Carrier im saying that the lack of experience in airmanship lacking in both of those are detailed examples of where a competent crew member on board would have saved the airplane much like the lion air, the same issue, they had another captain sitting on the jump seat who saved the airplane so when things go wrong, runaway stabilizers, its a memory checklist item, you dont look it up in a book, you know what to do, you disconnect the sav trim by the emergency cut off trim, you disconnect the autopilot and you fly the airplane none of that happened. The airplane was at full takeoff power until it crashed you and i talked earlier. I tried to ask you whether you thought airplanes in general were being over innovated or whether the movement on the max was a moonshot, you would not go there. Im not an Aeronautical Engineer i worked with them most of my life but i believe the airplane, were talking about the center of gravity, the way the weight is distributed, they were addressing an issue that is a minor probability, but they put the safety measure in it, they did it the wrong way, they didnt talk about it, didnt publish it and made it an option those are all mistakes by boeing the other mistake is thinking that every pilot is as good as pilots as you have thats not true. Being a boeing pilot myself, they train to a higher standard. Thats just it so i think the copilot on the ethiopian airplane had 300 hours. Hes like a passenger, he cant help you it overwhelmed them. By the time they got their senses, it was too late. Thats what i think contributed to the deaths. Its not the solo reason, but its a contributing reason thats significant gordon, always great to get your insights. Appreciate it on a day like today. Glad to help. Thank you. When we come back, well break down todays big news on boeing with ray lahoud and its one of the Top Performing ipos of the year. Well talk to the ceo when squawk on the street comes right back fights cancer, repairs shattered bones, relieves depression, restores heart rhythms, helps you back from strokes, and keeps you healthy your whole life. From the day youre born we never stop taking care of you. [narrator] at Southern New Hampshire university were committed to making college more accessible by making it more affordable. Thats why were keeping our tuition the same for all online and campus programs through the year 2021. [woman] i knew snhu was the place for me when i saw how affordable it was. I ran to my husband with my computer and i said, look we can do this [narrator] take advantage of some of the lowest online tuition rates in the nation. Find your degree at snhu. Edu. What are you doing back there, junior . Since were obviously lost, im rescheduling my Xfinity Customer Service appointment. Ah, relax. I got this. Which gps are you using anyway . A Little Something called instinct. Been using it for years. Yeah, thats what im afraid of. He knows exactly where were going. My whole body is a compass. Oh boy. The my account app makes todays Xfinity Customer Service simple, easy, awesome. Not my thing. Stocks and bonds have been rallying for their biggest gains in more than two decades trade web has become the Top Performing ipo that had more than a billion dollar offering the listing market under greater scrutiny as the sec says theyre looking into unicorn debuts. Joining us is the founder of trade web. Great to see you great to be here. Youre set to beat the market even though you didnt have the whole year to do it. What do you think has changed overall for your business . First of all, were incredible proud of tradeweb weve been at this for over 20 years. Going public is a big transformational change for the whole company. First of all, im here on sbns sb cnbc, which is citeexciting how has the business changed since the offer . People are more aware of tradeweb as a public company, were more exposed. We have analysts following us. Didnt investors even our clients around the world recognize us more. Our Financial Information is out there. Its a positive thing. Fixed income has been slower to adopt electronic trading, electronic marketplaces. Are you finding thats changing and that that change is accelerating yeah. The Capital Markets are going digital. Thats happening across the board. Doesnt matter what asset class youre talking about fixed income is a bit more complicated. Millions of different securities we have a Global Business spread out among different regions, different countries, its taken more time for this to gradually move from a phone based business into a digital business. In fact, today many markets were in, were at about 25 to 50 electronic you did the ipo in april, followon offering in october. What are you using that capital for . It was a secondary offering it was, okay. So we did a lot of the longterm investors were able to monetize their position. Sell their stock thats always a nice thing, particularly when its up. How much further can we expect this democratization of the bond markets worldwide has to go . I think its quite a bit further. Were 25 to 50 electronic depending on what market youre in u. S. Treasuries, government bonds are fairly electronic. They still have a ways to go we think theres opportunity left in it the business to further digitalize things. Once things go digital, thats not the end of it. Once we have a digital market, data science kicks in. Price discovery is important and you have a different kind of market that operates its an exciting future for tradeweb we had that massive spending bill pass through congress and signed into law. Expected to expand the deficit, thus more issuance of debt for the u. S. Is that a tailwind for your business over the last several years weve seen more debt issued in markets across the board government debt, obviously, corporate debt really anywhere in the world you have more debt issuance. We expect that to continue the more debt there is outstanding, the more new issuance there is. Thats a positive for our market perhaps even more important than new debt issuance is volatility in the market. Okay. As markets become more volatile, more trading occurs, were about the Trading Volume thats the most important thing for our business what are your expectations for 2020 were optimistic. The business itself, we look at 19, weve grown volumes about 35 over the last three years. Average a 15 growth of our revenues so were optimistic that we can continue the trends, do more business, get into new products, new regions, further digitize the markets. Will i pay less for trading a Corporate Bond then . Thats always the sticky point for so many investors at home, just what they got to pay if they want to own these things. I think electronic trading affords more transparency. The more market participancy, where prices are trading, it gets more competitive and pricing becomes better do you think direct listings get a harsher eye in 2020 . Im not sure about that i think theres certainly a lot of people talking about it, interested in it it gets back to this digit digitalizati digitalization, and are we able do things more efficiently in a digital format as opposed to what has been manual or voicebased. The vix averaged about 16 this year. The longrun average is 19 do you think well beat the average . Are you willing to go out there in the next 12 months . I dont consider myself an analyst. I tend not to make predictions about volatility or pretty much anything but we have an Election Year next year. Theres a lot of political things happening around the world. Expect more volatility into 2020 is a reasonable assumption if we get less, some would be surprised. Nice having you congratulations. Thank you very much happy holidays you, too. When we come back, the key to fighting amazon well break down walmarts secret weapon on taking on the tech giant at wn squawk on the street returns. Walmart announcing a reemphases on the giant outlet superstars that it started building in the 80s, say its the key on tato taking on amazo. Today is the final day to order for amazons guaranteed oneday shipping look at the etf xrt up over 10 for the year dipping slightly this morning. Joining us today to talk about this and more, saying things are fine with the American Consumer is jay Rogers Kniffen from jan kniffen. Welcome back great being here. All right why the reinterest in super stores this is really not new news doug has been talking about this for a while in pieces. They told us, wow, the super center, we can put stuff in to bringing in the customer vet care services, eye care, the kind of stuff you have to go someplace to do. So that brings in the customers. The other thing theyve done, they said well make the super center more efficient. We dont have nearly as much help on the floor or rather more on the floor and less doing things like stocking shelves and being in the back room theyve been able to take hours out of that part of the business they put robots on the floor to do the cleaning. Robots on the floor to make sure everything is on the shelf and tell people in the back, bring something out because the shelf is missing an item they built showtowers in test se where they can do automated picking and packing of goods to be picked up in the store or a driveth drivethru that makes the store more efficient and much more like an Amazon Distribution Center and its closer to the customer. They can deliver to you from the store. These are not new things they just put it altogether. Overall, given the fact this year we talked about so many names that seem to have found a key to the amazon puzzle, im thinking target to name one, and walmart is included. What do you think is going to be left to impress investors in 2020 i think everybody has figured out the key, right some people can do it cost effectively. Walmart and target are doing that better than other people, even though its still a strain for them competing with amazon is tough weve all figured out the stores and advantage, if you dont have troo ma too many of them, if theyre not too big or expensive whether youre macys, kohls, walmart or target or nordstroms, you all figured that out its harder and harder to do unless youre a very efficient box. The advantage to walmart and target is theyre efficient boxes. They get lots of traffic walmart in particular, since its a Grocery Store 58 of their business is grocery. Youre there all the time. So they keep that traffic running through to support the store and bring down the cost structure. So this is what were going to see people do. Were going to see stores close. Well see 12,000 stores close this year. Probably 12,000 stores close next year. Well see 26 retail bankruptcies, but were learning to compete in a world where online matters, and where the store, too, matters. Everybody needs both, online and both amazon knows they need stores. All the online only guys have been building little stores. Everybody figured out you have do both to serve the customer. Nordstrom is a good example. Theyre building 1500 to 5,000 square foot stores but theyre supported by the big store walmart has 4,500 locations where they can be closer to you than amazon can. Jan, going back to the walmart versus amazon. The wall street journal report about the super center, its talking about edge commuting walmart wants to get into edge computing, become a higher margin business that will support it and allow it to keep building out retail and ecommerce capabilities as well. How the amazon model. Exactly its worked for amazon but for a major retailer to get into this, does this muddy the waters orb do s or does it make . It does both of those none of us understand it we dont know how well it will work or how fast it will happen. Its clearly something that will work if they can do it effectively because we know they need more business strategies. We know that being more in touch with the consumer can come from the computing side, not just the retail side. And we know you can build a business there, because amazon has and we know a lot of people would like to see somebody else in the business besides amazon i think it makes good sense. The question we need to have answered now is how fast, how good, can it be done jan, really insightful. You have been a big help to us all year look forward to more in the months ahead see you soon you, oo all right. We want to, again, return to the topic of the day, boeing the leadership changes, and Dennis Muilenburg out as ceo next month, all eyes are on the aerospace giant, however it was a big weekend for boeing as well on the space side, specifically within the Defense Space and security business after star liner, its unmanned test flight of that capsule returned safely to earth yesterday morning 7 58 a. M. Eastern on sunday it touched down at the armys White Sands Missile range in new mexico, a successful ending to a botched mission in which it failed to dock with the International Space station after it launched on friday. You can see there with the video, it hurdled about 25 times the speed of sound and about a mile above earth, three t parachutes deployed and it landed in what was called an absolute bullseye. So the big question here now is what happens next for boeings star liner, given everything thats going on with the company in general it was an automation issue it was a Software Malfunction that basically caused the sm spacecraft not to fly and dock with the International Space station. Nasa, boeing officials will be poring through that data now to figure out whats next whether its going to be another test flight without crew or whether they can, in the coming weeks, coming months, even move forward without a second test, since the next flight for star liner could be with humans well have to see how all of this plays out as well for the company. All right lets send it over now for our cnbc news update a court in saudi arabia has sentenced five people to death for the killing of writer jamal khashoggi. He was murdered in istanbul last year by a team of saudi agents no names were given for those found guilty three others were sentenced to prison a volcano in ecuador lit up the night sky spewing rock and lava down its slopes its located in the countrys remote Amazon Region the last eruption took place in 2002. A United Airlines flight from new jersey had a rough landing in denver last night the crew on board flight 2429 reported a mechanical issue after the boeing 737 landed safely shortly after 7 00 p. M. Some passengers said they saw sparks on the runway but no one was hurt and luxembourg will be the first country in the world to make all Public Transportation free this is an attempt to curb Traffic Congestion the capital of luxembourg sees the number of people double during workdays. This is due to an influx of workers. All fares will be abolished by next summer. You are now up to date thats our cnbc update for this hour david, back to you thank you when we come back, former transportation secretary ray lahoud will join us on todays big boeing ns. Ew thats when squawk on the street returns. Boeing ceo Dennis Muilenburg stepping down immediately with David Calhoun set to take over next month Dennis Muilenburg had the Board Meeting over the phone, and the decision was made on sunday night and the effect it immediately, Dennis Muilenburg is out replacing them is david ka hyca. He becomes the ceo and president effective january 13th in terms of Dennis Muilenburg and how he is out of a job, it was just late october, early move, when november, when i pressed him on whether he should remain as ceo. You had more than one representative say you should resign i understand those inputs, i respect them again, my focus here is on taking responsibility, owning it we know what we need to fix. Were making those changes well continue to get better as a company. I remain resolute on that responsibility what was the straw that broke the camels back i believe based on conversations with people within boeing, who are familiar with the thought process there, it was likely that the things started to shift starting in november when Dennis Muilenburg and his Leadership Team said we expect to have this in service or certified by the end of the year. Back potentially in commercial service by the end of january. That immediately set off the faa and then last week was really the final straw that broke the cam camels back, when the faa, steve dixon, called Dennis Muilenburg into washington he said, nope, you dont call the shots here you will take back that timeframe and well let you know when this plane is ready to go that was a dressing formal dressing down of boeings ceo. Thats when the board said this is no longer a tenable situation. Its time for a change in leadership youve been hearing, it i certainly had, this board, its not like its been lost of them. Some people have told me that very interview you showed, followed by his testimony at congress didnt help muilenburg in terms of securing his future. The board was watching closely it was a terrible performance on capitol hill. It was really bad. It came across in the worse light in terms of how he answered the questions there was an element there that i heard from people in the company who said he comes off not arrogant, but clearly not as compassionate as he needs to be in a situation like that especially when family members and friends of victims, who were killed in the two crashes, you know, some of them confronted him. That was painful to watch. If you were a boeing supporter or a Dennis Muilenburg supporter, the end of that hearing was really rough to watch. There were family members of these victims getting in his face saying get out. You are not the person to be running this company i think youre right i think that performance, thats really when things started to shift. That in november was not a good month in terms of them miscalculating whether or not they could count on the faa to get this plane recertified by the end of the year, which was never in the cards, but that was the public posture they took yeah. Phil lebeau, thank you for bringing that additional color and those insights to us i have a feeling well be seeing more of you today. From his vacation, we should point out. Yeah. All right. For more on boeing, lets get to former transportation secretary ray lahoud who joins us on the phone. Mr. Secretary, thank you for being with us today. Good morning. Good morning as phil just reported, the straw that broke the camels back here, the fact that muilenburg received a former dressing down by the faa when pressed to pull the companys timeline on return to service. When you were transportation secretary, you, too, oversaw the grounding of a boeing aircraft, the 787 dreamliner back in 2013. The fact that this would be the dynamic thats taking place, how unusual is it and what is your reaction to it well, im not surprised that the board took the action that it took. When we were involved with the dreamlin dreamliner, we were in direct contact with boeing on a daily basis. We made a decision very early on to ground those planes the ceo didnt like it at the time, but i didnt care because i was looking out for safety in the end, i think boeing ended up in a much better place after we figured out that the lithium batteries were causing the fires. And we figured out what the fix should be for that it was done hand in glove with safety as the number one priority no compromise, no deals, but lets find the fix and lets fix it i think in the end probably the board felt that this has gone on too long, the fix had not been found. The relationship with the faa was not as great as it should be so the fact that were seeing a change in leadership at the top right now at this critical juncture in the midst of this crisis, is this something that will help the company to move through this, perhaps sooner than at least up until a couple days ago was looking likely . The one thing that the board needs to get back on its feet, to get boeing back on its game is to hire a ceo who puts safety as the number one priority find somebody quho has gotwho h reputation for safety. Find somebody who is just somebody somebody who has a reputation that is impeccable. And the issue for boeing now is safety their safety image has been tarnished. When you see airlines saying were not going to fly these planes, theyre not sure theyre safe this has to be the number one priority something that they have to talk about every day. A ceo who has to drum it in and maybe some instances change the culture. Maybe some other heads need to roll in terms of finding the fix and making sure that people understand that boeing will become the Safest Airline manufacturer in the world. Do you believe thats what will happen . Well see more changes within management now i do think that you cant lay all the blame on muilenburg the fact that the fix has not been found goes all the way up and down the chain i would not be surprised to see other heads roll in terms of the actual halt in production of the 737 max at this point, is there a critical timeline or, i guess, period in which if that halt continues on, where it becomes harder and harder to bring production back . Until everybody thats working on the fix gets the idea that the fix is not going to be done until theres 100 assurance that these planes are safe, and that they can be deemed safe by the faa, then nothing else matters secretary lahoud, thank you for joining us on the phone. Appreciate it. Thank you still to come, to hell with wall street. E ats the message president ial s candidate Bernie Sanders tweeted. Well break it down when squawk on the street returns soft music when i see obstacles, i create opportunities. When i see adversity, i find a way. When i hear never, i say now. [announcer] Southern New Hampshire university is education made to fit your goals with over 200 degree programs, flexible class schedules, and some of the lowest online tuition rates in the nation. cheering so when i face barriers, i can break through. [announcer] breakthrough at snhu. Edu. Robert shiller says the record rally will stretch on, but there could be a price to pay. Find out more on adg trin nation on cnbc. Com. More squawk on the street is coming up. Cnbc is out with the latest millionaires survey with the debate on the wealth tax waging on our robert frank joins us. He has the results for us. Good morning. A majority of american millionaires support a wealth tax, as long as it hits people who are wealthier than they are. 59 of millionaires support a federal tax of 2 on wealth over 50 million. Thats according to the cnbc millionaires survey which polls 700 people with investable assets of 1 million or more. The support falls to 48 if the tax hits those with 10 million or more. The richer millionaires, theyre more opposed, nearly half of those worth 5 million or more would oppose a wealth tax. Elizabeth warren proposing a wealth tax of 2 on those with 50 million or more 6 on billionaires critics say the threshold would probably have to drop in order to raise revenue millionaires feel like they pay enough already 60 say they pay their fair share of taxes, and a third say they pay more than their fair share it varies by party 88 of democratic millionaires support a wealth tax compared to a third of republicans millionaires think a wealth tax is unlikely to happen any time soon when asked about the biggest threat to their wealth, only 8 said taxes what are the other threats then what else is there . The biggest by far is government dysfunction of course that the definition of that depends on what your party is whats interesting, as i covered the wealthy for 16 years, polling used to depend on what your wealth level was, what your demographic was, education, geography. Now its all by party. Less dependent on what level of wealth you are, and its all if youre democrat, you support a wealth tax, government dysfunction is probably the republicans. If youre a republican, the dysfunction means the democrats. Stunning but not surprising exactly in our current age, unfortunately that seems to be the case so its anybody but anybody but them is fine thats right. We should point out, Elizabeth Warren has fallen in the polls, shes at 2 above 50, and 6 above a billion above a billion and the millionaires support joe biden over trump so biden would beat trump among millionaires hes talking about a big Capital Gains increase that would effect this group well have to ask them i would suspect the Capital Gains tax increase would be much more important to this group than a wealth tax. All right um, where does bernie stand on all this stuff . Well, his wealth tax is even steeper. Higher than warrens . He goes up to 8 on the top rank and, you know, hes not doing great in the polls but we are asking this group about the warren plan which is already 10 times or 20 times higher than the highest wealth tax levels weve ever had in europe what is different about her wealth tax than any other weve had, including those in europe, is that 2 or 6 in europe, the rates are at 3 . So bernie is more extreme than that you pointed out as well, robert, we should not just its not just the wealth tax, its also the change in social security, earnings top that would impact a lot of people so when you add the wealth tax to taxing the gain on that wealth, you are actually getting rates of over 100 on any kind of asset gain or investment gain when you combine those two taxes. Robert, thanks. Thank you, guys were seeing some headlines regarding the faa now, and the 737 max. Phil, is this what you have . Yeah, we have some color on this incoming ceo for boeing, David Calhoun had a phone call this morning, a conversation with steve dixon, the head of the faa. According to those familiar with the conversation, two important quotes from the conversation from David Calhoun to steve dixon. The first one, we welcome rigorous oversight the second one, calhoun in the conversation with dixon said boeing wants to be regulated the importance of these two comments within this conversation are very clear. This is a muilenburg phil, a corollary to what youre saying, the faa says First Priority is safety no set time line for when work will be completed, right thats the same stance that the faa has taken for some time. The fast moneyfaa said it is rt is ready when it is ready. Repeatedly boeing would miss deadlines, overpromise, underdeliver, i heard this quote last week from one regulator within the faa when i was discussing incoming data that was supposed to be turned over in the course of this, the person said it is kind of hard to judge homework when its not turned in. That says it all that was emblematic of what happened between boeing and the faa in the last six months clearly the conversation between David Calhoun and steve dixon is the beginning of calhoun saying things are changing. This will be a different approach to working with the faa, getting the 737 max recertified. But calhoun has been speaking to regulators and consumers as the Company Chairman for some time now, hasnt he . He has been talking with them, but not with the level of urgency that is there now. I think there was always an element of Dennis Muilenburg, working with the regulators in terms of getting the max recertified, and in terms of customers, david, lets be clear. Dennis muilenburg was never terribly close with airline ceos is not a terribly social person in that regard he wasnt rude to them, he wasnt nasty to them, but he is not somebody who when you talk with airline ceos, they say theres a warm relationship there. It was a workable relationship but it was not a warm relationship you can bet that will change under David Calhoun. He realizes the importance of talking with the ceos, and it goes simply beyond heres the aircraft, heres whats going on phil, thank you phil lebeau. You bet he is going to get a comp. Day, well make sure of that before phil came on with breaking news, we were talking with robert frank about the wealth tax lets get back to that proposal, various proposals, potential implications heading to next year bring in Jared Bernstein from the center of policy and Budget Priorities tony, first place to start next year, are we still talking about this as a legitimate concern slash question as to whether it is an issue pursued by whoever the democratic nominee is . I dont think so in all honesty. May be talking about taxes because we always talk about taxes in the debates, well talk about many different schemes jared probably has other ideas for taxes he might want to put on the table, but i think this one will see its day in a couple of months because it is clear that it is unworkable, not the kind of thing likely to happen Bernie Sanders and Elizabeth Warren are where they are on it, theyll talk about it, but i think it will fade jared, do you agree partially agree first, let me say happy holidays to everybody, including my old friend tony that i dont see enough of since he left us for new york good to see you. I disagree with one point, with the notion that the wealth tax wont be an issue. In fact, im pretty sure it will be as tony suggested, it probably wont be this warren idea that really can get to as robert said 100 rates i dont see good rationale for that the notion that we dont tax wealth much at all, most wealth accumulation, particularly unrealized gains goes untaxed, and there are lots of other ways to get at this tony is right, i have a list more importantly, so do the other candidates i think that will stay on the table. Jared to dig into that a little more, there have been studies out there done pushing back against the wealth tax, saying they historically when implemented never raised as much revenue as they promised to. How do you make that, i guess how does that get rectified, how do you get past that argument. Good question, and two responses. One, we can learn from mistakes other countries have made. Europe i think screwed up the base if you allow too many exemptions, it is not going to work they tax on residency, we tax on citizenship. Thats different these days of capital mobility, you have to hold hands with other countries. We now have a mechanism to do that but on the revenue side, i saw estimates of warren wealth tax that say instead of collecting 3 trillion or 3. 7, we think well collect between 2 and 3. Thats still really high i find it surprisingly high. And it is much needed revenue. Theres so much wealth up there, you can lose a lot of revenue and still come home with something meaningful ways of getting it are outrageous you have to, the Administrative Task of getting at that wealth on an annual basis is really onerous. Wasnt just being able to access revenue. There are ways to avoid some of that, some give to places like the center on budget and policy priorities to pay jared. Thats a tax shelter but also i am sure he is being very productive, ways to get around it, but thats not the biggest thing. Administering is cumbersome, difficult, assessing, auditing to get at it is clumsy and difficult. There are better ways to do it like what, tony look, if you want to race revenue, a lot of economists, if you look at a vat, you dont have the constitutional problems with the wealth tax, we didnt get into, clumsy, probably unconstitutional you can raise money that way, not direct or indirect taxes, great idea could do more of the capping the salt tax was a good reform in my opinion. There are other upper middle class tax protections like the mortgage Interest Deduction that you could do things with there are lots of things you can do without getting into these kinds of problems and administrative burdens that salt taxwas a terrible idea. Im with tony on that one heres the thing especially if you talk about the democrats agenda, you cant underemphasize this point. Going from wealth tax tosales tax or vat or consumption tax is going from a very highly progressive tax to one that is far more regressive. Economists love that, i understand why, tax and consumption versus savings, i get the rationale, thats not the path to progress and another reason the democrats, Bernie Sanders, warren, why theyre into the wealth tax is because of the extent of wealth concentration Federal Reserve just came out with new numbers average net worth of households in the top 1 is 26 million. The average net worth of all those households in the bottom half is 27,000 thats a thousand x times the difference theres progressivity that you mix if you go from taxing wealth to tax consumption. Broadly speaking of taxes, border adjustment tax was part of the original tax reform plan. What are we talking about in the Campaign Next year taxes will take center stage republicans will be defending the tax from two years ago, democrats put forth a number of proposals to raise taxes who will win that debate thats going to come down to choice between two people. Dont know who the other person is yet i think the set of issues though, taxes, health care, things like climate and what were doing budget those issues, Kitchen Table issues, bernie is right to talk about education, everyone ought to be talking about college education, something we want to see more of his idea of wiping out debt isnt a great idea, but these are things parents are worried about, what their kids will do in the future, what are the opportunities for them jared, tony, thanks for sticking around during the breaking news. Good conversation. Happy holidays to you both thank you you too. It is 10 00 a. M. At boeing headquarters, 11 00 a. M. On wall street squawk alley is live good monday morning. Welcome to squawk alley. I am carl quintanilla, with morgan brennan, Julia Boorstin joining us jon has the morning off. A remarkable morning boeing is the news of the day, Dennis Muilenburg is out at ceo. Phil lebeau has more