♪ good morning, everybody. welcome to "squawk box" here on cnbc we're live from the nasdaq market site in times square i'm becky quick along with joe kernen and andrew ross sorkin. we'll start with the markets this morning remember, friday was the best day for the dow since october 4th. the markets surged more than 330 points after that breakout jobs number, much better than had been anticipated check out the u.s. equity futures at this hour by the way the gains on friday were enough to erase all the losses we saw earlier in the week the dow, the nasdaq and s&p 500 all riding three-day winning streaks at this point. this morning modest declines, staff futures down only by 11 points s&p futures down by less than a point and nasdaq off by 3.5. treasury yields taking a look at that because we also say yields move significantly on friday

too. ten-year well above 1.8% and 1.822. a developing story from china with big implications for u.s. companies the financial times reporting that the communist party now ordered all state offices to remove foreign hardware and software within three years. this could hit firms like microsoft and dell, hp, especially hard. now analysts estimate 20 to 30 million pieces of foreign equipment would need to be ultimately replaced. the order is not yet public yet but was described to the ft by two cyber security firms so this is going to -- >> this is like the fallout from huawei >> this is the fall-out from huawei everybody out of the pool at one time think about microsoft and by the way one of the names not on the list, apple. >> interesting >> where is apple? apple doesn't do a lot of enterprise work in terms of corporate -- >> maybe not government. >> maybe not government work >> but. >> more of a consumer play >> i don't know. i was thinking about that this

morning. where apple plays in that. apple is obviously threaded this needle better than most thus far. >> they probably don't have a lot of government contracts. >> i imagine it's a government thing. >> right. >> your paper is not -- i mean, certainly shows what's still happening there if you're looking for things to start cooling down in terms of hong kong. >> with protests >> first saw it, i thought it was a swimming pool on a really hot day. it is not. >> this is hong kong, yeah. >> yeah. >> yeah. >> the biggest rally they have seen. >> biggest rally they have seen in months. >> it was remarkable. >> huge turnout other the weekend. >> i don't know how that -- and it's not just talking about it out of hand. it has to do with our trade negotiations one of the things on xi's plate. reminder, december 15th, the countdown is on to what we're talking about, president trump the deadline hits and tariffs set to rise on $156 billion in chinese goods, cell phones,

toys, laptop computers december 15th we'll see whether bojo how popular he is. he has a double digit lead, boris johnson. that's thursday, i think that has to do with brexit and everything else. you know what, after we're going to go into this lull around i don't know if it will be a lull, we may have an impeachment we'll go through this. we have to get to january 1st before we get some clarity on what's happening what's wrong with this >> have clarity at that point? >> it's something about a new year the journal has the same story actually what's with the individual investors bailing on stocks? >> what is with them >> says it's a really good sign. >> if outflows are a really good sign. >> yes. >> markets hit new highs, individual investors pulling massive amounts out of the mutual funds it's usually a counterindicator. >> what's up where have you been? >> i hung out. we went to connecticut. >> you did >> we did. we tried to go skiing over the

weekend but it all didn't work out. >> water ski >> no. but the -- >> do that today. >> the chair lift broke. nobody was on the chair lift but the chair lift broke we actually all went up there all excited with our skis ready to go and then it didn't happen. we hung out. it was actually a good week. >> sidestepping up and then coming down is not fun. >> no. >> it's not fun. >> probably not the best way to spend -- >> what about a pully or a rope tow? >> the magic carpet was working. i'll show you pictures later she was up on skis for the first time that was exciting. >> you -- you're upset today a little bit. >> about what? >> the cookie monster guy or something. >> no, it was oscar. >> oscar i just saw you tweeting about something. >> oh, yes the puppeteer behind big bird and oscar the grouch. >> devastating for you this weekend. it was like a punch in the gut.

>> it was. we all grew up with him. we all grew up with him. >> we all did not. >> big bird and oscar the grouch were my favorite characters. the same puppeteer was behind both i actually met the guy my mother took me to central park tweeted out over the weekend yes, it was like a punch in the gut. i had such -- >> died on the same day they were being honored. >> in washington >> in washington at the performing arts kennedy center. >> i saw that. >> it's been 50 years. >> i don't follow you. >> i know you don't. >> so someone -- >> you don't follow him? >> no, he doesn't. he doesn't want to hurt himself. >> life is too short i have five days a week of his opinions. >> i was actively tweeting about over the weekend another punch in the gut. >> is this going to upset me. >> we'll talk about amazon later. >> i saw that. oh, yeah >> what's happening. >> the left was mad at you again. >> i was furious. >> because you woke to the woke again. awesome. i did see that i saw that she's great. >> we'll talk about -- we have a segment about this later. >> she's the gift that keeps on giving to the right. any way, news related to the

china trade war. china exports in november slaing for the fourth-straight month. beijing stimulus steps are helping to stoke a demand. we'll see. amazon ceo jeff bezos is offering a warning about the potential risks for the united states if technology companies based in america decide not to do business with the pentagon. speaking at the annual reagan national defense forum in california over the weekend, bezos talked about the backlash that tech firms have faced for going after lucrative defense department contracts my view is if big tech is going to turn their backs on department of defense, this country is in trouble. that just can't happen and so, we have to -- it's the senior leadership team to say to people, look, i understand these are emotional issues that's okay. we don't have to agree on everything but this is how we're going to do it. we are going to support the department of defense. this country is important. >> microsoft president and chief

legal officer brad smith also weighed in on this issue >> it is absolutely a test of leadership to be clear as amazon and microsoft have both been in saying we will provide our technology to the united states military but at end of the day, i do believe we want to move our employees with us. we want to attract the best talent, not only the people that work for us today but the people who might join us, some of whom will come from outside of the united states. we need to understand what people are thinking and we need to win their hearts and minds. and what i believe based on the experience we've had at microsoft is that when we engage with our employees, when we listen to them, when we take a principled approach, we bring us all forward. i think that is what is best going to serve the united states defense interests, not just for a year but for many decades ahead. >> this has been a huge issue that former defense secretary ash carter spoken with us about,

the idea that technology companies here based in the united states are less likely to want to do business. >> this is a fascinating event you saw so many individuals all of whom obviously want to do business with u.s. government and they were all sort of jockeying in a way -- i was watching some of the stuff on youtube, all jockeying to say, are companies more willing to do business with the u.s. government than somebody else and all about how they thought about their employees and what they needed -- so i think -- but what i was going to say there was a comment made that i did think was so interesting which was in the '80s and '90s, one of the reasons that there was public support for a lot of the work that people in silicon valley were doing was a u.s./russia fight going on it was very clear. my friend josh wolf made one of these points i had seen and peter teal making some others. it was very obvious and people felt they had to because of our relationship with china today,

because of the economic relationship with china, there isn't this -- there is a u.s. versus china thing, but there isn't a u.s. versus china thing because economically in some ways certain companies -- >> it's always somebody, andrew. it's always somebody. >> i should find it. we should talk about it later more than interesting piece. >> always somebody it's always a reason to have a strong defense. >> battling it out over this. >> no. i think we need to i'm saying the public support -- >> whether it's china, north korea, whether it's iran. >> but the china piece because of the economic relationship if you can make it as clear, you don't have -- >> you're not frustrated at all that these ceos have to defend dealing with the defense department >> no. >> i'm happy that finally all these silicon valley companies actually aren't being hit by the woetness they --

>> microsoft and amazon are both based in seattle. >> seattle is worse. >> notice who was not there. notice who was not at that event. >> the actual big silicon valley events having so many problems with their work force right now. >> i can't believe we're having the conversation that a large group of the population would be mad at the tech companies for aiding and abetting the defense industry. >> with ash carter coming in here and talking about these things, he's somebody who worked with the defense department for his entire career at one point or another and who had been out in silicon valley trying to make headway. >> i'm happy i commend them, but looking at bezos now, he looks like he's ready to be in the s.e.a.l.s. or something. if we need some defense of this country, i'm sending that dude out with the special op forces with a bayonet in his teeth or something. his voice is deeper. what happened to him, huh?

he's cool. he is. >> he's a cool dude. >> look at that dude god, he's going to bust right out of that shirt. i think that's cool. can you see him like come up out of the water with charcoal on his -- argh. >> speaking of amazon, another issue we talked a lot about -- >> that is true. >> amazon announcing a lease to open offices in new york city's hudson yards less than a year after the company pulled out of those plans to build a second headquarters in the big apple. i'm going to change that in long island city. that's the more important part the new amazon office in manhattan will house a consumer and advertising team starting in 2021 and reignited debate over the company's failed efforts to build a second headquarters in queens the critics being aoc and many on the left progress more progressive end of the left proving that incentives are not

necessary to attract employers to talent-rich city like new york city. this only brings fraction of the jobs that would have gone with the queens city. new york city congressman alexandria tweeted out in part, won't you look at that amazon is coming to new york city any way without requiring the public to finance shady deals, helipad handouts to jeff bezos and corporate give aways. >> save city billions. >> and save the city billions. >> save city billions of revenue not coming in. >> let me make two comments. >> we know this. >> i have a different angle on it this morning. if you're a real progressive, if you were actually not a faux progressive, if you were a real progressive. >> like you. >> no. >> okay. go ahead go ahead go ahead >> if you were a real progressive, you would not make this argument. >> okay. >> a, we're talking about 1,500

jobs versus 25,000 jobs. but, b, a real progressive say you don't want the rich to get richer guess who gets richer, manhattan. this was never about whether new york city write large gets these jobs this was a question of how do you take an area i would describe underdeveloped long island city queens, which had been trying forever to get big businesses to come and do business there and get them there. getting people to manhattan does not help the cause so the idea that this is somehow some progressive effort is almost the antithesis of that. this is what -- this is the inequality she talks about the the antithesis of what i would think she would want. >> sorry it's okay. it's just -- >> i was trying to make an argument to the community of people who are supporting her. >> for someone like me or just irrational people to try to explain the whole woke mentality of anything in all the different

bells and whilss and now, no, that disqualifies you here, it's just crap, andrew. and i understand what you're saying but look, business is good we know this it's totally redundant they should have wanted it it's absurd -- we'll have the guy on today. >> we'll talk to him. >> nobody likes corporate subsidies. they're terrible to begin with. >> you go back and forth. >> the negative of that is you finally get to a woke place. i don't want to get to a woke place. i want to stay where i am. >> you're not going anywhere. >> are you sure? good we want jobs. >> we want jobs. >> we want the tax revenue from the jobs to do things for the city. >> given the amount of money that she's willing to give up to create jobs in so many other parts of the world, meaning for all of her other efforts. >> she's your problem, not mine. what are you arguing with when he about her for she's your party problem. >> this is your tease.

>> you know what i like, did you see the jobs number on friday? >> i did >> so, i immediately saw -- >> broadcast live right here. >> very first thing out of bloomberg news, worst kpi in u.s. has not -- >> that was not. >> i know. but i'm just telling you bloomberg is like, let's find one place in the country that really still sucks so we can write about it but it has nothing to do with us investigating trump and not investigating ourselves. >> that was a fair -- interesting fair story >> all right >> who ruined the coal industry, trump? >> no. but what he said he was going to do and what he's done are two different thing. >> you forgot to read the tease. we're not in break yet. >> what. holy -- any way. coming up, get ready for a busy week ahead. we have the play book for data points and market events to impact your money. those bloomberg ads. that's one charismatic dude when you put him on camera. we'll talk about amazon's

move in new york city with new york state senator michael ginariz. stay with us sorkin is back ♪ >> announcer: this cnbc program is sponsored by -- baird they're changing by the nanosecond. that's why cognizant created a unique engineering approach to design and build new digital products. learn how cognizant softvision designs experiences and engineers outcomes. ♪ cool. ♪ but with opportunity comes risk. and to manage this risk, the world turns to cme group. we help farmers lock in future prices, banks manage interest rate changes

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cme group - [ dramatic music ]ing ] ahhhh! -ahhhh! elliott. you came back! ♪

♪ get ready ♪ i'm going to try to make you love me, too, get ready, get ready ♪ all right on this week's agenda, the fed begins a two-day policy meeting tomorrow with the news conference scheduled for wednesday. it is expected to hold rates steady we also have a busy week of economic data including consumer and producer prices. we have the latest read on retail sales coming up also import and export prices the november jobs report saw blowout numbers friday with the unemployment rate falling to 3.5% even with the strong economic data, issues like the trade war and low interest rates clouded investor sentiment with recession fears. our next guest who doesn't need to come on today says that may finally be coming to an end. joinings now jim paulson, chief investment strategist. we'll get it right from the horse's mouth. did it get back to you were you watching when i was talking about you on friday? >> i just heard a little bit, i

think, of it, joe. >> pays to watch, doesn't it, jim in normally pay to be tuned even just in the background. any way, you sent that to nae even though we haven't emerged from a recession because there was no recession that it almost feels or at least there were certain aspects of our mood for the past six months there was enough of a concern about a slow down that that number on friday was like one of the first numbers that dispels a recession. >> yeah. you know, i think we had almost 20% collapse in the stock market last year. then the world economy slowed down then we had bond yields collapse in the negative territory and inverted yield curve, still had the trade war going on we passed the anniversary for the longest recovery ever in u.s. history that combined to just create a sense in most people's minds that we were in recession or imminently headed for one. i think those recession fears

piqued in august i don't remember at a time when we had that strong recession fears and the behaviors, joe, were very recessionary we were led by all the defensive assets like gold and safe haven dollar and bond and defensive sectors, low vol investing it was going up, it was led by bearish assets if you will then the data got better in the summer people still doubted it. they doubt that the stimulus, policy officials was going to work that sounds a lot coming out of past recessions when everyone is very doubtful it's going to work and then we get a blow out jobs number and you had the stocks going up even though yields were going up it just felt like exiting -- finally exiting a recession. we'll have to wait and see if that's the case if we move forwards more optimism next year, but it sure feels like you're coming out oaf a year of recession fear. >> you can just see it in some of the numbers in terms of 135

billion being pulled out of u.s.-stock focussed mutual funds so far this year you would think if you didn't do sort of the good news is bad news, you would think that was a bad thing, but journal goes on to say outflows are assigned and investors aren't chasing the stock market and strong performance and suggests that the major indexes have plenty of room to run, even though it's been a fairly long rally i think that plays into what you're saying, the sentiment >> i agree you know, there's a number of oddly good things right now, joe, that we just 11--year-old recovery shouldn't have. i'll throw out a few of them here productivity picked up in the last few years it's almost more the two times greater than it was in the first six years of this recovery if you're at full employment, what's the one thing you need a recovery extender and we got it

with the pickup in productivity over the last three years now about 1.5% per annum labor force participation rate, you talked about friday, is now rising so the unemployment rate has fallen by .2%, job creation is up 1.4% and the difference is 1% increase in the labor force partition pags rate is a gift this late in the cycle we're having a surge in household formations in the united states because millennials are finally getting married as they average age goes over 30 in forming households. that's a huge positive for growth we have -- we have this huge chunk of the economy, the manufacturing sector we thoroughly recessed and can now recover it again had the privilege of reviving a big part of our economy and to your point, we still have a wall of worrywarts. the only difference now is they're armed with a wall of

cash and they're woefully under allocated to risk assets, so if it does continue this recovery, there's a lot of portfolios that are going to have to up their risk asset exposures which could drive stock market values and other values higher. >> you're very good at compartmentalizing everything, jim. you sound so happy with the way things are going, all these great policies, this trump economy, that i know how you really feel. it just must be weird for you. you compartmentalize it, right you want things over here and everything else is over here and fully to put up with what's going on, but to just enjoy all the money you're making. is that basically it >> you know, money may trump trump. >> elizabeth warren versus donald trump what do you do elizabeth warren/donald trump. what do you do >> i personally, joe, would like

a more moderate choice in there somewhere. i'm hoping we get a little more moderate choice. >> let's say that was it i want you to say it i'll laugh if you say either one. forget it. i'm not going to get you to do that it's just too hard it's like what is it, like sophy's choice paulsen's choice see you later. thank you. >> thanks. >> god he's excited about things so am i. i'm okay with it coming up when we return, the edge for investment. those were good numbers. >> those were strong numbers >> the edge for investors. we'll hear from morgan stanley ice innovation lab and do that next and plus a box office disaster we'll show you the movie that couldn't bring in an audience even with discounted tickets "squawk box" returns with that in just a moment ♪

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great. thank you. thank you, sir. lunch next week? terrific. say hi to the team. will do. call my office, i will. -sounds good. alrighty. servicenow. works for you. welcome back to "squawk box" this morning time four executive edge morgan stanley selecting ten startups where women led can get coaching on building their businesses and meet with potential investors. joining us to talk about that

c carla harris so what happens today. >> yes today is the demo day we talked about before we're so excited we have over 300 investors showing up so that's been a big learning because the number has gone up every year since we've done this now is the time for the companies to come out and show what they've done over the last six months and how they have advanced. >> give us an example of one of the ten companies. >> this one company called blue wave gone through early epa trials and show they can kill mersa on most surfaces that's one exciting thing. there's another company called mighty well, a wearabled my tech company if you will that has made some very important strategic collaborations and probably start clinical trials with a major hospital in the country post the lab. >> blue wave go back to that. they kill mersa. >> they have a machine where you can put a teddy bear in a children's hospital and you put

it in there for five minutes and it kills all of the germs on the teddy bear. >> that's huge. >> it's a much bigger problem in hospitals. >> that's how most infections are transmitted. whether you're in a hospital setting or not, think about an orthotic, a limb, those get smelly and infected. again, you can put it into the device and it will kill anything that's on that surface. >> so, at the end of today, what kind of funding do you think happens? or how does it happen over the next couple weeks? >> yes here is how it happened in the last couple years. many of the folks that have actually come to the demo day keep their relationships with the companies and then they will actually be apart of their series or be a part of a pre-series a-round. i expect to see that happen in a big way with this class. >> how much money do you think all in if you were to measure how much money maltly gets raised after today as a result of this? >> i would say it's in the low 10s of millions over the next

year or so. >> do you think there's a unicorn? >> absolutely. don't ask me who it is i have to like all my kids, right, all nine of them. if you guys weren't doing this, do you think these companies would have access to this kind of capital that's the fundamental question. >> yes, you are right. and i think that many of these companies would not have an opportunity to raise the kind of financing they will be able to raise beyond this lab. not just because of the visibility that the lab creates but also because of the some of the content and coaching we have been able to give them no question. >> thank you for coming in. >> thank you for having me. >> let us know what happens. >> i will. >> we want to know about the unicorn. >> i'll let you know. >> i would be so happy if one of these companies has their ipo here one day wouldn't that be -- >> absolutely. one from our first class is on the way that's landen. she's on her way when we come back, a tesla cyber truck spotted in the wild. we'll show you the test drive caught on cam rand talk to

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[ dramatic music ]ing ] ahhhh! -ahhhh! elliott. you came back!

♪ good morning u.s. equity futures are little change this morning down 23 on the dow. big day on friday after the dow's report, s&p down less than 2 points nasdaq indicated down about 6 1/3. overnight in hong kong protesters marched in one of the largest demonstrations in march. 800,000 people participated. police say less than 200,000 largely peaceful with a few incidents of vandalism something else that's taking place this week, unprecedented trial on tap today that could test the federal government's role in deciding the future of

mayor corporate mna. coalition of 13 states and the district of columbia are suing to block the 26 billion planned merger between t mobile and sprint it would combine the world's third and fourth largest cellular providers this is going to be a real test of what happens with these states whether effectively states will disintermediate what the federal government has done if by the way this deal doesn't happen, there's a whole view in mna land -- it's funny all these mna bankers. >> it creates all kinds of uncertainties. >> they're licking their chops. >> more fees coming through? >> they'll lose the fees on this particular deal, some of the fees, but then the what can they do with dish and charlie, charter, some people talk about comcast, our parent company what

are the different versions could softbank come in and do something different with sprint. >> it would be very unsettling if the states undo any deal ever done if that happens? >> you're asking the sort of existential question about regulation in america right now. >> it's happening on all kinds of places too. the auto manufacturers who are saying, okay, we want federal goal li guidelines we follow, california says if you follow the federal and not ours we'll come after you, too it is very confusing there are different rules that the federal government doesn't supersede let's also tell you about the box office "frozen 2" dominating the box office for a third-straight weekend. disney sequel bringing in $34.7 million in north america that brings it global total to about $920 million and it pushes disney's total take for 2019 over the $10

billion mark another animated release was a total bomb playmobile the movie brought in $668,000, the third worse opening for all time for a domestic release in more than 2,000 theaters based on the line of german children's toy the movie is being released domestically by stx films. >> you haven't -- you're laboring through >> how about "claus" on netflix? the early story of santa claus >> claus or clause. >> it's claus that becomes clause it's a cool movie. >> my son is so artsy. you know about waves, my son went to see waves. very affected. i think my wife was, too >> what's it about >> there's some very sad disturbing tragic things i think

that happen. he just -- they came back and they were like -- >> shocked. >> yeah. i didn't go out. they let me stay home and -- you know what i was doing. >> gambling. >> winning winning! i was 4 and 1 on saturday. 4 and 2 on sunday. i think i bet on friday too. but you know where i am. >> addicted. >> 2 and 20. >> i'm up $760. >> i'm at $760. >> start up of 500 52% return not annualized. you want to do a 2 and 20 with me i'm taking it right now do i need to file registration >> on draftkings. >> yeah. you want in? >> jury finding elon musk not liable for defamation. over the weekend he was seen driving tesla's new cyber truck around the city. we'll talk about musk's reputation and what it means for the stock with tesla investor kathywood. that's next. "squawk box" will be back in just 30 seconds.

stay here. sfx: [phone ringing] you still have service? call the insurance company it's them, calling us. it's going to be a week before they can get through on these roads shhh, sorry, i didn't catch that. i said ask how soon they can be here right now? what's now? he says they're surveying our property now they're probably at the wrong house i don't see any hovering his name is hovering? look up? by automating claims with machine learning and analytics, cognizant is helping insurance companies advance how they serve even hard to reach customers. cool ♪ see, we told you we would be right back u.s. ekty futures are indicated a little lower coming after big gains on friday capping a week that actually got rid of all the losses we had seen early in the week at this point the dow futures are indicated down by 27 points,

though s&p futures down by two points the nasdaq off by six points but again those big gains on friday came after the jobs number was much better than anticipated. new troubles for tesla after another incident involving the company's auto pilot system. a man driving a model 3 in connecticut slammed into the back of a state police car on the highway. police saying the driver told them he put the car on auto pilot because he was checking on his dog in the backseat. the good news, nobody was seriously injured. >> explain that to the police. oops sorry. explain to that to the officer you hit. >> yeah. i don't even -- that would be a very bad conversation to have. check this out, spot it on interstate 405 in california, a tesla cyber truck test drive this footage provided by roberto cruise who said the truck looked massive and stood out like a sore thumb it was more impressive in person >> sore thumbs are bad, aren't they

maybe it just means that you certainly notice it. >> it does look big and high >> it's a truck. >> yeah. >> maybe it is joining us right now is tesla uber bull kathy wood the founder and ceo. great to see you. >> thank you, becky. happy to be here. >> tesla is the top holding in several of ark's funds does that continue to be the case >> yes >> there's a new story about elon musk or what about tesla. what do you think so far what do you think of the cyber truck or the trial that just found he was not guilty of defamation >> well, on the cyber truck, we analyzed it from many different angles, metrics and it far surpasses other trucks you saw the towing of the f-150. there was some doubt about the cyber truck being the uber truck -- >> there were questions when they saw it pulling the ford f 150 saying because the slack was

there gave the advantage to the car. >> sure. so sam chorus, you look on twitter, you'll see a number of charts he's done comparing the cyber truck to the f-150 and other trucks there's just no comparison. >> you think -- i guess that's a point, too, though it's not necessarily a fair comparison you think it will be people who would bought a f-150 or a brand new market >> it's interesting. we did a google trends analysis of the excitement about the cyber truck relative to the early days of the model 3 and what we're seeing is the excitement is in the areas you would want it to be, in the midwest, in the more rural areas. so, i actually think it's going to be a significant competitor to the f-150. >> what happens next they had strong earnings, a lot riding on the next quarter that comes up what you watching to prove to say, hey, we were right, this is

the way it's headed and it's going to continue to go up from here >> well, there are four barriers to entry that tesla has and now many more people are beginning to appreciate them their battery, the cost of their battery much lower so much low r than other auto manufacturers, the other auto manufacturers have to sell their higher vehicles at a -- >> higher price. >> loss or higher price if they want to meet the competition tesla they have to sell at a loss as they're losing their internal combustion engine that's one mote. this is like taking a leaf from apple's book when apple was pushing this smart phone market ahead much fast eer than noek ya, ericson, motorola, it designed its own chip and the rest is history. >> what kind of market share do you think tesla has to capture to kind of capture the kind of price that you talked about over

the years for where the stock could be >> well to get to -- so we have our bear price five-year target is $700. that would be if they lost two thirds of their market share and had no autonomous -- >> if they lost two thirds of their market share >> yeah, so going from 17% of global sales down to 6. >> and by the way, just so we're clear, you're measuring this on total ev sales and you'r considering that to be a separate market. >> if their market share declines. >> like apple did, right >> right >> but apple maintained 80% of the profits. >> what did you say your price would be >> $700. doubling over five years which meets our minimum 15% compound annual rate of return. >> but they have to -- as a total share of the ev market, not the total share of the automobile market. >> correct >> it has to be 17%. >> no, no, no, no. it's 17% now and our bear price says they'll

lose two thirds going to 6%. our bull case, our bull case, used to be they would lose one third of the market share going down to 11%. we are rethinking that because they have been maintaining that 17% market share over time and so it's quite possible that they could gain share. >> can you relate the ev market, total ev market to the total automobile market. take those numbers and translate them for us, what percentage of the auto market -- >> will evs. >> does tesla have to capture for these numbers to work if you think about it in that context. >> okay. so, we believe that the ev sales in 2024 will be 37 million units. so that's more than a third of total auto sales and so tesla maintains its market share, i have to do the

arithmetic, i think the more relevant static is percent of evs since that's where the market is going, right >> right but what i'm trying to understand is therefore when this is all said and done to the degree you have to believe under your scenario and i think largely everybody's scenario that one day the entire automobile industry will be 100% in the ev market, i'm trying to think through what does that mean tesla captures. >> we believe it could capture we're evolving to the point of view it could sustain this 17% market share yeah >> what do you think when you hear people -- your bear case is that the stock more than doubles from here. but what do you think when you hear people say my bear case, the guy last week talking about it, my bear case is the stock goes to $10. >> i think they're ignoring a lot of realities battery is a mote, chip is a mote, artificial intelligence, their miles collected, real

world miles which was going to feed the a.i. engine, they've got 14 billion miles, google has 10 million miles and still tesla is the only auto manufacturer that can do over the air software updates to change performance. >> very quickly, what automobile manufacturer in the world has the largest market share right now? >> well, i think you've got toigt and volkswagon. >> what numbers would you put them at right now? >> they have roughly if i'm not mistaken 10 million units each. >> okay. so what percentage of that -- >> so autos are about -- autos are about between 85 and 90 million in terms of unit sales per year. >> okay. then my last question, and they are market caps? >> to us -- to me that's not relevant because tesla is not an auto company and it does not have -- and does not face the hurdles that they do in terms of

trying to move to electric and move to autonomous it's going to be pretty difficult. >> kathy, thank you for coming in today. >> you're welcome. thank you m. >> merk is buying a company, doubling the price coming up, the republican anyway, it's weird maryland, new york, new jersey continue to try to reverse the new tax law. don't forget to subscribe to our podcast. you'll get interviews, original content and behind the scenes access look for us on apple podcasts or on your favorite podcast app and subscribe to squawk pod today. boxed in, or held back. especially by something like your cloud. it's a problem. but the ibm cloud is different.

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the salt battle continues. new york, connecticut, maryland and new jersey continue to fight to have the salt reduction cap reversed joining us now new jersey congressman scott gotheimer and they're co-chairs. they are bipartisan because who's the democrat and who's the -- do you know >> it's upside down. >> you're the democrat >> i am the democrat he's the republican. >> theoretically you want to get rid of the salt cap because you are from a fairly wealthy area in new jersey. >> our tax went up that's why i want to actually get our taxes down >> okay. i don't understand that as a democrat how about you? >> so i support removing the salt cap but i fought very hard during tax reform because i'm on

ways and means. >> you want to remove it >> yeah. >> that would blow a huge hole in an already bloated -- >> i do believe in lowering taxes. you see the economic growth on tax cuts right now we're seeing numbers you saw the jobs numbers you lower taxes that's a good policy if you're going to lower taxes on new yorkers, i can be part of that. >> you're from a salt state. >> wouldn't it exacerbate income inequality who is affected? most average people aren't affected by the salt provision, right? you're talking about your really well healed constituents would be benefitting. >> most of my district is affected by salt and their taxes are up most of my district. property values are down in berggren county, it was at $24,000. when they gutted it at $10,000, that's meant a massive -- >> it's everybody. >> you can't buy a home. property taxes are high. >> exactly property taxes are -- >> that's the problem.

and i kind of understand where the republicans come at this and say, okay, get control of your property taxes why are your property taxes so high >> you know my answer to that which is, hey, those states that are often complaining about it, how about you stop taking all of our tax dollars, ripping us off for these moocher states who keep stealing from us. >> you're hitting the real problem. saving the $10,000 state and local problem. it's a spending driven problem causing them from going through the roof get the spending under control out of our state capitals and you'll lower it. >> what about to josh's point that a lot of the states that are in favor of this are actually taking money from the wealthy states >> the moocher states. we've heard this argument, you go back and forth at the end of the day. lowering taxes is good for everybody so i think we can come together. >> i say one thing. >> fix the root problem. >> here it is. the issue is that it's double taxation i'm fine i say to mississippi that takes

$4.38 for every dollar it pays stop relying on our money. half their budget comes from us. >> in all respect, the flip side of that is when i talk about increasing capital gains tax, for example, or taxes at the end of life people like joe and others -- >> what do you mean, people like him? you don't want to raise any taxes. >> they say that's double taxation. >> right. >> so -- >> i'm not with you on raising those taxes either but my point to you is why are we making this -- these other states that are looking at us and telling us how to run our state, stop telling us how to run our state, worry about your own shop stop taking half your budget from the federal government and relying on that and start there. right? then actually be -- they should be responsible then they can talk about us. in the meantime -- >> josh, are you yes on impeachment? >> i'm still -- as i think i should and the responsible thing to do is looking at all the

facts. >> you don't know enough you didn't sit through all -- what we've sat through >> we've got hearings today and we're going to -- >> you really don't know yet >> i know that i'm disturbed by a lot of what i've seen. >> is there a chance you vote no is there a chance -- >> the fact that i'm not answering means i don't answer until i go -- >> it's going to be bipartisan. >> i hope you study all the facts before making a stock pick >> i feel -- i've got my own viewpoint on this. i don't -- i'm not voting so it doesn't really matter but how about you? >> we've got to go a huge satellite launch.

' big week ahead. big trouble. why jeff bezos is worried about the risk of big tech abandoning

uncle sam. and the msrp fakeout are those big discounts incar ads getting you excited? before you head to the showroom you'll want to hear a cnbc special report as the second hour of "squawk box" begins right now. good morning and welcome back to "squawk box" right here on cnbc. i'm andrew ross sorkin along with becky quick and joe kernen. dow looks like it will open down 41 points off. s&p 500 off 3.5 points and the nasdaq looking to open down about 10 points. joe? >> big week ahead for the markets following friday's big jobs number. the top of the list, a two-day fed meeting that begins.

is it time again for that? steve liesman joins us with what a look at investors should be watching i thought as of friday we decided that we're not worried about good numbers or bad numbers? they're sort of -- we can just put them on the side of things for a while. >> why don't you read the fabulous script that i wrote there which is almost exactly that. >> does it really? >> it says almost exactly that >> you are bad at reading the prompter but you intentionally remain bad over 30 years. >> that's not a skill that really would take you a long way. >> i don't really like it either but it has in there what i want to say. >> what if you never had to think about anything but reading? that would be bad. >> yeah, it would be bad what the report that i wrote here says is that the blowout jobs number had a couple of things in it first, it rolled back the concern over a looming recession and an economic slowdown second, it did so without igniting, as joe suggested, much concern about federal reserve rate hikes that you might think with a 266,000 job growth.

rate cuts remain the odds on favorite but we have a 0% chance of a rate cut in december. not going to happen. then a tentative 51% in july, which, you know, is likea hedge. is not really even a -- >> so far out it's probably not -- >> so far out we can't even see it that's what the market thinks. with the fed ex pektexpected to hold, it's expected to be on the policy rate holdout. they're likely to come down. let me tell you where the fed is 2020, 1.9% they still have to cut the median fed forecaster has a hike built in then 2.1, then all the way up to 2.5. that's coming down, folks. probably that whole structure of rate projections are going to come down and we'll see where the fed stands the new thinking is rates won't go up until inflation firmly shows up and that may not happen until the seemingless bottomless

pet of workers runs out. i did some work on friday looking at participation rates, employment levels. there may be as many as -- depends how you count it, 10 million extra workers out there. take a look. very simple exercise men and women 16 and older participated it would be 3.3 million women and 7 million extra men. this is 16 and older doesn't take out for retirement although retirees are working until older. 16 to 19 are out of the work force, too we have no idea how many could come back in, how much it would take for salaries and some massive jobs betting on them not returning has been the wrong bet and that all continues for low inflation and the fed that can remain on hold >> when we've talked about this in the past we've pointed out there are issues like the opioid crisis and other things that have displaced some of these workers and make you wonder whether they can come back to work. >> right some of that may be and some may be the wage.

i've always said, don't tell me somebody's not going to do something until you tell me the price they're not going to do it at. >> i guess part of the question would be benefits, too the trump administration has moved to cut back some of the extension of benefits that were put in place during the great recession. >> i'm not sure that's trump administration stuff >> we just talked to one of them. >> we just talked to the trump administration last week about some changes they're planning with the snap program. >> that they're planning. >> that they're planning, yeah. >> but the biggest part of the change has been at the state level. it's harder in general to qualify for unemployment insurance and a whole bunch of reasons why claims have -- the level of claims have come down that's probably not the biggest explanation for the idea of why claims are down and that's because there's no jobs out there. >> joining us to do that is michael schumacher, the head of global rate strategy at wells fargo and sarat sethi.

reports last week were fantastic. >> exactly if you look at economy, things are getting better our views if the tariffs don't come on, we still have a ways to go the market looks like it's adequately priced. there are areas in the market financial services, home building products are adequately -- we have good opportunities in those they're trading at multiples way below the market really good balance sheets and have good earnings trajectory. >> december 15th happens next sunday which means monday morning you're coming into we don't know what. how would you place your bets ahead of that? >> the cash that i have on the sideline, if that does happen and the market sells off like we saw last monday, there are going to be good opportunities out there. good high quality companies, whether it's the visas, master cards, honeywells, all of those will be sold off that's when you go back in if

you've missed those. >> do you think the opposite is true if there is a detante or status quo as of sunday. will the market push higher or has most of that been baked in. >> i think a lot is baked in but then you'll have companies that are not forecasting additional growth i fear that down the road you might get this real push in and the markets could really run not a bad thing, but then you have to be careful because valuations on some of the growth stocks are already extended. that will be the opportunity to take money off and say, okay, where do i want to be for the next couple of years now we've got a pretty fully valued market. especially the momentum side which today is very fairly rallied. >> let's talk about the rate structure. the ten year on the good news friday pushed above 1.8% watching things firm up. you don't think the fmoc is going to be the most important announcement we see from the fed. why is that? >> no, it's trading. the fmoc is pretty well baked

in the most interesting thing out of the fed will be talking about repo it's bad to talk about repo monday morning at 7 a.m. so we'll set that aside the trade is the dominant factor if there is a deal, maybe not this week but the next month or two, we think tens push up to 210, 215 if by some amazing miracle -- >> that's a rapid move >> not really. 25, 30 basis points. it sounds rapid in today's context, but that's not a huge move think about where the ten year began this year, 2.68. you could retrace a fair bit of that even more if you get a good shield bottom line, we think it's going to be moderate but not for a few months it's a mini bear market. >> sarat, what happens if rates firm up. >> i think the financial services sector will do well the whole fear of the inverted yield curve we had had this market completely sell off especially on the interest of the stocks so financeals i think, especially the big banks, the

regionals will do well you have to be careful because it will flow out of the dividend substitution stocks into the cyclical and value stocks where i think the opportunity will be. it could be a rotation in the market to your point, you might not see a huge rise in the overall market but within the sectors you'll see a rotation. i think that's where investors have to be kind of careful. >> becky, i think the market has a zen going with the trade war i think they're off of this idea that it's going to dramatically derail the economy i think there's an acceptance, a drag on the economy and it's probably a couple .3. >> .3 gdp? >> gdp can grow at 2% with a consistent trade war. i'm really embracing the idea that jim bullard came up with a couple of months ago and i think others have as well, which is there is no kind of it's going to go away the trade war and the conflict

with china, you saw the story in the times today about the wto and what's happening there this is part of the fixture from now on and what is that old -- the subtitle to dr. strangelove, how i learned to love the bomber -- the bombshell trade. i think the market has a certain thing with it. it's the most consequential outcome. china is with the state enterprises. no international the dow, icrosoft, all kinds o others as they kind of retaliate for the huawei zte situation what does that mean? >> this is two steps forward, one step back. i think a lot of the american companies are baking this into their forecast that the growth that you're really seeing from

china for the next three to five years, you have to moderate that some of it might be headline news, your software isn't going to be used u.s. is going to have that >> what you're talking about are the highly valued gte. >> they're built in. >> this is another thing investors have to be cautious of it's trieding at 30 times earnings what you have to invest in and your exposure. maybe not just in china, it could be more in europe and the other emerging markets. >> sarat, michael,thank you fo coming in. >> thank you see you later. coming up, to infinity and beyond from jeff bezos to richard branson. we'll talk about investing in the next frontier with nasa's administrator next andrew, you still want to go up in one of these, right >> i do. >> i'm all for that for you. >> first, as we head to break,

deal news for you. dow component merck is buying arqule for $20 a share did you own that one so nice. >> some hedge funds were getting out of it yesterday. >> up 100% this morning. $2.7 billion stock deal specializes in cancer treatments hello. up 101%. stay tuned you're watching squawk you're watching "squawk box" on cnbc what are you doing back there, junior?

since we're obviously lost, i'm 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, that's what i'm afraid of. he knows exactly where we're going. my whole body is a compass. oh boy... the my account app makes today's xfinity customer service simple, easy, awesome. not my thing. the space program aims to put humans back on the moon by 2024. >> in that >> oh, geez. we're going together reallyshould be -- you should be there as well because one of the goals is to -- >> no thanks i'm staying right here. >> a lady is going to be going as well. making the way for private

companies to build a lunar economy and one day send humans to mars. joining us is the nasa administrator. jim, good to see you exciting this is a prelude maybe to mars. >> thank you >> which seems far away to most of us. it's a space launch system rocket it is different than what we've seen in the past and how does it work it's not like a shuttle, right is it reusable >> no. no, it's not the space shuttle went to lower earth orbit. the space launch system behind me is the most powerful rocket ever built and it's going to take our astronauts to the moon. it's also going to enable us to assemble a space station in orbit around the moon which is going to be evolvable to be the ship to take us to mars. so the core stage of the sls rocket which is behind me is now complete we're very excited about it because this is going to enable us to go to the moon, sustainably. we're going to stay at the moon.

we're going with commercial partners, international partners driving down costs and increasing access but we're also going to utilize the resources of the moon. on the south pole of the moon there's hundreds of millions of tons of water ice which is of course life support. water to drink and air to breathe but it's also rocket fuel hydrogen is, in fact, rocket fuel it's the same rocket fuel that's going to power the sls rocket behind me. of course we're doing all of these activities to get to mars. so we're very excited about the core stage of the sls rocket being complete so that we can get on with the artemus mission which is our mission back to the moon sustainably this time we're going to stay. >> commercial pay load initiative are there more private companies involved now than in the past with nasa? there's 14 we'll talk about some of the new ones just added. i mean, there are always subcontractors, i guess, but it just seems like this is even expanding the private sector's participation.

is that fair to say? >> big time. absolutely we are expanding the space economy. it used to be that nasa would purchase, own and operate all of the hardware that would fly into space and now what we're doing is we're saying, hey, where there's a commercial marketplace, we want to be a customer we want to be one customer of many customers in a robust commercial marketplace we want to have numerous providers competing against each other on cost and innovation driving down costs, increasing access to space. the sls rocket behind me is the rocket that's human qualified, that will be able to take our astronauts to the moon, but once they get into orbit around the moon we're going to have capabilities that are going to be delivered commercially. as you mentioned earlier, we're going to have all kinds of activities on the surface of the moon delivered by thecommercia lunar pay load services program. the idea being that we need all of these commercial partners to combine with what only government can do at this point.

then we need to combine with what international partners can combine and provide a coalition that can go to the moon and stay. >> geez. driving around up there. you're going to need that -- i guess you're going to need that. maybe one of those new tesla trucks it kind of looks like what you'd be using up there on the moon, doesn't it i mean, maybe that's why they decided -- so this is -- this -- one way of saying it, we're buying -- nasa is buying rides to the moon rather than owning the delivery system. that's kind of cool and it might unleash the private sector. >> so what -- when it -- yes, that's right when you think about human flights to the moon, the rocket behind us is a nasa rocket nasa purchased, owned and operated it, but we're also going to be delivering cargo and we're going to be delivering payloads to orbit around the moon to the gateway think of it as a space station that is evolvable to become the

ship to take us to mars. that's what we're building it's going to take all of the above. >> andrew is in. i don't know whether there's a lottery, a list, something like that, but you're ready, right? >> i don't want to go on the first one. >> you don't want to go on the first one. >> good, how are you. >> maybe, number 100. >> great to see you. i wish we could have a longer conversation about this. this is something that excites me a lot we have a lot coming up on the show to return when we return, call it the msrp fakeout why those discounts you're seeing in ads and show rooms might be anything but true that story when "squawk box" returns right after this don't forget to subscribe to our podcast. you'll get interviews, original content, and behind-the-scenes access look for us on apple podcasts or on your favorite podcast app and subscribe to squawk pod today.

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'tis the season especially for car sales. phil lebeau has been doing some digging. phil. >> reporter: andrew, right now, the big thing and more and more automakers and dealers are

moving where they say, 20% off or $18,000 off sticker price which makes you think, wow, that's an amazing deal i can't believe that they're giving $18,000 off of a vehicle. well, look what's happened to sticker prices this is the average sticker price, average msrp over the last decade. yeah, that's right it continues to climb and it is not going to be slowing down want a good example of why this is not bad news for the automakers look at the prices paid for the ram 1500 pickup. this truck has been red hot especially over the last couple of years in 2011 the average price paid, that's what you and i would pay in a dealership was just over $33,000. today it's just under $49,000. so even though these sticker prices are rising, the transaction prices are rising which is why the automakers can get away with giving you the feeling that you're getting a great discount whether it's 16,000, 20% off, whatever it might be >> a lot of people think, i'm

going to pay sticker, something close thereof. when you have an expensive vehicle and you can advertise 20% off or $15,000 off, to a lot of people that signifies a really great deal. >> reporter: they are good deals. are they amazing no because the average incentive relative to the transaction price, it's only a little bit above the historical average we're showing you fiat chrysler because we mentioned the ram 1500 that is on the verge of potentially passing the chevy silverado for 2019 to become the second most popular pickup this is not just with ram, this is every vehicle that's out there. every brand out there is seeing this where they are boosting up the sticker prices and they're also getting a much higher transaction price. >> phil, i just read a story last week somewhere saying that the deals that are being offered by the manufacturers and the dealerships right now are much higher than average, too they are offering bigger

discounts. is that because the price goes up, you have to offer a bigger discount you think of that with retailers? >> reporter: correct what you really want to look at is the percentage of that discount relative to the transaction price and that's only slightly higher than normal so that's really to tell you whether or not this is a fantastic deal or whether or not this is the optics of it all look, if you tell somebody i'm giving you 20% off of something or 18% off, you sit there and go, i can't beat this. this is fantastic. in terms of dollars, yes, these are greater deals than we've ever seen before, but in terms of a percentage of what we're paying, no, they're only a little bit higher. >> phil, we were talking about that truck again, that crazy looking moon truck is it really going to -- f-150 guys going to say, i've got to have it? >> no. no they are not going to say that the lifestyle buyers the people who are, let's say, southern california which, by the way, that's the largest

pickup market for a metro market in the united states you get a lot of lifestyle buyers there you wi you'll get a lot of lifestyle buyers in a lot of cities like dallas, chicago, even down in florida and miami. this video that was out over the weekend, get ready for this. we're going to see more of this over the next couple of years because it's such a unique and some would call it weird looking truck that when people see it out being driven around -- by the way, this is a prototype this is not -- it's not for sale yet. they haven't even decided, okay, here's what the price is going to be. i mean, they're talking about what it might be, but we're a long ways from where it actually goes on sale. >> the nasa guy wanted -- that's the new test -- prototype for the moon vehicle, i think. there's no outlets up on the moon, are there? >> can't recharge them there. >> can't plug it in anywhere, can you, sorkin? >> not yet but jeff bezos is going to try once that infrastructure is

built, he'll build the infrastructure in space. >> thank you, phil. >> reporter: you bet. >> still to come this morning, why jeff bezos, speaking of, is worried about the risk of big tech abandoning uncle sam. we have his comments from over the weekend when "squawk box" comes right back

♪ ♪ ♪ good morning, everybody. welcome back to "squawk box. we are live from the nasdaq market site. u.s. equities a little bit weaker remember, we had a pretty active week last week last monday things did look pretty dire. things turned down after monday trading session but by the end of the week we had three sessions in a row with gains, the third day, friday, being the biggest day of gains it knocked out all of the losses right now after closing at new highs the s&p indicated down by a point and a half dow down by 24 the nasdaq off by 4.5. a couple big talkers to talk about.

amazon ceo jeff bezos is warning about tech companies not doing business at the pentagon bezos discussed the backlash the tech firms have been facing for going after lucrative defense department contracts >> my view is if big tech is going to turn their backs on the department of defense, this country's in trouble that just can't happen and so we have to -- it's the -- i understand these are emotional issues that's okay. we don't have to agree on everything, but this is how we're going to do it we are going to support the department of defense. this country is important. >> for more on this and today's other tech talkers, want to bring in joanne lipman also cecelia kangus.

>> hi. >> here's my question for you, joanne i'll start with you since you're sitting right here jeff bezos is there. we talked about this in the last hour we saw brad smith from microsoft there. what you didn't see were the googles, apples, some of the other companies there. how much of this is trying to get the business, and i don't want to say this cynically because i think jeff genuinely believes what he believes, but part of this is about getting the defense contracting business >> yes in fact, i was actually thinking about that who is the audience for what -- for his comments just now? really his first primary -- first and foremost audience, it's really the pentagon, right? he is -- amazon is contesting this $10 billion contract that went to microsoft that he felt really should have gone to amazon so he's got to convince the pentagon, he's got to convince the white house. that's really his audience secondarily and incredibly importantly, as you mentioned,

you've got these work forces at all of the tech firms that have been sort of in an uprising. we saw it at google where google employees forced google to abandon some defense department plans. and we've got to deal with sort of this generational divide. >> that's what i was going to ask cecelia. on this generational divide. do you think it's a generational divide and there's this new found pressure at these companies? do you think there's some kind of historical context for the shift that's happening here? do you think the companiesare going to -- the history of silicon valley actually was in being very supportive to the defense department hewlett-packard, that's where the beginning of the business came from. do you think that's fundamentally changed? >> yeah, i think there's a different company that we're talking about. these are internet companies and they promised something different when they were hiring their workers. they promised their technology would do something benevolent for the world. google's model was don't be

evil engineers who signed on, a very competitive job market as you know in silicon valley, they were promised you're going to do things that are going to be great for humanity, that are going to be great for people in general. doing something so disruptive and different. they did not think their ai in the case of google would be used by the defense department in what the words of some protesting workers would say is to ultimately lead to the deaths of some people during war. they didn't want to be involved in war they didn't think that they would. so there is a cultural divide, i think, and it's' cultural divide that came with the new waive of silicon valley giants that are different than hp, ibm and other big tech companies they came with the idea that their internet technology was going to be different in some way. >> andrew, you know, you mentioned something earlier that i think is really important and i believe it was you who mentioned this earlier, that there was a time not too long ago when we were all -- everyone was united against the common enemy -- >> yes. >> -- in russia.

>> this was a point my friend josh wolf made at this conference which i had not thought about. the zeitgeist was set up different than it is today. >> very, very different. so we are no longer united in that way i do a lot of corporate speaking on workplace issues, and when we see this divide on employees and it truly is a generational divide, you have these younger people coming in, when you talk to them, and i know, joe, that it drives you nuts that -- >> drives me nuts because i didn't hear them say anything about enabling china in the weger concentration camps and they didn't say anything about their companies dealing with china. can we just -- you know -- can we be fair about what we're -- and, you know, the defense department doesn't only make killing machines the defense department might make things that prevent people from being killed. they might make things that cause -- >> that's the argument. >> it's a faux argument that

we're having here and it's just annoying to me that we think that this world is -- suddenly doesn't need defense contractors, doesn't need ai -- >> cecelia's making a very smart point. >> for the woke crowd. not for the woke crowd >> educate them. >> they were established in a fund amountly different way. >> the defense department is in the business of doing evil things >> no, no, no, no, no. >> that's what we said they weren't going to do anything evil. suddenly their company that they're working for are doing evil things but not with china, just with our own -- >> the young techno optimists are here we're here to make the world a better place >> right. >> as i was saying, when i speak to these groups, these corporate groups, it's not just even at tech firms, you speak to these younger groups and they feel like they're activists they compare themselves to the activists in the 1960s.

>> that's a different thing as well. >> back to the 1960s it's not that different. >> they are like the activists of the '60s. those activists turned into adults. >> cecelia, you've been very patient. i'll give you the final word because we have run. >> i think the patriotism argument does help when you're thinking about your bottom line. you're seeing a new wave of patriotism when it comes to defending your business against the big tech backlash. you're seeing companies like facebook and amazon and google say, look, if you don't want us to be strong then china is going to be stronger i think patriotism is an interesting tool when used to defend yourself against regulators and in the case of the use of these -- their technologies for the big defense contracts. >> cecelia kang, julia, thank you both >> thank you. coming up, we're currently in the longest economic expansion -- i'm feeling an excedrin headache coming on.

expansion -- happens every time. expansion in bull market on record where are we in the cycle? and what does the answer mean for your 2020 investment decisions? mike santoli has that decision xtne i tell clients, etfs can follow an index, but which ones target your goals? it's not about quantity. it's about quality. no trendy stuff. i want etfs backed by research. is it built for the long-term? my reputation depends on it. flexshares etfs are designed and managed around investor objectives. so you can advise with confidence. before investing, consider the fund's investment objectives, risks, charges and expenses. go to flexshares.com for a prospectus containing this information. read it carefully.

welcome back, everybody. it's a question you hear all day on cnbc. just how late in this cycle are we mike santoli joins us. he has some answers. good luck with that. >> there's a good question this reena bides because you keep getting mixed signals. different parts of the economy are operating on different clocks out of sync the longest expansion but not a lot looks late, mid, early here's what looks late not over but late. employment, 3.5% employment. we're seeing more job growth that's probably more late than not. consumer confidence peaked, flattened out. corporate debt has built up to record levels. that's something that's an atmospheric condition that does happen towards the latter part of the cycle car sales peaked a few years ago. in years past that would have been a good bellwether it's backed off and not fallen apart. here's what looks not so late. housing, it really was slow to recover during this expansion. it's now got really good supply and demand dynamics.

cop summer debt levels the consumer debt burden is way lower than you would expect a decade into an expansion and that is actually something that really is giving a lot of people reassurance that there's not that much jeopardy at the household level in terms of the balance sheets there corporate investment if you were looking in excesses in over investment, not the corporate sector, the publicly traded corporate sector. that's the backdrop. i think it's why we have this sense out there that the stock market, if you want to look at the entirety of this run since march of 2009, you've had these switch backs in flatter periods where we thought perhaps we were at a late cycle period these recession scares that's the real flat lining for a couple of years we've talked about a few times. it happened after 2011 we had a recession scare and then most recently last year now we broke out of those, right, and had big up legs that was the gains have we just broken out into another one that will be more sustainable as we get reassurance on the endure rability of the cycle?

that's the question going into next year. >> i guess when you look at an expansion that is the longest expansion that we've seen, the longest run, automatically makes people questioning it. because this was such a slow and gradual expansion, does that suggest this can go on for longer and longer? >> yeah, that's the tradeoff you didn't have the rapid spurt of growth that would have had a more hawkish fed and i think that these periods in the stock market where you've had these 15 to 20% declines every couple of few years, that has kind of purged or prevented certain kinds of excesses. valuation by no stretch is cheap. we're definitely kind of getting later in the cycle in terms of where stocks are valued. if a recession is not around the corner, the market finds a way to stay supportive. >> mike, thank you great to see you. coming up when we return, taxing wealth. what investors need to know about capital gains and the cera for the white house. stay tuned, you're watching "squawk box" on cnbc who says our bank isn't tech enough?

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and tv with you a breeze. really? yup. you can transfer your service online in about a minute. you can do that? yeah. and with two-hour service appointment windows, it's all on your schedule. awesome. so while moving may still come with its share of headaches... no kidding. we're doing all we can to make moving simple, easy, awesome. go to xfinity.com/moving to get started. welcome back to "squawk box. joe biden's plan attacks capital gains. no malarkey in this one. robert frank joins us. >> good morning, joe raising the tax rate on capital gains. for those making a million bucks a year he would bring it from 23.8 to 39.6 that would be the highest rate since 1978 the question for investors is how a near doubling of the capital gains rate would affect stock prices and markets

now history shows there are big selloffs before rates go up but then ultimately rates don't drive the markets. now in 1987 you might remember the top rate went from 20 to 28. -- to 28%. there was a lot of selling in '86 leading up to that tax hike with capital gains revenue doubling just in that year now the market though remains strong we had that crash in '87 but then they resumed their upward climb. now we also look at 1970 that's when capital gains rates went from 27.5 to 22.2%. once again you had a lot of capital gains sales surging from that height. 1970 was a good year for stocks and that continued up for another three years. there has been -- never been an increase as high as bidens if you live in new york, new jersey, or california. your combined state and federal tax on a capital gain would be more than 50% and biden would also eliminate the step up in basis, which we talked a lot about on this show that allows people to avoid any

appreciation on stock they hold until death. those two plans, the capital gains increase combined with step up would raise 1.2 trillion over ten years also mitigating this is the fact that pensions and foreign governments own a lot of stocks so they're not subject to the tax so they wouldn't be forced to sell or want to sell before an increase. >> can i just point out, you mentioned that there's never been an increase like this but the ones that you were talking about on these past years, it was an increase of 8 percentage points or 5 percentage points. >> yes. >> you're talking about 20 percentage points moving up doubling the rate. >> absolutely. >> has anything like that ever been tried >> not on a sort of total rate hike basis we have had rates this high. i was interested to learn in the 1970s we had capital gains rate above 39, almost 40% so we've had rates this high. >> but they came from where? part of it is a big delta. >> that's the point. it was a gradual increase from

34, 35, 36 never from 23 to 39.6. almost double. >> if you're a long-term holder, what you would do is sell now and buy the stocks back so the gains you're measuring would be -- you may be paying higher gains -- higher capital gains rate but on much smaller gains >> that's right. that's exactly what i think we saw in '86, it wasn't where people exited the market they sold it before the increase and came back. it does affect revenues and total capital gains sales but it doesn't affect the overall market because to your point, they come back in. >> let's bring in another couple of voices on this. joining us is seth hanlon, center for american progress action fund senior fellow and grover norquist, americans for tax reform president gentlemen, welcome to both of you. grover, i know what you're going to say and i think i agree with you on almost all of this. seth, i'm going to give you the word why do you think this is a good

idea >> because we need to raise revenue and we need to reduce inequality the best way is to tax people that have already enjoyed massive tax cuts that were promised to kick start the economy and really haven't 70% of capital gains go to the top 1% so vice president biden taxes those gains just like at the regular rates that regular people pay on their labor so there's a principle of fairness there. raises revenue to put into higher education, health care and climate. >> grover, your response >> i think this is wonderful i can't imagine the democrats deciding to declare war on the 100 million people with th 401k the 40 million americans with an ira attacking the value of people's investments capital gains taxes are taxes on getting rich they're taxes on people starting out. silicon valley wouldn't exist

with this. people are able to put tremendous effort, time and money into something with a high risk and a high payout. >> it's not going to go for everybody. it's going to be for those who are earning a million dollars or more. >> that's not the position he said he was going to do it for everybody. two things, one he said on record he wants to do this to tax everybody. >> biden >> biden biden. biden. >> it wasn't part of the plan he rolled out though. >> may not be but he said it in the past whenever they decide to tax rich people with something, like the personal income tax, that was only supposed to hit people who made more than $1 million at the time with a 7% rate. now it hits almost everybody at more than 7% whenever they put some marker out there, it always hits everybody. >> here's the complicated -- is there any scenario in which you could imagine supporting some form of tax raising? >> well, an increase on the capital gains, democrats used to take the position, oh, of course

capital gains is sensitive and we never raise -- when they raise capital gains taxes they don't raise income it actually reduces the amount of money thatcomes in. it's damaging to the economy every time we've done it we're not a low capital gains tax country. we're higher than average. so we really ought to be going down not up to be more competitive. something that congress did and the president did with the corporate income tax now they want to go in the wrong direction on capital gains taxes? i mean, we've been through this before even carter cut the capital gains tax. even clinton cut the capital gains tax. the democratic party has gone huey on this they're declaring war on people's life savings. bad politics but good for the country because it means they won't get elected. >> seth, let's answer the first point. it's not in the plan that biden just rolled out, this is only supposed to go on people who have over $1million. would you like to see it go to other people as well as grover

thinks that will be the plan >> that's not his plan i would certainly tax people making like in the high six figures let's say, but that's not his plan i think most importantly, capital gains taxes simply don't affect people who have their savings in 401ks which is where the vast majority of middle class savings is we've heard this before. every time the tax rates have gone up we've heard the economy is going to crash, people want to invest. the capital gains rate went up by 9 points at the end of 2012 the s&p 500 has doubled since then and the recovery, as you were talking about, has just continued. so we've heard this argument before it just doesn't wash as you've mentioned, there's no long-term mention with capital gains and stock prices there's no long term relationship between capital gains and real investment in the economy. >> seth, is there any way you would use this new revenue just not to add more spending but,

you know, to deal with, i don't know, not spending as much maybe trying to not let the deficit grow as quickly? and i'm just -- you never give me any -- you're going to reduce income inequality but you never tell me how you're going to bring up the lower end all you tell me is how you're going to hurt people at the higher end instead of making everyone equally poor or poorer, is there a way that you can use this in a good way where the government is actually effective maybe we ought to use it just to make sure we don't add to the deficit? would you be okay with that, with the tax increases >> that's better than nothing. i don't think deficit reduction is a huge priority at the moment. >> raise more and spend more is what we want to do now we don't seem to -- >> raise more and invest more. i think vice president biden's plan puts it -- >> why are you laughing, grover? why are you laughing when you hear something like that you can't even hide. it comes right out go ahead and tell me. >> look, we had 50 years of the great society where the

democrats told you they knew how to cure poverty. they were going to spend $14 trillion and they had very little effect on the poverty rate. >> that's not true dramatically reduced poverty including elderly poverty. go ahead, grover >> thank you and according to their own numbers it didn't have the effect it certainly did awful things to people's family life, but that said, the reason why the left doesn't talk about curing poverty is that they spent 50 years, a lot of money, and didn't do it now they're going to fix inequality which you can do with making anybody better off. you have to make rich people worse off and reduce inequality. that's why they're reducing inequality i think helping poor people is a poor idea. i think smashing middle income people is a stupid idea. if you think the capital gains tax won't affect your behavior, your ability to buy a house, your ability to make investments and do well, then you should vote for the democrats i think that's going to be a

very interesting hard sell for the democrats. >> we've got to be. >> one of the crazier ideas they've had. >> thank you very much, grover and seth thank you. >> more coming up when we return the big headlines out of u.s./china trade talks what they mean back in a minute

how much room to run does the market have before the end of the year? dow's coming off the best day in two months we've got more than a few market moving events on tap for this week what happens to saudi aramco's $2 trillion valuation? that stock is set to trade weel 2 we'll take you through the stumbles. amazon is expected to expan in the big apple the final hour of "squawk box" begins right now. good morning and welcome to "squawk box" here on cnbc. what -- >> thank you. >> that wasn't me.

live from the nasdaq market site in times square. i'm joe kernen along with becky quick and -- do you see who's here >> i do. >> andrew ross sorkin. >> staining to come in. >> absence makes the heart grow fonder. >> however heard the joke absence makes the fart -- >> no, my children -- >> they'd like it. it's so juvenile so, so -- as you can tell. that's the punch line, actually. there's a setup to that that we weren't going to go into u.s. equity futures at this hour are indicated down about 30 points or so i thought it was a funny joke when i heard it actually the nasdaq indicated down 9. s&p down 2.5 treasury yields this morning are a little bit higher than what we averaged last week after that jobs number that we saw on friday we did see a little bit of a move higher on the yield curve

>> here's some of the stories. developing story from china that could have big implications for u.s. companies the financial times reporting that the communist party has ordered all offices to remove foreign hardware it could hit firms like microsoft, dell, hp especially hard if they go through with t. 20 to 30 million pieces of foreign equipment would need to be replaced the order is now public. that would have a big, big implication not just for those companies but i imagine u.s./china trade relations as well obviously to some degree a blow back and also a little bit where we are with huawei separately disney is closing in on an impressive movie milestone with this weekend's nearly $35 million in north american ticket sales for "frozen 2. the company is a hair away from

reaching $10 billion at the box office the total is well above disney's previous of $7.6 billion in a year in which that took place in 2016 that's quite remarkable for mr. bob iger congratulations if he hits that $10 billion number amazon ceo jeff bezos warning of negative consequences if the nation's biggest tech companies, he says, shy away from working with the pentagon. bezos spoke over the weekend at the annual ragan national defense fund in california >> my view is if big tech is going to turn their backs on the department of defense, this country's in trouble that just can't happen and so we have to -- and it's the senior leadership's team to say to people, look, i understand these are emotional issues that's okay. we don't have to agree on everything, but this is how we're going to do it we are going to support the department of defense. this is important.

>> bezos made those comments as amazon, of course, continues to fight a decision to award microsoft a lucrative pentagon cloud contract. >> we are seeing some evidence of pain in china from the trade war this morning kayla tausche joins us with more on that front. good morning. >> reporter: data overnight showing china's exports to the united states dropping 23% in november that's compared to the same month a year ago as the u.s. maintains tariffs on varying amounts on the vast majority of chinese goods. chinese imports of u.s. goods down just about2.8% in the sam period suggesting that u.s. businesses are feeling less of an impact from the trade war than chinese businesses. perhaps one reason why the assistant commerce minister in a press briefing today said it's beijing's hope the two countries can reach a phase one deal saying china hopes the negotiations can keep moving forward based on the principles of equality and mutual respect and reach a result that can reach all parties as soon as possible, end quote. more tariffs are set to kick in

on sunday. here in washington another deal is in focus today. that is the usmca with the white house reportedly submitting final edits to democrats and sources saying that calls and meetings in the last 24 hours about full year spending bills are mentioning usmca and we may know more this morning about whether that trade pact of president trump in this trade decision could be tied to that year-end spending bill guys >> kayla, thank you very much. right now let's bring in fred kemp he is the president and ceo of the atlantic council he is a cnbc contributor we're ticking down sunday is the december 15th deadline before the new tariffs are set to come in not that i anticipate we're going to have a deal that's wrapped up by then but where are things headed in terms of where are those tariffs put on, additional tariffs are imposed >> first, becky, quickly on the big picture and then on the tariffs. the big picture, i've been saying this on your program and

elsewhere, that we're in the 17th month of these trade talks, that these have never been about trade talks. markets have always got it wrong. this has been about a systemic competition between market capitalism, authoritarian capitalism between the united states and china and it's going to continue. it's going to continue for years to come and so as you make deals, it really is in a geopolitical context then on the deal, trump wants 15 to $16 billion in agriculture purchases per year after two or three years. that would be up from 8.6 billion last year and it would be a doubling from where we were before the trade talks so that's going to get -- that's going to be hard to get to and the chinese would have to take from others to give to the u.s. and they're reluctant to do that the chinese want an agreement that we're going to back off from tariffs that are currently in place 360 billion before they agree to anything at all

so there is a chance of phase one and there may be some news before sunday so that the u.s. foregoes a new -- tariffs on a new 156 billion but i think this is all really a dance and the chinese see that right now although they're suffering economically, they have their slowest growth in 30 years, politically and diplomatically across the world they're gaining right now and they're winning strategic space on the united states. >> fred, it's harder for the market to look at how things are going to play out over ten years, even longer what you're talking about is a battle and the two super powers coming head to head and figuring out how the relationship is going to take place. just in terms of what happens with these tariffs the one thing that could really i think pop the bubble in terms of where the market is, not that i want to suggest these valuations are getting bubbly, we are sitting at new highs.

the economy is going in favor of the market continuing to climb one thing that would go against that is if we hit a real roadblock. it sounds like things get a little frostier between the two nations between now and the end of the year. what's your guess on that front? do they both have enough riding on that where they want to see something riding on it or it's a detante situation? >> you hit the nail on the head with detante i don't think trump wants it and i don't think president xi wants it the best outcome would be some sort of phase one deal that could be agreed in principle before the weekend so that you don't go into the new tariffs. short of that you could have enough progress so the u.s. just punts and it looks like u.s. negotiators are willing to do that and push beyond that would be the best outcome the new complication, we also have today the six-month anniversary of the hong kong protests. >> yeah. the big protests we saw over the weekend with massive turnouts

from crowds there. >> 800,000 people. it was actually allowed by the police and so you have also new sanctions. the house has passed sanctions supporting the hong kong protesters but more importantly from the chinese side it has been on the weegers and on the province that is repressing the muslim minority. that is even larger than their defense budget and so that could really affect what technology companies from the u.s. can send to china and it also cuts to the bone more. the chinese are quite upset about this it's going to be really interesting to see how the trade talks play out against the new human rights tensions. interestingly, the chinese are blaming u.s.ngos and they're blaming congress, but so far they're really not blaming trump. so they're looking like they want to leave the path open for a deal with trump. >> even though it looks like things are getting more

precarious, your headline here would be don't read too much into it just yet >> what the chinese are telling visiting business people, they want no escalation they're going to play this as reasonably as they can the rhetoric has become tougher but they're still not walking away from the table. they're still seeking a deal they need it because of what's happening to their economy. but on the other hand there's a lot of pride invested in this. so i think the chinese is going to keep it in balance. the u.s. is going to keep it in balance. we're going to hit crisis. if it's a phase one trade deal, it will be weak. don't bet on a phase two any time in this administration. >> fred, thank you good to see you. >> thank you. coming up, amazon says it's expanding its work force in new york city but this time it won't get billions in incentives like those it gave up earlier in year when new yorkers objected. today's question, do politicians need to offer amazon big tax

breaks in the first place? andrew might have something to say -- andrew, i'm framing it to get you fired up. >> no. >> after a -- >> no, michael's going to be here. >> we're going to talk with one of the biggest opponents of the plan to bring a big amazon campus to the five boroughs. michael gianaris you're watching "squawk box" on cnbc ♪ ♪ ♪

welcome back to "squawk box. futures are about where they've been down 22. down 2 on the s&p and nasdaq down 7 amazon beefing up its work force in new york city the company is adding offices and 1500 workers in long island city queens. that was supposed to be one of the locations for the second headquarters amazon canceled those plans in february after heated local protests joining us is one of the fiercest opponents of a long island city campus and a politician who's been called the amazon killer. senator michael gianaris whose

district covers long island city good morning to you. >> good morning. >> great to see you, senator i know there were a number of you taking victory laps of sorts on monday -- or i should say friday evening when this news broke in large part making the argument that said, see, the city didn't need to offer these subsidies. we can debate that point in a moment, but make the argument first. >> well, the argument is that amazon was coming to new york. they were always coming to new york and they will continue to come to new york because that's where the talent pool is that's where their competitors are hiring talented people google is adding 20,000 jobs without significant subsidies. facebook just almoston the sam day as amazon announced an office space twice as large as amazons. they needed to be here they always needed to be here. many believe they knew they were selecting new york before this whole process started. >> this feels like a false victory though in many ways because all the companies you

just talked about including amazon are not locating in your district they're not locating in long island city which is what this was always about from the very beginning. they're all locating on the island of manhattan which seems to have no problem attracting companies without subsidies. the issue i thought was always about trying to get a big company to act as an anchor tenant to build a hub around and create an ecosystem in an area that has not had that kind of attractive opportunity for business before. no >> which is happening organically anyway the first building amazon was set to occupy in long island city was full within a matter of weeks. so long island city is growing some would say it's growing too quickly. the affordability of housing is something we have yet to deal with adequately. the point is this, is that worth $3 billion in subsidies? i want to address that point over the last three months i want to address it, people say it's 3 billion off of the

expected revenue it's really just getting less than you want. getting 9 out of 10 dollars, it's still worth doing most of the expected revenue in this study was coming from taxes on the new jobs. you are still going to get that if they add those jobs anyway. new york city, manhattan, queens, brooklyn, bronx, staten island, it's the same tax base -- >> but let me just say this first and then i will answer your question. if they r generating that same expected revenue and we are not providing that revenue and subsidy, we are in fact saving that $3 billion. that is a true statement people need to get their heads around that. if those jobs are coming anyway, which i believe they are, then we are saving that money for use on other things, on other public works, mass transit, affordability of housing. >> what about the issue of the jobs themselves being in long island city? doesn't that matter? doesn't the goal have to be to create an environment that's hospitable to lots of big businesses, to create that hub isn't that what you've always wanted >> in fact, as i said earlier,

that is already happening organically. it's not happening in a splashy way, not with the giant amazon logo but it is happening with small and medium-sized businesses which is the way it should happen. we don't need to subsidize the largest companies in the world in order to make that happen what happened friday shows that. >> the thing to me though is if you are somebody on your side of the aisle who might be considered liberal, progressive, to me this is actually an example of the rich getting richer this is inequality -- this is everything that i would think you'd hate the idea that manhattan is getting these jobs not long island city, that's the piece of this that seems so backwards to me >> but here's what i couldn't get -- >> by the way at the same time, the other piece of it, michael, if the goal is jobs and given so many of the other policies which i believe you support which i

would have imagined add to the debt in the name of jobs, it seems preposterous to me to look a gift horse in the mouth like this i will accept on face value that it is an affront to so many people, the tax subsidies for corporations and the laundry list of terrible examples where they haven't worked, but i look at this particular -- this particular deal as one that actually looked like it held the company accountable and actually would have created those jobs and if it didn't, we wouldn't have been paying for it. >> right we obviously disagree about that point because there was $500 million of the 3 billion that was straight up cash subsidy. >> correct yes. >> in fact, they were going to acquire and utilize a very, very valuable piece of land that would have happened whether they created one job or 25,000 jobs people have to remember there were zero commitment binding legally for them to bring any jobs into this project the mou that was bantered about

on the first page says there's nothing in this document that was enforceable. it was all a conceptual statement. if people want to take that and believe it's true, they're welcome to do that some of us are more interested in the accountability you're talking about. you keep harping on the difference between manhattan and queens as if the two mile span of the east river is somehow incredibly impactful it's less than a half hour subway ride from one to the other. when you say manhattan has the jobs, you make it sound like there are only going to map hat tan residents. >> the whole point is to build a hub where you have not only employment from amazon but then you have restaurants, you have laundroma laundromats, you -- now you could say you don't want gentrification that's a different argument. i would argue gentrification is progress recognizing there has to be ways to solve on the other end so people can have affordable housing which i know is its own conundrum but the idea that you don't want that kind of progress because of

the gentrification i think is a problem. >> i certainly have a problem with gentrification. that's a huge part i take issue with your assumption of what's going to happen take a look at seattle where small businesses around the amazon campus have been failing since they got there they tend to be very insular they provide everything from five star chefs in the cafete a cafeteri cafeterias they're designed to keep people from going out and supporting local businesses i actually traveled to seattle more than once during this last year to take a look at what's happened there i talked to people who were amazon employees i talked to local government representatives. >> but what about -- i mean, look, there's lots of issues in seattle. if you told me amazon wasn't in seattle i think we'd have a bigger problem or seattle would have a bigger problem. >> you mentioned the word housing in seattle which is almost laughable their rents have gone up three times the national average

homelessness is the highest which is because of gentrification. >> what's the alternative? that's the piece of this i don't understand. >> the alternative is better planned and more moderate growth at a pace that a community can handle and with a community and public plan driven not by the desire of jeff bezos to make profits but the communities -- >> can i ask you another question this commuter idea that somehow -- look, i recognize -- it may very well be that a lot of people would have commuted to long island city and they wouldn't have lived there initially. i think the hope long term would have had to be that there would be additional buildings, but i'm going to turn it around. think about the bronx, think about harlem, same type of subway rides, half hour. the difference between placing a big business in the middle of harlem or them taking office space on park avenue seems obvious to me. in a perfect world you'd want that business to be in harlem even though they're only 30 minutes away by subway

the reason is because hopefully it would actually create an economic -- create more economic viability, create more jobs. it would gentry phi parts of the neighborhood. >> i'm into the quibbling with your premise yes, we want job growth and we want jobs. this was not the plan to make that happen. this was a horrible idea with a massive subsidy unjustified to a company that didn't need it. we don't need to be paying bribes to amazon to get them to locate a couple of miles down the road from where they're planning to go anyway. we will have job growth in long island city. if you step foot there, there's buildings going up every day it's one of the fastest growing parts of new york without amazon you say gentrification is progress it's not to people who live there who have to find a way to live or are driven out to the streets. homelessness would go up as it did in seattle. >> senator, it is a great debate and longer conversation. we hope to have the opportunity

to see you in studio at some point soon. >> look forward to it. >> you bet. >> speaking of seattle, i had the rams last night and -- but, no did you see this >> what does it say? >> bet on addict surge with gambling apps. talking about you. >> legalizing -- >> right in the post page two legalizing app-based sports betting comes with a heavy price with an avalanche of gambling addicts. >> it affects you directly. >> now i'm worried now i'm scared. >> we've been telling you that for the last month and a half. >> i think you just -- i don't know that guy had a lot of good answers. >> could you not bet on anything for the next week? >> no. i'm already jonesing this weekend it's army/navy. >> we've got to get -- >> tomorrow good basketball. >> the next break. >> there's 25,000 jobs the new york -- >> 25,000 jobs. >> new york budget is 150 billion a year you're talking about $3 billion over a number of years it's preposterous.

it's such a missed -- >> missed opportunity for you. >> when you are on my side i let you go i let you go, go, go, go, go, go i'm into the going to let you go. >> that's what we're going to do, go how the ipo of saudi arabia's public trade is up there's a $2 trillion market cap valuation and whether we will ever see shares of this company list on the american stock exchanges. stay tuned, you're watching "squawk box" on cnbc every year, our analysts visit thousands of companies, in a multitude of countries, where we get to know the people that drive a company's growth and gain new perspectives.

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coming up. elon musk escapes court problems with the pedo guy. plus, what a sub $2 trillion valuation means. there are huge implications and we will tell you about them. stay with us coming up, stocks are closing in on all-time highs once again and investors are hunting for clues about where the markets go next still to come this hour, key technical levels to watch as you weigh decisions that will affect your portfolio stay tuned you're watching "squawk box" on cnbc when it comes to your customers' expectations,

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welcome back to "squawk box" on cnbc. here's some of the stories that perhaps, we don't know for sure, maybe, some investors will be talking about today. merck is buying cancer drug maker arqule for $2.7 billion. >> this is really interesting. do you think this will spark off a wave of additional consolidation? are there other companies investors could be looking toward >> what can investors do i think that's a very good question and there are a million of these little -- not a million but a lot -- this was a route 128 i looked it up. >> boston. >> off shoot of harvard, m.i.t very small targeted chemistry for oncology. >> how do you know this is the way the major pharmaceutical companies are growing. they look for a biotech company

that's already done a lot of the risk they can bring it into the pipeline. >> it's rare when you wake up -- >> a stock is up 101%. >> she worked at cnbc for so long do you have stocks that go up 100% when you wake up? >> no. no don't really own any stocks either whatever is in my 401k. >> this deal is expected to close in the first quarter of 2020 another drug industry deal this morning carries an even bigger premium. french drug maker sanofi is buying synthorx. >> 1 0e 1%. >> look at this. that puts 101 to shame. >> oh, my gosh well, with a name like that -- i just hope they keep that name as one of the subsidiaries. someone thought that one up. that's a terrible -- a name like that is a terrible thing to waste. it's a u.s. biotechnology firm $68 a share here $2.5 billion

sanofi ceo will join us live tomorrow at 8:15 eastern i guarantee i'll say that tomorrow canopy growth will be getting a new chief executive officer david klein will take over as canopy's ceo constellation, by the way, owns 38% of canopy growth and klein is already canopy growth's -- >> those two biotech companies being bought, all cash deals. >> is that -- >> looking at some of these situations thinking stock prices are high, that's not what's factoring in here. those are all cash deals. >> wow that's even better if you're a holder of arqule which i went through every possible way to figure out what that stands for, the derivation ar capital qule all squished together >> you came up with what >> zip nada, nothing. zero i don't know.

>> there's a story we don't get. >> is there an about us section on the website that explains >> there's the reporter? >> i'm just thinking. >> i went there. i know everything about it it started in 1993 mostly a chemical company when they started they moved into biopharmacy. i went through a lot of that i could not find -- >> i predict an email in your inbox this morning. >> i'm looking for it on twitter. >> when you're in it, give me synthorax too. >> it may be free again. >> right kim kelly is here. we're lucky to have her. we're going to talk about shares of saudi arabia's state owned oil company expecting to trade on the stocks exchange kate is here if you are really looking at this, you would judge this as a success that it finally got out of the gate after all of the troubles that it had along the way or is this to be determined

at this point? because it fell so short of a $2 trillion valuation and because it's not listed on an international stock exchange >> right i mean, to be fair to them, it's tbd. it's possible they'll get to the $2 trillion mark this is a stock that should be trading many years to come the thing is that mohamed bin salman, the crown prince, who is the person that unveiled the plans to take this deal public in 2016 as part of his vision for modernizing and diversifying the country had his heart set on a $2 trillion valuation or even 3. if you look at that document he said 2 to 3. to come in at 1 point be point 7 and after this fairly rocky road that i write about in the story where the international banks, they hired, tried as much as they could to make that work. >> where do you think he got the number from? i've seen the same bankers, they must have told him about that originally. >> i don't know. this came up in many conversations. there was some impression that he just sort of came up on its own. >> like 420 from elon musk

>> the other thing you would hear from experienced bankers, especially the people who know the e&p sector, it's not hard to value an oil production company. you have many comps. the fact that there was so much back and forth over what this should be worth is a little hard to understand. >> this is such a different company though. >> yeah. >> because of the saudi government's ownership interest. >> sure. >> because it caps the up side of what can happen because it's now on the saudi arabian stock exchange, that means a lot of international investors, u.s. investors can't play into this do you think there would have been more demand if u.s. investors could or do you think it would show potential short falls of this business model and this company >> so i think it certainly would have been a more widely distributed book my understanding is investors are widely interested. they went out and did what they call pilot fishing in the u.k. which is an early unofficial road show where you have certain comps, not all the details you bring management on the

road they met with black rock, capital group, janet henderson and people want bed to buy it. >> that was before we had all the issues with khashoggi, right? >> so this was -- you're right that this has been an ongoing process for years. this phase that i was talking about was relatively recently. late september, early october about a year after khashoggi but people wanted to buy it at a much lower price point they were talking about as hedge funds, of course, in new york were talking about $1.1 trillion implied valuation or going on up to 1.5, 1.6, 1.7, but not 2. >> is that almost a victory lap if you can say, we got 1.7 and that was the high end of the range and jpmorgan said you can see it from 1.1 to 1.7, at least it's the high end of the updated guidance >> that's definitely how they're looking at it. this is true the company is a point of national pride in saudi. you've been there. i've been there. it's a sophisticated operation

well run well respected on the national stage. there's a sense among the citizenry that it's really valuable, important to own a piece of the stock they also offered incentives like low interest loans and other things to get people on board. they sold it around the gulf region so some of their neighboring countries bought in. there was a comment made by the oil minister, i believe, this was something we did with our friends and family so, yes, there's a little bit of a -- >> this really doesn't work. what happens to mbs? what happens to stature, power by the way, if they ultimately can't fund all the things he wants to do because the valuation doesn't get where it needs to be. >> mf bs has taken a lot of digs there was the khashoggi murder there was the detention of the elites at the ritz it eroded trust. there has been the war with yemen which has been highly controversial. those are just a few things that have been an issue, but elusive

foreign investment i think is a key. i think in a way the economics of all of this as we all know are critical if over time the aramco ipo doesn't help diversify the economy and bring in proceeds to do other things, that could be problematic. they need a job creation vehicle that gets people away from being dependent on government jobs and slowly but surely they're bringing in outside players. it has been more elusive than he imagined. >> thank you >> thank you. elon musk scoring a legal win all related to a tweet he posted more than a year ago. phil lebeau joins us now with more on a trial and really what comes next is it over for this issue? it's buried? it's not is it? >> maybe not they have talked about the british cave diver has talked about filing perhaps a defamation suit overseas as well as they may appeal this outcome that came out on friday. we'll talk more about that in a little bit it was an active weekend if you

follow tesla and tesla shares. on friday night there was an accident with a tesla vehicle that was in auto pilot mode that collided with a state trooper's vehicle in connecticut that state trooper had stopped to help another vehicle. that is the latest accident involving a tesla vehicle that is in or was in auto pilot mode. remember, back in march of last year there was a fiery crash in mountain view, california, where at tesla that was also in auto pilot mode collided with a barrier. in that case the driver was not engaged with auto pilot. all of this has people or the auto pilot was engaged but the driver was not engaged with the vehicle. the ntsb has been looking into that accident. all of this raises the question, will we see any kind of fallout when we have these auto pilot accidents? so far what the ntsb has said in the past is, look, the driver has to be engaged. this is not 100% full self-driving where you tap it,

you can fall asleep and you can do whatever you want to do you have to stay engaged as the driver and finally, guys, tesla fans are making note of this video in southern california over the weekend. yeah, it's the cyber truck driving down the road. i've had a few people saying to me, look, is it out already? no, this is still a prototype. it is being driven in southern california you're going to see more video like this being posted online as this prototype or other prototypes of the cyber truck are driven around. by the way, 1 million auto pilot capable cars are expected by the end of 2020, guys. the key here is auto pilot capable. does not mean that these are fully self-driving vehicles, it just means that they are auto pilot capable. >> phil, thank you for that. joining us right now for more on this story is wall street journal reporter tim higgins and greg irwin is here as well we'll go to the west coast since you woke up so early there, tim.

your sense though of this auto pilot situation and what it really means in terms of regulation >> well, it's been a huge question mark, right when we first started seeing these crashes there was a lot of concern maybe the federal government would pull this back and it's been clear it hasn't occurred knits is a, t nhtsa has been studying this they have been able to push the avant guard and get the technology out there and see how it works, get people accustomed to it. if you look at investors, at this point they sense that it's out there for now. >> so, craig, how much does -- how much does this help tesla get ahead of all of its other competitors who have been less aggressive with this technology? >> so tesla's showing data that their incident rate, their accident rate with auto pilot is 1/7 of that of typical miles driven for the average vehicle so that is a lot of learning

it does give them an advantage but there are a lot of other real competitors out there. >> who else do you look at that you think has technology that's similar to what tesla is doing >> i think nvidia has a good operating system that they can sell to any oem that wants to buy it. >> you think it has on/off that is as good or if not better. >> i bought a new volvo. it drives beautifully. it has a semiautonomous driving, automatic follow the key components are available on a lot of vehicles the number of vehicles that are coming on the market with more features is impressive. >> tim, here to me is sort of the large public policy question, which is at what point are people going to feel comfortable on the roads with this technology? and to the extent that you hear about deaths, you hear about accidents, we obviously just showed you footage of this accident with a police officer, how much do you think that actually weighs on all of this

and do states get involved on an individual basis and try to regulate this stuff? do you think regulators are going to play completely hands off on this forever? what happens >> you're hitting on an issue there that once drivers start using this technology, they become very comfortable with it very quickly in the case of tesla, we've seen in the past they've become a little too comfortable and they think it can do more than it can do they think it is self-driving where it is more like a super cruise control feature >> right. >> we've seen competitors such as general motors like with cadillac, they have a camera that watches your eye to make sure you're paying attention to the road we're seeing more debate around that should car makers put in place more safeguards to make sure you're using the technology. >> is all of that going to be done -- you're seeing that being done by general motors do you think that's going to get

forced on the manufacturers? >> that's the question, right? if we start to see more and more fatalities, that conversation becomes a lot sharper. once we saw the uber crash involving an autonomous car back in tempe, arizona, a while ago we saw a lot tougher questions about the testing of autonomous vehicles on the road. >> we have to go craig, here's the question we have 40,000 deaths on the road >> about that. >> if i told you that you could take that 40,000 number down to 5,000, which would be a miracle, if i told you that 5 thourks deaths were going to happen because the computer misoperated as opposed to a person making a mistake, would people find that politically palatable? >> it's obviously an roi that people would take. people would take the reduced fatalities fatalities are bad. >> really? >> i think so. >> ah, yeah. that's kind of -- >> like the airlines, right? >> i think they're terrible. i don't know what the number has

to be where it becomes politically palatable to be killed by a computer i think it's a very interesting question mark about that >> right. >> there's accidents -- >> in a very macro way and micro way. >> aviation. think about aviation. >> 100%. that by the way is even lower. thank you so much. becky. when we come back, what to watch ahead of the monday morning open on wall street. fairlead's katie stockton will join us. don't forget to subscribe to our podcast. you'll get interviews, original content, and behind the scenes access look for us on apple podcasts or bs your favorite podcast app and sucribe to squawk pod today. ssi. and when you open a new brokerage account, your cash is automatically invested at a great rate. that's why fidelity leads the industry in value while our competition continues to talk. ♪ talk, talk

you know there is no i in team, becky. no i in team i'm willing to come over here. i'll play along. i'll play along. i'm wearing lululemons, but i'll play along i'm not afraid or ashamed we're under an hour until the opening bell on wall street. for a look at market technicals, let's bring in katie stockton at fairly strategies. you've gotten this pretty darn right over time. i'm glad. >> thank you. >> i keep inviting you back

because if we were explaining how wrong you had been, it wouldn't be as much fun. s&p had some breakouts that you taukd abo talked about significant. >> third major breakout since the bull market began in 2009. to me, breakouts, you see it right here, that's a breakout. this is a 2016 breakout. and here was your 2012 breakout. breakouts as you see do tend to see positive follow through, we're already at new all time highs, that's rarely a bad thing for the market there is not a lot of signs of exhaustion, only short-term in nature if any. and the breakout that we saw here actually projected to about 3280 so what that assumes is that this trajectory will be maintained from that corrective low. so that gets us up here, which would be about 3280. and that's about 4.5% above current levels >> that's not a long-term

objective. >> more immediate term used to be long-term now immediate term in nature, first half -- >> what do we got to get through first. is there something -- >> there is no more hurdles left importantly, i would highlight on the russel 2000 -- >> it is confirming this, right? >> that's right. that had resistance still left on the chart, right? so the 2018 high here, which is around 1742 is left there still as resistance, but if you can see here, we just saw a nice trading range break out. that breakout bodes well for the intermediate term upside follow through, long-term momentums on the verge of turning positive for the russell, small cap benchmark. that targeted resistance level is 6.5% above current levels that bodes well for the s&p 500, reaching that same level and it also aligns nicely what we could see in terms of the january effects. we had really pretty pronounced underperformance by small caps, versus large caps. last year we had the same kind of scenario, you get that sort

of tax loss selling phenomenon and get a phase of outperformance, this is a ratio of the russell -- the s&p, you get the phase of outperformance typically january into early february. >> so it -- the complaint has been it hasn't been broad enough, this is broadening things out >> the breadth has been there all along. i'm not sure what people are talking about when they say -- >> they're talking about faang. >> faang, right. >> we want faang to do well, which it has now and that's breaking out oo. >> faang can obviously help the major indices with such a big footprint and even the laggards within faang are now really participating in the momentum here we have google, not necessarily a laggard, but really a fresh breakout on the chart and very long-term in nature. you can see that here. it was a wide long-term trading range. that was about $250 in width, which if you project from breakout point, it gets it to about $1500. >> katie, thank you. thank you for coming -- do i look thin, becky

you know. >> relative to katie >> just -- >> relative to kyle, but we can't see him. >> stay on your -- >> kyle, can you stand over here that's not nice, was it? thank you, katie. >> down to the new york stock exchange jim cramer joins us right now. jim what do you think happens this week? such a wild ride last week i think the big issue overriding all of this is what happens with the tariffs, whether they get put on sunday or not >> yeah, i think that right now the president is kind of a game of chicken where the president feels he has the upper hand as of this weekend where what seems to be going on is that the chinese keep ratcheting up you talk about the computers this morning chinese are relentless in making it so it is difficult for the president to do a deal at the same time, the president feels like the longer stretches out a deal, the more opportunity there is for american companies to leave china so i don't know the hand that the president xi has i know the generals are starting to get upset, this is because of

the 2020 -- there is a big centennial and they want to start showing the united states that they're tough i don't know, becky, i've got to tell you, why should there be a deal >> well, they think -- it is funny, we had fred kemp on this morning, explaining it from the chinese perspective, they think they're holding back, they're being the mature ones, the adult ones in this situation i saw that as provocation. what are they going to do with working out equipment over the next two -- >> it is provocation the president, i think, the mnuchin side saying, listen, don't worry, everything is good. navarro side is saying look what they're doing right now, they're ratcheting things up once again, also with cybersecurity. i think the president is saying if they're going to continue in my face to not want to do a deal, i'm happy to walk away that's i think the tenor of things now. >> thank you we'll see you in a few minutes. >> thank you >> before we go, we have two pieces of sad news and one that literally just broke moments ago. paul volker, the fed chairman

who waged war on inflation, has just passed away at the age of 92 years old he had been battling cancer. i had seen him about a year ago, published that book. but was a huge giant in the world of economics and policy. we should also mention maybe not in the same breadth, but don maran, a friend of this show, and also towering figure on wall street for so very many reasons also passed away on friday >> we will miss both these gentlemen. ntmee'll ms thhe isbo tse gelen. ♪ for every family going home for the holidays, there are countless people working to help them get there.

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♪ let's groove tonight share the spice of life ♪ good morni ing and welcome o "squawk box. i'm david faber with jim cramer. carl has the morning off a look at futures as we get ready to start things up at the stock exchange a half hour from now, full trading week we're looking for -- what do we call that, down slightly lower open doesn't really matter. road map this morning, the