>> good morning. welcome to "squawk box" on cnbc. we are live from marketsite on time square. i'm becky quick. looking at u.s. equity futures you'll see red arrows. this is happening as we await that fed meeting the minutes we'll get later and the press conference that comes with chairman jay powell last couple of days, we have seen a decline from the market all of these levels near the record low looking at the treasury yield, you'll see the 10-year is yielding 1.816%. >> aramco shares have begun trading after the long-awaited trading, it is now the world's largest initial public offering.

the stock rose 10% early today it hit an upward limit actually set by the exchange. so it couldn't go higher the listing falls short of the prince's original goal it did raise $25.6 billion instead of the early target of $100 billion the price gives aramco a value aition of $1.88 trillion it makes it the largest listed company in the world >> i guess, what next, right >> not that far from $2 trillion if you are mbs, you've been -- >> you've been doing research. 1.88 is not that far from two? >> i'm just saying, there has been this thing going on for a long time about how much he's

going to raise whether he's going to make it work, would he get his $2 trillion 1.88 is not bad. >> is it going to list on the london stock exchange? >> and the valuation is the other thing. so many are local investors. some of them have been loaned money by the way, by the government a little vendor financing. >> getting the list on the exchanges. if it gets to the london stock exchange in a sort of uberish way, does this market value these things differently >> or are we looking at this as the same thing >> we have another data point from chevron about the value of things in the ground right now

if chevron says $10 million is overvalued on these properties it costs more money for a lot of these new techniques to get out of the ground. if they are acknowledging $10 billion, who knows if it is valued >> is this a valuation overall >> that is where it is coming from now >> you think the overall value for oil, it is not that propertiable to get that out >> our peek oil friend, simons we were arguing with them 12, 13, 15 years ago boone who just passed away finally conceded that he was dead wrong about oil we are making our suvs a little longer, which you just saw we are going to talk more.

i'm excited about having worth on he's a good guy. >> ceo michael wirth will join us at 8:30 eastern to talk about why they are writing this down and getting rid of some assets they are doing restructuring in good times they have the flexibility and ability to do that shares of chevron down >> my next read is about the usmca. >> you are going the wrong way you are backwards. >> look at the camera. >> i'm looking at you. you are looking backwards. i am the viewer. i'm seeing it backwards. that way yes. >> okay. c. next week, you'll have to do it. we are all doing it.

usm -- let me do this first. update on trade talks with china. we'll do the c u.s. and chinese trade negotiations laying the groundwork even though president trump hasn't decided whether to push back the december 15 deadline trying to figure out how to get beijing to make tremendous purchases of u.s. farm products. have to wait and see yesterday, kudlow said tariffs are still on the table if president trump isn't happy with the outcome of the trade talks could be free tremendous or disastrous >> odds on additional tariffs. i think the market thinks so too which is why a bit of a shock to

investors. >> yesterday, we were close. >> i wasn't here >> we were on the close side any given day, we don't know here is what i was talking about. could be next week in other trade news, top officials from canada, mexico and u.s. sign a 25-year old nafta trade pact duped the usmca. house speaker signaling the deal could be up for a vote in the house. nafta 2.0 is better or new nafta. it soupnds like the marine corp but usmca is closer to ymca. >> who ate eight doughnuts on the air but you won't do the

symbol you uncomfortable with the village people is it did you used to do ymca? >> i did >> your sticks are better than that >> yeah. >> let me know when you come up with up. >> in the meantime work on an f can i get an f can i get an a >> f you can do. stand up >> faa >> moving toward creating a new safety branch. this comes in the wake of the dead lie crashes of the boeing 737 max. this is according to an internal email obtained by the washington post faa administrator steve dickson will be testifying before congress today he'll join us in an interview at

8:00 a.m. eastern time this will be interesting >> he's on and wirth is on and senator rob portman is on. a lot of people on today have you looked at -- >> are you ready >> no. who else is here >> you are of the opinion that you should be experiencing the whole thing along with viewers >> i was surprised to see becky this morning >> we have some days it is hard to get days off i have some i have to use. >> that's what i was doing last week >> if you don't use them, you lose them. coming up -- i do like being here but i do -- for mental and physical health, you need to take those days.

>> andrew agrees with you. >> for sure. that i shouldn't be here fed chair jay powell set to speak later today. we'll tell you what that means for investors. pat toomey that might be your interview rob portman about potential for trade deal with china. we might ask how they are going to vote on some other issues the new agreement with canada and mexico, toomey opposed that. "squawk box" will be right back. ♪

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the fed is going to announce the latest decision. expected to hold rates steady and value key markets. we've been watching the news conference for any comments on improved economy, lower employment after the big job's number we had on friday for the november jobs report joining us now head of fixed income global market strategist at invesco. i first want to talk to brian. you feel pretty good

that's nice. you feel good about recess assets and not even defensive recess assets. we used to talk about your concern for a top dollar, a lot. you are right about that the effects of that are going to be negative in some markets. negative in process or economy >> we were optimistics on risk assets if the federal reserve remain tight, if we continue to strengthen the dollar, then you could have a strong dollar coming into this year, it would be a year of weaker growth that's why the markets are up some 25 to 30% they should be pleased

they've eased financial conditions markets have responded in kind >> once they had capitulated last year when you shifted to what maybe wouldn't be as negative of overall markets. >> we have been in mind of the secular bull market. we believe it started in 2009. we were never negative in the secular perspective. we were saying that the federal reserve was responding the stimulus which caused this emto raise interest rates multiple times. you were worried the dollar would have gotten stronger >> they had to back off. we needed to see improvements in policy this year we got that and other opportunities. >> jay powell is where they need

to be. are they at normal on hold? everything is good >> consensus is that we'll be on hold one of the things we are watching is what will the outlook for 2020 be? if we look at the dots, with he see the floor is where policy is we look at expectations, the market is looking for more the question is, what will they do with guidance how does it flow through financial conditions and how does it translate to the real economy >> the next move, no one will answer this. i don't care when it is. the next move is up or down on the fed? >> we think there on hold for the time being but we think probably down. >> down? most people think up because of the 3.5% unemployment, wage gain, work force getting tight

seen in profit margins as they compete for workers. we are pretty low still. the next one is down, why? >> we are focused on the inflation story. we saw tightening too quickly, too fast then the delayed reaction. then past neutral. we had two policy transitions. we think that will create a lot of hes den si in terms of when we look to tighten the future. >> paul volcker died a couple of days ago do you think this is still legacy he put a nail in it. there is a lot of consideration on additional policy tools it is global demographics productivity

we certainly imported it one of the other things we are watching from the fed is what other policies have we seen in play there is a limited number of bullets. if there is anni insurance poli. that is one of the things we'll hear more been in 2020 >> an interesting thing about volcker, we all grew up and were raised on what went down in the 1970s. the back of inflation that would lead to this great moderation. it has been a shift towards a disinflationary environment. what the federal reserve has been learning and learned the hard way in 2018 is that raising interest rates is a problem. to your point about the dollar because capital comes to the united states, slows and brings

down the national earnings my view is that it is likely on hold i agree. i think the next move is down. if they attempt to raise rates again, the yield curve is flat and starts to cause problems for the world economy. i believe we need improvements on trade in 2020 i believe businesses start to need clarity i don't believe trade kills this cycle. it will create some inefficient outcomes it will lead to the stalled business activity. so long as we get improvements and businesses, i think this proceeds >> you watch the fed or you care

about this too >> definitely watching trade you look towards expectations for 2020 in terms of corporates. we are expected to see earnings go up about 10%. that improves profit margins for 2019 when you look at what is priced in at the market there will be constructive for business spending and through the overall earnings picture if it were to escalate, what does it do in terms of labor market and investment. i don't think that is priced in right now. that is something we have to watch. >> thank you good to see you. >> when we come back, trade war fall out the government reportedly planning to spend big bucks to process rare earth minerals. later, don't miss our exclusive interview with chevron

michael wirth. "squawk box" will be right back. 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. that's why we go beyond the numbers. t. rowe price. invest with confidence.

. welcome back to "squawk box. the u.s. army planning to fund construction of rare earth processing facilities part of an urgent push by washington to use rare minerals. the first embarkment by the u.s. military into rare earth china leads the use of rare earth. using the monopoly as potential leverage in the trade wars interesting in looking at the american first strategy. >> isn't even america first but protect yourself >> now, by the way i'm sure there will be environmentalists and other people that look at this with other views.

>> which we certainly need to talk about >> some of those rare earths are necessary if you want to build things like electric vehicles and the batteries for them >> and phones and other things >> everything is relative. life is relative >> we may be using those a few more years rareearth. that was the band singing, i just want to celebrate should we be singing ymca? >> both. ♪ >> you are uncomfort with that you think "i just want to celebrate" is good for the usmca. are you happy with that? this is 1971 when the song came out. i remember it very well.

i remember the moon landing too. these things give me perspective, wisdom, not negative things. there are some negative things i take about quite a bit in sports, $324 million deal new york yankees are betting big with pitcher garrett coal. he's agreed to a nine-year contract that's roughly $36 million a year approximately $1 million per start that would make the 29-year-old the highest paid pitcher of all time and fourth player in history to sign a deal worth more starting the deal with strikeouts with 326. i was already thinking about the next thing comparing it to ceo pay. we get into. whole discussion about that.

do ceos have a true marketplace. this is pure, you pay the guy, you want him to win. more people come to the stadium. >> he was i think a first-round draft pick for the yankees but decided to go play for ucla. he's been a yankees fan his whole life, so it is a coming home >> you are out and completely detached again >> can we talk volleyball, bad mitten >> volleyball is a serious sport. >> so is bad mitten. >> coming up, a tail of two video game stocks. we'll tell you about a winner and a big loser after the break. and don't miss our exclusive interview with faa administer

steve dickson. michael wirth's daughter played volleyball >> and looking at yesterday's s&p 500 winners and losers ♪ through the at&t network, edge-to-edge intelligence gives you the power to see every corner of your growing business. from using feedback to innovate... to introducing products faster... to managing website inventory...

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♪ >> good morning, everybody welcome back to "squawk box. we've been watching u.s. equity futures. dow futures have turned

negative s&p futures still above about 1.5 points and nasdaq up about 10.5 >> we've talked about tha this the past running on fumes >> i remember that >> years ago >> running on fumes. >> tell the public what's going on >> relax that's called a tease. two stocks to watch in gaming. gamestop reporting a surprise third quarter loss sales fell 23% a loss of 49 cents versus the expected 11 cents per share profit the forecast as it struggles with the shift to digital downloads to games there are reasons to go in talking to the geeky expert that works there. my son likes to go and stuff but

we wondered how long it could avoid the fate of block buster expected to decline in the high teens. >> there will be a day on the console side you have to download the games that will happen where every game is downloadable you'll still need a console. >> by you can buy it on amazon >> you need the console and you probably need the fiber or wire to your home that's what you'll need. in a 5g world, actually, you may not even need the cable to get the download that's where this is headed. >> i've never been to a dave and busters. you? >> are you crazy i have been too many times >> because of the video games. >> henry and max love it there

there is a game i love there we can get the tickets and the prizes >> cheap, crappy prizes. >> i tell them all the time, we can go buy these things on amazon >> the ball thing and you throw it at the thing as cross the way, there is like a hair coming out of each one. >> skitball. >> you throw it from the side. >> i'm oddly good at that. and there is one where you press the thing and get the ball to drop in the jar. >> and bad mitten. what is the best prize you've gotten the little thing you put on and you can't pull your finger out >> the best thing we ever got was a spiderman pancake maker,

no waffle waker that has a spiderman. >> that's a real gift. >> trust me, there was a lot of playing involved to get those. >> you've used it? >> we have had a spiderman waffle on a saturday morning >> we don't have anymore time. >> that's the bdave and busters segment. restaurant chain dave&busters posted increased sales expected to fall but by less than it had previously forecast. shares up by more than 2%. >> telling you about dropbox the chief customer officer will step down after a brief transition period. the chief tech officer announcing back in october he will be leaving. eek executive will receive a transition payment of $500,000

according to a regular torry filing >> when we come back, the house will be questioning the faa over the certification of the boeing 737 max. the faa administrator will join us this morning. and don't miss the exclusive interview with chevron ceo michael wirth. apps are used everywhere...

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welcome back the house infrastructure committee holding a hearing on the faa administration over sight. t faa plans to create a new safety branch what should we expect this morning? >> plenty of can'tor we'll talk to him about this washington post report that they'll create this second branch to fill the safety gap. in the hearing that will take place today, this will be focused on how the faa has handled the 737 max. designed authorization or designation reps that is a

controversial issue. many people perhaps they need to reign that in, take back some of these dars, these are people that work at boeing and approve some of the parts going through the certification process. in the afternoon, there is a second panel where a former boeing manager at the plant, what they now call a boeing whistleblower. he'll be talking about why he believes they increased dangers as they were increasing production, basically moving too fast which hurt the workmanship on the planes creating safety issues the whistleblower and his complaints we asked boeing about that the company says, look, we took his complaints seriously when he raised them. that will be a focus of the questions in the afternoon panel. in the morning, it will be faa

administrator steve dickson. before that, he'll talk with us exclusively coming up at 8:00. we'll talk with him not only about the 737 max, the certification process and the big question is right now, they have said all along, we are not going to go on boeings time line once it is certified, we'll do it on our own time line. we'll get an update from steve dick son >> a great get you going to get scott kirby on here >> will you bring him on, please >> do you have some questions for him? >> i do. we just want him on the show get the relationship going and everything else. >> sure. >> you'll work on that >> we are working on it. i have a menu pad here what does joe want >> great with steve dickson, congress has some tough questions

he's the new guy he wasn't there for any of this. former air force pilot, former delta pilot. he's the new guy coming in to clean it up. >> correct he's not somebody they'll turn around and say why did you make that decision? he's a fresh set of eyes when you talk with people here in washington, that makes had imappealing. he does not come in with sacred cows where he says, no, no, no we can't change that he's coming into this job saying, okay, what works what doesn't work? what are we going to fix so that the faa retains the status it has had for decades when it comes to aircraft safety he wants to make sure that happens under his watch with the faa. under this report, this gets to that will we create a new branch when we look at that process.

let's do that. >> you think the odds, how would you handle this in terms of whether you think that 737 max gets approve in december or not? if you are going to congress, there is only a few weeks left in december. if you do do it, it will sound like you are caving to boeing to begin with >> right they have a number of hurdles that still need to be cleared including a flight and reviews that have public comment periods built in some of them are 10 to 15 days do the math. this could happen early january or end of january, that is a possibility. increasingly, that's what i'm hearing is more likely >> let's bring another voice on this as well airline industry watcher is principal at kaplan research what are you listening for this

morning? what are the key points? >> i agree hard to imagine this being certified anytime soon here. there is scrutiny around the world. what is tricky here. a little more complicated. it used to be what the faa did getting ahead of things before you go forward that other regulators are going to be okay with we have known for a long time that certification might be done in the u.s that is fine but those reports that canadian regulators that perhaps according to the internal middleman would be okay with the fix. that whatever certified year would be certified around the world.

>> not only certified around the world, they have to make sure they are right when they continue to be the gold standard >> exactly the faa's credibility here the skrcrutiny is on the faa. in the end, the faa now has this additional need to show independence that will matter for the future aircraft programs here look, in the end, it is in bowin boeings interest to get this right. if they take extra time, one thing, they will get this plane to what it was supposed to be. the increment al plane from the previous generation. so that pilots can continue to transition between planes easily >> is it that's the huge question it is a different air lean line

terms of engines being moved >> the point of mcas is to make the new plane feel like the old plane. we'll see from the training standpoint if that continues to be the case. if not, it puts this plane in a tough place against the new airbus the new airbus 320 are the increment al change from the old plane. easy to move pilots between the two planes it is in boeings interest. every month that goes by costs a lot of money if it takes a little time for the faa to be comfortable, then it is worth getting it right for the long term. >> thank you for joining us. we'll see you later this morning

with the faa administrator coming up, this mystery stock is up more than 90% in 2019 our next guest says it is not done rising yet and why college educated mothers are to thank. play the guessing game >> announcer: don't forget to subscribe to our podcast interviews, original content and behind the scenes access look for us on apple podcast or your favorite pad cast app so servicenow put your workflows in the cloud, huh?

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welcome back to "squawk box. our next guest joins us to highlight three stocks in his portfolio that have hit ll-tim highs just within the past couple weeks and he thinks they're going even higher. here with us is bill smead, chief investment officer we have the telustrator here i can say is this going to go up or is this going to go down? that's the question of the morning. so, okay, let's start with this. we have target, walt disney and jpmorgan, all of which have been on a huge run. the question is, if you own these stocks, should you hold them or should you keep going? >> right that's always the big question the index's advantage is they never get out of the way of the best performing stocks they never sell too soon on a

stock that goes up 50 times. as portfolio managers, you have to hold your winners to a fault. in the case of target, as just one example, it's had, as you can see, a nice little run up here, so as a -- >> look at you with the telustrator. >> here we go. as a long-term investor, you know that it could pull back 10, 15%, even 20% but over the next ten years, there are 90 million millennials having kids, buying kids' apparel. they sell carters at target and their apparel sales are at 10% we're at the early stages of aggregating. you might go down here and then up here on the next leg and you'd feel really bad if you sold it here >> okay. let's talk about the next one on our list as we flip it around and show everybody walt disney if we can. >> if we can >> if we can if we can't, that's okay we can make a smiley face. >> look at this thing. it has been on an incredible run.

short-term question and long-term question the short-term question is actually whether you think it continues to go higher what kind of news we'll get on disney plus in terms of subs that will be the next catalyst then sort of long-term, by the way, even if disney plus works, what you think of the rest of the business, especially the business that's connected to linear television. >> right so, first off, in this particular case you've had a nice run up, although what you don't see here is the prior three or four years of the stong has languished for quite a while. secondly, at the current interest rates, most of your major highly thought of growth companies trade at 25 times earnings, which is about where disney is right now. >> okay. >> a better question with disney, whereas, it might do this for a while, is did the people that went on disney plus watch something that they really liked. >> right. >> because i'm seeing advertisements for netflix talking about -- >> "the irishman."

>> i saw it in milan and the movie theater. they love scorsese and torentino. i'm a "godfather" guy and i was checking my clock at 2 hours i just heard today 26 million people they said watched at least 70% of it. that's about the time i checked out mentally was about 70% of the way into the show. so -- >> watched it in the theater instead of watching it at home where you can check out and back in. >> no. if it's not a good movie, it doesn't make any difference. and i am -- i mean, literally, i don't watch diane keaton movies, because her character aborted michael corleoni's baby in "the godfather. >> you can relate that back? >> everything on disney plus, the people are delighted because content is king. there are a ton of kids coming along. a child is born in the united states, regardless of

socioeconomic background and a child is a customer of this company. >> how many bathroom breaks? >> i made it all the way through. that's a good question. >> did you really? >> tell me what you think of jpmorgan who has been on a nice little run. >> so this is fascinating. you know, at smith barney 12 years ago i worked with jamie dimon. during the time he was working sandy wile, they kept talking before we get done we'll get to a 15 multiple with this, they ended up merging with citigroup. in this particular case in the 1960s when the economy was pretty good and rates were rising, the multiples on these banks went into the 15 to 17 world. they've been stuck at a 12 multiple at best and remember how hated these businesses were. >> right. >> now 90 million millennials have not been liability customers of the banks and one of the most profitable things the bank does is make those loans so, yes, it could correct temporarily but then of course

when it gets done doing that over the next five years, you might go back to this and have a lot of fun in the process. >> bill, thank you >> thank you. >> appreciate it i'm going to do this smiley face with -- >> i don't know -- >> you have to change the -- >> i'm just learning how to use this thing >> oh. >> wrong one >> we've got to go >> terrific. >> you didn't like my usmca. there you go did you see -- >> sorkin, did you see "the irishman"? >> not only did i look at my clock, i watched the tv series >> that's the way i watch things now. i can't watch anything. >> here's the thing. i'm going to give you the bottom line scorsese let these guys do whatever they wanted to do i can watch them forever even to the point of talking about priests and you follow the gangsters live to the end. it was good. it was disney never has -- >> you're not going to see too

many more -- >> disney never has a 70-year-old guy play a 40-year-old guy. isn't going to work. >> they're drawings half the time they're not even real. >> coming back it's been reported that there's a cyberattack on business every 39 seconds. ouch. i don't even want to think about it. comcast business has a solution. we go beyond fast with a cloud-based security system that automatically updates, so you always have the latest protection. phishing. malware. risky sites. it can help block all of that. it's one less thing for us to worry about. comcast business securityedge automatically protects all the devices on your network. call 1-800-501-6000 today.

decision day for the fed what it means for your investments straight ahead tariff tensions. senator pat toomey joins us to discuss the latest on the trade front. plus, pot stocks up in smoke. a major cannabis conference kicking off today. the ceo of acreage holdings joins us to talk about the industry's future. 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 i'm here with becky quick and joe kernen we'll show you what's going on and where it's headed.

the dow will open up 9.5 points higher s&p 500 up 5 points and nasdaq looking to open up 20 points here's what's making headlines at 7 a.m probably similar to 6 a.m. if you weren't tuned in, saudi aramco shares jumped the maximum 10% in their debut session on the riyadh stock exchange. it puts it at 1.9 trillion the faa is moving to create a new safety unit according to an incoming email that came by the washington post. the unit would be created to address gaps in oversight following those crashes involving the 737 max aircraft phil -- >> fiphil lebeau is going to brn us the interview -- >> with john dixon, the new administrator before he goes to congress. >> before he does? >> yeah. >> coming here first mortgage applications rose 3.8% last week. the rise is driven by a jump in

refinancing activity the average rates holding under 4%. >> countdown is onto the final fed decision of 2019 central bank widely expected to keep rates on hold steve liesman joins us now with what markets should expect later. >> reporter: good morning, andrew with the fed meeting days after the blowout jobs report, normally the market will be thinking about when and how much are they going to hike, as in, that's right, how much would they hike today, but not in the new normal times we live in. instead, the expected to remain on hold and the question is how long is that hold going to last and which way will the fed next move part of that comes from the very high bar that fed chairman jay powell said at the last conference for any kind of interest rate hike. >> i think we would need to see a really significant move up in inflation that's persistent before we would consider raising rates to address inflation concerns. >> what would it take for the fed to move? let's take a look. a material change in the outlook are words powell has used

before inflation or growth coming in much different from how the expected a trade deal perhaps though some economists think whatever impact the trade wars have had is baked in for the first half of 2020. then of course a change in global economic growth, weakness or strength either way and their interest rates christine lagarde taking the helm tomorrow at her first ecb meeting. it's real policy rate, that's adjusting it for inflation it just needs to be negative in the times we live in to achieve potential growth take a look here go back to the end of the 1991 recession. the real fed funds rate has been negative 55% of the time this century 71% of the time so a negative real funds rate is normal fed got slapped around by markets and the president and it's now aborted attempt to push rates into positive territory. what we all thought used to be normal, not a mistake it's going to make again any time soon. look for the fed to be on hold for several months

i think, becky, what i'm hearing is that is positive for risk in this market. >> hey, steve, i've seen a few people speculating is the reason it's so strong is there is a lot of temporary work for the holidays does that theory hold any water for you? >> unless what you're saying is the government did not adjust correctly for the expected push in temporary work. >> or are there more temporary workers than normal? i don't know. >> reporter: if that's true, that's good. that's the term seasonal 'tis the season for seasonal adjustment the data expects a massive influx of workers in december. it seasonally adjusts that out just like it expects these people to leave their jobs in january, they seasonally adjust that out that's how we get 100, 200,000 i've said this 100 times, becky, as you know, we may be up 1 million or down 1 million, the way the seasonals, they smooth that out up 100,000, up 266,000 it may be there's more temporary

workers. if that's true, there's a good sign of expectations for reta retailers for holiday shopping. >> but the short answer is no. >> i'm going to get in trouble for this >> when he says it in advance, that's when you know -- >> reporter: we're always in trouble. nothing you can do. >> that's the second delay. >> quick aside we have important people waiting. >> reporter: what am i. >> jeopardy last night guess how many dead concerts bill walton went to following them around? i'm wondering how it compares to you? >> reporter: i'm going to guess bill walton is in the 800 to 1,000 range. >> 850 >> wow. >> well done, steve. >> reporter: i know bill i've gotten to know bill he is a fantastic person is he so lit up by -- >> his mind is gone. >> reporter: i'm about 100 -- >> his holdings on we're going to have a big cannabis guy -- >> reporter: i'm about 150 i did 150 in my day. >> i was at a few. >> reporter: when i was at sunny buffalo, joe, we had the new

hampshire coming out, i was the editor i could decide what two weeks we took off so i planned the two weeks around the grateful dead spring and fall tours. >> it was on "jeopardy," alex trebek and vanna. >> i'm impressed. >> how many of the 150 do you remember about half >> reporter: what was the -- i don't remember >> he doesn't even remember the question. >> he's not in studio so there's no reason to rush out here. >> reporter: i remember all of them they were all great. >> okay. all right. i apologize. ahead of the fed's decision on rates, ahead of our discussion about cannabis, let's talk about the trade situation and the markets. joining us is jeff hensarling. he is the former congressman from texas he's now executive vice president of americans of u.s. and jim keenan is chief investment officer at blackrock. gentlemen, the big issue the market has to be thinking about

are trade talks with china jeb, you're the expert on things happening in washington. what do you think is going to happen with this deadline? will we see additional tariffs put on on december 15th? >> i kind of doubt it. we've known we're on a roller coaster ride and it will have ups and downs. you don't know what's around at the end of the ride everybody will be in good shape. so if i'm, you know, secretary mnuchin, if i'm larry kudlow, i'm whispering into the president's ear, we have to get this done. we know economic policy typically takes as long as nine months to filter through the economy. we know that a lot of cap ex checkbooks have closed over the trade anxiety. so i still think that odds very much favor a starter deal. i don't -- if the president thinks that he's close, i don't think he will impose the tariffs, but i must admit i've decided not to make my living trying to predict what this

president will do, but at the end of the day i think it's very important he knows he has to ge this done, but i'll tell you on the other hand, which is what economists love to say, speaking to various people in the administration, i think it's necessary. the president is totally prepared to run against china. >> i bet that would be my guess, too, because larry kudlow and mnuchin may be whispering in his ear on one and peter navarro will be whispering in the other. i think president trump thinks this is an unfair trade situation. he probably leans towards that side of the fence in terms of where he comes down. >> of course he believes that. again, this is just phase one of what he needs to accomplish. on the other hand -- >> he's got to get something in phase one, right >> i believe so. on the other hand, if i'm sitting there in china, i'm not going to get a better deal from this guy if he gets re-elected because then it's totally donald trump unplugged and if the democrats go hard left with the senator warren, i might even get a worse deal so i have to be

calculating that we know -- >> we're still talking about a baby deal? >> i think so. i think right now -- >> in terms of the calculus, you're talking about a baby -- this isn't like i want to get through these other issues with china ahead of the election at all? >> no. >> jim, can i ask you initially, when president trump decided to take on china i thought that it took -- i didn't think it was done for political reasons and i thought he did it at great peril because he had an economy going, tax cuts, deregulation, he had a market going and i thought he was doing it because he really believed we needed to do this and it was his own political peril but now it's playing into his -- as you just said, his base probably would like him to continue to take -- did he know in his mind that it was going to become something that it was a positive for him politically all along? what was the calculus there? because i used to commend him on, look, you had the nerve to do that when it could have caused a slowdown in the economy which means you won't get

re-elected do you think he always knew? >> when i was in congress and i met with the president, i knew there was one thing he was committed to and that was trade deficit deal. >> okay. >> with china it felt like again we had been getting ripped off for so many years. it's not just the president. democrats, republicans, everybody has something in their district who has had their technology expope preeighted by the chinese. >> if jim is right, what does that mean? how do you figure the calculus based on the idea we're going to have the fed say they're not doing anything any time soon >> i think in the near term the market is already pricing in the expectations that there's not going to be a tariff put on over this weekend but i think if you just take a step back, you're dealing with two economies now that have grown at scale that this is long run where they're going to compete against each other, right? the global growth picture is slower and lower than it has been for the last 30 years what you are seeing right now is two economies that are learning how to try to compete with each

other and the rest of the world is trying to figure out how to deal with america and china as they start to deal with each other. i think it's a lot about jobs, right? some of the long-term impact is whether it's regards to tariffs or it's a little bit of deglobalization. some of the supply chains, the labor has utilized the global labor force for a long period of time and that's led to limitations on labor income. now you're seeing some of that move. >> i think it was steve liesman, i'm hoping i'm sourcing this correctly, if you strip out china growth, if you are no longer selling to china, the u.s. multi-nationals don't have any growth what do you think of that? >> if you look at china but emerging market growth, they have been a significant portion, over 50% of the global growth over the last decade plus, right? so there's a level of maturity that they're getting to. again, that's why the global growth picture looks lower there's headwinds associated to the amount of debt in the aggregate system it's a different environment

we're moving towards >> in that environment you would do what? buy u.s. stocks, buy international stocks, avoid both >> in the short term we like international stocks just because of the outperformance of the u.s. i think from a long-term aspect, we have to look at what the valuations are, what the low growth picture looks like. probably a pressure on sustainable inflation though we do think you'll have some of that next year aggregate returns are going to be low to make real returns above that, you have to capture some dispersion because there are going to be winners and losers. >>en, we're out of time. i can't let you go without asking you about usmca what will that mean for the markets if that is passed? >> i think there was a great fear we might end up with nothing, although it is questionable whether the president can essentially wipe out nafta. i think it will be very

encouraging. there is some debate what improvement it is over nafta, but i think it will calm markets. i think anything that says we're not going to have an escalation of a global trade war is going to be good for the markets. >>en, jim, want to thank you both >> what do you miss the most what do you miss the most? can't come up with anything? >> no, i can honest honestly, it's the people. the best part of congress and the worst part of congress is the people. >> who's the worst >> oh, my, how the time has flown. coming up, a major pot conference kicking off today we're going to hear from the ceo of acreage holdings, the alng ichleesn banking and funding and much more. "squawk box" coming right back at fidelity, online u.s. stocks and etfs are commission-free.

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things around. jane wells joins us with a preview of what's next jane, good morning >> reporter: hey, becky. yeah, in just a few hours they'll open the doors here in vegas. 35,000 attendees who have one question, is 2020 going to be better than 2019 because 2019 was rough we talk to two investors putting hundreds of millions at work and the chief corporate officer of a canadian company when "squawk" returns. today's big number, $30 billion. that's how big the legal cannabis industry is predicted to be by 2025 according to a report from new frontier data. on this day in 2008, bernie madoff was arrested and charged for running his infamous ponzi scheme how long is his prison sentence? the answer when cnbc "squawk box" continues

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>> reporter: yeah, guys, 35,000 attendees. this is the largest marijuana conference and it's happening at a tough time for a whole lot of reasons. look at this big number. the top six publicly traded cannabis companies have lost a combined $25 billion in market value since the end of march so everyone from canadian companies to american investors are hoping it's bottoming >> one thing that's gone wrong is companies are relying on their public currency, their stocks to raise capital. as that comes in, i think it's

fair to say. >> the slow amount of retail stores caught everybody by surprise >> q3 you had a shock to the industry around vaping and over the last couple of weeks, the most well healed canadian lps hit their numbers and subsequently announced capital raises. >> the clouds will start to part and they will come back with capitalists anticipating in early 2020. >> i think the launch in the state of illinois is going to be a big market mover for the entire industry and that's coming in january. go visit a dispensary, go see a grow, start to understand the market i think investors have, you know, just blindly gone into the sector, so to speak, without really doing granular work i think it's a real bottom up industry even though i believe in the macro there will still be a lot of winners and losers. >> reporter: what you were looking at there was planet 13

it is a massive, potentially 130,000 square foot marijuana super store in vegas it does over $5 million in sales. it's cash flow positive. danny moses says do your due diligence. more companies issuing stock to have cash so choose carefully. he likes presco and gti, green thumb industries guys >> jane, we've got a special guest you might want to stay tuned for this we're joined by kevin murphy, ceo of acreage holdings. does this point to maybe being problematic that we actually get to where there's a federal legalization near term >> i think all markets will ebb and flow. >> is that what this is? >> i think so. today we're in a 2008 event for cannabis, but we know that there

was a 2009, 2010, 2011 and from our vantage point, cannabis is being one of the fastest growing industries in the united states today. >> so was juul. >> you will see the back side of this how many people got out of tech in the early 2000s not to participate in the googles and amazons. >> they also didn't participate in the pets.com and others that disappeared. >> no, no, no, that's where you differentiate between a number of the expert players in this space. clearly there's a differentiator between the haves and have nots for sure. >> it will be federally legal e legalized recreational use of cannabis is the end goal no >> i think there's a number of goals that gets us there today 33 states have a medical program. >> right >> of which 11 have an adult use program. >> >> okay.

>> so we believe the opportunity set in those states is extraordinary. >> you say 2020's going to be a great year every democratic candidate wants to legalize it joe biden is on record saying the same thing he said back in 2010 he said i believe it's a gateway drug and legalization is a mistake. they ask him that again and he says he still has the same feelings but not every democrat -- the leading democratic candidate is not for it. >> vice president biden does advocate for state's rights as does the president of the united states. >> talking about federal just the federal one he might oppose but whatever the states do. >> sure. what we're really striving for is federal permissibility. making it okay to utilize the plant in the states where it's legal, and today it's 33 states and the opportunity set there is a big deal. >> federal is a big deal you can't do the interstate banking. >> federal is a big deal i can look at it quite

differently and say it gives my company a huge advantage now that a lot of the larger consumer product players can't be in it today which gives me the opportunity to grow acreage to be ultimately when it is federally legal, to be a global dominant player alongside of canopy growers. >> here's the other issue with not being federally approved and that is there is not federal oversight. we've spoken with scott gottleib, the former head of the fda about that there are questions about what you can trust with these things because lots of tests have shown the amount of cbd or the amount of marijuana or thc in any of these products is not always as advertised there's not federal -- >> and that needs to change. i for one believe that we have to really create more predictable, dosable product offerings for people that can rely on what they're using that's where i think descheduling or rescheduling this drug. today it's a narcotic, a

schedule one drug with no testing and from our vantage point that has to change for sure and really bring to light what really the majority of this country believe, and they believe that this plant should be available for adult use and more than 90% of this country believes it has medicinal value. >> we have them on screen here cannabis and banking when you talk to ceos and banks about working with you in this industry, what do they tell you? >> we'd love to have the opportunity to bank you and the rest of your colleagues. that's what i'm hearing, but i believe safe banking is around the corner >> right. >> i truly believe that there are three major issues why safe banking needs to be available. number one, it takes people out of harm's way. people are at risk transacting in a cash business. >> you still think it's a cash business. >> pardon? >> it's still a cash business? >> it is predominantly we are afforded the opportunity

to use debit cards and other forms of payment, but the smaller players don't have that advantage and from our vantage point, it's unfortunate. there's no reason why one would have to pay their taxes with truckloads of cash it just doesn't make sense if you want to fuel an illicit business, make it a cash business let's not make it a cash business, tax it appropriately and account for those taxes. that's what we're striving for. >> those numbers on the stocks, that's more than ebb and flow but maybe it has to do with the euphoria that was in the marketplace pre-2019 it doesn't necessarily mean that the overall story has changed down the road. >> the overall story hasn't changed. >> and they all were way ahead of themselves. >> they may have been, but i'm a believer that they will catch up and they'll surpass that. >> all right >> so from our vantage point, again, you know, look back to 2008 where you could have bought

a number of stocks at their all-time lows and they're either taken out or prospering years later. so we have had huge momentum in 2019 with safe banking in the house overwhelmingly passing we've had the moore act coming out with very, very positive indications out of congress and i think it's just a matter of time >> you can do 100 pushups, sorkin, this dude. >> minimum. >> minimum 100 see, you give me one of those cbd gummies -- >> oh, no, with cbd i was only able to do 40 before that. now it's 100. >> come on >> no, it's absolutely true. >> are you feeling pain? >> i'd blow off the entire workout. i'll do it next week maybe. >> he has inflammation. >> that's the key. >> actually, not this -- not the gummies. >> just saying >> there's not a big motivation booster, marijuana let me just tell you

>> you heard >> i've heard that i have heard that. i'm here every day so you can tell that i'm not -- way in the past anyway, thank you. >> my pleasure. >> 100 pushups, minimum, one sitting. not more than one set? >> one time. >> wow >> all right still to come on "squawk box" this morning, faa administrator steve dixon is going to be testifying before congress today. before he does he will join us in the "squawk box" exclusive intervi interview. 8 a.m. eastern time. he is the only republican to say he will vote no on the usmca deal senator pat toomey will tell us why right after this break we made usaa insurance for members like kate.

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the trade front is busy now. in the meantime, house lawmakers plan to take up president trump's signature trade deal today. a renegotiated nafta known as usmca. kayla tausche joins us from washington kayla, the biggest question, what's happening with the china trade talks right now?

>> reporter: well, that is the big question, becky. all is quiet on that front for now with just days before that deadline usmca is being seen as a sort of proxy for the china deal and sign to the chinese that the u.s. can successfully negotiate a deal the house will vote next week and the senate will not vote before a holiday recess. some senators like john corn nin and pat toomey say they will spend their time on funding issues instead both sides hailing the usmca as a win for the u.s. economy here's president trump just last night. >> in addition to replacing nafta i've taken the toughest ever action against china's trade abuses they want to make a deal so badly. and we're doing well with the deal so badly but they want to make a deal. please make a deal we don't want to pay tariffs

anymore. please please >> reporter: just four days until those new tariffs would kick in, wendy cutler, the former u.s. trade negotiator, she believes the sunday deadline for a deal will be missed. u.s. officials have suggested the tariffs are on until they're not but they also say any sign of progress could at this point war rant she warrant shelving them. >> the usmca trade pact could be up for vote. senator pat toomey, the only republican senator, the only one who says he plans to vote no good morning >> good morning. thanks for having me. >> you are an outlier on this, at least at the moment tell us why. >> yeah. you know, i hate to be the skunk at the garden party, but i think the actual substance of the actual agreement matters, and if you look at what they did, what they set out to do with nafta and what they did in fact with

usmca is they've passed an agreement that's meant to restrict trade that was the idea, right nafta is a free trade agreement. there are zero tariffs on manufactured goods,all of manufactured goods, zero tariffs on 97% of agriculture goods. you had this free, fair, reciprocal trade agreement with no tariffs that had resulted in quintupling of exports to mexico, pennsylvania exports to mexico as well and we have a trade deficit with mexico. they've gone through this whole process of restricting the ability to trade so in my view, we shouldn't be going backwards. it was perfectly fine to do some of the updating and modernization that was necessary and appropriate. that's fine. but we shouldn't have put an expiration date on this thing. we shouldn't have put all the auto rules meant to limit mexican auto sales and we should have preserved the mechanism

that allows negotiations to be arbitrated outside of a court system so in my view we shouldn't be going backwards on trade, we should be going forward. >> senator, you're the only one at least publicly on the record right now, republican that is, who's planning to vote on this do you know of others? >> i know of many republican senators who have significant concerns i don't know how people are going to vote in the end let's be honest, there's a lot of reasons one might vote for or against a particular trade agreement for a particular president at a particular moment i'm simply saying, the substance of this agreement is meant to limit trade and i'm in favor of expanding trade and so it moves in the wrong direction. >> do you have any concerns that if usmca is not passed that nafta at some point could be ripped up as president trump had threatened to do in the past >> so, first of all, the president has no legal authority to unilaterally repeal any law and nafta he's enacted through legislation so the president doesn't have the authority to do

that and we shouldn't be cowed into voting into an agreement that diminishes trade based on a threat to do something the president doesn't have the authority to do. >> but, senator, it sounds from your last answer when we were talking about whether there were others like you who might be thinking about voting against this, that you're suggesting they are being cowed. >> no, not necessarily there could be any number of reasons and i'm not going to speculate about the motivations of my colleagues, which i assume are good motivations it could include just a different interpretation of the agreement itself i'm simply saying that, you know, this is a big deal and people could have the many different factors in mind. >> senator, so let's say china, just shift gears quickly. >> yeah. >> china agrees to a first deal. we start making progress on a second deal. they start saying, you know what, we're going to come into the 21st century we're going to stop doing a lot of this stuff. all of these things that we've wanted for so long start happening. you've been against tariffs all along and the whole approach to

what's going on. would you say, you know what, i was wrong. i'm glad we did this >> so i have to correct you, joe, because i have not -- i have put china in a separate category because i recognize the behavior is different, the scale of the economy is different and to my mind one of the most important things is the politics are different. >> are you for the tariffs finally? >> i've been in favor of the president confronting china. i've always been a little bit torn, frankly, by the use of the tariffs because we pay a price for that, but i've acknowledged that it was right to confront china and i certainly hope the scenario you lay out is exactly what happens. >> i was laying out -- i don't know what the chances of that are. >> i don't know either but that would be the desired outcome. >> because there are a lot of people that the default answer is we should have gone with our allies the same crap from 25 years -- that's their default position which is just total crap. >> i have not been second guessing the president about tactics here reasonable people can disagree

but the confrontation was necessary. mexico is very, very different. >> to the extent that you have that view that you make a distinction between the situation in mexico and the situation in china because -- go ahead. >> mexico is a medium-sized country with a small economy, a poor country that's still developing and the only competitive advantage they have is lower cost labor and as a result of that there's one sector, the auto sector, in which they've been successfully able to export products to the united states. we've got a trade deficit with mexico who cares? it doesn't matter. i don't know any reputable economist who thinks that's a problem. china is very different. one, the behavior they engage in systematic theft of our intellectual property is a totally different kind of problem. also, i'm concerned about their geopolitical positions i think they want to establish in asia and western pacific. it's an authoritarian regime

that's extremely repressive and they'd like to export a world order that serves them and not us china's a totally different category. >> senator, always good to see you. happy holidays. >> thanks for having me. >> thank you. coming up, secret sign a secret sign the markets could go higher. mike santoli brings us a look at rtr eedex that could mean some fuhegrn arrows for equities "squawk box" coming right back

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let's get to mike santoli. is it really a secret index, mike >> i wouldn't say that the commodity index crb is a secret, but it's not one that we look at typically all the time every day. in fact, this -- there's an equal weighted version of this that actually looks like it's on the move a little bit more what's interesting about this is you have a very important low in late summer. we had this, of course, deflation recession fear that really had a crescendo in august and then another goodloe in october and it's starting to run again. within this you have crude oil near the top of its range, copper is starting to run again. it seems as if there's a little bit of a reflation and there's macro indicators of cyclical

strength they're settling in. the flip side of the commodities move is the u.s. dollar index has faltered off its highs it's certainly not broke down. it was in a range but this move starting in early october is somewhat the kind of obverse of what was happening in commodities. all of this suggests in a reflation mode and markets are trying to hint that we do have maybe a higher metabolism global economy coming along the way >> mike, you're talking about commodities. sorry to spring this on you. what about this whole idea of what happens to oil prices over the longer term? we have michael werth joining us later. they're writing down a lot of their investments because they think global oil prices are not going to be as high as they had previously thought. >> yeah, i think that's been an overhang on crude oil and energy stocks for a long time what we have here is wti crude shuttling up towards $60 it's the top of a multi-month

range. it's not at all breaking out longer term, we don't know what the next cycle looks like. i think those two things are not incompatible in the short term it seems like we have to use more of it. long term these are not high return assets. >> did barons ever write about peak oil >> i'm sure they did. >> was it ever on the cover? do you remember that >> i'm sure it probably was. maybe 20 years ago. >> yeah, you lived through all of that. has any malthusian bet ever paid off? it gets cheaper and more abundant. >> it's not a negative story necessarily. >> no. >> commodities in real terms have gone nothing but down for -- >> just something to keep in mind, you know what i mean >> absolutely. >> for the younger generation. the dire warnings usually don't necessarily pan out. >> mike, thank you good to see you. when we come back, citi private bank out with the 2020 outlook for the markets and it is brighter than many have expected chief investment officer will join us after the break.

he has the highlights of the report. check out the futures. a few green arrows the nasdaq up by 20. "squawk box" will be right back. don't forget to subscribe to our podcast. you'll get interviews, original content and behind the scenes access look for us on apple podcast or on your favorite podcast app and subscribe to squawk pod today. is the monolithic view of emerging markets obsolete?

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a little more than two weeks away from the last trading day of 2019. the s&p has gained -- can't be right. 25%? let's find out how much further this bull can run in 2019. let's bring in david bell. he's unveiling his outlook for the new year excited to hear about your outlook. does it imply multiples stay the same because of low interest rates so it's earnings driven? can we get more gains. >> yes. >> because of? >> earnings. it's not going to be multiple expansion. we're going to be in this sort of trading range we expect the 10-year to go up 2.25 we expect earnings can be up globally and in the united states by 7% or more and the reason is because manufacturers are under manufacturing.

what we're seeing is the need for manufacturers to fill the supply line. >> resupply everything >> exactly this is a real under performance on the manufacturing sector. >> everywhere? >> everywhere. so this year it's been underwhelming. we started expecting that the fed was not going to support the markets. the fed has done a good job supporting the markets and they've been global. >> nothing to the idea that people were trying to buy things before the trade wars? >> that's true of course people are going to buy the day before tariffs are going to go up tariffs have been in place for a year and change and that's not the story anymore. that's the underlying story.

on employment reports, you can't pick one data report things will be brighter and that could last for a very long time. >> very long time. long enough to last into 2021? >> yes, long enough to last into 2021 when you look at what the real risks are, it's a major escalation in tariffs, a major bond problem somewhere in the world that is completely unanticipated right now but we don't see areas of the market that are over heated so let's take a look, for example, housing. housing is running at half the rate it was in 2007 when it was over heated. it's not an over heated sector without over heated sectors you don't have an immediate and imminent reason for recession. everyone, all of our clients have been sitting on the sidelines raising cash and have missed a 16% year for an average portfolio at citi private bank next year it will be up, let's say, 7 or 8% if we're entering recession, better to enter it with $108 rather than $100

that's what we're telling people. >> howard marks, i saw this this morning, stock market will breathe a huge sigh of relief if president trump is re-elected in 2020 do you agree with that do you think there's risks there if he's not elected? >> there are risks regardless of the outcome of the election. the president unfettered second term could do more on the trade front that will be damaging, we don't know that will be based on this year whether he comes with any agreement with china. >> he said on cnbc actually is where howard marks made those comments he said it yesterday on cnbc you see risk either way? >> yeah. i see risks we're going through some type of major changes in that. >> let's say it's not trump. >> right it really depends -- >> let's say it's bernie sanders. >> it's interesting. we heard about the oil markets and we just wrote about this

ironically if elizabeth warren or bernie sanders were there, ironically the oil markets and stocks could do materially better. >> that's a small part of it. >> one that's been a real underperformer for the s&p. >> what about in general the economy in general >> it depends whether or not they change tax policy >> obviously they want to. >> it would require a -- >> the election isn't even your biggest risk for next year >> no, that's right. the trade is clients are once again giving themselves a reason not to be invested in a balanced and global portfolio the largest risk to our investors is stay overweight the united states in the next four or five years. we've had a ten-year run that's been terrific in no decade has that run been repeated where the top performer stays the top performer. >> that's the thing the u.s. is

going to decline -- >> no. >> people have been saying this. there have been other opportunities for a long time. >> take a look at our strategic return estimates in the united states we expect 5 or 6% over a decade. the emerging markets is over 11% that we expect per annum. >> you said that ten years ago >> no, we didn't, but the data actually if you were to look back at our valuation models which are 5 to 10 -- where else -- when we go somewhere else to invest, you may be investing in a place that's elected bernie sanders half the time. >> i don't know if there is a bernie sanders in asia. >> i'm talking about europe. >> that's right. europe is a place where you can actually find dividends and dividend growers, companies that are going to grow earnings and dividends at much lower valuations, also that have exposure to global markets we like those very much. there are things to find in places that's how you want to build a portfolio. finding valuations, finding getting paid in cash and i think this is a time when people under

estima appreciate the value. >> david bailin. >> you wouldn't want to be marty bailin now. >> that's correct. >> you bet. coming up, the faa reportedly moving towards creating a new safety branch to stop gaps in oversight the faa administrator steve dickson will be joining us with a "squawk box" exclusive interview. the fed in focus as it gets ready for the final decision on interest rates for 2019 a preview and what it means for your money is all straight ahead. we'll be right back right here on cnbc.

the fed gets set for the final rate decision of the year. the big factors that play for the central bank straight ahead. how did boeing's 737 max plane get certified to fly steve dickson will testify live. he'll join us. a $10 billion write down of

chef vonn ass chevron assets the final hour of "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc i'm joe kernen with becky quick and andrew ross -- none of us can. u.s. equity futures -- >> that guy with cbd gummies. >> who knows what else. >> so nutty. is your doctor an osteopath/acupuncturist. >> you have a real doctor? >> pretty western doctor. >> i'm wondering because i see the things that' got you doing where did you find him upper east side?

>>. >> nailed it. >> how often, you punch a clock every week with that guy here comes my paycheck. >> the shoulder. >> but you have a lot of things in addition to the shoulder. >> i have lots of issues the shoulder is the big one. >> tmi. >> the torn -- >> how did that happen did you do that skiing or something? >> no, tennis. might have to have surgery you might see me -- >> oh, no. >> a sling for six weeks. >> because you had the other thing for a while. >> all sorts of -- old i'm getting old. >> we're not missing a lot with the markets. on a need to know basis with you. keep us updated. up 12 points on the dow jones. nasdaq indicated up 22 the s&p 500 up 6 you know how torn i was when you

were going to get that thing fixed. you were out for a week which i liked. all the times you used to be sick you're not out anymore because you're dealing with the sinus. for me it was a play it forward. i'd rather have my -- >> think of it as a capital investment >> you saw the ten year, where were we? >> 1.8%. here are some of the stories that investors are going to be talking about today. chevron will be taking a charge of 10 or 11 bld to write down the value of the assets because of a supply glut they've changed their own outlook for what they're expecting for oil prices over the long term. chevron is considering selling natural gas projects we see that stock is down by half a percent this morning. ceo michael wirth is going to join us. shares of saudi arabia's state owned company is up 10% in riyadh

it hit upper limits set by the exchange they wanted to raise $25 billion instead of $100 billion. the price gives aramco a valuation of $1.88 trillion and that does make it the largest listed company in the world. shares of gamestop are down sharply. reporting a quarterly loss of 49 cents a share compared to expectations up 11 cents per share. they cut the full year profit forecast as customers delayed purchases ahead of the new release of some new game con soles out there. that stock down by 16% there will be a hearing on the faa max. steve dickson will be our guest. we also have phil lebeau

>> reporter: thank you, andrew steve, let's get right to it we're glad you're joining us here on "squawk box" exclusively. the main question everybody has, the 737 max, the timing when it will be recertified and you will lift the grounding boeing says it will happen by the end of this year what's your sense in terms of when you will recertify the plane? >> thanks for the opportunity to be with you, phil. it's a pleasure to be with you and your viewers this morning. and how many times have you heard me say that we're not on any time line. we're going to follow every step of the process however long that tak takes. there are 10 or 11 milestones to complete we're in the portion of the process right now where we're looking at the validation of how the software was developed that will take some time but we'll work through every step of the process. >> reporter: you're on your own time frame let's be clear here. will this plane be recertified in 2019, by the end of this year >> as i said, there are a number of processes -- milestones that

have to be completed if you do the arithmetic, each one will take some time. there are a few interdependencies and some things run in parallel once the design is approved, once we do the certification flight, there are pilot training requirements we're bringing in international pilots to help us with that process and then there will be a report that goes out for public comment. if you just do the math, it's going to extend into 2020. >> reporter: so it won't be recertified this year. do you expect it by the end of january, by the end of february? what would you say is realistic? >> it's impossible to say, phil. if i had that kind of a crystal ball i would severally be able to share it but it's very important that our team works closely with the international authorities working with us and with the boeing team to do this right. we're going to do it diligently

because safety is our highest priority. >> you've made it clear here, there is no plans to recertify this this year, it's not going to happen, yet when we talk to boeing, we reached out to them last week. they're sticking with the target we expect recertification in december, commercial flights in january. are you frustrated with boeing putting that out when the reality is that's not close to that happening >> i understand that a company, a manufacturer in this case, has a project plan with milestones and is devoting resources towards moving things towaforwa but, again, i've made it very clear boeing's plan isnot the faa's plan we're working closely together but we're going to keep our heads down and support the team in getting this report done write. >> has any other boeing executives made unfair requests, if you will, in terms of putting

pressure on you and your agency to speed up the process of getting this plane back into the air? >> i've made it clear that i'm going to support my people that means i'm going to take whatever time it takes to get this process completed and to do it the right way, the way it should be done having said that, i would not say that there have been any requests to cut corners. there have been discussions from time to time about which processes run in parallel, where the interdependencies are. that's dialogue that is not counter productive but i just want to make it clear that we are going to be very diligent about every step in the process whether it's training, software development design or mechanical issues with the airplane. >> steve, andrew has a question for you. andrew >> wall street journal report out this morning suggesting this is going to come up during the hearings so i wanted to ask it to you in advance right now which is this internal report from 2018 back in november where

this faa in terms of analyzing, this is now after i believe the first crash, says that they believe that the max could have averaged one fatal crash about every two or three years so knowing that at that time can you walk us through the pressures that the faa may have felt or not felt in terms of keeping that plane in the air? >> sure. the process that you're referring to is a risk management process and one of the reasons that we have the safest aviation system in the world in the united states is because we are very data driven and our data systems have become much more sophisticated over the years. and as you have in many industries, you use that data and those tools to analyze so

there are immediate actions after the lion air crash and then the team came together as data came in to develop a decision support tool to determine how quickly we needed to move forward with the manufacturer with modification of the airplane. >> steve, the fixes that were suggested at the time were inadequate, i think. but i have a question, it says that some of this data-driven stuff is very conservative and that it sort of looked at it as this is a worst case scenario that's not really reality. we're talking about if it's the absolute worst case this is what would happen so it seems like you're saying we don't need to take it that serious. i bet you from now on the worst case scenario will be thinking of every factor. why do the analysis if you're not going to take it seriously >> well, remember, the grounding

an airplane is really an unprecedented decision it's really only happened three times in our history we need to understand what the causes of an accident are. remember, mcas didn't bring down this airplane by itself. we had maintenance issues with the aircraft there were issues with how the aircraft was operated. all of these things acting together create a certain level of risk that we need to manage and bring down to an appropriate level. we also need to recognize, i would be the first to say, that what we have done historically in terms of safety is not going to -- is not good enough today or tomorrow. we need to continue to refine and improve these processes. >> the idea of is this an incremental change to the aircraft i think that gets at the question of what sort of pilot training will be required.

what are your thoughts on that >> we haven't made a decision on pilot training we don't want to keep our thumb on the scale on that, frankly. and, you know, boeing will make a proposal as part of this process and we will have a team of 16 u.s. and international pilots of various experience levels and various backgrounds that will validate the training proposal in the simulator and then after that we will produce an addendum to the flight standardization report which is the process by which the airplane is certified from a training and operations perspective. we want to wait for the outcome of that process to wait for the final determination. >> and that question of the process for the pilot training, this gets into there's going to be a public comment period. >> yes, there will. >> some of those may be 10, 15 days

>> yes. >> even if you add that in, we're looking at a plane that may not be recertified until the end of january. >> you have also even with the master list, the maintenance requirements, we're in a 30-day comment period for that which started a little over a week ago so, again, as i said, doing the arithmetic on these processes you see it pushes into next year. >> reporter: one last question have you heard from president trump about the max or anyone in the white house, look, coming up on 9 months, it will be a year, we need to get this plane back in the air we need to get boeing delivering planes again >> no, i have not. this is my decision. this is the afc decision >> steve >> thank you very much.

>> an important interview. rob portman on what a finished usmca could mean for workers it's developed and you're watching "squawk box" on cnbc. who says our bank isn't tech enough?

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>> you don't want to sacrifice the good in pursuit of the perfect, senator >> it builds on the north american free trade agreement and it improves it and updates it this is a good thing the gdp growth, joe, is greater as estimated by international trade commission. >> it's a good deal for america. >> do you have any of the same concerns of senator toomey on any of the issues?

are there things you would change if you could if you were king >> if i were king, you know, i wouldn't have negotiated quite the same agreement, particularly in terms of dispute settlement and other issues that have to do with changes from the existing agreement but, look, this is better than the north american free trade agreement in so many respects it's a great example of persistence and patience this was negotiatedover the past couple of years and signed off on a year ago. it took the house a year to say, yes. this is starting to provide benefits for people of ohio and our country. we're there and now we need to move forward quickly >> we had a convergence of events yesterday, an hour within the big news of the day with the articles of impeachment, but the afl-cio, something going on for the last couple of days. was the timing in your view suspect or is that -- speaker

pelosi said, it gets done, written up, it's exactly the way it came in or was there, like everything else, a political tone to the timing >> i think both, joe look, it is more than a coincidence that this happens the week impeachment is announced. they've been criticized, i think rightly, by people saying you are being distracted by impeachment and not doing the work of the american people. this is a good example of it it helps everythibody and a goo example of it. at year end congress likes to put things off whether it's the appropriations bill that are hopefully coming together, whether it's the defense authorization bill which came together yesterday after four or five months of negotiations, things do tend to happen at the

end of the year around here. >> so we didn't ask senator toomey much about this, but i just want to ask you quickly we don't want to dwell on this could it impact the market and investors? they list the possible gop senators that could in some crazy scenario vote yes on the impeachment and trial. your name was actually in. i think you were in the third tier you have the romneys, you have your lamar alexanders and susan collins. there was a next level the media entity writing it was trying so hard to get to 17. they were like this doing back flips. hope springs eternal they were appealing, but you were there is there any scenario, anything else that can happen that would get you to a yes in the senate trial, senator >> well, joe, i don't know why i was on the list. probably because i'm saying i'm a juror in the senate and i'm going to listen. i think everybody should listen.

we should allow both sides to present their cases. i think that's going to happen now. talk about the senate not taking it up. i've seen nothing thus far that rises to the level of impeachment. that's important we focus on the fact that we have an election right now before us. we've got presidential debates going on we have voting in ohio it's going to occur in two months we've got priorities coming up in new hampshire and california so, i mean, i think the american people are going to have a chance to go to the polls. those who would like to remove the president from office, they'll have their chance through the democratic process that's a much better way to do this. >> in your view, what would be the number for the gop do you have any idea will there be a couple of outliers to go with the minority in the senate? >> joe, i guess it depends on

whether there's something new. if there's new evidence. if not, i don't see it. >> the president says he really wants a trial because he wants to call joe biden and adam schiff and all of these people to be called i don't think mcconnell thinks that there's necessarily -- i think you need majority votes to call some of those witnesses, right? >> yeah, you would by majority under the rules that existed in previous impeachments and none have resulted in a conviction, by the way this is an extreme measure to remove someone from office who is elected by the american people. >> is this bolstering trump in ohio >> i don't know. >> you're from the good part, cincinnati. >> i beg to differ. >> i won't mention any names but there are -- >> toledo, all of them are great. >> cleveland might as well be new york city. >> cleveland is great. >> all of ohio is great. >> great football team down

there you've got, too. are you going to pick that burrow guy >> i hope so the kid is from ohio. >> he's amazing. >> 1 in 11 record. we should get that. >> hey, you have the patriots on sunday i don't think you have to worry about that i'm not sure they've been sucking thank you, senator >> thank you. >> sucking >> yeah. >> thanks. >> i suck. >> i don't suck. >> thanks, senator. >> nice to see you, senator. coming up when we return, we're going inside chevron's plans for a $10 billion writedown on the value of its assets chevron ceo michael wirth is joining us all of this happening on the first day of trading with saudi aramco we'll talk abo tuthat and more you're watching "squawk" on cnbc

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welcome back to "squawk box. rick santelli here live on the floor of the cme group with the november consumer price index breaking it is up .3 of the pattern and in the rear-view mirror up .4 unrevised. gore is up .2 as expected. year over year headline up 2.1 .1 higher than expected. .3 than the rear-view mirror let's look at core year over year where you strip out food and energy exactly as expected. a bit warmer

maybe the point is that it is holding some of the monthly gains, of course, that we had last month we'll continue to monitor pricing pressures on this, the last fed meeting of the year and on real average weekly earnings for november year over year, up 1.1 average hourly earnings year over year also up 1.1. the market, we lost half a basis point or so. 1.83 we failed on jobs friday to hold very long above the mid 1.80s. resistance considered 1.86 to 1.90 as we go into today's meeting. andrew, back to you. >> great thank you for that want to get back to steve liesman now who joins us with more steve? >> yeah. as rick suggested, a little hotter on the headline and pretty much in line on the core. one thing that's worth mentioning is the base effect from last year we have sort of difficult

comparison so it may be a little bit hotter for that reason, but no real sign here of any concern for the federal reserve. remember, tharp preferred inflation method runs half a point below. 2.3 on the core might mean a 1.8, 1.9 on the fed's preferred indicator. they're not going to see any particular concern you have increases pretty much across the board in the 01, 02 nothing standing out except the 1.19% change in the gasoline services up 0.3 and housing up 0.2, 0.3 it's pretty much in line and no reason for the market to make a trade on this issue on the idea of inflation being relatively muted. maybe the guy, becky, that you have coming up can tell us what's going to happen with oil prices and, therefore, we get a better look at what's going to happen with inflation. >> we're going to give it our best shot, steve thank you. good to see you. in terms of what steve was just talking about, oil major

chevron has announced it will be taking charge of $10 billion this year to write down the value. it's related to lower commodity prices as the industry deals with the supply glut joining us is chevron ceo michael wirth. great to see you. >> good morning, becky. >> let's take a look at this you took a look at the assets and you looked at where the oil prices are heading where did you come up? >> business is good. we're leading our peers in shareholder return this year we've seen record production and free cash flow is growing but good isn't good enough so we're setting the standard higher for ourselves we're streamlining our operational footprint. we're harnessesing technologies and we're simplifyingour organization to get the right people on the right work, all of which are actions that will deliver even better results. >> the assets that you're writing down, tell us a little

bit about them these are shale assets i think appalachia is part of them take a look at that and why you think this is an air you we need to write down. >> we regularly take a look at our long-term outlook for commodity markets. as we do that, we also will look at our assets. and we evaluate which assets will deliver the highest returns on investment for our shareholders we've got a great portfolio of things to invest in and the assets in the northeastern u.s. along with some in canada and other parts of the world simply don't compete as well for our investment dollar as others do we are staying very committed to capital discipline this is the third year in a row where we've held capital spending flat. we are to make tough choices to high grade those prices that we'll invest in. some may work better for others. >> it's interesting, there's a lot there. you're talking about flat capital expenditures it's a big number. $20 billion. >> $20 billion is a big number

so it's important that we spend every dollar to generate strong results. if you go back about five years ago we were actually spending $40 billion so we've brought our spending down as commodity markets have reset and i like to tell our people in a commodity business, capital discipline always matters and cost discipline always matters. we intend to make the hard choices to continue to deliver leading performance. >> how have your production numbers held up in this time period where you've kept it flat for three years and come down substantially from where you were five years ago? >> we've seen growth every single year for the last three years. we're showing 3 to 4% growth again this year year to date we've seen good strong growth for projects that are highly economic we've talked about the permean basin in the u.s. which is driving global supply growth our production has grown and our cash flow has grown.

>> let's just focus on that. you're looking at places where you think you can spend less money and it's easier to get the oil out of the ground. you think those are the assets you'd like to double down on or buy additional ones and get rid of ones that are a little more difficult? >> that's certainly part of the equation the real focus for us is on delivering strong returns and so the projects that have low investment costs, we can get products to market and deliver strong returns to our investors are the ones we're focusing on the other thing that the shale has which is nice, it's a shorter cycle. roughly 2/3 of our spending delivers cash flow within two years and that allows us to adjust capital spending to markets if we need to. so we've got a budget that allows us to adjust. we've got the lowest break-even price to cover our dividend among our major peers and the strongest balance sheet. puts us in a strong position financially to support cash distributions to the

shareholders. >> mike, it's joe kernen in a world where we thought it was going to run out, this is a good problem you could get the stuff out of the ground if you wanted at the right price, right the stuff you may not want to do for shareholder return it might not be -- what price would you need oil to be to -- for -- to not be taking this write down and go ahead and develop it? >> well, these are primarily gas oriented assets. >> gas. >> the broader story here is there's an abundance of resource in the world we're not running out. innovation and technology have allowed us to meet the world's demand, and it's a growing demand, for energy in an even more efficient manner. we can do this at lower costs, which is good for economies and consumers, particularly in developing countries. >> we can go back and get it, couldn't we, if -- >> at some kind of cost. >> at a certain cost did your -- you know, they -- you're a chemical engineer from a great engineering department,

cu, by the way, the buffalos did that hope you decide some of these things that you do i think chemical engineers should be hired for just about everything because that's hard -- you've got to go to school for that and you have to actually work. >> well, that's a few years ago. it was a demanding curriculum -- >> yeah. >> -- and, look, we've got a lot of smart engineers of all different types in our business and they're essential to drive the innovation that is really continuing to fuel, i think, this benefit to the u.s. economy and the global economy. >> do you think that aramco needs to write anything down >> well, i -- you know, i don't know the details of aramco's business they've certainly been in the news a lot lately. they're a great company with great people and we have a long history with them. >> i imagine you've been watching the ipo process just in terms of looking at valuations, looking at different assets. i think we're all trying to figure out what to take away from this whole process on the valuation side and then also on

the sort of larger question about whether a company like that can ultimately land up on an exchange like the new york stock exchange or in london and how that might change some of these valuations and how that might even impact acompany lik your own >> well, i think it's very early to speculate on that this is a relatively small portion of their company that they've made public and, of course, we've seen this in other state-owned companies in our industry and places like china historically where they've become publicly listed and i think it's a gradual process that unfolds and markets adjust to the information and the opportunities. so this will play out over a period of time, and i think, you know, we'll just have to watch how that plays out >> michael, you made the point that you're in a good position right now. the company has good times and good things that are happening it is an unusual way to go about a reorganization that something like that. it's probably the smart play to do i've also seen though you make the point that you're doing this

because you don't want to wait for oil and gas prices to rise if you look out for a long time do you actually think oil and gas prices could rise down the road are we really in a secular change where this is a big glut for all sorts of oil and gas and we're kind of washing it around the world. commodity markets are difficult to predict if i could get oil prices accurately, i might be doing something differently. we try not to build our business on a hope that prices will rise but rather take a look at the things we can control, which are the capital choices we make, our costs, the way we invest in technology and efficiency and be prepared to compete in any environment. certainly today we see a world that's well supplied with both oil and gas and it looks that way for a period of time with the long history of the indu