i think that kind of gets at how with the head winds of when you think of politics and legal threats the industry faces that kind of lays down a play book of how they will get through the next year. >> an important segment. thank you very much. appreciate that. that does it for us at the exchange power lunch starts now thank you very much. it was tweet herd all around wall street. president trump says he is quote, very close to making a very big deal with china and stocks are rising. plus the wife in the peloton ad speaking out as the stock falls but could the ad turn tout be the big that gives on giving to peloton. later, to buy or not to buy.

that's the question facing millennials. one expert says renting is the way to go. power hundred lunch starts righw the dow up 300 take a look at the sectors hitsihits i -- hits new highs today all jumping on the day for more on the trump trade tweets that launched the market gains today, let's bring in cay lee from washington. >> reporter: tyler, president trump is in a deal making mood first a tweet this morning that said getting very close to a big deal with china. they want it and so do we.

then making these remarks earlier this morning at an event here at the white house. >> you look at europe, asia and a lot of different places. we won't talk about china because we're working a deal with china i wouldn't say up until now they've loved me >> reporter: there's a meet ing in the oval office at 2:30 p.m the trade principals will be discussing next steps after making this olive branch last year the u.s. offered to china to cancel the upcoming tariffs on december 15th and to cut earlier tariff rates in half on the $360 billion in goods where they're already in effect. this was first reported by the wall street journal. my sources also say the talks happening at the deputies level because the ambassador has been fully absorbed with usmca. he's on capitol hill briefing

republicans. some said he made comments on china. there seems to be some optimism on the hill after meeting with ambassador lightheizer the final decision rests with the president. we'll see wa he decides later this afternoon guys >> thank you could be like the oprah show a trade deal for you a trade deal for you trade deal for you the dow down 150 points. let's get to bob for more. >> contessa, historic highs by just barely. 31.53 is the historic closing high we are well off our highs. it's the original spike that's good for almost about 40 points.

that was quite a move in the s&p on the president's tweet i think some of the concerns that are out there is reports. we don't know if they are real or not that the u.s. would reimpose the original tariff level. you get a sense this never ends. i think those are some of the problems we don'thave anything really concrete right now we do have a lot of break outs this is very encouraging you don't just want apple and microsoft, the top ten stocks breaking out you want broad break outs. that's very healthy for the market you get the deep cyclicals breaking out to new highs. you get big global consumer name like nike breaking out you get the usual semiconductor names. new highs right across the board.

all together nearly 200 stocks at new highs that broadening of the rally is very, very healthy back to you. >> all right thank you very much. rjts stocking dealing with trade war whiplash as president trump gets ready to meet with top trade add vievisers in the oval about 2:30. maybe some of the prior tariffs are reduced. what does the market do in response >> the market does what it is doing today. you're seeing a nice rotation.

it takes some of the pressure off the economy. maybe increase business confidence the implications are wide ranging. >> tom, your thoughts as well here it would seem as though this phase one deal is pretty much as advertised if it comes to pass it looks like there will be maybe some more protections on intellectual property but the heart is agriculture purchases in return for postponing and reducing u.s. tariffs. is that a good deal for the u.s. or are we giving up more than we're getting. >> i think the right way of thinking about this is you remove major source of uncertainty. when i speak with clients no one asks about what the details will be they want to know if it's going

away or not. for most people it will be you remove this major source of uncertainty. people that get involved with the very micro detail will call it a winner or loser it's a big win i think what you have to keep in mind is over the course of 2019, capital expenditures have suffered at the hand of these tariff and trade wars. think of it this way, it should have been a 5 or 6% yields it's going to want to be a flat year at best that's bierly the result of trade. we're dealing with these trade

issues not just between the china and united states but also europe as well i don't know when you're looking at the big picture in 2020 here, when we talk a bit about business confidence, about the fact that this consumer service found that 60% of the cfos expect to reduce their head count in 2020, what are the warning signs here that maybe the optimism is not so well deserved. >> go ahead. what i would say is with all due respect to that, i don't know what that cfo survey you mentioned was but that was pretty clear in its view on what head count going to do over the course of the year we have generated quite a number

of jobs. it's suffered at the hands of trade. it's also saying that their view is a positive one. if you take a big step back, job growth will slow down in the coming year. it's built into our forecast sgr john, let me ask you a point on what tom just said or respond to this, a lot of people have said the trade tension has been a wet blanket on global growth if some of that is lifted, does that make 2020 a year to invest internationally in addition to maintaining in the united states >> that was the point i was going to make. we're so focussed on the economy

but the trade tensions have hurt the euro zone even more so the fact the trade tensions get less lessened, that will help the european economy and that will flow into our financial markets here what we think we could see is if the european economy starts to improve and confidence increases in the u.s. as we were just talking about, maybe we can see a little pop in capital spending, you could see interest rates creep up a bit we would love to see business confidence increase and see interest rates rise a little bit. that would be a great barometer that we're on the right path >> an interesting few days that we're living in right now. thank you very much. optimism on trade lifting stocks today but looking ahead to 2020, there could be some reasons to worry c c contessa just referenced one of them new york city is expecting wall street bonuses to shrink by 9%

from last year that's a drop of $2.5 billion. we have some other troubling signs from our cnbc cfo council survey >> we surveys chief financial officers of major global and private companies about the challenges they face and what they expect for 2020 the answers we got this quarter were really interesting. they expect to increase capital spending over the next 12 months, many of those same executives say they expect to cut jobs back to u.s. and north american cfos 40% plan to increase job only 20% of global cfos expect u.s. recession in 2020 and within the u.s. and north

america the number is closer to 6% >> very interesting. very interesting and surprising. >> thank you very much coming up, buying a home is the most expensive decision any of us will make more people are choosing not to buy. is renting smarter shares of peloton is down 12%. it's a controversy erupted over its new ad over the holidays is all the bad press going to ats xtn weluh. press th ine opor nc

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it's been a week since the infamous peloton christmas ad aired. as controversy swirled, the tok t -- stock tumbled. research is calling the stock a buy. the actress caught in the middle spoke out on nbc today show. listen to what she said about the backlash >> honestly, i think it was just my face. >> what do you mean? >> my eyebrowing looked worried. >> the picture is the one she says is at the heart of this whole thing. >> i'm telling you, it was my face that's the problem this just went -- exploded from there. >> she's like i'm such a good actress that i've created this our next guest says this entire ad might turn out to be a gift

to the company with us now is the cnbc contributor. it's good to see you, mike why would the backlash over the ad be a good thing for peloton are you just going with all publicity is good publicity? >> if you look at peloton and make that challenge, how do you get consumers to fall in love with the brand it's got a $2,000 plus price tag and the biggest barrier is will i buy this thing and will i use it if you look at the fact the actress is on the today show, every one is talk about the brand, peloton has a real interesting challenge. overall it will be really strong consistent positioning for them and something they can build upon >> what's more important to them is it the social media chatter

is it the earned media of the actress appearing on the today show what's the driving factor that could be an immense silver lining >> i think it's a come fwhabinao the two. how can peloton change lives and how can this be an alternative for your membership. being at the center of the dialogue being focussed on the conversation during the holiday time frame where people are buying gifts, i thought it was a brilliant casting and the ultimate result will be positive for them >> the issue here is that america's default reaction to just about anything these days is outrage we're primed to get angry over the slightest slight, whatever it is. i put the reaction to this ad in that category. i'm sure i will get a lot of autoraged e-mails over this.

to me peloton's challenge is you talk to anybody who has this device, think love it. they are evangelical about it. on the other hand this is not a device that has a wide mote around it. lots of other people from life cycle two to novelist to whomever is still in business could build the same thing >> yeah, you make a really, really good point because peloton has created a community. it's not just about the bike it's about the experience. it's about being part of the community and as you mentioned, often times consumers irrespective of what you say they're going to be some backlash in this world that we live in. i like it when brands are authentic. when they stay true to their positioning and when they are confident enough to put out an ad like this they can't worry about backlash on social media. they really have to worry about accelerating the adoption of the product that ultimately creates

this community in which they have done a really nice job with >> i'd like to propose the next ad goes something like this, man gives his wife a peloton for christmas. wife looking at it like this thanks and works out for a year and goes back to her husband and says thank you so much for the gift i've met my new boyfriend because of this and now i'm leaving him and he's a billionaire. do you think that could work for peloton? >> i doubt if we'll see that >> imagination there >> in all seriousness, is there something that more generally companies can do intentionally to create outrage so they get some of this broader brand recognition? >> i don't think that works either i think authenticity is really the key. if you look at the ad, it's -- peloton has really tried hard to communicate that this is an

alternati alternative. this is being part of something bigger than just a bike. it's about being part of this whole fitness revolution and they've had a hard time breaking through those messages if you look at the commercial they did a year ago, it had a husband an wife sharing the experience and while it was nice, obviously, it didn't invoke the type of emotion you're seeing now. i think as long as brands are consistent with messaging and understand, you have to take chance and have messages >> mike jackson, thank you for joining us cnbc parent comcast universal is an investor. we have a news alert right now on facebook. we have the story. >> the ftc is seeking an infunction over facebook over how its app interacts. the ftc is looking to seek to

block facebook from enforcing its policies around integrating the back end of its app. ma the ceo said they are looking t make the communications services sbre gra integrated this says they are trying to bartha from s-- bar that from integrating the apps we have not heard back from them yet. what this is really about here, as you see facebook shares down over 2% is mark said the future of facebook is encrypted messaging. the question is would the very deep integration as all these

systems be problematic should there be antitrust action against facebook going forward >> the stock is down $4.30 about 2% thanks very much for that report netflix shareholders may be sad to say good-bye. the stock up 3600% in the past ten years. can it follow up this decade of domination with even more gains? we'll debate that and can you bet on the banks even without an increase in interest rates anywhere in the foreseeable future our adwitrers ll weigh in coming up on power lunch. (upbeat music)

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- [narrator] take advantage of some of the lowest online tuition rates in the nation. find your degree at snhu.edu. welcome back fto power hundred lunch. financials hitting the market today.

jpmorgan, bank of america, citigroup and wells fargo all spiked let's bring in the trading nation team today. let's talk about whether this can continue obviously financials have been an out performer for the last few months part of this value and cyclical trade. with the fed on hold, does the group still look good to you >> the group still does look good this is one of our top sector ideas. right here, right now the financial sector spider is testing its pre-crisis peak back from may 2007. we are banking on a break down we upgraded in october you have overall bullish conditions and we see very constructive behavior in how the sector is performing we can see financials basing

versus the s&p 500 now breaking above resistance. see a lot of similarities to the fourth quarter of 2016 that's how we're thinking about returns going into 2020. we think there's more upside for leadership here. >> yeah, obviously very dramatic move to the upside back then see if we can have a rerun or not. how does that filter into your view of this sector? >> you've got two major things that are supporting banks now. the first is that the valuation cycle is obviously favoring cheaper stocks and banks fell into that category the fact they just traded low on multiples has been a huge boom for them

since the fed cut the short end of the yield curve down it steepened the yield curve. as long as that shape remains there which is to say the out look for the economy doesn't get any worse so the long end falls, then that's all good for banks the second is fees that's being driven with issue is still strong. we still see a good out look to revenues for banks all in all it's an interesting ra trade right now. >> very strong on the debt side whether the banks have big role. thank you very much. for more trading nation head to our website. back over to you ahead, president trump meeting shortly with advisers on china trade at the white house we'll bring you the headlines as soon as we get them. to buy or not to buy

why one real estate investor is advising clients, rent he joins us next a decade of dominance. 2019 is on its way out but we'll tell you which stocks are buying opportunities. all of this when power lunch returns.

welcome back reports are now crossing wires that the united states has, in fact, made a trade deal with china. as you probably remember the president was set to begin a meeting with his key trade advise

advisers reports are now a trade deal has been reached in principal and the meeting that's going on right now is a briefing where the details of it are being spelled out to the president >> we had some headlines coming out that potentially this could have a 50% cut on existing tariffs. we're waiting to hear the details of what this deal might entail you can see that number one we saw a 300-point jump in the dow earlier on this headline dow jones up we have very good sourcing in this the tension has been between on the one hand the sort of trade and tariff dubs represented in the popular press, at least to

what the popular press says by larry kudlow and mr. light heiser who play a bit more of a hard line along with president trump who seems to favor using tariffs as a way to bring out a better deal. this deal presumably will involve a fair amount of commitment toing aing ing ing i agricultural president trump says he supports paid family leave and expanded child care benefits for all american workers he spoke during a white house summit on that issue saying he's committed to getting it done >> it's time to pass paid family leave and expand access to quality.

we're going to have really an expanded access to quality affordable child care in addition to all american parents. >> t-mobile ceo arriving in court where he will testify in favor of the long sought merger between his company and sprint state attorneys general are arguing that combination will cause harm to consumers by lowering compositilowe ing competition in the industry. major league baseball will test for opioids and company but only players who do not cooperate with treatment plans will be subject to discipline. marijuana will be removed from drug abuses and will be treated the same as alcohol. lots of news in major league baseball today that's the update. back to you. thank you very much. we're seeing stocks on the rise on o report coming out there's a deal between the u.s. and china. this is the deal that largely

investors were expecting we have no details yet they would cancel the tariffs that go into effect. give me your reaction. >> the day started out being about tariffs and no one was thinking about the deal. people could see the deal within eye shot we heard a bunch of tweets that have resulted in nothing after a couple of days in the past huge tail wind from the market if a deal is done now there's not a whole lot to hang your hat on if you're going into year end. that's why we saw what we just did. >> let's talk about the pop and what we see every time there's a headline that seems to indicate might get a deal or one that indicates that maybe we're going to put off a deal through 2020 until after the election

we see the stock market going accordingly. in this case will it matter what the details are or does it just matter that we can stop talk about it and have a little certainty for a brief period of time in. >> i think you bring up a great point. i think phase one of the deal every one said it was supposed to be a lackluster deal and it was mostly about ag products or agreements going forward the fact we get phase one under your belt is a huge thing for the market i think it opens up phase two, phase three. >> when we were together last friday, equity me if i'm wrong but i think i'll call you saying you were a little worried there might be an air pocket waiting for the market after the first of the year. correct me if i got that wrong >> you got it right.

>> does this change that in any way? >> i don't think it does i think it makes it worse or more likely. the reason for that air pocket is because there's no reason to sell the market ahead of year end. every market participant has a vested interest in the market trading higher once you look out to the first quarter then it's all about estimat estimates. if the estimates get ahead of themselves and i expect analyst communities will push their estimates higher because they probably been so low and got run over and a lolt of thet of thest had not seen we're going to get a deal done. i think we will see one in the first quarter or soon thereafter >> the earnings expectations will get ahead of themselves and

when the disappointments come the market follows down, right in. >> exactly we've heard about earnings recessions we didn't get one. now you could see analysts try to ratchet them up so they don't look silly and the companies could really fall short and the hedge funds have three quarters of the year the play around with that's where i think the market could be susceptible >> we're seeing all the major indices popping. the volatility index is falling down now 5% on the day we also heard it's entering a wait and watch period.

where are the opportunities? >> if you see calm waters, you have to buy what's leads tech is what's out performed for this year. for the last three years to last five years you have to be there you have to sell things that provided an overall stability in the market i believe the s&p we're at 31.63 in the s&p now i've been thinking for the last couple of months that 3200 is my year end target. i think you can get on board and play a lot of those risks on

>> thank you for that perspective. how is the bond market reacting? rick is tracking the action at the cme. >> i can answer your question in three words. zoom, zoom, zoom looking at it today in the 30s revisiting 234 if you look at ten-year note yields and this could be the same for 30-year bonds, just slightly different what is occurring today is similar to what occurred at the end of october for different reason the notion of trade deal getting signed to catalyst now but even after the last that resulted in ease within a week we started revisiting the 190s. the curve steepened. the chart after the last meeting at the end of october, early november around 194. that was the best level since the end of july. in the case of 30 bonds it was the best level since early august we're getting close to those

levels i'm motnot sure if this particu story will do it the dollar index didn't lay low. it's been soft it's been like chocolate in the sun. today it's up almost half a second you put a one week chart up, it's just recouping some of the damage done over the last seven sessions tyler, back to you thank you very much. still ahead more details emerging as the u.s. and china have reportedly reached a trade f.al awaiting mr. trump's sign of we'll be right back with more after this quick break

moments ago the u.s. and china have reached a trade deal, at least in principal. derek, welcome good to have you back, sir >> thanks for having me. >> are you surprised that we get to this point or is this pretty much how you thought it might play out with the looming deadline sunday of the

application of daadditional tariffs on additional goods? >> it's not how i thought it would play out we weren't going to apply those. that was to the side a while ago. it seems if the president is going to agree to a deal that this is a big rush we just had usmca. we didn't have a deal last week. if the president agreed, it's a big surprise it would pull together so quickly. >> why do you say that it doesn't feel quick to me. it feels like it's been going on now for the better part of 18 months or longer >> well, right we made an offer last week to the chinese about reducing tariffs and their response in terms of what we offer the united states in return is inadequate there hasn't been a visit. if the president does sign off, the question is what exactly is in the deal that got us from last week to this week where

we're done in such a short period of time >> it appears there will be a substantial purchases of agriculture product but beyond that, the details are sketchy. >> right we have a baseline remember the president said in october we have a deal, we'll have checks in three or four weeks. which makes a lot of people wonder what we'll hear from him today. the baseline deal with a currency provision there was an ip provision that didn't do anything it was greater access to services in china and the add purchases you were talking about. if that's all we got, we should have been done in october. if the president is signing off, which we haven't seen yet, but if he is, what put us over the top? are what's the key concession that made him change his mind? >> what do you think of the market's reaction to this. now we're up 200 points.

we've seen the movement back and for forther, higher and lower. in this case what do you think is actually relevant to moving the markets higher and lifting optimism not only in the united states but globally? >> i think there's a positive global effect where a lot of disruption of trade was thought to be on the table i'm not sure the phase one deal will end that. certain sectors will do better it's tiny. trade, exports to china don't matter to the united states very much i think the market will be responding either to global improvement or specific sector improvement. >> you're right on the macro level. if you're looking at the whole impact, maybe that's true.

it matters to farmers who sell and grow soybeans. it matters to those who grow and sell cotton and the tobacco farmers and the bourbon producers in kentucky. this issue of trade hangs heavily over certain industries in the united states when we're looking at trade too, it's not just china. we are now embroiled once again in issues of new tariffs on companies -- countries coming out of south america you have issues on trade with european union right now what needs to happen in to 2020 to see a lot of this resolved? >> i don't think you can get it resolved in an election year if usmca pasdss the senate which hopefully will happen next month x we have taken care of the big issues yes there's other countries. there's the 232 auto tariffs on europe but canada and mexico and

china, our top three trade partners that's as much as you can do to boost the u.s. economy if you had deals that stick with those countries. i think politically there will be a problem during an election year because president trump said he would bring manufacturing jobs back to the u.s. and cut the trade back to e united states and cut the trade deficit. this deal doesn't do that. if it sticks the u.s. has deals with its top three trade partners the that's as far as we'll get in an election year. we appreciate you coming on, on such short notice we are following these reports that the u.s. and china have reached a phase one trade deal stocks are higher. although they are still off the highs of the session we'll have much more as we follow the markets and these headlines after this.

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a lot of news breaking this hour we got an alert on boeing. phil lebeau has the details. >> reporter: boeing ceo and stan deal who is the head of the commercial airplanes division wrapped up a meeting at the faa with the administrator steve dixon and basically this is a meeting where steve dixon made it clear to the boeing executives the timeline that they follow is the faa's

timeline we just received this statement from boeing saying we'll work with the faa to support their requirements and their timeline as wework to safely return the 737 max to service in 2020 basically, that statement, tyler, is saying in the past you had boeing said recertification in december, back in commercial service by end of january. now they are saying we're taking guidance off the table, we're going with the drum beast set by steve dixon and the faa. you heard mr. dixon tell me yesterday on "squawk box," it won't be certified this year, might be recertified sometime january, february, somewhere early in there a number of hurdles still need to be cleared. that's the latest news from boeing they will take their guidance off the table and any guidance about a return for the 737 max will come from the faa back to you. >> a lot of news on boeing including a very unflattering

story in this morning's "wall street journal" about that company and 737 max. president trump meeting with his top trade advisors at the white house. let's get to kayla tausche what are you finding out >> reporter: three source confirming reports of a deal in principle between the u.s. and china. of course, this deal was reached among negotiators and still awaiting the sign off of the president of the united states one source who is close to talks said president trump has been trying to drive up the amount that china committed to agricultural purchases remember back in october he said china would be purchasing $40 to $50 billion in u.s. agricultural products that number moved closer to $40 million with the chinese saying highest they ever purchased in the past was $26 billion and president trump has been focused on that number and wanted that to come higher we'll see what gets decided in the oval office. when i reached out to the white house they said a deal in

principle had been reached in october but the problem was the chinese hadn't signed on to that deal we never saw an official release from the chinese side that they agreed the to what president trump announced. in the intervening months they've been haggling which tariffs would come off and if china would make those purchases. how is this time different i'm told the chinese ambassador is expected to sign whatever is agreed here today in washington. it's important that this deal is reached in short order because there would need to be a federal register notice published that officially delays those tariffs that would otherwise go into effect on sunday, so we're expecting an announcement from the white house at some point today. unclear how long this negotiation behind closed doors will the take. sources that have been in touch with the white house and negotiators say there's a deal reached in principle by negotiators and it's up to president trump to sign off. >> kay larks didn't we get news

that the chinese started to buy back more of our agricultural products. >> reporter: yes, they did there was some skepticism that they were only doing that because they had seen a depletion in the chinese herd of hogs because of african swine fever that depleted that population, they needed u.s. pork and only doing that for selfish reasons. it's really that sticker price, that $50 billion number that the u.s. has been focused on or at least the president has been focused on it wants the chinese to hit that target the frustration has been trees the usda and the president they've been making these purchases sort of on an ad hoc basis and they want a wholesale commitment to that big number. >> any more clarity on whether there would be 50% cut on existing tariffs >> reporter: we know that's the offer that u.s. new yorkeror oo

made >> let's discuss the headlines further with chief analyst what's your reaction to what kayla was reporting there. maybe a big news on the agriculture front and wait and see here on tariffs. >> i think my reaction is to take a deep breath and recognize that we've been here before. and that we need to see what actually shakes out of this over the next couple of hours but also over the next couple of weeks because we've known numerous events where there's been a deal agreed in principle that fell apart. so, our outlook continues to be is that there will be irritants even if it's a short term deal good new tariffs won't be imposed if that's the case but there will be continued irritants to the u.s. china relationship whether it has to

do with technology companies or hong kong or other sorts of things, and probably going to be a bumpy road ahead >> what would it take to significantly change your outlook? >> well, in all likely -- first of all, it's good if there's a cease-fire it's good if there's any pull back on tariffs for the u.s. economy and good for the chinese economy as well. so, you know, i don't -- even if there's an interim deal that could be positive the news, it's likely that this deal will not solve the underlying issues, keep referring to it as phase one and it should have been accomplished back in october so even by their own measures there's a lot of work that needs to be done to settle the issues between the united states and china. >> are there any immediate actionable investment moves that come to mind out of this, patrick? >> well, if you're a day trader, trading on the news i would say

no because we don't even know what kind of news that there's a deal but we've had that news before and as much as we would like, to you know, believe whatever comes out of the white house, there's been many times where it hasn't quite shaken out that way. >> patrick, thank you very much. "closing bell" will pick up our coverage right now welcome to the close bell. i'm courtney regan i'm on the floor of the new york stock exchange at the okay terri -- caterpillar booth. 59 minutes left to go. see if we get any more clarity before the "closing bell" sound. >> i'm quintanilla in for wilfred frost. trade obviously the big driver as courtney said reports just crossing u.s.-china deal has been agreed to in principle and awaiting the president's signature.