and landing in lebanon where he says he escaped injustice. i don't think he can extradict from there it is tuesday, december 31, 2019 "squawk box" begins right now. ♪ good morning we are live from the mart the dow dropping 183 pointsing believe it or not. that was the worst day in four weeks. the decline that tells you where it has been headed dow at 28,26

nasdaq on track for the best performance. dow futures indicated up about 34 points and gains for the nasdaq and s&p futures treasuries, the 10-year has finally hit 1.9% exactly been watching for that a long time >> above that yesterday. >> looking at it as the economy has shown some pretty strong signs. >> now we do it in tens. normally we wait for 3%. the volatility >> we talked about that. the inflation volatility is really low he thinks that why multiples have stayed so high. it will take years of inflations

coming back. >> multiples can stay where they are. this just happened we'll bring it to you. an iraqi security source telling nbc news that demonstrators have stormed the u.s. embassy in baghdad's green zone they have used tear gas grenades to try and prevent them from moving inside the compound hundreds have gathered what we saw. some saying it was about time that some of the air strikes killed fighters from iran-backed coalition from operating in iraq a big piece saying finally we are addressing some of iran's

activity ramping it up. >> there had been a take out from the week before saying saudi arabia has changed how it sees people administration had talked very tough. as a result, he was changing the way he operated trying to neighbor have a less contentious relationship with some of those enemies. >> a lots of people are bullish about 2020, just in general. good economy rates stay low trade may be a little more on the back burner. one of our guests said, it is not the unknowns we need to worry about. the unknown unknowns

it is like yogi barra. it is not the unknowns it's the unknown unknowns. we know about the unknowns it is the kim jung-un -- nobody knows what is going on with him. supposed to be a good year for oil. normally, it is high single digits so -- >> we'll see we should tell you also about some pro democracy protesters. staging new year's eve rallies

plo police plan to deploy thousands of officers. carrie lam says the unrest has caused sadness, disappointment and rage i'm torn ghosn ghosn, gone. ousted nissan chief has fled house arrest in tokyo. he landed in lebanon people say how did he get there? he was known for private jets. this would violate strict court opposed movement and lebanon does not force --. he says, he will no longer be

held hostage by a japanese unjust system. all three of his passports are still held by his lawyers. his lawyer called his behavior inexcusable. he somehow went to turkey first. he was first arrested in tokyo last november on charges of hiding income and enriching himself. nissan fired him after investigations revealed he had understated his salary you saw that mask. that's what is with confronted with in make up today. >> with good reason today. >> you are sick. good reason. >> i think it is okay by now >> i hope. >> tamiflu is a wonder drug.

you can exist. it lessens the duration and severity >> it is pretty harsh. it has its own side effects. >> it does you are not supposed to drive a car. but anchor a show. you should watch today you really should. >> so carlos ghosn, he gets out and gets to turkey that is the bigger question. obviously he went on a private plane but to not have a passport i see how you could do that. >> he's been very frustrated there were a lot of things that shed some light on the japanese justice system where you have

99.5% of charge of guilty in these things >> whether he earned the money or came about it >> one way or another, he learned a lot of money and there are places where many will allow to you get through somewhere >> this is one of those cases, i would think. >> you have the private jet. i don't know about japan but certainly, there are a lot of countries in the world where money talks. >> we should tell you about tesla's new shanghai factory producing 1,000 cars a week or 28 cars an hour. tesla broke groundless than a year ago and started delivering cars during a ceremony in china yesterday. the stock is down. electric car news. ford says the first edition of the high-end electric mustang

has sold out no longer taking any preorders you can still order the mustang mach-e it is like a cross over. who buys sedans anymore? >> suv's >> uber and post mates are suing california over legislation that would force them to treat their drivers as employees instead of contractors. the suit aims for protection and duel process and carves out exempt for others including travel agents, truck drivers and commercial fisherman uber has been fighting this. it would completely change the business model for any of these companies if they had to pay their workers as employees

it is probably more nuanced. there are some uber drivers who are absolutely employees others are doing this as shift work if you dig through to figure out who is an employee and who isn't, there is probably a more nuanced way of trying to figure that out >> we all benefit from them not paying their employees a fair wage, i think they are still not making money they are never going to make money. they go back and forth undercutting each other. your $20 fare will be $40. >> i think there is a more nuanced answer to this

if you are an employee working 40 hours a week or more, you should be treated like an employee >> okay. so they require that and then they leave california so you are back to cabs it's like air bbn. i understand a lot of employees are willingly accepting the terms the way it is right now >> that's an argument for saying minimum wage shouldn't exist >> it certainly shouldn't be national >> states shouldn't have that. >> states do but there is an argument for the 10 million to get their raise, two million people lose their jobs >> i understand the argument >> you think price controls are going to happen? >> no, i don't >> it is wage and price control. >> just like you tell andrew on

begun legislatio gun legislation. election someone and change the law. >> where is he >> he's out somewhere. i'm sure he's not watching >> he's not doing a sit in >> no. he's on vacation >> to be clear, that was not yoggi bara it is done ald rumsfeld. yogi said predictions are hard especially about the future, which is genius. >> nobody goes there it's way too crowded >> i like that we always say going forward. why? we already know what happened going baby ward. >> coming up, get ready for the final trading day -- what are you laughing at?

>> you >> he knew my record on my bets. >> are you above or below $500 i'm hanging on by a thread i won both games yesterday and i'm back to $116 but i'm still on my original -- >> just don't put any money in today. >> i've got my pick. u.s. equity futures are up 23. what do you think? >> how much will you bet if you lose this game >> three games, i'm going to bet $30. we'll talk strategy and later much more on ousted nissan chairman carlos ghosn who has fled house arrest in japan and landed in lebanon. we'll talk to the wall street journal reporter covering this gambling is legal in new jersey. just in case you are wandering >> announcer: today's big

number $62,330,000,000. that's how much companies raised this year by going public. the highest in five years but well below what analysts were expecting. their values are why i walked away from my business, took the giving pledge to give my money to good causes, and why i spent the last ten years fighting corporate insiders who put profits over people. i'm tom steyer, and i approve this message. because, right now, america needs more than words. we need action.

some things are too important to do yourself. ♪ get customized security with 24/7 monitoring from xfinity home. awarded the best professionally installed system by cnet. simple. easy. awesome. call, click or visit a store today. welcome back the final raiding day of the year and the decade. check out the top performing dow components the catch is most of these stocks joined the index during

the decade apple leads the list up 868% over the last decade united health up 864%. visa up 759% and home depot with gains of 651% and nike adding 510% the bottom five, again, we should say these are the bottom five not considering the ones that already got kicked out of the dow. ibm up 1.5%. exxonmobil, goldman sach and chevron and walgreens boots with 60.4%. joining us now to talk strategy and what you should expect in 2020 and the head of multiasset strategy at ubs asset management pretty phenomenal year

what do you expect in 2020 >> it has been a great year but we can't forget that we had very cheap valuations coming into the year it is a bit artificial if we look year-to-date if you look back at global equities, they have not really gone anywhere for two years. >> u.s. equity have. certainly the break out for the quart has been really strong looking around the world where the value is we think investors are going to look for international markets to catch up. that's kind of how we are more focused going into 2020. >> a lot of that is looking at the economy here and around the globe. >> it has been a great year.

we did a 180 in the economy. the fed raised rates a year ago. today, the fed did their pivot they cut rates three times economic growth came in above expectations in 2019 we got some pretty good momentum going into 2020. housing is one area that may be a surprise to the upside as analysts estimate new home prices >> and economy new turs gains around the globe and not just in the united states next year? is. >> we have been hoping that. if we do get a more sun stan sh substantial trade deal, the chinese auto sector, if that were to turn around, it would help that's a lot of ifs.

i would like to see it happen. my gut tells me that is something that might happen later in 2020. we might need it then. the second half of 2020 is a mystery. we are heading into the economy to kind of chill out and we see that growth tends to slow a bit. >> it is your call the markets will outperform. how will the global markets do >> us equities will go up. you could get double digits. in general, look, we have a fed that will remain quite easy throughout the year. they are doing that whole inflation framework. we expect earnings to rebound with the economy in general, we think it is a bit of a goldilocks environment. >> you aren't taking any money

off the table and you might put more to work here? >> the surprise is that we may get even better. everyone is coming in saying, we had such a good year there is only so much further stocks can go. we have a very positive macroand policy environment that sets the tone for further gains not at the speed this year >> you are a ziran guy you listen to both guys and decide what are clients supposed to do where is he in 2,200 for the year >> i think he's around 3,000 >> he's moved up >> in asset management, we have a different investment process

>> he this gave me the song and dance about one was institutional and the other retail >> turns out that retail has been right >> i can lose money yourself i don't need help. my account is out at ubs i should say that. >> ever since running general electric i'm a member of the family so you only can talk about things if you are part of the family >> absolutely. >> it is just tough love >> jeremy has been right >> he has. he doesn't come on anymore because he's mad >> well. >> we can only hope. >> jeremy is my friend he lives in my town. >> he's got an open invitation >> great to see you guys happy new year, by the way

this is reamly illy it i forgot until i drove in here and i couldn't get in here >> i won't be here tomorrow. >> i won't be here either. i like being here. >> me too. but stay back with your germs. when we come back, your report card for hedge funds in 2019 we'll talk perform and and farewell to the funds that shut down stay here and "squawk box" will be right back. apple card. is a new kind of credit card, created by apple, so it's simple and transparent

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the hedge fund industry saying good riddance to another painful year which saw more and more funds shutting down the hedge fund playbook for 2020 >> reporter: new rules are key themes more truces. elliott settled with at&t in october, it did so in a unique way. proposing several changes

watchers say these settlements will not become more popular making these things lower. fewer proxy fights there were only nine proxy contests reaching a vote that is less the norm over the last six years lastly, new rules. the sec is looking to enact new regulations of proxy advisory firms which advice investors on how to vote on governance issues these new rules make it easier to fire on reports frmt karl icon say it makes it even more difficult to practice asset investing. when we come back, we'll tell you -- >> don't you think john vogl is

laughing somewhere >> yeah. only because it has been a good year the passive aggressive passive investing is being active. >> the s&p is better than these guys they buy a hundred million dollar apartment in new york >> it's easy -- nothing is easy. it is not easy to beat the market over an extended period of time. only a handful of people can do it coming up, how the tariffs will affect your favorite wine or beer. squawk booze news is next. and we'll talk bank stocks that could make you money in 2020 a look back at the big per f

performance. bank of america up 42.65%. let's look at yesterday's s&p 500 winners and losers ♪ flush ♪

good morning welcome back they are playing all these songs in honor of carlos ghosn

>> at least we don't have that foreboding sound welcome back, live from the nasdaq marketsite in time square tonight, here. >> you already can't get in here unless you walk. >> is that why i had trouble getting in >> i had trouble every year. i forget this is the day you don't drive. crazy. what a great team. s next day, it's all cleaned up. >> you will see one or two pieces of confetti >> if anyone tonight needs to use the rest room, you can come here >> you better not offer what you can't do >> no. do not come here where do they go >> what do you think >> it is called depends. that's what people do out there.

you can't go to the bathroom you are locked out there six, seven, eight hours >> nice warm feeling >> temporarily >> that's gross. it is going to be wild tonight i have no desire do that do you >> no. i'm here every day >> i don't even want to wait inside here and watch from this advantage point. >> there will be plenty of people this will be a big one in 2020 >> it is the end of the decade okay >> did you know there was no 0 a.d. >> it went from 1 b.c. to 1 a.d. if you had a problem, you have to go back to the fifth century, which was actually the 400s. are we in the 20s seth century

not? >> 21st century. >> there is some dispute about >> we are rolling into a big round number >> the third millennium started. >> fine. technically you you are correct. tonight, you may be toasting the new year with products that have been hit by tariffs or are about to face tariffs. we have some booze news. >> reporter: not even to mention your plates. it could happen in about two weeks when trump administration could slam 100% tariff on french wine and cheese over france's tax on big tech in addition to 25% levees related to an aircraft dispute that already targets other european wines, whiskeys and your favorite after

dinner drinks. companies are already having to grapple with those changes >> each company and distiller is grappling with this differently. some are eating the cost and passing it down all the way through the retail chain and impacting the consumer it is critically important particularly during this time of holiday selling season get these matters resolved >> more than 300 companies have been commenting since the trade representative have been unveiling these moves over the year a vast majority of these have been imposed writing, quote, the damage that will be done to our business and the businesses we sell to will happen swiftly and if and when the tariffs are removed, it may take year sts to recover or may be impossible

they have been negotiating before many argue that it is the champaign consumer paying higher prices that they are not exactly worried about. >> i had talked to a wine editor saying, okay, is this good news? potentially. potentially they would be there. and thinking it would give california wineries room to move and still be competitive >> right not to mention the additional retaliation to come from europe. last year, europe put tariffs on american whiskeys and bourbons and those fell the french have a lot of pride in their wine and say they don't import california wine it would be hit if that retaliation came pass.

>> thank you coming up, a pulse check on financials the banking sector doing quite well almost in line with the broader market which would be surprisingly well because it was 28%. we'll talk about how the biggest names look positioned heading into the new year and we'll talk more about carlos ghosn's run to lebanon while awaiting trial in japan. stay tuned you are watching "squawk box" on cnbc i love the new myww program, because it's tailored to you! take the personal assessment and get matched with a proven weight loss plan. find out which customized plan can make losing weight easier for you! myww. join for free + lose 10 lbs. on us.

financials are better than expected in 2019 with help from the feds three interest rate cuts a growing economy has returned 28% almost matching a p performance of the s&p joining us, you know so much about the ins and outs wolf was here yesterday. >> i saw wolf. he gets noticeably excited for me, it's overwhelmingly feeling of dread

just boring, complicated he loves it. do you get excited every quarter when the period is up. >> we try to find something exciting an meaningful for investors. >> you need to be excited. you got 10 reasons or 10 things to consider. i want to ask you about the first one. what do you mean, america first will drive large bank and performance in 2020? what is that is that the trump policy of nationalism versus globalism >> i love the question america has really driven our economy and banks have benefitted strongly. with he think in 2020, you want to be more selective all boats are not going to rise in the fourth quarter. those who have 80 to 90% plus of the revenue from the u.s. are going to do better because of the engine of the consumer

bank of america, jp morgan chase. getting to what could be a risk over the next year or two. possibly in the capital markets. you have a lot of strategists on the show and they talk about the underperforming markets outside the u.s. economies are flat or down banks are benefitting in lending. being smart on investing in economy. that is a lot of what we are looking at >> some of the risks, latin america, weak local currency less exposure there is good. that is good it flows into america first. it would have to be a big jump in the economy of asia and off shoots from china. in the u.s., the risks you've got to watch are coupled

the oil tax shooting back. second, mortgages. did you know 85% of mortgages aren't the large banks lending tree the third is liquidity banks are tightening up on leverage loans overall, a really good picture for 2020 we are staying with the consumer and that gets you back to america first. >> for the consumer, you point out that credit may be a bright spot >> we are beginning to see increases of loan provision for credit cards u.s. household still today is healthy. compared to before the financial crisis we would expect that the loan

provision and reserves the other area is auto loans your loans roll over and nows it $65,000. these shadow bank areas. it is not the jp morgans that woen won't be the risk. rates rise in the second half of the year they start i think that can happen. it will be a start on the upside good or bad? >> good. we are sitting here a year ago you thought rates are coming down you didn't want to own rates a possible upside surprise i think the operating businesses are good we talk about the consumer let's say in q 3 and q 4, we get an up tick of rates. >> not necessarily the broader market like a traffic light i'm in the green area.

the 30-year fixed rate to 3.7 to 4.1. we hit red and it is negative for the consumer or housing market >> banks avoid the presidential election spotlight why? >> why be in the limelight >> what do you mean? you don't worry about banks? you worry about other sectors? >> there is more exposure, drug pricing, pharmaceutical. >> i think elizabeth warren would be tough on banks. >> think about where we were in the obama years. no reason to be out in the limelight. >> low risk during the election year thank you. >> he's excited about banks. i think it is endearing.

nice trying to help clients it is your job. >> i think we'll get great total return >> that is exciting. thanks, ken. investors position portfolios for the 2020 outcome how they are placing their bets next carlos ghosn's flight from house arrest in japan to lebanon we'll be right back. at leaf blowers. you should be mad your neighbor always wants to hang out. and you should be mad your smart fridge is unnecessarily complicated. make ice. making ice.

but you're not mad because you have e*trade which isn't complicated. their tools make trading quicker and simpler so you can take on the markets with confidence. don't get mad get e*trade and start trading commission free today.

don't get mad get e*trade and start trading if you listen to the political it sounds like we have a failed society. but nothing could be further from the truth. americans are compassionate and hardworking. we aren't failing. our politicians are failing. that's why i'm running for president. to end the corporate takeover of the government. and give more power to the american people. that's how we'll win healthcare, fair wages, and clean air and water as a right. i'm tom steyer and i approve this message.

welcome back, everybody. the countdown to the 2020 election is on and investors are placing their bets creating candidate baskets tailored to different scenarios. "the new york times" putting out a story on this. investors weigh 2020 election. joining us is the author of the piece, kate kelly. reporter at "the new york times" and cnbc contributor great to see you. >> great to see you, becky how are you? >> good. let's talk about this. i feel like market players are playing this out already i feel like there's a little bit of a pause. >> i think you're right. i think this got really active starting in august and going into the fall particularly when you saw the rise of elizabeth warren in the polls. that struck fear into the hearts of a lot of investors. there have been hedge fund managers, numerous ones who say we'll see a double digit decline in the stock market if she's

elected. we've heard that on this air there were puts bought on the s&p with a march expiration. you'll have a thought in november. >> double digit is 11%. >> right >> or 99. >> 30. double digits is also 99. >> right i guess i was trying to be broad because folks like steve cohen haven't specified. >> 40 or 50. >> 10 to 40, right then people started to look at individual stocks that could be affected by her platform or bernie sanders' platform which we know is similar jpmorgan did an interesting basket they have 51 stocks. they call it the progressive democratic agenda index. it's a whole range of things, some of which you would expect like big tech companies, google, facebook which he has talked about breaking up, some of the health care providers, humana, cigna. >> drug companies? >> right also some that are sort of labor intensive which could be affected by a rise, for example, in the minimum wage. so papa johns, the gap, things

you wouldn't have necessarily thought of that was an interesting one to see. then of course the trump trade is also not obvious. i mean, even though the markets have done incredibly well this year as we know, have done well under trump in general, the question is like how much more -- how many new aspects of his economic agenda are we going to see the tax cuts are baked in, right? we've seen a start of financial deregulation that will presumably continue but how much more benefit is there? how much more up side for these major financial stocks is yet to be seen. >> when do you think the next leg down takes place is this super tuesday? is this when you see iowa, new hampshire? when do things start to heat up again? >> yeah, good question i think a lot of hedge fund managers wait until after super tuesday. they don't have a good sense until then although some of these options could get relatively expensive leading into that if we have a sense from the polls as to how things are going. i mean, i think most traders have a predict it screen open all day. >> right. >> they're looking at real clear politics they want to know even if they

don't have a specific hedge on, they want to know at all times where this is going. i interviewed a bunch of strategists for this they said u.s. politics is the number one risk factor on investor's minds going into 2020 with the possibility of recession second >> kim -- >> that's kind of crazy. >> i look at predict it. i don't care if it's thin right now. what is being traded is where it is it's just where it is. >> sure. >> am i wrong or do i need to wait until the lion and the interest gets higher on predict it i don't know if everyone watches this but it's pretty funny right now you've got to admit. trump is at 48 cents, 47 cents i think biden is 24. >> 48 cents to win a second term. >> yes. >> biden gets 24. >> right. >> elizabeth warren is below andrew yang now. >> right. >> bernie's like 20. >> yeah. there's just -- that is just such an open field even though -- >> crazy. >> -- you've seen -- >> democrat wins election is 51 and republican wins the

presidency is 49 >> right right. >> but it's also interesting to watch the jockeying in the democratic nominee and who goes up and down there because bernie suddenly resurge -- he had a heart attack and all of a sudden he's back to almost on top again. >> yes. >> unbelievable. >> elizabeth warren -- >> she's had a fade. >> toxic since the medicare for all. >> she's had a fade. >> bloomberg, nothing. nothing. zip. just -- >> well, the other interesting thing is -- >> -- crickets. >> -- how do you place a bloomberg, biden, buttigieg in this spectrum. >> hillary is on there, too. >> yeah. it's true. but if you think about what they're going to do from a policy perspective, it's clearly somewhere between trump and warren/sanders. >> right. >> but to figure it out economically is tough right now. >> kate, thank you great to see you. >> thank you >> "new york times." times square, your square. >> place to be. >> we call it "squawk" square.

not catching on. speaking to a reporter in paris who has the latest on the titan of the auto industries fleeing japan. where's steve miller "take the money and run" take the money and run

going, going, ghosn. he's on the run saying he escaped injustice in japan. tesla shifts into overdrive as the stock trades near all-time highs, the company makes a huge push into the world's largest auto market. plus, we're ringing in the new year by looking back at some of the most memorable moments of 2019 the second hour of "squawk box" begins right now ♪ go on, take the money and run ♪ ♪ go on, take the money and run ♪ ♪ go on, take the money and run ♪ ♪ go on, take the money and run ♪ good morning welcome back to "squawk box" here on cnbc i'm joe kernen along with becky quick. andrew is off today. u.s. equity futures at this hour are indicated up a little bit.

they've moderated. they ev they're only up 3 points on the dow. 3 up on the nasdaq s&p indicated up a little over 1. slightly bigger gains earlier. >> like 36 earlier for the dow. >> a bit of a pull back yesterday. >> here's what's making headlines at this hour former nissan chairman carlos ghosn is in lebanon. he fled japan where he had been awaiting trial he issued a statement saying that he would not be held hostage by what he called a rigged justice system there. we'll have much more on this story in a few moments. boeing has reached a compensation agreement with turkish airlines the airline didn't say how much it received but a turkish newspaper reports that the amount was $225 million. ride hailing service uber and post mates are suing california over a new law that's set to go into effect tomorrow that law would require the companies to treat certain

workers as employees rather than independent contractors. uber has said that it may be forced to hire fewer drivers and reduce its coverage area as a result. let's talk markets the dollar has weakened nearly 3% in the last three months. if the trend continues, the same companies who bemoaned the strength in the dollar could be singing a different tune this has nothing to do with tesla. i want contessa to do a tesla story because we're going to call her contesla. >> it was a run being theme yesterday. >> beat it into the ground. >> contessa brewer >> it might have an impact let's see how we can work this in. >> are you on the exchange today? >> no. >> you know -- >> but if you want i'll make a surprise appearance on the new york stock exchange. >> we'll do that and we'll play fake applause. >> i'm not a producer but i play one on tv. the dollar index is down 3% in 12 weeks

it's a move multi-nationals take very seriously many currency watchers say the dollar will get weaker in 2020 in the s&p 500, 43% of revenues come from over seas sales. a weaker dollar makes those goods and services more competitive beyond our borders top beneficiaries here big tech, nvidia gets 87% of its revenue from over seas that stock is already up 33% in three months amd gets almost 80% of its revenue from overseas and as the dollar has dropped in three months this stock has soared 57% in that same time period then there's apple 58% of revenue from overseas apple is up 30% in three months. on the other side of the coin, companies that import a lot like walmart and home depot could faulter. if you look at shares of walmart, flat in three months. home depot is down almost 6.5% another down side of a falling dollar here often, not always,

serves as a warning that the u.s. economy is growing. concern and optimism over the dollar was a big theme in last quarter's corporate earnings calls. in october google's ruth porat said she expects currency headwinds in the first -- fourth quarter of 2019. dominos cfo jeffrey lawrence cited a 1.7% impact on global retail sales and a $1.5 million impact on international royalty revenues for the quarter it was due to the previously strong dollar. so we'll wait and see what happens. what could be the driver if there's going to be another driver of global growth, what is it >> all right so you're leaving here and you're going out to -- >> new york stock exchange. >> i'm going down to the new york stock exchange. >> and then what >> i'm going to pinch-hit on "closing bell." >> so you can't be on?

>> i can -- from there it would be like remolt. >> don't bother. if you can't be with me -- >> no, you're not going to be there. >> nobody puts babe in the corner. >> let's talk about weak markets. j.j.kinehan. i'm looking at your notes, j.j you're talking about what's happening this morning so we're going to micro analyze today's actions. i want to go out to 2020 with david lebowicz then we'll come back for the near-term stuff and vix stuff with you, j.j. you're like a 6. you're like on a scale of 1 to -- you're like a 5.5 on how you feel about the markets, aren't you it's not like a meh. that's a 4.5 you're like a 6, aren't you? it's okay. 18 times earnings is expensive so the earnings need to match up with that but -- >> but you look at where rates

are. >> so stay in. add a little don't get out but watch trade. watch growth globally? >> exactly i think the path of least resistance for stocks over the coming year is up. i'm rooting for the stock market in 2020. what we do think though is that the market and the economy are going to continue to be buffeted by some of these geopolitical and growth risks that have frankly been with us for the better part of the past 12 months it's not about turning purely defensive but it's also not about having a fully risk on approach it's about splitting the difference you were talking about financials earlier when you look at dividends and b buybacks, you're getting 7% of the names. in an environment where we expect volatility particularly with the presidential election on the horizon, a little bit of padding is always a nice thing to have. >> so are you saying it's a market of stocks not a stock market so you -- you're not only saying that you're meh on the overall market, you're saying we have to

find pockets where it might be better than other ones are you a 5.5 or a 6 >> i'm a 6. >> not a 6.5 >> i think the risk here is that we've been talking about 2% growth for quite some time that's no longer a forecast, that's a reality and in a 2% economy with muted inflation, are earnings really going to be 10% which is what the street's looking for i think that's the big risk is people are expecting, oh, you know, the clouds of uncertainty coming from trade have broken entirely i'm not sure it's that clear-cut. we are cautiously optimistic that's how i would describe it. >> oh, i hate that term. you can fall back on it. you're not optimistically cautious. >> no. cautiously optimistic. >> j.j., you're near term. i see your intermediate term is the santa claus rally period the five days at the end of the year and the two first days. n of the new year >> what's long term, january >> well, hold on

if you want to go back where you started with the currency stuff, i'll go there for one second, joe. >> go ahead. >> that is, i think there's a few stocks that get overlooked in that. number one is actually probably a gm the reason i say that is gm, i don't think most people actually realize this, gets more than 44% of the revenues from china so actually that may help some of their sales there then you look at stocks like coca-cola and mcdonald's with rely heavily on foreign sales also you know, the thing is if the dollar kind of really crashes, that may not be great for them, but sort of a slower downward move for them would be fine, too. the reason i say you don't want it to go down too much is the commodity prices may go higher which would actually cost them more in the long run those are three of the stocks for what -- >> that's what i started with. path of least resistance leads stock higher as the decade nears a close. when we go through today and begin the new year, is the path of least resistance still

higher >> it does -- yes, it is higher, but what i would say is it would not surprise if we started the year with some sort of a selloff. it's almost been be -- you've seen more money coming in the last couple of weeks as people, you know, may want to window dress, et cetera i think overall it's almost gotten to -- i hate to use this word, but really is a little too easy, so to speak, over the last few weeks. so usually when you have these types of moves some sort of small selloff will help shake people up a little bit. >> are you talking about garden variety selloff, 2, 3, 4%? >> yes exactly, becky the other part of it is it will be interesting to see the one pattern we've seen over the last few years is any sort of selloff has been met with buying we'll see if that sort of continues also as we head into the new year if people look at every selloff as a buying rather than as a time of panic. i think as people are starting to readjust their portfolios at the beginning of the year, you know, many did at the end of last year but you'll see a lot

of people doing it at the beginning of this year also, it may be interesting to see if people really come in full force and drive it higher from any sort of selloff. >> sound like santoli. let me ask you one outlier question so the con sentenctences -- consensus is mid to higher level. what are the chances you got a 20% downward move or back in the mid '90 type thing, no one is predicting we do another 28% this year. is it possible we do another 28% this year? is it possible we go down 28% and somehow we miss the consensus, just the knee-jerk 7 to 8% return everyone's forecasting? which is more likely >> so i saw somebody writing the other day talking about a 30% year in 2020 i think that it's more likely that we see a significant move to the down side rather than the up side, and i would also add that these down side moves are much more short lived than they once were. >> get a 20% down move and then

a 25% up move? >> we very well could. that would leave us in the ba balance. >> 25 above where we are now >> i think that would be challenging. the gains we've seen over the past 12 months have been driven by multiple expansion. i'm not sure how much more multiples can expand earnings growth looks like it's going to be tepid. >> you're not a 6. you're a 4 j.j., what do you think? the vix is going to move -- go ahead. >> i don't think we'll achieve either, joe, to be honest with you. if i had to put my money on it, i would put my money on the up side. >> so would i. >> that's the least expected. >> me, too people don't remember '94, '95, '96. there were three years at 30%. >> the probabilities are low on both ends. >> i know. i'm uncomfortable at the sell side, you know, blah, blah, 5, 6, 7 that's all i'm hearing people that come on more interested in keeping their job than giving anyone -- >> david, your response?

>> i'm asset management, right >> right >> i think the real key is going to be what happens with the rest of the world if we see a dynamic where manufacturing begins to come back, where the dollar does weaken like contessa was talking about, then there's risk to the up side. but when you look at what's going -- >> if the global economy takes off, i would think we would be helped. >> it helps us, right? >> yeah. yeah >> we can do 2%. that's all we can do. >> i don't know if that's true either without trade -- i mean, we did 2% with trade problems we did 2% with the fed tight for too long. >> i'm not sure the trade is as resolved as a lot of people think it is. joe, what i would say is if it does happen, i would put the odds on the first quarter rather than the rest of the year only because as we get towards the election i believe the probability of us having a big move starts to narrow and narrow and narrow until we have something decided. >> really? >> you may have some -- >> i don't know what that means.

>> i think you'll have good interday moves, i don't think you'll have the follow-through moves that you need. >> all right david, thanks. j.j., sorry to rank you. >> no, that's okay we're friends. >> yeah. you know, number ranking >> happy new year, uys. >> you, too. see ya. when we come back, the story we can't stop talking about this morning. how did carlos ghosn escape japan without a passport and without being noticed? we'll be joid ghafr isnerit te ♪

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with 24/7 monitoring from xfinity home. awarded the best professionally installed system by cnet. simple. easy. awesome. call, click or visit a store today. ghosn landed in lebanon which would restrict movements in a statement he said he, quote, will no longer be held hostage by a rigged japanese system where guilt is presumed discrimination is rampant. i have not fled justice, i have escaped injustice. and political percent is he skugs.

we're on a private jet and we do know that you went via turkey. there are unconfirmed reports that he actually left his house and in an instrument case. after having some people over for a concert at his house it's unconfirmed for now it's pretty sketchy on the details about how he managed to get out of japan. >> like a cello case >> have to be a pretty big instrument. >> not a mandolin. that's crazy what other cases i mean, i guess there's big amplifiers and could be a keyboard i don't know is that what you're saying, nick a cello case >> yeah.

>> i'm not sure which instrument but, yeah, that's certainly the rumor in the lebanese press right now. the japanese justice system by this he was finally able to be out on this that was something that took him a very long time to get to that point. what do you think happens with japan. this was not the right move. >> his lawyers, they understand his reasoning. they are trying to get bail so he wasn't completely under house arrest

he lived in a house in tokyo he recently took a trip. clearly this is embarrassing for japan. he will execute and he left. there will be a lot of soul searching with how to deal with these cases and he has electronic tagging and high security they have long said he wasn't a flight risk and now he's gone. so what happens next is difficult to tell. there's no extradition treaty between japan and lebanon. ghosn can stay in lebanon and nothing will compel him to stay. >> does this mean he can't leave lebanon? what other countries do have extradition treaties with japan?

>> yeah, i don't know to be honest i think it's early to tell my guess is that he's probably going to lay low in lebanon for a while. there's nothing. maybe in the future he can go to brazil where he was born it doesn't necessarily mean he can't travel anywhere else. >> what's been happening to nissan renault in the meantime, nick these two companies had been kind of cooperating in this partnership. what's happening without having carlos ghosn there >> they've started -- they spent a year fighting. it's kind of calmed down lately. it's less but, yeah, they've been fighting with each other and the profits have collapsed nissan's profit was $7 billion a couple of years ago. down to 1 billion this year. renault is not doing too well. they've lowered their expectations for the full year recently both companies the share prices are down around 30% since carlos

was arrested in november of last year >> and the next turnfor that, mean, the auto industry has been one that's been so closely watched. they had to spend a lot of money on things like new initiatives for electric vehicles. also new concerns about emissions that they're trying to prep up for, those standards so what happens next do you think just between nissan and renault. >> yeah, well, so i think some people, you talk to nissan and renault, all of these issues which you mentioned, the fact that they have to spend a huge amount on r&d, the emission rules. the fact that the car market is going to be turning to next year means they will come close together and they will manage to put their differences aside. at the moment this is wishful thinking they can set aside differences

there's little progress in terms of cooperation. >> nick, thank you for joining us today we do appreciate your time. >> thank you so much for having me >> all right coming up, it's an annual fan favorite the highlights and low lights, equal, i think "squawk box" this year i can guarantee you there will be no "squawk"ard moments whatsoever >> no, you can't. >> there's one. >> 2019 year in review >> oh, my god, mac aflac trivia question. the 2020 new year's eve ball in times square is a geodesic sphere which measures 12 feet in diameter how much does it weigh the answer when "squawk box" continues. after surgery we had extra bills followed up visits, deductibles. we thought health insurance had us covered up for everything, but it didn't.

aflac gives you money directly to help you with those things. i want to thank my wife, my mom, the duck. get help with expenses health insurance doesn't cover. get to know us at aflac.com

now the answer to today's aflac question the 2020 new year's eve ball in times square is a geodesic sphere which measures 12 feet in diameter how much does it weigh the answer, 11,875 pounds. as we get ready to say bye-bye to 2019 and hello 2020,

it's time to take a look back at some of the lighter moments we've had this last year right here on "squawk box. >> here we go. 3, 2 -- >> good morning. welcome to "squawk box." >> here on cnbc we are -- >> live from the nasdaq market site. >> we have a huge show coming up. >> for real -- >> when andrew gets back >> one back in time we had some doozies. >> it happens. >> right there keep your distance. >> trying to give me high five, is that what that is >> seems like you've been able to see things that not everyone is able to see >> joe, you're on tv >> oh. >> what's going on, joe? you're on camera. >> i'm stuck with you. >> it's awkward, isn't it? i just made it much more awkward. >> thanks, kyle. >> we're mad as hell and we're not going to take it anymore welcome back. >> so glad to be back. >> i bet him 20 bucks that we would not be out by 10 after. >> supposed to be out by 10 after. >> can't blame me.

>> friday, i'm in love. >> i don't know what's going on this horangue. >> you say knack knack would you -- >> why don't you like to being on -- you know, if you acted like you liked it, we wouldn't do it. you've taken 30 years off his life he's 17 years old, he looks like he's 90. >> there's no buffer here. >> i know. >> there's no one here >> we saved the spot. >> we did. >> we won't move. >> i see you guys are keeping your distance. >> we're much closer. >> much closer. >> than people think. >> happy valentine's day >> let's find out where you got those roses. >> i have nothing for -- i have nothing for you. i have nothing -- and i'm not talking to melissa, either i'm talking to andrew. i don't have anything for you. >> what do you think the proper etiquette is. >> don't slam the door. >> would you say it's more inflation? >> i'm not an economist. i know you play one on tv. >> this is really cool warren buffet is investing in apple. >> everybody pitches in. >> yeah. >> just wind me up

point to the stage. >> anybody else you want to say before you drive away? >> potential "squawk box" guest host. >> yes. >> at some point >> i'm down. >> are you ready for that? >> you guys are fun. >> pleasure being here joe, not tootoo. >> what do you -- >> yes >> yes. >> again, i know >> look, this is a business show i know the numbers. >> yeah. and there's proof of it right there. >> well, some. >> becky is back -- no, that's not it >> alt -- help me here >> thank you >> with fungi. fungi. with fungi did i say it >> i get needles all in my face every three months so this doesn't -- and everybody else is going, wow try where i get them, in the forehead. >> yeah? >> no. >> not. >> does it look like i get them in the forehead? >> ahhh -- >> i'm not going to say butt do you want me to say butt >> butt. >> butt. >> let's head to the bathroom

and check in with jane who, yes, is in the bathroom. >> hi, jane. >> you caught me at an awkward moment. >> stuff that's been going on outside of the ground floor in times square. >> that's a reason to watch. >> you do not want to miss this. >> that's a reason to watch. >> you're likely to see just about anything. >> looks like that guy's watching us closely. >> i'll do that. i might do that. >> it's the weekend. >> what's that >> this is the alternate universe. >> when we come back -- bless you. >> welcome back to "squawk box." >> i still don't think we need to eat this, frank i just don't -- >> ah, my fingers. >> googling. >> did you say go slack yourself. >> you can say -- >> it's nicer than what i've heard you say. >> exactly. >> that's what i mean. >> us -- or is it the other way? >> you're right. >> it looked -- >> m-c-m-c-a.

♪ ♪ ♪ >> if my wi-fi goes out -- >> that's the alarm? they have no idea what to do. >> set to spike. chinese -- chinese vice premiere i'm saying it to myself. china's vice premiere. let me do it over. see you on the course. i can't talk let's do it over >> got an extension to dplcomply rules on the damn stability. >> no, dam d-a-m. >> i'm more disturbed by that. we're all clothed. >> clothed. >> we're all fully clothed >> okay. >> it's weird you went there though i don't -- >> your hands don't get -- right? we like this. >> making me uncomfortable. >> wow, this is tmi. >> see by yourself over there come on in. >> no. >> come on

come on. >> no! in fact, i won't hug becky, oh, my god >> we're all looking at each other. >> the new digs are old. a little back to the future. you and i together this way. becky's still in the middle. >> still here. >> all the same. >> no, no. >> he's running. he's running >> so close to me. what are those what are those and why are -- >> they're bling lev me alone. >> i couldn't do it. >> get a shot. >> come on, are you still -- >> bye-bye go away. >> what if we didn't what if we all did -- there was a -- i mean, there would be nothing to show, would there >> well, three hours is a long time >> we have time, and that was a year's worth, right? that's okay. you know who i feel bad for, dean >> me, too he had to look through all of it to find that stuff. >> dean. we want to thank our producer,

dean milar and tyler for putting that together. no, but that was every -- >> that was every moment we fooled around? >> yeah. in the entire year, three hours a day. >> yeah. >> so interspersed with -- >> a lot of stuff that didn't make air before. >> you know, did they tell you they would use out takes >> no. >> because i didn't know that they were -- that that was fair game >> yeah. >> there are worse things they could have used. >> there are there are. there's things that -- when my phone rings i just hope that's not hr at times, right i mean, it's like -- in this day and age. >> speak for yourself. >> i'm speaking for all of us, believe me anyway -- >> anyway, thank you to both of you. >> happy new year. >> really great. happy new year, everybody. show's not over yet. still to come this morning, the u.s. beginning and now ending an entire decade without a recession. that makes this the longest expansion in the nation's history. we're going to debate what this could mean for next year's presidential election when

"squawk box" comes right back. i am totally blind. and non-24 can make me show up too early... or too late. or make me feel like i'm not really "there." talk to your doctor, and call 844-234-2424.

welcome back, everybody.

joining us right now is seth hamlin he is center for american progress action fund senior fellow also adam michelle who is heritage foundation's senior policy analyst welcome, gentlemen, to both of you. >> thanks. >> thanks for having us on >> let's talk about what we can expect for 2020. get into an election year and that tends to mean that very little gets done in washington do you think that's the case this time? seth, you first. >> yeah, i wouldn't expect too much in 2020 in congress i mean, i think the flurry of legislative activity a couple of weeks ago was basically it for this congress so i would expect more kind of proposals creating contrasts but not actual legislating in 2020. >> adam, if there is anything that could be done, what would you target >> you know, i think it's the time for the republicans to set the agenda and say something that's very different than what the democrats are proposing.

we're seeing sort of tax anything that moves proposals that are coming from the left right now and i think it's time for republicans to really own the tax cuts that they pass and double down on that agenda, that americans deserve to keep more of their money rather than sending it to washington. >> okay. let's talk about what could potentially happen with taxes 2.0. that's been something that the republicans have floated, have talked about what potential changes would you see with any taxes coming through? adam >> i think it's most important to keep what we've got making the tax cuts that expire in 2020 permanent, but at the almost unanimously every democratic proposal has a piece of it that wants to dramatically raise taxes on savings and investment across the board middle class savers, for high income earners, so i think republicans need to put forward something like a universal savings account that allows middle class savers to put money away for things other than retirement it would be like your 401k, allow you to save.

but for everything in life that we should be saving for other than just retirement i think this paired with permanent tax cuts continuing to increase investment here in the united states are the main planks of what tax reform should look like going forward. >> seth, i have a hard time imagining that any democrats would support extending those tax cuts permanently, at least not without some big sweeteners along the way. would something like a middle class tax cut, middle class savings plan or even a salt deduction, would any of those things lure anybody from the left to go along and support republicans on making those tax cuts permanent >> i mean, i think the problem is president trump, he's now going into his fourth year of office and he now has a record and he realizes that the 2017 tax law is a big liability for him because it was sort of the exact opposite of what he promised and the exact opposite of what people actually want in the tax code, which is the number one priority is making corporations and wealthy pay their fair share

so he has a liability and we've sort of been hearing about this tax cut 2.0 for a couple years now and then we've never actually seen it and i think, you know, if they roll something out in 2020 i think it's going to be seen through the political lens. >> sure, but if they dangled something like reinstating salt deductions, would that be something that you could see some democratic congressional representatives go along with? >> i mean, it's really hard to see. they beat -- they promised to -- they threatened to veto the salt bill that came out of the house. i really don't think that there's going to be much room for compromise on taxes in 2020. i mean, i think you're just going to see setting up a contrast with president trump defined by the record he already has on taxes from 2017, $2 trillion increase in the deficit for tax cuts weighted to the wealthy and corporations and the democrats wanting to roll back some of those tax cuts, close loopholes and increase tax credits for low and moderate income working families. >> one thing that strikes me is

that the two sides are so far apart in terms of where they think taxes should be, what they think the structure should be that there's a chance you never get any permanent tax reform that's put in and you deal with these like part-time solutions for whatever administration is in office at that time for whichever party happens to control congress at that point i mean, that to me seems like the worst of all possible worlds to constantly have tax policy changing and sliding all over the place, both for corporations and for individuals. what do you think of that, adam? >> i agree i mean, i think having permanent tax policy is one of the most important pieces and that's why making the tax cut -- the tax cuts that we got in 2017 permanent is so important. i want to go back to this salt deduction -- >> let me just say, if you want it to be permanent you probably will have to give on something and find some way to compromise with the other side. you're never going to get permanent unless you can find the way to sweeten the deal with both sides. >> well, i mean, i think that

allowing americans to keep more of their money is an important principle that conservatives should stick to. you're right i think there are places where the two sides of the aisle need to come together republicans and democrats around washington unanimously criticized all sorts of subsidies and loopholes that are in the tax code. they could help pay for making a lot of the -- some of the tax cuts permanent we unfortunately saw congress at the end of the year extend a lot of these through the temporary extenders providing special tax credits to various different special industry constituents here in washington it's these types of sort of washington swamp as usual policies that we can compromise on and get rid of from the tax code permanently. >> seth, quick last word on this >> yeah, no, i agree with adam about the personal nemanence isn last-minute give aways is not

good the trump administration had their chance in 2017 and they made a decision which is make the corporate tax cuts permanent and make the individual tax cuts, the tax cuts for families and household expire after 2025. that's why those tax cuts are temporary. >> seth, adam, i want to thank you both for your time today it's good to see you. >> thanks a lot. happy new year to you. in the meantime, we continue to watch a developing story out of iraq. demonstrators stormed the u.s. embassy in baghdad's green zone. sources say guards inside the embassy used tear gas grenades to get them from moving towards the main buildings in the compound the a.m. bas is a door and other staff were removed they were protesting deadly u.s. air strikes that killed 25 fighters for an iran-backed militia in iraq. president trump tweeting earlier this hour, iran killed an american contractor wounding many we strongly we sponded and always will. now iran is orchestrating an

attack on the u.s. embassy in iraq they will be held fully responsible. in addition, we expect iraq to use its forces to protect the embassy and so notified. coming up at the top of the hour, top white house trade advisor peter navarro will be joining us first though, investing in the next frontier. we'll talk about the great space race and the billionaires in the lead "squawk box" will beig bk. rhtac

welcome back, everybody. the space race is on morgan brennan has the update. >> reporter: 2019 was another year of firsts as they had prime contractors and virgin galactic was the first to go public 2020 will be the year commercial space emerges from science circles and policy meetings to become a main street and wall street story first, a new era of human spaceflight. virgin galactic and blue origin will begin flying passengers to the edge of space charging hundreds of thousands in the

long awaited add vent of space tourism. boeing will carry americans to orbit from u.s. soil. >> liftoff. >> reporter: and start selling rides to private astronauts. second, more public-private partnerships as they look to send americans back to the moon and with limited resources, nasa will share more risk with companies spurring spacecraft development to lease services. public-private partnerships will extend to the military as well as the defense department stands up the space wars to better secure the final frontier. third, space busts more companies will find funding, including from vcs and other investors. but with hundreds now competing, more will also fail, especially in crowded areas of the market like small rockets and small satellites and speaking of those small satellites, one of the first things on tap-in 2020, more strides towards megaconstellation. spacex is currently targeting three missions in january alone

to launch hundreds more starling broadband satellites into orbit putting elon musk's space company well on the way to offer internet access. spacex isn't alone either. softbank backed onewebb is expected to launch monthly launches next year just recently also we got more details about amazon's project kyper which will set up operations in redmond, washington, this year as well. it will be a big one for space, guys. >> you are a smart one, aren't you, morgan? staking out this -- >> i try. >> staking out this territory. what's going to happen in the next ten years in terms of this beat it's going to -- i don't know too many beats that are going to have more developments and more sizzle and excitement and now actual financial implications. pretty exciting. >> reporter: yeah. i may be partial, but i happen

to agree with you. i've said it before, i'm not alone. this is the same comment from several of those billionaires who have helped fuel and fund this commercial space race as well that's that they see this spacek tore basically as the next internet it's interesting that you're seeing in some ways this full circle i mentioned the broadband satellite constellations that are going into orbit this year by the thousands hundreds and thousands that was the type of thing that folks like bill gates back in the late 1990s were hoping to do it didn't work then but now as costs have come down it's poised to work today. you're going to see a lot more money come into the space and when you see human space flight actually happen, which could be next year, that's going to bring even more investors to it as well. >> be careful what you wish for. you think you're pretty smart. you're going to be strapped on one of those things to go up there. >> i'm not scared. i'll do it. >> you will? >> totally >> you can join me. >> no. no no >> better you than us.

i'm going to hold you to that. >> happy new year. coming up, tesla shares. we'll talkbo aut the new shanghai factory in the coming year

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>> thank you. >> we've been talking about this plant opening today and looking at things going smoothly for this part. i've had some bears on twitter and the headline should read they produce 15 cars what do you think and what are you hearing on these reports how do you think it's going? a plant up and running from flat ground to now in a year is pretty impressive, right i think they're running up ahead of a lot of people's expectations. >> producing anything. >> absolutely. the real question for us is what the margins are going to be on the cars as they roll out. as they ramp up capacity and produce more vehicles, they should be getting economies of scale and should be able to see margin improvement that they're starting this early i think is bullish and then we're going to look at what the results and the information that they share with us later this week when they report full deliveries >> i heard headlines that kind of indicated that china is going

to be doing them favors in what you can give back for subsidies in the sales what does that mean in terms of the margins? >> we're watching that closely in china the policy is shifting obviously what we've seen with all of their technology efforts is the policy will be laid out for a year or two and then it adjusts in terms of that market. we saw a shift mid year last year we're expecting another shift this year as they figure out how the incentives are incentivizing on these vehicles. tesla being able to avoid some of the import tax and some of the other duties benefits them from a cash flow perspective >> you've got an outperform rating on the stock. it's trading at around $410 today. hit the $420 mark earlier this year which is kind of amazing for that take private sort of pitch that people had thought was crazy at one point to actually see the stock trading there. for you, what's an outperform? do you have a price target do you have any idea where it's going to go? >> obviously the stock has had a tremendous run in the last

couple of months here. it is extended beyond, you know, kind of all-time highs in the last couple of weeks as we look at this, it's about an earnings leverage and what we're going to be looking for is what the operating leverage looks like in 2020 we're over $4 of earnings next year the third quarter they put up $1.80 of eps as we see them scale up there should be some real serious incremental operating leverage here as we see that leverage we think the multiple may go a little bit higher. >> meaning you don't want to see anymore stair step or incremental progress, you have to see constant turn >> yeah. i want to see cash flow. at the end of the day it's about cash flow whether it's cap earnings or non-cap earnings how much cash are they earning and how consistent is that >> thank you >> good to see you. coming up, our newsmaker of the morning, white house trade advisor peter navarro is on next my dad joined the navy and helped prosecute the nazis in nuremberg.

their values are why i walked away from my business, took the giving pledge to give my money to good causes, and why i spent the last ten years fighting corporate insiders who put profits over people. i'm tom steyer, and i approve this message. because, right now, america needs more than words. we need action.

you leave it to me. i'll get your taxes in an ok place. what? just as soon as my audit's over, this gets my undivided attention. you take a lot of trips to the caymans, phil?

pretty great, right? oh phil's legally dead. fell off a boat. going by denis now. celery. long story. what do we got here. oh. not going to want to see this. i don't think this is going to work. just ok is not ok. at&t has america's best network, now with our best plans, at our best prices, starting at $35 a line for 4 lines. new from at&t sealing the first phase of a u.s./china trade deal. peter navarro joins us live to talk trade. uber and postmates versus the state of california. the company's filing suit against a law about to take effect that could threaten their

business models. and ghosn his own way. pops up in lebanon fleeing a rigged justice system. the final hour of "squawk box" begins right now ♪ you can go your own way ♪ you can go your own way ♪ go your own way good morning and welcome to "squawk box" here on cnbc live from the nasdaq market center in times square becky is here and andrew is off. it's the last day before the new year we may have -- yeah. >> it's midnight somewhere 8 a.m. here on the east coast but it is midnight right now in sydney, australia. so happy new year, everybody >> down under. >> down under. right. this is what we're going to be expecting here, what is that,

another 16 hours from now? >> so it's warm and summer and new year's down there? >> yes and the toilet flushes >> is that true? are you -- >> i learned that on the "simpson's." >> they also supposedly fosters is a word for beer. >> fosters, eh >> that's true. >> oh, wait, that's canadian i'm getting it wrong >> happy new year. especially to all of our friends down under we've got some stuff going on here though. we need to talk about white house office of trade and manufacturing director peter navarro says phase one of the u.s./china trade is a done deal. the vice premiere could be in washington as early as this week to sign off on it. peter navarro joins us now he's also an assistant to the president and, peter, welcome. great to have you back >> it's midnight somewhere. >> that's right. usually -- >> usually we say it's 5:00

somewhere and you know why >> yeah. yeah >> i've been kidding yesterday and last week that trade is so 2019. >> what i'm doing is we did phase one, looks good for phase one and this financial markets seemed to have at least put it not on a back burner but not quite on the very front burner at this point. is that the right sentiment to have, that the phase one deal, we can count on that pretty much being in the bank? >> that one is in the bank, joe. there's four other ones in the bank in terms of countries covered. don't forget, we signed the epic japan deal that's $7 billion for our farmers. we renegotiated the south korean deal and we got canada and mexico, which is twice the buying and five times the exports. that one sitting on mitch mcconnell's desk ready to go to the floor of the senate. next year, yeah, 2020 we're going to try to get something going with great britain,

vietnam, europe and anybody else who wants to fairly trade with the united states of america >> is it possible that the deal could be signed as early as maybe next week? are rumors of chinese officials coming to d.c. to sign it next week can you shed any light on that >> i cannot. i'm going to defer to ambassador robert e. lighthizer, a great american who is probably on the phone as we speak with his chinese counterparts parsing that we're just waiting for the chinese translation of the 86-page agreement. >> yeah. >> i'm trying to figure out whether it's going to be more pages or less in chinese >> do you know who -- it was an old phrase but the president, we'll see what happens. >> yes. >> we hear that a lot, don't we? >> yeah. how's that working out it's working out great for america. >> we'll see what happens. >> yes, indeed. >> are you happy with the details of phase one you can confirm or deny this, that maybe you didn't like certain parts about removing

from some tariffs makes america look weaker than you'd like or -- >> sure. i mean, look, the phase one deal, if you break it down, it's got great stuff in it. it's got essentially the same chapter we had in the may deal the chinese walked away from on intellectual property theft so that's a good deal we've got a base obligation in forced technology transfer so that's a good start for wall street jumping up and down on wall street financial market access for the banks ensuring companies and credit card companies so that's a good deal and if you go through the numbers on the purchases, it's not just ag. you've got $200 billion of purchases above the 2017 baseline over a two-year period. about 1/4 of that is agriculture, but you've also gotten energy, services and manufacturing. so that could take a pretty good chunk out of the trade deficit with china so that's a good deal.

and you also have a nod to the currency manipulation as well. so phase one, great start. we should be able to get it signed in january certainly. let's see what happens >> hey, peter, there was a huge takeout in the wall street journal yesterday about cyber espionage from chinese nationals. just how they had kind of worked their way into different cloud systems like hewlett-packard had stolen all kinds of intellectual property. wall street journal did a story. even though i knew there was a lot of corporate espionage taking place and theft taking place, this kind of awed me in terms of what they've been pulling off. >> right you should see some of the stuff i see and you'd be awed. no, i think that -- i think 2020 needs to be the year where we have a very candid discussion about that aspect of the

relationship i think what president trump has done beautifully in his first three years in office is changed the discussion about china prior to him taking office economic engagement is going to turn them into democracy today i think there's a clear-eyed view on capitol hill. the president has taken a hard line and gotten good results from china the cyber espionage is intolerable as is the killing of americans with fentanyl. so i think those are going to be two 2020 important issues. but i'm looking forward to a great 2020 i mean, the forecast wise, i'm seeing closer to 3% real gdp growth and 2%. i'm seeing at least 32,000 on the dow and i'm a little disappointed, joe. you've got to play that clip for me. >> will you just wait please we're going to do the trade stuff first.

we're going to get into that toward the end >> all right. >> let me ask you about huawei quickly. >> sure. >> there's a lot being made of the record revenue that the company recorded, but the chairman himself says the revenue -- the growth was slower than expected and more challenges remain in 2020. do we want huawei to fail? is there any way -- do we need to decouple completely is there any way that record revenue for huawei can be a symbiotic or an okay thing for us do we just not want them succeeding at all? >> well, i don't know who the we is, but let me just express -- >> the royal we. >> what the -- >> there's no royal in the white house. >> no. >> the issue with huawei is both a hardware and a software problem. you have on the hardware side the concern that if your 5g systems are full of huawei routers, bad things can happen in terms of shutdowns and

siphoning of data. in the blink of an eye with software on your handheld device or whatever, then espionage comes into play. as becky said earlier, there's plenty of instances of chinese espionage. again, that's a concern that's been expressed at the department of defense, at the justice department, at the state department it's a deep concern and, again, it's one of those issues that i think we need to look very closely at but it's a danger. >> here's how i'm going to show you. cnbc did some calculations on the first three years of some presidents and stock market gains. i think we have a chart to bring up there you can see the presidential performance in the s&p 500 the president's at 51.8, current president, 51.8%, president trump. there are the respective gains for the other presidents i will tell you, peter, that we use november 9th as the date for where we measure that.

anybody who uses january 20th has a vested interest in minimizing the returns. >> correct. >> they've got an axe to grind. >> correct. >> anyone who uses january 20th is not being honest because it's november 9th, stock markets look ahead. the market was supposed to go down thousands of points with the election of donald trump and so november 9th is the correct date to use. if you don't see that, that's wrong. okay but here's what we talked about on november 9th. this -- i told you we'd bring this up. here it is >> if you're out there today, just look at the chess board this is a very bullish thing for the markets and dow 25,000 is going to be like the ragan years and it's a good thing. >> 25,000 from 18,000 is 38% over four years. >> we can do better than that. >> people hear that, whoa, 25,000 are you out of your mind what is that, that's like single digits >> all we need to do -- >> i can't do rule 32.

38% over -- >> for those who are worried or thinking about bonds, should they short the bond market >> i like joe's optimism here. if i got here and said 30,000 people would go -- >> so we're twenty-eight five. you said 38 in the first four years. it's 51 in the first three now you gave what is even scarier is that with your prediction back then you gave four main tenants of what was going to cause that on november 9th. do you remember the four that you said >> indeed, i do. four ports of the economic compass, deregulation, tax cuts, the unleashing of our energy sector and fair and reciprocal trade and, bingo -- >> i don't know if i was listening to fair and reciprocal trade because i had no idea -- >> what that was >> that we were going to take on china. i guess we should have known when you, mr. china hawk, you know, got this position in the administration i guess it should have became clear. i thought you were kind of an outlier. i couldn't believe -- i don't

think anyone believed at the time we were going to be that aggressive with china. suddenly the sentiment has turned to where i think most people think it was the right move >> pretty extraordinary. let's not forget that day after the election when you and i were sitting there, futures were down hundreds of points and you and i were the only people bold enough to say 25,000 or higher on the dow. that's pretty good prediction. >> yeah, i know. i took a lot of flak -- someone that worked for the company at that time called me a jackass on another show >> so did i. >> then "the new york post" picked it up if there was a jackass that turned out from that, it was -- he looks more like the jackass. >> let's not forget in 2019 i had two lead editorials against me in the wall street journal calling the navarro recession was coming so how's that working out? >> i just wonder from here on out, peter, whether this has been played forward -- you think 2020, more to come and that there's a lot of gas left in the tank in terms of -- why do you

think 3% that's the one criticism we hear a lot. >> closer to 3%. >> is that the trade war that you are in favor of obviously was sort of canceled out the positive effects of the tax cuts in terms of ceos spending on capital equipment and making business investments because that stayed flat then productivity doesn't increase then we don't get to 3% or we're stuck down at 2% again that's the rap on that >> it is. >> you say back to 3% this year. >> that is the globalist rap and that's -- >> that's me >> basically got a double enten d dre on that. >> when we would sit and do forecasting i'd talk about the four drivers of the gdp equation, right? consumption, investment, government spending and exports. so let's break that down and see how we get to 3% if you look at consumption, we've got very low unemployment. rising wages and incredible

optimism on consumers. consumers will be the anchor of the expansion in 2020. then you get to exports. all of these trade deals the president's been negotiating will kick in in 2020 it's the big five. it's japan, south korea, canada, mexico, and china. so we're going to get a really good lift there and improvement in the trade balance if you look at the sleeper in that, those four points, the sleeper is the government, right? you had the national defense authorization act and the appropriations bill passed two weeks ago. massive government spending which will both be a fiscal stimulus and importantly to me strengthen our defense industrial base. then finally, joe, in terms of investment which has been lagging, you've got a combination of this being the best economy in the world of tracking investment plus tariffs. tariffs have done a tremendous

job tracking selective investment in industries like the auto industry. japan has been bringing in billions of dollars hand over fist into places like tennessee. when you add those four points up in terms of the economic drivers, you continue the four points in the economic compass of president donald j. trump, it's going to be the roaring 2020s next year and i'm very bullish about this and as you know, stock market's leading indicator of the economy so 32,000 is a conservative estimate of where we'll be at the end of the year. i did predict 30,000 on the dow in july if we got usmca passed and lower interest rates there it is. >> the last roaring '20s didn't end well. >> this is true. >> we've got huge deficits we're adding huge deficits we're not doing anything about entitlements obviously there was -- >> no gloom and doom on new year's eve, joe. come on, baby. nothing but positive.

>> can't be all positive. >> the tamiflu will kick in and you'll be positive. >> spending, some of it was on defense obviously but then there's -- will there be any -- in your view, you're a china trade guy, any refocusing on spending and ways to curtail that in the next four years if the president is re-elected? >> well, elections do have consequences, joe. and when we did negotiate that appropriations bill we had to do it with a democratic house and that led to a lot more spending that we otherwise would have had. but, you know, i think 2020 -- here's the difference between donald j. trump and maybe the old roaring '20s what trump has done is turn the republican party into the party of the working class what he's brought about is a structural revolution that continues in terms of restructuring our economy, going

back to the future of manufacturing. we have a strong defense industrial base. we have a trade policy based on america first and not having the u.s. treated as a piggy bank we've got half a trillion dollars in trade deficit to get down we do that, that's going to be a growth machine so structurally we're going to be sound through the '20s and, again, it's all good and it's a strategy, joe, that dates back not just to that day after the election you and i sat together and made that prediction but throughout the campaign. this economy stems from the dna of the trump campaign that goes back to the seven jobs plan promises in june of 2016 and those four points in the economic compass. >> we probably should end this soon, but how many more phases of trade do you -- with china do you see being necessary? how long would it take to address the most contentious intractable issues, the i.p. and

the state-owned enterprises, et cetera when do you see -- do you ever see china -- there are some people that are hawkish like you that say that it will never happen with china, that we need to decouple and just play hardball forever basically >> well, i think yesterday's china hawk is today's realist. i don't think i look at china any differently now than most of the folks in government, particularly places like the state department and the defense department you see it clearly for what it is in terms of what more we have to negotiate, i go back to what i've called the seven deadly structural sins in china what's missing is something that becky mentioned earlier which is the cyber intrusions into our business networks and the broader problem of espionage we have to wrap our head and handle around that because that drains billions from our economy. the whole issue of dumping in

state-owned enterprises is a very big deal to ambassador lighthizer and i'm sure he wants to turn his attention to that. in terms of the intellectual property theft, when you actually read the agreement there's a very interesting section in there on counterfeiting i'm going to be spending a lot of my time in 2020 making sure that when you go on ecommerce platforms like amazon and alibaba you don't get stuck with counterfeits from china. the flow from china is just horrific it comes in every day. that both takes jobs away from us but it also defrauds consumers and sometimes can actually harm them depending on the product. so there's a lot of work to do in phases 2 and probably 3, but there's no two people better to do it than ambassador lighthizer and president trump. >> all right so what -- you know, you're not a stock market forecastor but you play one on tv.

>> used to be. >> do you have one -- >> used to be. >> yeah. should we revisit -- okay. so december 31st, 2020, where's the -- where's the dow >> well, i said conservatively 32,000. >> 32,000. >> and the nasdaq will surely outperform tech's doing really well one drag on the dow has been boeing i think it's a highly diverse company. the defense budget's going to help boeing and it's going to get through all of its problems and once it does, then we won't have that drag, but it should be a great year for the stock market great year for the economy joe, the beautiful thing about donald trump's economy is that it's working for the working class. that wall street journal article that said that workers' wages are rising faster than managers on the front page of the wall street journal, i thought i was reading the main street journal that day. >> peter navarro, thanks for all of that time. >> joe, becky, happy new year.

>> happy new year. >> it's midnight somewhere right now. >> you're right. it's 5:00 somewhere. that's a different issue thanks, peter. >> thanks, peter. when we come back, carlos ghosn gone hefleas what he calls a rigged justice system in japan. he's in his childhood home of lebanon this morning we'll bring you the latest details. uber files a last-minute lawsuit over a new california gig economy law that's set to take effect tomorrow we'll get to that story next when "squawk box" comes right back ♪

some things are too important to do yourself. get customized security with 24/7 monitoring from xfinity home. awarded the best professionally installed system by cnet. simple. easy. awesome. call, click or visit a store today. ♪ ♪ welcome back to "squawk box," everybody. here are some of the stories that investors are likely to be talking about today. former nissan chairman carlos ghosn confirming he is in lebanon. he's left japan and gotten away at least physically from criminal charges he was facing there. it's not clear how ghosn was able to leave japan. he did face heavy restrictions on his movements there reuters is reporting all three of his passports are still being held by his lawyers.

in a statement ghosn says i am now in lebanon and will no longer be held hostage i have not fled justice, i have escaped injustice and political persecution. reuters says that ghosn's lawyer called his behavior inexcusable and said that ghosn had probably violated bail conditions. japan's ministry of justice did not reply to a comment from cnbc. in other news, let's take a look at shares of tencent music. they're buying a 10% stake in vivindi. the deal values universal music at about $34 billion. ford says that reservations are now full for the new mustang mach mache. the vehicle sells for $60,000.

it is the first of a dozen electric vehicles that ford plans to launch by 2022. uber and postmates are suing the state of california over contentious gig economy bills set to go into effect tomorrow deidre bosa is set to join us. we talked about this a lot of angles. not knee-jerk what the right thing is. >> no. it's difficult it's the 11th hour we're a day away from it going into effect. the gig economy companies are the ones with a lot at stake so this lawsuit comes after months of unsuccessful lobbying for a carve out to the law known as 85. they're putting on their gloves and escalating the fight they're doing it along with two individual gig economy workers, drivers. these companies are suing california and its attorney general claiming that 85 violates constitutional guarantees of equal protection and due process because of how

it targets some workers and companies. now the law will require some industries in california's gig economy to reclassify contractors as employees now there are some exceptions for contract lawyers, doctors, engineers, other professions but not so for truck drivers, freelance journalists nor drivers and ride sharing food delivery all three of them are using legal means to fight back. uber and postmates, their complaint last night 85 as you've been talking about is meant to give drivers gig economy workers more protections but many drivers and others in the gig economy argue that it will actually take away their flexibility. certainly it could up end the business models of these companies. either way uber and others could spend millions fighting it facing resulting lawsuits themselves or ultimately changing the status of their workers and it pushes that path to profitability that we've been talking about all year, guys, further out when investors are already skeptical. uber and lyft poised to close

out 2019 as some of the worst performing ipos of the year. it's really at this point uncertain how this plays out they've been really lobbying for this exemption for month. >> we want an exemption, we want an exemption we want an exemption this law isn't fair because of the exemption? >> no, they say they wanted an exemption but even as it goes ahead as is, they don't pass the so-called abc test that requires companies to treat their contractors as employees so they're not going to do anything. >> i think the legal reasoning they're going after this is because it violates their constitutional rights because of the carve outs because not everybody is being targeted equally. >> right. >> we want to be one of the exemptions, if we don't get it, the whole law is unfair? >> that's a good point they say it's with no rhyme or reason the key thing is they're filing a complaint along with two gig economy workers. drivers for postmates and uber who are saying that if this goes

into effect they essentially cannot work anymore. they need the flexibility and the fact that they haven't been listened to adequately in their opinion throughout the process denies them their due. >> the unintended consequence of, you know, we know about good intentions and where they lead if the unintended consequence is to kill the gig economy, then all the people that -- they don't have the persuasion with their job right now but do you destroy all the jobs in general because you don't have the persuasion i mean, these companies are operating on a razor margin right now. this is not going to allow their business model to continue >> it won't if it goes into effect. >> that's what i mean. >> in the full way they won't. >> do they think about that in california do you want to kill the goose that lays the golden gig egg >> remember, too, california is just the start >> that's what i mean. >> other states are considering

similar legislation. >> we'd all like full health care we'd all like, you know, to have an unbelievable 40 -- >> the same arguments that have been brought against walmart and others for years and years if you are offering affordable products to consumers and consumers love you are you doing that on the backs of your workers and walmart has changed their policy. >> the company that doesn't exist doesn't employ anyone. >> uber and lyft have said though that they will actually give benefits to their workers they'll give a minimum wage. again, it goes back to the whole crux of the argument how do you regulate tech companies? how do you regulate where gig economies -- >> i don't trust democrats in california that i can tell you. >> let's bring a couple other voices in to talk about this story and more sarah fischer is media reporter at axios emily glazer joins us from "the wall street journal. what does this mean? and i guess i'll start with you, emily, since you're there in the heart of things. what does this mean right now?

what are kind of the quakes that you're feeling throughout california as this law is set to go into effect >> everyone is talking about this in california i'm based in los angeles, travel to san francisco frequently. it's hard to get into a lyft or uber without a driver sometimes mentioning it. let's not forget there are a lot of folks that file as contract workers based on their taxes i think it accounts for about 14% of people in california. so even though the uber ceo recently said that california accounts for about 9% of its uber rides and eats bookings, and that it is much more negligible when it comes to adjusted ebitda, this will have a big impact both for the state of california and it's why uber, lyft, and others are spending more than 100 million to try to get out of it. >> sarah, what does this mean from a policy perspective? because i can understand both sides of the argument. if you have employees who really are employees because they're, working 40 hours or longer for a

company feel like they are not being paid a fair basic minimum wage, but then you have other people who would like to have the flexibility of being able to drop in for 10 hours, 12 hours, 20 hours and pick their time, how should legislators be looking at this? how should national and other states kind of follow what's happening? >> i think this is an enforcement argument one of the arguments that's being made is we have no way to measure how many people are being misaligned as full-time workers when they're contracted workers. >> that seems crazy when you call yourself a tech company not a -- >> that's right. >> if your entire company is set up to do that, that seems a little disingenuous. >> it does that's why california lawmakers are going after the ride sharing companies, the app companies in particular they're leaving carve outs for some of the legacy industries for real estate, medicine. they don't think they're being disingenuous for the way they file the claims. >> look, i can understand both sides of that, too if i'm uber and lyft and say

you're carving out other industries and not me, why not >> they say you're biased against us we're biased because you've tried time and time again to undermine the regulation. >> that's a fair call. you have to look at the history. they were trying to skate by and not be regulated. >> they've been negotiating this issue in courts for months and months and months. this isn't something that's brand new. uber's paid out millions of dollars already. some has been forced into mandatory arbitration. >> what happens now? if the law is set to go into effect tomorrow, is there a stay >> they're hoping the complaint can bring it to a court which could potentially file an injunction which would say you can't enforce this law until potentially we can get it on a ballot measure in november of 2020 to me that seems unlikely. i think uber, lyft, these companies are going to have to comply beginning january 1 if they want to get it on to a ballot measure they're spending millions to do it, they have to fight pretty

hard. >> i also wonder, i thought what was interesting about the complaint last night is it includes uber and postmates. where's door dash, lyft, the other door guides? do they have their own strategies uber has been the most vocal i wonder what they're planning to do. >> they'll all be equally impacted by this emily, do you know >> absolutely. you know, i don't think we know exactly where the other companies sit right now. to your points, this doesn't just impact car ride sharing enterprises, it includes truckers, therapists, so many other industries attached to it. we know uber has been the most vocal. its ceo on a recent analyst call said how california is a percentage of the business uber and lyft. tomorrow is january 1. that's when this is about to go into effect to see whether or not these other companies and others impacted speak up. >> you know, to me it seems like

it would be fairly easy to measure how many hours you're working, particularly if you're a tech platform. okay, if you work 20 hours or less, you're a freelancer. if you work 30 hours or more, you're not if you get to 35, 36, 40 hours or higher, i could see one of the unintended consequences uber saying, forget it, we're not letting anybody work over 35 hours. >> part of that is wait time do you count that? the companies say you can't operate as they are right now. one of the main things, too, you eluded to this, uber says it's a platform it's not a good look when you are saying drivers aren't a part of your core business. i think that just gives more ammo to lawmakers. >> all valid points. deidre, thank you. sarah, thank you emily, thank you, too. coming up. will the recent strength in the energy market carry over into the new year oil is on pace for the best month since last january check this out

among all the s&p sectors energy had the worst performance of this decade posting an increase of just 5% that's less than .1 of the next closest communications services and way below the top. some opportunities remain. we're going to talk about how you can play energy in 2020 when "squawk box" returns

♪ ♪ welcome back to "squawk box," everybody. we are still about 13:23 to go before the ball drops right here in times square, but as you can see, preparations are well underway take a look at what's been happening around us. this is already about one of the safest places on earth because you have a huge recruit station here and lots of police officers, but this time around getting ready to go, new york city police department and the counter terrorism agents are saying this is the safest place on earth tonight they're watching everything tightly. they have 1200 security cameras taking place thousands of uniformed and plain clothes officers they have more than 200 blocker vehicles to block off the streets and make sure that no cars or trucks can get through this area. they've also got bomb sniffing dogs and they have drones that are circling through the skies

as well for the first time they are expecting anywhere from 1 to 2 million people who are going to be here tonight that's what new york city police officials and city events planners are saying. other people say it's going to be closer to 100,000 crammed into this area right now it's still early by about 11 a.m. eastern time you will see these cues start to fill up here where people will be standing and waiting for about 13 hours what is that yeah, 13 -- 13 hours so that they can stand here. through that entire time you are not allowed to bring any umbrellas through here you are not allowed to bring any alcohol. you are not allowed to bring any backpac backpacks. if you are coming you will be in for a long haul. by the way, there are no bathrooms here so get ready for that, too. things are underway. we are heading into the very end of the decade even though you don't like to call it that, joe. we are heading into the end of 2019 and we're waiting for the ball to drop from right above us a little bit later tonight we'll send it back over to you, joe. >> yeah. >> i can't hear you.

>> i know you can't. i know you can't but i know you agree with me. a million and a half people, no bathrooms. what could go wrong? what can go wrong? coming up, more reaction to our interview with peter navarro. we'll talk about what the president needs from the economy next to drive his re-election chances. his opponent's arguments about why he shouldn't sit at the head of the world's large eggs economy anymore. stay tuned you're watching "squawk box" on cnbc most people think of verizon as a reliable phone company. but to businesses, we're a reliable partner. we keep companies ready for what's next. (man) we weave security into their business. (second man) virtualize their operations. (woman) and build ai customer experiences. (second woman) we also keep them ready for the next big opportunity. like 5g. almost all of the fortune 500 partner with us. (woman) when it comes to digital transformation... verizon keeps business ready.

earlier this hour, about 40 minutes ago top white house advisor peter navarro joined us to talk about the developments in the u.s./china trade situation. >> the phase one deal, if you break it down, it's got great stuff in it. it's got essentially the same chapter we had in the may deal the chinese walked away from on intellectual property so that's a good deal. we've got a base obligation in forced technology transfer so that's a good start for wall street, jumping up and down on wall street, financial market access for banks, insurance companies and credit card

companies so that's a good deal. >> joining us now with insights on trade and the market impacts, ed mills, washington policy analyst for raymond james and james bettacucas, a fellow -- a fine fellow. no, just -- that's an actual title. i was putting -- >> that's the title. >> at aei and jimmy peas, a cnbc contributor. ed, i'll start with you just to ask you to look into peter navarro's mind set you heard what he said is he pleased with the phase one deal or do you believe some of the scuttlebutt that he thought maybe we should -- i mean, he is a hawk earlier he said everybody is a hawk do you think it's a deal he's happy with >> i think what i saw in the interview is peter navarro is a

good soldier i don't think he's necessarily pleased but he's not going to come on here and say that as he knows this is a done deal. he's laid out on this program a number of times his seven deadly sins and i'm not quite sure how many of those seven deadly sins are dealt with here, but i also think he's a bit of a realist. i think his statements about how he and other hawks within this administration has really changed the conversation in washington, d.c., and has changed the conversation nationally he's made the country more hawkish overall in raising some of these issues with china so from that perspective he absolutely has to be thrilled but ultimately i think he knows that for him to actually accomplish some of his larger longer-term concerns here trump needs to be re-elected and i think he looks at this deal and says this should help the economy. this helps president trump potentially get re-elected he'll be a good soldier for now.

>> jimmy, maybe there's something to that. you need another term to do a phase 2, 3, 4, whatever we need to do to do the hard issues. you need to get re-elected and navarro understands that, do you think? >> that would be his theory, that you need more time. at no point has the president ever sounded like peter navarro when talking about china the president never talks about china especially when he's speaking sort of extemporaneously anything but purely economic trade deficit terms. that's not how peter navarro views china. he views it as a ussr, japan, the existential threat he would like to move the supply chains back to the united states long, cold war, twilight struggle for peter navarro everybody who is bullish about wall street in 2020 is assuming

the president doesn't listen to peter navarro and isn't hawkish like peter navarro. >> for the markets, it is just about trade. we may not solve hong kong, we may not solve the weiger, but the markets will probably be placated if they didn't think there was going to be an acceleration in the trade conflict maybe the market is viewing it correctly. >> i think they're viewing it as a pause. no conflict. i don't think they're betting on anymore phases i don't think the market is assuming that they're going to be -- that china is going to quit subsidizing anything. they just want the tariffs to stop and i think that's a pretty good bet for 2020. >> so, ed, do you think that the unknown unknowns of next year, we've been using that term because it's pretty funny. we know the unknowns, but what about the unknowns, unknowns the fears are something we're not thinking about. >> i think the biggest unknown

is who the democratic nominee for the presidency is going to be i think that is going to be kind of the biggest drivers of this market especially in the first half of next year if one of the kind of folks from the liberal lane, a bernie sanders, elizabeth warren, start emerging as the front-runner for the nomination there absolutely is going to be a stock market reaction. outside of that, the unknown unknowns is kind of some of the geopolitical risks we had a lot of saber-rattling within the last 24 hours regarding iran >> yeah. >> the kind of iraqi embassy kind of in baghdad, the u.s. embassy there. north korea continues to be kind of on that list of things to watch. so, you know, we have a lot of macro positives right now with the budget deal, with the defense authorization, the things that peter navarro withdrew during your interview it doesn't mean it's all clear sailing in 2020 but generally

speaking things are more favorable than not. >> jim, we've got to go, but i think the left is split right down the middle. i've seen people say a centrist candidate can't win and then i have see people say a far left candidate can't win. 50% say one thing, 50% say the other. >> i think you know where a lot of people's hearts are the spread between four more years of donald trump and four years of bernie sanders is tremendous that's something i would think a lot about in 2020. >> the spread. you mean -- what does that mean? trump would win easily >> no, the difference between four more years policy wise, this isn't romney versus hillary clinton or something >> yeah, right >> you think bernie could be elected, jim >> again, the easy answer -- >> you do, ed? >> yeah, i think it could be. >> hey, who knows after 2016. >> yeah, for sure. >> wild world. >> it is. >> happy new year. >> happy new year to you. >> thank you. >> we'll see you all right. when we come back, energy stocks

that you need to have on your radar in the new year, including meme key energy infrastructure nas. we've got the topics next. stay tuned "squawk box" will be right back. pizza hut wings are bigger & better than the other pizza guys wings. no one outwings the hut.

energy is the worstfor i s&p sector of the decade there are opportunities to be found. joining us is now is ron thunel at tortoise capital advisers this is the worst performing sector over the last decade.

why has it been so bad and why do you think it will be better the next ten years >> well, you know, becky, one of the things that investors are thinking about going forward is one of the known unknowns or unknown knowns as far as investors are concerned is this, going forward, the u.s. is going to play a really critical role in providing low cost energy to the rest of the world. we think that's something that investors have really underappreciated over the last ten years. but it has taken a while to get there, that's what's really caused us to be in this position of underperformance. a lot of production in the u.s., but not a lot of cash flow the next ten years will be a lot of cash flow and the u.s.' role as a provider of energy the rest of the world will become really critical >> rob, the u.s. role in providing all of this energy has been really been a big part of the reason that oil prices have come down, energy prices have come down so significantly and not looking at triple digit prices for oil or for so many other of the raw commodities and

not looking at the high prices if the u.s. is doing such a great job, that's fantastic news for the consumer it may not be great news for the companies that turn around and sell that commodity. >> and that's very good point. the thing i think we'll ind ofit in the next decade, there is other things happening that go beyond oil there is plenty of supply, oil prices will remain low for a long time. that's probably a good thing in our opinion. there is also opportunities and probably the biggest opportunity is in u.s. natural gas production and then the ability to export natural gas. and the infrastructure that is necessary to do that and so we see a lot of opportunities outside of oil in the energy sector, specifically in natural gas. >> okay. rob, thank you very much we'll have you back next year to talk about the plays you would like to see. we appreciate your time today. >> thanks, becky. >> not until next year we'll see you thursday coming up, the count downis on, the final trading day of the

month, and some feel the decade begins in a little more than 30 minutes. we'll tell you what to watch don't miss the ceo of chipotle on "squawk on the street." we're coming right back.

year begins in a little more than a half hour ahead of that, let's talk about what we should be watching in the markets. joining us, ryan dietrich, senior market strategist at lpl financial research make anything of yesterday and today? looks like we'll end with two down days. optimistic for 2020? >> good morning, thank you for having me back we're optimistic last 20 years. the last day of the year has been higher seven times. that's something to be aware of. big picture, we hear from advisers and their clients, we're up 30% this year total return that's got to be bearish next year one thing i want to hammer home, that's not the case. that happened 12 times since 1950 next year higher 15% on average, we had a recession twice good year can -- you won't have 30% gain next year, but continued solid gains and avoiding recession is our best case here in this bull market, continues to go in 2020.

>> what did you say we're not going to have, 20%, not going to have 30%, you sure >> well, nobody is sure in compliance with -- >> happened three times in the mid-90s. >> it is possible. but the key thing i think is that you likely are not going to see an end of the bull market. >> so you're with the 8%, 7% return camp that a lot of people -- that's a crowded place, either probably more likely to go down 20 or up 20 and come right in at 7%. it is possible >> you're right. it is possible it comes down like some of the other guests said before i came on, u.s. china trade, if we get positive news there, we could see an extension of one thing -- another thing i want to mention before we end the last show of the year here for "squawk box," it is important to note how bad the 2000s were last time we saw a decade like that was the 30s the 40s, 50s and 60s, stocks continue to do well. we had a great decade this

decade i i know you argue when decades start. this thing could still continue to go in our view. >> thanks. we have got to -- we do have to get to "squawk on the street." we'll see you next year, ryan. happy new year. >> happy new year, everybody we're off tomorrow back on thursday "squawk on the street" begins now. ♪ ♪ one more time celebrate oh, yeah ♪ >> good morning. welcome to "squawk on the street." i'm scott wapner with morgan brennan and mike santoli live from the new york stock exchange carl, jim and david have the morning off. let's get you set up for the trading day by looking at futures. stocks off their worst day in