with were in recession the equity market rallied. go figure. so that's what i think is likely to happen again. so going to joe's question, the equity do well continuing into the initial part of 2020 but that should not give you comfort if you are amedium ter investor >> it's great to see you >> it's great to see you both. >> happy new year, everybody right now, it's time for "squawk on the street" >> good morning, happy new year. welcome to "squawk on the street". i'm scott walker, we are live from the new york stock exchange carl, jim, david have the morning off. let's take a look at futures for the first trading day of the new year and there you go that's what china stimulus looks like for the u.s. market it looks likes we will set markets right off the open the dow opens higher

stocks coming off their best year since 2013. s&p 500 up better than 20. as i said, those china easing measures overnight giving a boost to global markets here in the united states. the road map starts with exactly that, the bull is on the run, wall street looks to keep it going in the new year. stocks said to open a deck they had sharply higher. carlos ghosn mystery tesla on a tear. a price market boost. we begin with the markets looking to a strong start to the new year this after we saw the dow rise 22% in 2019 the s&p 500 up almost 25%. the nasdaq 35% was the gain. so here we go, let's get it

started. >> a slight pause at the end of last year. nothing to speak of. it's been a bit of a tradition a good update of january it doesn't determine the rest of the year it seems the trends that took hold at the very end of last year are intact. you have a good fourth quarter return as we did it tends to carry over a little bit. even though the market seems like it's getting stressed and people are getting comfortable with the bullish case. i say that in the near term, though, wall street is not predicting big up years in general. it's more or less saying, ah, we can tack on a little bit the market doesn't go gently in one direction for long >> we have two more days technical le of this santa claus rally. already, many of the notes out from traders, market watchers, et cetera, saying we are ernest in seeing how we are starting next year, starting next week. earnings will be the big focus you go to the middle of the month. one of the key questions, we've talked about it quite a bit. are the expectations if terms of

earnings for 2020 too high >> earnings are all over the map. as we heard from the many guests that came on with us last week earnings growth will be zero, 5% >> no, 8%. no one has a clue on what the earnings picture looks like, maybe that's how it is hard to get a forecast >> they're single percentage gains, right still at 9%. almost everyone believes that is i think generally too high that's not a given in every single year, but they always start out too high i don't think anyone thinks earnings across the board are going to be strong that's why i think when you are close to flat in earnings, it means some are growing a lot lots are shrinking in terms of profits. it's bifurcated the markets. growth stock, that's the big question, do we get a rebalancing rotation type of action the growth stocks that carried things largely toward the end of last year. it's not about this year's

earnings you see a rotation into the more cyclical stocks, january tends to be a good month for that. people start to get more optimistic about what the economy can do when cyclical's out perform. >> it brings us to a trade deal. with the details ultimately of that, we've gotten >> details, schmetails, give me the signing, that's what wall street wants, doesn'tit. >> you mentioned the start the hour, the fact that we are continuing to see monetary stimulus and overnight lowering the reserve for all the banks, there is that expectation we will continue to have this accommodative policy even as the fed holds perhaps this year. >> it's a reminder if nothing else, global easing, stimulus remains in play. china is such a big story on the trade front and the economy front that if they can keep their economy from falling

completely out of bed, which they have been managing to do out of the entire trade issue by virtue of stimulus, et cetera, then you have a market picture that looks pretty good today is a pretty darn good reminder of that. >> when we were talking about fears of a trade war and what it meant for the companies and the economy. what it meant was things were going to get ugly in the company. that's the bottom line when you brought it back to the fortunes of global companies, it was about can that economy continue to contribute its share of growth i think the trade agreement, deescalation, expectation, the easing moves is they're trying to figure it out or they may be have >> of course, to both of your point, that also speaks to the ripple effects of china on so much of the rest of the world. the points on the pmi numbers we got overnight, too, still not great. and the fact that you know given what we've seen happen in emerging markets, the fact that

so many strategists have come on and said maybe emerging markets, especially with trade deals coming into play could actually look attractive in the year ahead. >> maybe a bit of, i don't want to necessarily calm it an ominous sign >> that story today in the wall street journal, they're exclusive. the first read, ceo moved up now, recession fear as their number 1 risk for 2020 so if you are assuming you get these trade deals. it's all of a sudden going to open the corporate speck oughigt maybe have you capex and have to rethink that >> although i was going to say in the fine print. but it's in the article. the survey was taken in september/october. okay that was before you got the trade deal now there is some commentary in there saying we don't think ceo psychology has changed very much guess what market is up 10% since then. ceo technology is much more bright than it was when they took that survey that's my thought on it. >> let's let the check writing you know match the thought let's see what happens

joining us now, j.p. morgan kelly, ma iflower. david, what do you think where we going to go this year in the stockmarket >> well, it's not going to be as good as last year. i think we can still probably certainly for the first half of the year move up i think what's really going on here the feds put in a relative gratuitous rate cuts last year what that did is put the yield below inflation. it's hard to find another place domestically putting your money. that's causing the flow of equities behind what we've seen the last few months. i think the economy remains slow and stable that's probably allowing the stockmarket to move up longer term, people need to look at longer terms. evaluations are higher than average, that means music returns over the next decade. >> larry does that make sense? >> i think it makes a lot of zplens look as we turn the page into the new decade, new years,

there is a heel of opt mile on u.s. gains and the largest economic expansion in modern history w. that said, we always look forward to a chance to reflexion in the new year, reflexion starts with a portfolio. two dynamics, one is the so-called january effect the end of that tax selling in december, much more muted than normal because of it the other dynamic, of course, window dressing. window dressing was more pronounced last year we saw apple and microsoft leading the market 15% of the s&p returns >> that is pushing people into technology names, losing their heads. portfolio projection means looking more broadly outside >> that injection of the liquidity, emerging themes should be emerging markets i agree with that it means looking more broadly outside of last year's leadership it means rotation into 2020. >> that i'm much more excited about. >> david, one of the things you highlight in your recent note is the focus on the fact that are you focused on longer-term

concerns what are they and why? >> yeah, one of them is population growth. you know on december 3rd, it's one of the quietest days of the year, they released numbers that show the slowest population growth in a century. influenza of 1918. we got a declining growth, declining immigration of the lowest birth rate in 32 years. what it suggests is, we're locking in 2% growth we're in the going to do better than that unless we have a huge surge in capital spending we don't expect here. slow u.s. growth if you look at the end of the last decade with internationalic with i thinks looking a lot cheaper than u.s. equity, one of the keys is making sure you got enough international exposure. i understand people's nervousness and disappointment over the last few years. make sure you have that. they are cheaper the rest of the world will grow faster than in the u.s. and years ahead. >> david max a very good point

diversification doesn't mean owning apple or microsoft. it means owning other countries, other industries the rotation we saw in energy names coming in, is a sign of things to come him it's about growth not multiple expansion last year tech was all about multiple expansion we need to wait more broughtly, see if the earnings come out and see if the fundamentals can catch up with the stock performance we saw last year >> maybe we were stuck at a 2% track. the 2, 2, 2, backdrop is good, 2% growth, 2% treasury yields, give or take does that mean we revalue incrementally higher in that type of environment? >> only for a while. because there is a squeeze if profits going up you know the good news is i think we can probably avoid recession over the next year this is a stable slowing economy. the bad news for profits is we are seeing wages, it is squeezing the profit margins,

so, yes, from a financial perspective, stocks look attractive i think proper growth will be low single digits in the year ahead. if you have any bump in the road in terms of demand, it can be worse than that. there are some limits here people need to be careful. we shouldn't get too giddy as the stockmarkets really tell you, an economy that's better than the one we really have. >> larry, going back to the point you made about multiple expansion, what markets need to tell us in terms of the fundamental also what happens if that doesn't happen where does the market go if you see those earnings fall short? >> look, there is no doubt by the end of last year, it was getting priced into the market david made a point early on, there was 2 to $3 trillion cash. as that money started to accelerate towards the end of last year. by the way, they continue into this year, that money's got higher expectations. if the earnings aren't there, stocks will ultimately track those earnings you will see certain areas that may have been fundamentally

pushed up no valuation low volatility, for example, one area that made a lot of sense, it was very defensive. you can't hide your way into prosperity you got to have the earnings growth you can't have the multiple expansion. by the way, going into an election year, we have to be insane to take this market for granted. at the end of the day, it's all about fundamental also all the liquidity is really great, it's driven us so far we should send a gift basketto j. powell last year. we should have pro growth policies to enable that. >> leave it there. thank you, larry, david, we'll talk to you again soon. coming up, carlos ghosn as a fugitive the latest nissan chairman fleeing from japan to lebanon. taking another look at the futures, poised for a pop in the major averages to start this first day of 2020, at least in terms of trading

more "squawk in the street" from post-nyse when we return if you listen to the political debate in this country, 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.

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new details emerging in the story of carlos ghosn fleeing from japan hi, phil. >> reporter: scott, this is a global story with developments coming from all different parts of the world let's start off first with the report that came out in the last hour or two that interpol has issued a warrant regarding carlos ghosn the way this works is interpol issues this warrant which has been received by the lebanese

government and it's up to lebanon to decide, do we arrest him? do we keep this under notice what do we do? so we'll see how that plays out, meanwhile, are you looking at video of japanese police raiding the home, turkey is questioning the pilots who were flying the plane, essentially that got him out of japan and another plane took him into lebanon, carlos ghosn will be holding a press conference next week we say reportedly, it has been in a couple of report, he will talk out of the middle east on wednesday of next week others saying they're not sure if that is the case. one thing is certain if he talks, whether a press conference or one-on-one interviews he will have a lot to say. there is a report he had a french passport. >> that allowed him to get into the country of lebanon finally if you look at shares of nissan renault, we are looking at the day when he was arrested

in 2018, the stock is down 35% guys, we'll get more developments i'm sure later today and over the next couple of days exactly or maybe not exactly but more details on how he was able to get out of japan. >> what's interesting, phil, maybe most interesting in reading the articles is that the japanese have done very little to try and figure out up tothi point exactly how it happened. they haven't contacted the airport, the fact that it fell over this new year's period, which is sosa cred to the japanese, it adds to the whole story, okay, he's gone, we'll figure it out later. >> you know they have to be smarting from this i mean this is the ultimate thumbing your nose at authority. from the japanese perspective, they're looking at this saying, wait a second, we had this guy under house arrest and cameras watching the house, he still got out of the country that is the ultimate keystone

cop maneuver there from the japanese perspective i'm sure as more questions are asked in japan, you will see the government respond in some fashion, okaying at a minimum, we have to figure out how this happened >> i want to know what this does to this two decade alliance between nissan and renault we seen the cracks emerge after ghosn is ousted. when you have headlines saying france won't extradite ghosn if he goes there, it only adds to the tension. >> completely adds to it keep in mind the french government, it owns a chunk of renault. >> exactly >> so they are in this partnership. it's not like they are in partner with the japanese country. no, it is the french government that has a major say in what happens with reknow. this relationship is fragile to begin with and has been since the arrest of carlos ghosn by the way, carlos ghosn is

being investigated if france there is the possibility they may come up and say look we believe he should be extraditeed from lebanon we don't know that will happen that's another element that certainly plays into the dynamic of how the french deposit handles what is a very awkward situation. >> yeah, awkward, intricate, phil, all that stuff applies i know you can track it. thanks, so much. talk to you soon we could see record highs on the first trading day of the year the s&p set to open up just about 17 points that would bring it just right about to its interday all time do you, short of that up 146 at this hour and the nasdaq looking to open up about 72 points. more "squawk" on nyse when we return wing business. from using feedback to innovate... to introducing products faster... to managing website inventory...

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welcome back we are just 8 minutes before the opening bell all the major averages poised to open higher. we are on a record watch in the meantime, let's bring in a wealth singer market strategist, kenny, happy new year >> happy new year to you, morgan >> what are you watching right now? >> so what are you watching? first of all it's thursday, friday of kind of a vacation week so i don't think you can put a whole lot of emphasis into what actually happens we see it, futures are up, markets will be higher i think you have to start to wait until next week when everybody is back at the desk. you start the conversations again. earnings will start on the 14th of january in ernest so there will be a lot of talk around that. really the guidance, but remember the earnings are

history as you and i talk about all the time they've already happened, they're done it's really about what the message is going forward so between earnings, between trade and between politics, i think that's really going to be the driver at least through the first quarter. once we get a better idea some super tuesday who the democrats are kind of pushing to the top of the list. >> so the way to think about this, kenny, that this rotation we've seen toward risk assets, that's likely to continue at least in the near term >> well so here's what i think i actually think we're going to see the market come under a little bit of pressure unlike today it feels once again this continuation of this search if you really look what happens, the market is up 14% since october. right? with very little pullback. i they lot of that was the year end addressing the santa claus rally. the last lack of people locking profits into that surge at the end of the year. i do think you will see some of that come the second, third week of january people take profits ahead of

earnings kind of ahead of some geopolitical stuff that happened over this week we saw not only in north korea and the middle east. i think that will give people a reason to watch the market come under a little pressure. nothing dramatic, certainly a little pressure. then i think the focus turns back to the fundamentals right? the earnings like i said will be a big conversation for the rest of january >> and you know on the other hand, kenny, people wondering if we could be looking at something like a little rush by retail investors to get a piece of it there hasn't been, maybe january will be the time it happened in 2018, you did get a big break after an initial surge. any science of that? >> listen, i always find this conversation interesting, because it makes it appear as if the retail investor has been sitting out this whole ride. it hasn't done anything, all of a sudden goes, oh my god they jump in at the end right? for money that we manage and for

the feel that we're talking to, they have been involved in this rally. retail investors have their money invested they may be a little less aggressive maybe they are waiting for that market to pull back. i don't necessarily think that there is this rush by retail to get in, because they've missed this whole move at all if are you a long-term investors, a reit long-term investor, you should have been in this market your advisers should have had new this market. any adviser that has been telling you as a long-term investor to sit it south and wait you should talk about getting a new adviser. for the most part, retail is comfortable. there will be certain pockets that retail investors are very excited about. up can't help but get all worked up about amazon and the retail story and apple and all that stuff. those things will continue to perform well for the broader market retail is in it was smarter than they were three or four years ago. they are a little more

methodical they understand how to play that game so i don't see a rush of all of a sudden there is retail money coming rushing into the market i think we're there. >> all right thanks for joining us today. opening bell is just minutes away stay wh itus we set out to make the best bike on the market,

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you are watching cnbc "squawk on the street" the opening bell set to ring in just about one minute's time we are on record watch the dow my fall right off the opened needs 163 for a new record some of the stocks with eare watching, i had my eyes on wells fargo, got downgraded to a bear. they like charlie sharp. they think the whole thing will take longer. >> that group has rallied as a complete block now is the time to figure out if it's justified based on the name, based on domestic versus global exposure and all the rest of it. wells has had a good run >> they're about to ring the bell here. you hear the clapping already? just a moment, you will get that yeah, financials have been a good group

we have been watching the bulk of those stocks continue to rise really toward the end of the year you have a little tick up in interest rates it doesn't hurt. maybe a little better economic picture as well. there is the opening bell. the s&p 500, mentor, a national youth mentoring movement we'll watch the major averages open all strongly across the board. another stock to keep an eye on, morgan, is tesla, tesla gets a street high bump in the price target today to $515 at can accord they say, quote, the year of the ev revolution is going to gather speed. >> the easier revolution to gather speed we also note that we will talk about we will see more ev models as well. we see how all of that shapes out. meantime, you are expecting auto

sales. most of them tomorrow, there is a chance we can get the tesla numbers later today. we will be on watch for that meantime, the company saying they will begin delivering the shanghai-made model 3s to the public remember they started deploying earlier this week. next week, that will be one to watch as well. >> on that note, ford by the way got a big downgrade to a cell. under perform at ever core we talk about auto sales and where we are in that cycle, ford gets cut to a sell >> that stock gets opened. basically flat, but again to a touch higher, you do have an overall higher market. >> that was also a kind of a relative value call versus gm and gm opens up 1% on the day. so it seems as if the market has already been kind of moving in that direction, feeling like xm looks a lot cheaper for what it's worth really the overall where we are in the auto sales cycle is maybe something will be answered by

the monthly sales. >> you guys get a check of this ma hussei mahaney note everybody puts out the list of surprises for the year ahead mark is still on that list with his open interesting things, maybe most importantly that jumped out to me, uber and lyft the chief profitability in 2020. along with the fact that the ipos that really laid a big fat egg in 2019 roar back in his words in 2020. and it's uber and lyft among them, pinterest, chewy and other names like peleton on that call. >> liss whan those companies, themselves have put out in terms of forecasts for profitability, too. the other one that got my against on that list is netflix, dubs, the ads could accelerate in 2020. obviously, it's been a big focus of wall street right now whether we continue to see that slowing subscriber growth again

in the face of all this competition. >> how about amazon? >> amazon's profitability plummets in 2020, according to mark mahaney it had a decent year and under performed dramatically the gdp. >> 2019 was the kind of heavy investment year for amazon maybe it would transition back toward harvesting. >> that call says not really the question is whether the market would be okay with that because historically, the conventional wisdom is you actually buy the capex cycles. the other thing he did say, he expects the internet sector to get another dividend >> i was looking at that. >> it doesn't say which stock. you can easily see alphabet deciding to pay the dividend the question is how investors would interpret that that often has been one of these signals, okay, hyper growth phase is over now we're into a boring business it happened with microsoft

its super growth phase in the '90s was coming to an end. >> i don't know, just what we saw in terms of multiple expansion and apple last year could be turning that narrative on its head. >> yes, apple did not conform to that idea that once you start to be a dividend payer, you slow down >> that is very true although that dividend yield is back to 1% right now. >> he throws out facebook as a possibility, which would be interesting. >> that stock had such a monster year up 50%. bocking as a possibility thinks maybe one of those three along with the one you mentioned google the other thing he talks about as relates to the other internet names and facebook specifically, no material is taken against the regulatory platforms in the year ahead. as we said before, maybe they get a slap on the wrist. they don't get smacked up aside the head. >> right we are talking a 12-month window does anyone think whatever is going to happen from the government is a significant

policy where it will be within a year probably not >> an election year no less? >> exactly it almost seems it serves almost everybody's purpose in going after these companies to have them stand out there as targets as opposed to put anything tangible in place. >> meantime, if you look at what is performing the best, it is tech stocks, led higher by some semi names again and communications services. >> how they track again, western digital and semi cap and things like that that's so far gotten away. >> netflix is up about 2%. >> i was just going to say na. >> facebook as you said, communications services. facebook is up just about 1% of course, apple, coming off its own incredible year leaving out behind, it's up another 1 and a quarter% into 52-week high pushing almost 200 bucks for shares of apple right now. >> i was going to mention black

don, which actually got an upgrade, up about 1% and the call here is thating loo look, e publicly traded asset universe and also a beneficiary of the pain of some of the more focused active asset managers, really doesn't trade as that much of a premium at all in fact, it's a discount to the overall market >> that call seems to work it's more of a continuation of the trend-type call. but it is getting a little traction >> that stock up 1%. >> as i mentioned before, you have a number of the semi conductor stocks that are rallying some of the biggest gainers in the s&p today as well a number of price target increases, different analyst calls helping propel that sector higher of course, it has been such a proxy for any kind of china trade deal possibilities as well >> let's take a look at shares of united airlines as well, up

better than 2% it's one of the bicker gainers this morning >> that stock got a nice upgrade this morning over at evercore. not as much exposure to the max issues as some of the other airlines have had. we have been looking at that story today how airbus takes over for boeing for the first time in a number of years in terms of airplane deliveries obviously, the max is having an issue on that front, whether that is a longer lasting thing who knows? notable, given the size and scale of what boeing is, frankly how widely held it is for investors, the ones watching this program boeing is in an awful lot of portfolios it will be key to see how that stock does this year 328 is where it is, it's up shy than 1%. >> i think institutional investors have been very slow to bake way from boeing they believe in the long-term story, the stock held up better than one might expect given all the news flow. >> certainly we saw airbus top its own forecast in terms of

deliveries in 2019 now it's the large effort aerospace manufacturer given everything that is going on with boeing airbus had its own issues this year as well in terms of production stock having to lower and trim its forecast back if early fall as well, so it goes back to this investor theme that you have this duopoily that's not likely to be disrupted any time soon, boeing, this will be another good month for boeing. you have production halting 737 max and and keo ceo as well. >> it brings us to the story we haven't gotten too yet, tiffany inviting buffet to make a bid against lvmh and buffet saying i will take a pass on this one he is sitting on a you want to call it a war chest, whatever you want to calm it, he is sitting on a mountain of cash.

$120 billion, wonder whack he will do with that. it's been a while since he's done a deal. >> i do think you have to keep in mind that if you are a company in play, i mean it's worth a phone call to buffet right? this is the second time we heard this story there was a company that had a tentative agreement to be acquir acquired you want to check to see if berkshire hathaway might be interested in there is tremendous prestige, maybe tiffany thought it wouldtive perfectly. a couple things about the war chess, first of all, it's a lot of cash. not all unencumbered they have a big insurance business it's spoken for, at some level the stake in apple i think it's worth one-77th of what berkshire's market value, it's doubled he owns plenty of equity exposure sure. >> the question is, do we need to he probably wants to find something that's a value >> i'm glad you said that, is it

a broader comment on valuations in the market at large that buffet looks across the landscape and says you know what the market has gone up a lot valuations are high. things are too expensive i will sit and wait until something happens in the market. then i'm going to pounce on something. >> yeah. which i think are exactly the kind of commentary we heard from him in recent months when he spoke to becky quick and come out. berkshire hathaway the class b shares, though, they're up 12% over the past 12 months. speaking to how much despite all of the different businesses. despite that grant flow, that cash pile, the fact that this the a company that is under performing and investors have been i guess you could say impatient to see something done with that mon. >> it's a big equity portfolio with a crash drag in a bull market plus they own a railroad there is all kind of back and forth in terms of what other exposures the company has on a wholly owned basis

i think the cash pile says, he puts on record, he hates bonds he has been kind of wrong about where he thought yields should be he's owned in cash instead of bonds. but in terms of not seeing values, one ought better buffet quotes of all time is he vows investing as a game like you are playing baseball are you a hitter, there is no called strikes you can let him go by until you see the perfect pick he is not going to feel compelled to swing it's the perfect one he's not going to feel compelled to swing because he hasn't done so in a while. >> he will take pa look at the landscape. you mentioned this in past conversations with becky i do remember the most recent ones she asked him about apple he said i'd love for it to come down and be lower. asked if he'd buy more are there things take buffet would look across the landscape and say i'd like to buy more of that i don't know. >> one thing is he hasn't bought

a whole lot more of his own shares that's what investors feel it's a missed opportunity he hasn't done a big buyback only modest levels clearly he does it only reluctantly and only under certain pretty strict terms so that will remain a question. >> by the way, we were just above the prior closing high on the dow. the record high. we were plus 165 we are right about that area right now. bob pisani is watching all of it and what's moving on the floor good morning, bob. >> the important thing, it's a great start to the year, 5-to-1 advancing declining stocks, several big global sectors the key story today is not on the u.s.-china cut it's bank reserve ratios again this in theory frees up more money by lending by the banks over there essentially it means more liquidity, folks this is a nice rally over in europe the euro stocks 600. this is a new high europe has lagged the umgs for

yea -- the united states for years now. finally a decent year for them hang se ha hang seng, doing better. shanghai seven-month high there. let's look at here in the united states chinese stocks here. mchi the broader china etf sitting up nicely here ali baba a new high here at the new york stock exchange. that's important semis, of course, this is all china related. emerging markets metals and mining strong utilities are lagging here again you see the effects of more liquidity in china. even more on the u.s. stockmarket. the question is, what is 2020 going to look like the exact opposite situation i keep emphasizing this, on january 1st, 2019, we had earnings recess fears. stocks were cheap. 13.9 historic average. here today january 1st, 2020, we

don't have recession fears immediately on the horizon, stocks are expensive exactly the opposite 18 times forward earningles. that's pricey here the question is, can we get to better earnings in 2020. so we don't have to have a high multiple at 18 that's a little risky. 2018, we had a huge push up in earnings growth largely because of the tax cuts and improving economy. 2019, we're not done yet, let's tall it flatish for six months early estimates for 2020 almost 10% we know these analyst estimates tend to be high, three or four percentage points lower. a lot of strategists have 5% earnings growth for 2020 or so that's a fair number it would take pressure off the multiple let's take a look at the early reporters, we have a number of companies, 15 or so that do november ending quarters you want to see how the analysts

kind of reduce their numbers or increase them for the first quarter. so we had estimates lower for some of the big quarters fed-ex in particular nike by analysts in the first quarter. micron, general mills, carnivale. that's two-thirds. 10 out of the 15 lowered by analysts after the reports end of november. some like autozone and costco, they are doing terrific overall. what's the story it's a very mixed picture here you want to watch, the numbers are not clear. we have a big earnings pickup by early reporters. remember for the santa claus rally here we like to watch this. the last five days of 2019, first to 2020, average gained 1.3% so far at the open we are up 0.7%. a little below typical numbers here, mike given the run-up we had in the month of december, maybe that's to be expected back to you. >> bob, thanks, very much. for more on the morning's

movers, let's get a chance to see seema mody >> hi, the china stimulus is one way to kick off the new year chinese strategists say there is more to come amid new concern around the china economy and whether the growth rate will break below 6% on that note, chinese listed tech names, jd.com weibo as well, baidu the nasdaq the first trading day of the year, we're looking at apple opening at a new record high apple, of course, was 2019's best performer with an 86% gain and questions this year is the launch of the 5g phone will it continue to capitalize on its success in wearables? microsoft another big winner on the nasdaq as well why not draw your attention to tesla at this hour it'splanning to deliver its second batch of chinese made models from its shanghai factory on the 7th of january.

this is a factory built last year certainly a sign its strategy in china is starting to pay off the number in earnings will tell us the real story. >> that stock up 1.5%. guys, back to you. >> thank you we're staying on top of the markets as we see new records in the new year the dow, the s&p and nasdaq all hitting fresh record interday highs. this morning the dow trading just below 200 points. the s&p is up half a percent the nasdaq is back above 900,0 "squawk on the street" will be right back don't go anywhere.

welcome back stimulus news is fueling the record to report highs and this as president trump says that he will sign phase one trade deal on january a 15th >> so tell us the latest there is an expectation that we will get the deal signing in d.c. and then phase two. >> yeah, that is the exact tapeo out of the white house but the chinese have not

confirmed this >> do they usually >> thechinese style is to be much more cautious, so we have seen them not confirm information, but you then it turns out to be true sometimes and also there is an expectation that if it is not january 15th, a signing would happen at some point because the economy is slowing down overnight we had economic data which disappointed it measures small and medium sized manufacturers and it was worse than people expected so that data plus also the messaging out of the leadership which has been that 2020 would be a year when they need to stabilize the economy is leading to expectations that there will be a signing at some point >> and what is the conversation like about the last sentence in the president's tweet the other day of a visit to beijing, a more formal visit? >> there hasn't been any confirmation

i mean, there has been more discussion about phase two, so there will be a phase two, there has been a lot of fear and concern with a tech war blueireg so whether that leads to some discussion or if anything at all. so that is the part that lot of people are talking about >> there are conflicting reports as to how far we've progressed whether it still needs to be translated and the navarr navarro/mnuchin disconnect >> and there are a lot of people who said that this looks like what was discussed back in may hasn't been a whole lot of progress >> and we did talk about the sort of easing move overnight into china how do we think about this in terms of is it really just a routine providingly quid tid lr

is there a sense of urgency. >> i think both. we are leading up into the new year and so there is a cash tranche a lot of people were talking about the cash crush and the other part is that there is concern about the economy and so this move plus on january 1st, we had import tariffs, that is another way in which that they could try to stimulate spending in china. and then there is another big political factor that is coming up why people think that 2020 will be an important year to stabilize the economy. and that is that in 2021, there is the 100s anniversary of the c communist party. a xi jinping wants to double the per capita so that means 6% growth. >> and chinese consumer inflation -- well, we'll leave that for another day anyway, thank you so much for

joining us on another day of record highs for the market, western digital and amd leading it highers a you take a look at the board. we'll be right back.

record highs for the major averages dow up just shy of 200 points. but all across the board, another record setting day for the majoavagr eres squawk on the street back in less than three minutes.

good thursday morning. we're live at post nine. let's take a look at the markets. a record setting moment here on wall street, all three major averages setting newmilestones >> first trading day of 2020, record highs across the board to start the year but can the rally continue >> plus going on the run, an interpol arrest warrant out fni.

and a ban on the flavored ecigarettes as early as tomorrow we will start with the new highs. how should investors be positioned with us now to discuss, tony krazenimentnd also margie potelle. he said it is getting too easy >> when we think of the bond market, it is not likely to be the same last year was a turnaround year after a difficult 2018 when the federal reserve was raising interest rates but kethe key component probably

ont onts won't be there this year it will be stable because of the economy expansion, so 2020 could be a coupon clipping year. but the main thing, the risk leaning toward one side, which is toward wider credit spreads, not higher interest rates. so if risks in the bond market, it is somewhat widening credit spread and who knows what type of event because there are still numerous uncertainties for this year, political, trade and the election that would affect the market >> and margie, what is your outlook for the year what will be the best investment in '20

>> i think stocks will be the best investment. i think people are yuunder estimating the positive things in the market. and i think that equities will continue to expand on the up side >> and implicit in that if the idea that we're still in this -- let's say 2% growth economy, earnings are single digits, if it is going to be a very good year for stocks, that would suggest that we will expand valuations and kind of get a little more excitable in terms of investor enthusiasm >> and i think that is a likely scenario whether stocks go up because of earnings going i higher, because of p.e.s expanding or just a recommending difference shortage of stock and lack of news so stocks would likely to surprise on the upside especially when so many money is

positioned that money is still poised to enter the market and that will keep us from having any deep correction i think >> and back to the outlook for the bond market, how should investors be positioned particularly versus other types of assets? >> first of all, don't try to mock it. many believe that the federal reserve won't cut interest rates. and so many bond investors will say why am i invested in bonds with the yield so low globally and there is something calmed conditional correlation, that when something bad happens, bonds will be there for you and your portfolio will benefit. the key risk for any investor is quequity risk, so you want to he fixed income for thedy vee

diversification. so we recommend going up the value chain, sticking with more high quality bonds because bonds are priced for perfection and there isn't a lot let in terms of yield >> and what do you see as the biggest risk to your investment thesis for 2020 given all the uncertainties? >> i would think the biggest risk is that some countries emerging market, china perhaps, disappoint in their growth prospects. so you will have modestly positive growth rates. but if we had a real corruption in one of the major merging markets, that could roll over on to our markets but the u.s. market has strong fundamentals so i think that it will be pretty immaterial negative force on the equity markets. >> and where within the u.s. markets -- there is a big debate whether it would be continued

you outperformance of growth are on you the cyclical stocks. >> yeah, we saw lagging sector, but i think that year that we are looking for the growth sectors to have sustainable growth sa and above average returns. >> and does the dollar continue to weaken? >> i wouldn't look for a lot of movement because the stories abd stories matter but there is a risk of lowering the policy rate, but others could keep it stable so that might weak think the doll the dollar on the margin, but then the second half of the year with the election prospects. >> all right happy new year to you both and this story is turning in

to a global catch me if you can caper. new details on carlos ghosn's flight from japan. a lawyer for ghosn says that he will hold a news conference in beirut on the 8th of this month. so in less than a week and joining us on the cnbc phone line is a 50 year veteran of the auto industry, bob be lulutz good to talk to you this morning. and you have known carlos ghosn for quite a while. there are elements here of just simply, you know, a global executive caught between jurisdictions and things about the japanese judicial system but what are your be observations in the situation that mr. ghosn finds himself in and what does it say if anything about the machinations behind the scenes in this car company that he once ran >> well, we don't know

he claims he is the victim of a conspiracy to oust him but having known carlos ghosn for a number of years and having observed his personality over the decades, seeing him become more and more suffering from ceo disease where he showed all the signs of believing position to be omnipotent and infallible, that type of person a ality does tend it slip over the line and do things that the rest of us would not do because they think that they are so important and so well connected and of such vast importance that nobody would ever call them on it and i've observed it a number of times in my career that the people who receive nothing but

ed a uhe lags from t ad uhe lags and from within their own company, they neff accept negative feedback they tend to develop this god complex and believe that they are above the law to some extent so i'm not saying that he is gilgtdy guilty as charged, but i know the profile and i've seen it many times before and i would be extremely surprised if this was the represent of a result of a conspiracy and he was in fact totally innocent it is possible, but personally i don't believe it >> that is a pretty searing character indictmentsment if i must say, bob. i mean you basically said everything but that he is guilty

>> well, he was a control freak and needed to am massamass enors power. and being ceo of three or four car companies at the same time, we all only have 24 hours a day, some of which is devoted to sleep, it is impossible to really exercise those duties in a good way without delegating most of it most people would put themselves on the board or they make an arrangement to where they effectively help runt other company. but declaring yourself ceo of all these companies simultaneously, it does not make any sense. and a lot of his person a al mannerisms, i don't know if you ever saw the movie "revenge of the electric car" which mass a

segme -- it has a segment on carlos xwoen ghosn in meetings. and miss mannerisms the way he walks into a meeting room, it is more like a head of state than a ceo. so just signs of someone who takes themselves more seriously than they should and again, this is not necessarily negative, i'm just saying that he exhibited tratde of someone who takes position too seriously. >> bob, to your point, there have been serious ramifications as well to the companies from which he was ousted. renaud and nissan, and we've seen cracks emerging around the alliance what happens to that alliance and what happens to these

different manufacturers and potential tieups as we head into another year >> nissan is experiencing a goodly lum goodly number of difficulties. what happens when you have a hard line ceo, people start make up numbers and hiding the facts. and he told nissan america that you will attain a market share of -- i don't know where it was, 11% or 12% and they couldn't do it so they started discounting the heck out of things and putting cars into daily rental amend cheap leases and everything to get the numbers. the minute carlos was gone, the ugly truth of what nissan was really like emerged because people started telling the truth. so the alliance was never great.

and i will tell you somebody has to explain this alliance business to me because he also came to general motors another one point and suggested that we join in. and our reply was how does it work we can understand a merger, we can understand a joint company, we can understand rules on how you divide up investments and how you divide profits, but in an apply answer, h-- annellianct say everybody has to trust i've other. but it is not a formal business arrangement where you have hard and fast rules so general motors even though we had serious financial problems

at the time, welected to pass and of course ghosn swawas goino be ceo ofettomotor, but that never would have worked >> and a lot of nations want to cling to the glad they have the manufacturer, they don't want to let it fall into a twilight period, right? and this is in part perhaps the backdrop no idea carlos ghosn came perhaps under greatest attention by the japanese authorities. at least that would be his side of things, that they didn't like how the alliance was being run >> and that is all very responsible. quite possible that once he holds this press conference, the evil conspiracy is revealed, he will be cleared of all charges and the japanese judicial system

will get the bad reputation that it richly deserved that is all possible but again, it would surprise me greatly if there were no basis whatsoever for those allegations. but your point about the global industry, it is true that every country likes to maintain its automobile industry. and the reason for that is the automobile industry is so fumt am huge amounts of capital, g gigai employment and then the tier two, tier he three, athree, and mom and pop shops. in the states we used to say one out of every search workiven ie

on an automobile industry. if you look, most glass doesn't go into building, it goes in to cars number one destination for carpets is not homes, it is cars et cetera, et cetera almost any commodity, number one is automobile. and so they make the car industry a priority. >> without a doubt bob, really appreciate your time this morning thank you very much. >> sorry it wasn't on camera >> next time appreciate it. thanks, bob. still to come, the race for the white house. senator bernie sanders reporting a blowout fourth quarter in his late either fund raising efforts. we have those details ahead. and we're all over the market rally on the first day of trading in 2020. we have fresh record highs

giving up some of the gains as the morning unfolds. big owti aadsh sllhe here today, remember, you have the hilton app. will the hilton app help us pick the starters? great question, no. but it can help you pick your room from the floor plan. can the hilton app help us score? you know, it's not that kind of thing, but you can score free wi-fi. can it help us win? hey, hey! we're all winners with the hilton price match guarantee, alright? man, you guys are adorable! alright, let's go lose this soccer game, come on! book with the hilton app. if you find a lower rate, we match it and give you 25% off that stay. expect better. expect hilton. - when i see obstacles, i create opportunities. (soft music) - when i see adversity, i find a way. - when i hear never, i say now. - [announcer] southern new hampshire university is education made to fit your goals with over 200 degree programs, flexible class schedules, and some of the lowest online tuition rates in the nation. (cheering) - so when i face barriers, i can break through.

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call today. comcast business. beyond fast. the race for the white house is heating up as presidential hopefuls report their latest eamon javers has the latest. >> we're getting a look at how they did in terms of fourth

quart fund raising including a big number from bernie sanders take a look at what wie're calling the feel the bern rate he raised more than $35 million in the fourth quarter from 1.2 million individual donors. average donation they say of $18.53 he is pictuis effectively crowd sourcing the campaign. they say the campaign received money from 45,000 new donors just on that day, and total more than 5 million individual donors the most common donor pretty standard, teacher, amazon and walmart employees and starbucks baristas are all at the top of the list so where does bernie sanders rank donald trump crushed his number request $46 million in

fundraising. you see sanders at 34.5. bootigieg at 24.7 and yang, $16.5 million raised by the yanlg oig cyank campaign we should be getting the other numbers over the coming weeks, so we don't know about biden or warren or somers others. but traditionally the campaigns that have done the best put their numbers out early. the ones with the worst disclose them the last possible segment >> and is wil is we'll be looki numbers. is there seasonality >> yeah, there definitely is and as you get closer to the election, a lot more interest. so it sort of builds steadily.

the trump campaign said that the impeachment effort by democrats in the house really drove a lot of intensity among the trump base and is whenso when you gete fired up, that is when people say i'm giving to that campaign and this is driving a lot of the fundraising for the trump campaign >> obviously a lot of heat in the debate thanks very much as we head to a break, look at shares of tesla, trading higher after a bit of a boost the firm taking its price target up to $515 through the at&t network, edge-to-edge intelligence gives you the power to see every corner of your growing business. from managing inventory... to detecting and preventing threats...

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move requirements to keep them on the market, a net public health benefit weighing their use to help quit smoking versus history of drawing kids into an addiction of nicotine. and when we return, is recession ahead in 2020? the biggest risks to the rally that is next stay with us ♪ ♪ i've been a caregiver for 20 years. no two patients are the same. predicting the next step for them can be challenging. today we're using the ibm cloud to run new analytics tools that help us better predict and plan a patient's recovery. ♪ ♪

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welcome back here is your cnbc news update. former obama housing secretary julian castro has dropped out of the democratic presidential race it comes as he failed to garner enough support or donations to make the recent debates. he is the only latino candidate in the field was 1% in the polls. and taiwan says a top military official was killed in

a crash. five others survived as chief of the general staff, he was responsible for overseeing taiwan's defense against china. indonesia says severe flooding has killed 16 peopleiss it caused buildings to collapse and more than 31,000 people were put into temporary shelters. back here at home, new york yankees pitcher don larsen has died he was the only pitcher to throw a perfect game in the world series he accomplished the feat against the dodgele rs in 56 he was 90 years old. and you are up-to-date that is the news update this sor hour >> sewage, thathank you. so is there a recession ahead?

that is the question from our next guest author of a walk around wall street is joining burt, nice to see you. ceos are certainly thinking about the projects of a pr recession. is the fear justified, should they be concerned about within this year? >> well, the, quote, reliable leading indicators don't seem to be very worry zchsom he very wom but i think that it is very difficult to predict recessions. even the reliable indicators that often precede recessions, even thosewho say that the

stock market is a great indicator has predicted nine of the last five recessions so don't try it at home, it is really very, very difficult. and i think that you would get yourself in hmore trouble than not. in the middle of last year, i remember many people saying oh, my god, the yield curve has i inve inverted, that is a very reliable predictor, sell the stock and be wary. and then what happened if you had sold your stocks in the middle of the year, you would have lost one of the strongest last half of the yeied

so don't twri it at home >> so how do you assess the economy? manufacturing has been weak, the consumer has been carrying the lloy load how much longer can that maintain itself? >> for a long time we've had an economy thats that had a greater and greater hair share in the service sector and a smaller in the manufacturing secretary toy. why see any warning signs now. and if there is one, it will be a shock that we don't know of

right now. not something that we can see in the immediate future >> so going back to don't try it at home, a number of economists end up with egg on their face. people we've doing it because they want to position their part portfolios how do they think about that >> rebalance from time to time suppose you were comfortable having 75% stocks answ 25% in safer more sfiksafe safer in fixed income. and suppose you look at yourt portfolio in january and because the stock market has been so strong that you are now 80% in stoc

stocks so okay, take the 5% off and butt it into sapu it into safer assets from time to time rebalance. that has proved to be snag always will keep your risk within the tolerances where you are comfortable. so rebalance but don't drive >> and it was a maverick idea, keep costs low, essentially passive indexing do you feel as if lesson has been fully ob soabsorbed, so mission accomplished >> there is no question that

this caught on when my book was reviewed they said it was ridiculous advice and now in mutual funds, the index is now more than 50% and active share is less standard & poor's does something called a spiva report each year. each year you find that the least two thirds of active managers are beaten by the index and the third that win one year don't win in the next year so when you compound it over 5 years, it is more than 50% don't beat the index so i think frankly it has been proven, it does work, and frankly, i think that there is even too little indexing now

there should be more indexing it works and the best thing to do >> perfect last word we wish you well happy new year >> happy new year to you and to all investors 37. and mills are kicking off the new year with a pay raise.3 and mills are kicking off the new year with a pay raise.7. and mills are kicking off the new year with a pay raise.. and mills are kicking off the new year with a pay raise. seattle phasing in a $15 an hour minimum for all employ years by the year 2021. but so far the pros and kons aren't so clear cut. kate roernlgs went kate rogers went to seattle to find out more. >> reporter: at dick's drive-in, the average employee is in their 20s and turnover is low thanks to investments the come making in workers like offering paid time off and 401(k)s as well as 100% employer paid health insurance. the benefits are available to workers regardless of their

number number 6 hours and the company already pays above minimum wage with its seattle location starting at $17 and 18 $18 and an hour. but labor costs also rose. the company had to raise its prices for the first time in its history based on labor costs alone. nth pa in the past food costs had been the driving factor but as workers took home more, the president says an interesting trend emerged. >> they are choosing fewer hours at the higher wage rate which mines that i have more employees work the part-time hours and streets the harder when people need to change their schedule for fool

for school or family reasons wr wrrt and seattle's job broet has outpaced the state of washington with growth in weekly hours slower than the state's average. for some it feels unsustainable. which chef closed his doors as the year ended and while labor costs played in into the decision, so do did his rent, nearly $16,000 a month and his ability to pass on costs to the customers when his lee came up, he said that he decided it was time to move on. >> the ag wages are going up, price of food is goupg, propering up, apt that time is going up, rent is going up, my staff that feels

like i can't be in the city anymore, so i need to move on, so you have to find someone to replace me, and that is really hard so the cost of that just work through that as a business owner is going up. >> kai >> so kate, i think that it begs the yes has we see the minimum wages going up rngs maybe good for the employee, but the flip side is we're seeing more and more companies adopt more automation. >> and that is something that i think that we will continue see what i found is that rlot of the situations that you think unfolded were nuanced. even though more people had more

money to sfend, tpend, customere not happy about the price hikes. and they don't want to pay $25 for a salad. so there is dichtd different challenges that youcan't quite map out, but workers had their lives changed by the big wage being ins. making more money for the same work >> kate, thanks very much when we come back, new year, new laws recreational marijuana sales now under waund y in illinois. built for all people. - [woman] snhu was the best experience of my life. - [man] without snhu, i wouldn't be the leader i am today.

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in this product this is a multimillion are dollar decision born in front of our sighs. . >> and we saw a srough for 12019 blah as canada broadened the u.s., they had red tape and unsxektsd konsz quebss so is that case study in what not to do as more states adopt these measures themselves? >> yeah, an excellent point. the industry and business in canada and the companies that trade publicly are totally different than the yuunited sta opportunity. so being an operate like be green thumb, we have to list in canada so it is a good lesson for us to watch on regulatory hurdle, but

the university is in the united states there are 350 million americans interested in this product there is a broad range of develop graphic. so i think the united states will be leader you are starting to see market caps creep up and the industry is so much bigger than canada, the size in illinois is bigger than the country at this time. >> just to put that in perspective, do you think that 2020 will be the year that we see changes on a federal level in terms of cannabis laws? >> i think slowly but surely you are seeing momentum around the safe act and handling of cash, insurance, 401(k), and slowly that you will see capital markets and the ability for u.s. companies like ours to list in the united states. whether it is 2020 or 2021, i'm not pass we are focused on executing the business and excited about what is to come >> so a state level then, where do you see the opportunities

>> biggest opportunity for green thumb is in illinois we have 13 million people where dumt u adult use just occurred. current industry will go up 5 to 10 times and only a small number of operates with the kind of capacity and kind of capital to excuse this. in addition to illinois, everywhere east of the mississippi is a massive opportunity. so that is pennsylvania, new jersey, new york, connecticut, massive opportunities. >> if you project out a number of year, let's assume do get this wave of decriminalization, what does the industry look like we have legal products out there and producers are not necessarily fast growing businesses

so where does it get to a state of maturity. >> we think it is a $50 billion to 8 0 build space. bigger than wine or spirits. right now it is over a billion dollars of legal cannabis sales a month. so currently run rate is about $15 million. we think that doubles in two to three years. and you will start to see -- you've already seen interest from alcohol, tobacco, food and beverage companies that want to be in the space and have exposure to products that they are already making >> all right, ben, thank you for joining us and let's send it over to jon fortt with a look at what is coming up on squawk alley. >> well, place your bets, the year has begun, decade has begun, what happens with tech after last year's boon we'll take a look coming up. we made usaa insurance for members like martin.

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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. getting some new developments on the carlos ghosn mystery. phil lebeau has the very latest. >> we have a new statement from carlos ghosn regarding speculation about how kpaerl he

was able to get out of japan the statement from mr. ghosn says there's been speculation in the media that my wife carol and other members of my family played a role in my departure from japan all such speculation is inaccurate and false i alone arranged for my departure, my family had no role whatsoever that statement from carlos ghosn in the last ten minutes. guys, it is him saying it is not true, nobody helped me i was the one that arranged for me to get out of japan we still don't know the details of how exactly that was put together, who helped him the details. that remains very much speculation. if you want a fun game, go on the internet, look for theories how he got out of the country. they're all over the place very few true details that have been nailed down and proven as factual. >> phil, did you happen to hear what bob lutz said about carlos ghosn in the last half hour of

the show >> i did >> what do you make of that. no love lost between the two and there was, you know, some harsh things said about mr. ghosn's character. >> right not surprised. bob and carlos ghosn are in many ways similar in terms of level of self confidence they have as executives, and that's part of what made them so attractive for people that would cover it and worked with them i wasn't surprised to hear bob say what he said about carlos ghosn, and look, there were a lot of people, not just within general motors but other automakers as well that felt that carlos ghosn had this idea that he was it he was the bomb and he knew all when it came to the auto industry, and i think a lot of people within the big three were offended by that they felt like look, you've done some nice things with nissan renault, doesn't mean you're the end all be all when it comes to the auto industry.

i am not surprised by the comments from bob lutz. >> to be sure what everybody knows what we're talking about, he said among other things, quote, that carlos ghosn was, quote, clearly suffering from ceo disease, that he showed all the signs of believing himself to be omnipotent and infallible. it is interesting to hear another executive of mr. lutz's caliber say that kind of thing about carlos ghosn at the particular time, with so many unanswered questions yet about what happens with the case with mr. ghosn. >> that's the candor from bob lutz that people love, he will say stuff that maybe executives might say to you in private, and believe me, there are executives that said that stuff about bob lutz, that he has a god like complex, knows all in the autd oh industry. i think bob would say there are people that said that. the difference here, scott, he is not afraid to say it, and he said it to you within the last hour >> so phil, given the fact that

we are expecting this reportedly, this press conference next week from ghosn, especially with a statement like this about his family involvement or i should say lack of involvement in his fleeing and the way that went down, would you expect we're going to get more details from him. >> not at all, nope. i don't think you get any more details from him here's the reason why. because whoever helped him in getting out of japan, they broke japanese law you can make an argument he was held there, he didn't have representation, it was ridiculous conditions he was under. having said that, whoever helped him, and he probably had help from within japan in some fashion, whoever helped him broke the law in japan and i can guarantee you carlos ghosn is not somebody that's going to give it up, say look, it was this person, this person, and they did x, y, and z he understands the serious

nature of what happened. >> yeah. >> plunless the people that lef with him left with him, no longer in japan. we'll see. >> phil, thanks for bringing us the latest on the situation. when we come back, top ten internet surprises of 2020 mark mahaney joins us thwi his predictions next "squawk alley" is just moments away

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