me. >> out on long island. >> let's finish today -- nice being with you happy new year winner y wish you happy and healthy in the year ahead the dow is right at a 200-point gain, 0.75 of 1% happy new year to all of you as well "the exchange" starts now. thanks, scott, happy new year to you and the gang as well welcome to "the exchange." i'm dominic chu. the record rally rolls on. could this be the time to bank some of the profits from the last year? plus call it the catchup trade. after a rough start to 2019, energy closes out the year with a big surge, but can that comeback last? and here come those gift returns. berkshire doesn't put a ring on it and new year, new drug prices. that's all ahead in rapid fire but we begin with today's markets and bob pisani at the new york stock exchange.

another day, another record. it feels like 2019 all over again. >> it does, and we're starting off great here record highs right across the board, dow, s&p as well as the nasdaq boeing a big help, by the way, on the dow, up about 6 points. that's 40 points on the dow jones industrial average the big story is overseas. china cut its bank reserve ratios which may free up some money for lending. semi conductors, also trade related, emerging markets trade related as well, industrials, all of this related to the china trade helping things out if you look at new highs, a lot of the new highs look like the old new highs in 2019, a lot of semis new highs, jpmorgan, banks also at new highs and fintech always at new highs and visa one of the movers as well. some stocks that have been moving up like the cyclicals and material stocks and steel stocks down today we had a downgrade of u.s. steel

over at key bank and a number of the steel stocks, ak steel, all trading down today. >> bob, thank you very much. as bob mentioned, we are marching to the new highs but with the s&p and nasdaq coming off their best performance since 2013, could it be time to bank some of those gains? also david katz, chief investment officer at matrix asset advisers ladies first, as always, why is it i could believe 2020 will be the same as 2019, or will it be different? >> well, they usually are different so we could start with that but as far as a january fade goes, while there is research that shows that a lot of times investors will sell their winners from the year prior in january, there's also really good research out there that shows this little thing called the january effect, which says that the market usually performs pretty good in january

in fact it's one of the better performing months for the entire year on average. you see 62% of the time that january is up for the year and if you get the first five days a big pop, that's even better for the outlook for the remainder of the year so if we can keep up with what we're seeing today, it could be a positive for the market overall. >> david, we could be one-fifth to the way of that five-day winning streak that could bode well for the markets overall, but it seems like it could be a time when after a nice, stellar run we could be due for a pause. again, maybe some of the bears have said it all year in 2019. do you think we can last this bull run can it keep going? >> at some point you're going to have a pause we think if you're an investor and looking at the next six to 12 months, we think the market can be up this year. definitely do not expect a repeat of 2019 you had a breakneck up pace in the fourth quarter, the market was up about 9%. we do think while january typically is a good month, there's going to be a slowdown

we think you have some stocks that did exceptionally well last year, that were above 30 times earnings we would not be shy about scaling back on them, taking a few profits in them. typically after a great run the market does slow down a little bit. by the same token, there are opportunities, either sectors or stocks that lagged last year that were down due to tax selling and we think they will pop during the year. so you have to be discerning where you're selling and putting that new money. >> david, which stocks are you looking at which ones are relatively outperformers given the performance they showed in 2019? >> a few that were poor last year we think were good businesses and poised for a pop are fedex, occidental petroleum, gilead and viacom cbs we think is a very good company as a spectacularly cheap price. we're expecting the stock to be substantially higher we do think at some point they

might become a takeover candidate. no matter what happens here, we do think you win. >> so, lindsay, if you're winning with some of the underperformers, what places are you looking at then that could be the places you either want to stay away from or maybe get into because they do have that runway to continue the bull run from 2019 >> well, i think david made a very good point. if you think about the multiple that the s&p 500 is trading at, 18.4 times right now, that's very extended from the historic average over the last ten years. it's averaged about 15.6 times so we're getting into extended territory for sure i think we're at a period where we really need to see earnings catch up to that multiple. so i'm with david and the fact that look at valuations of some of these companies the ones that have run the most might be worth taking profits in and looking for value in others that haven't caught up to their earnings potential could be areas where you could find opportunity. >> so, lindsay, the prepondi

preponderance of evidence, are we due for a good 2020 versus 2019 >> we're looking for the s&p 500 to show earnings growth of 8%, which is pretty good by historical standards but the problem is this is january 1. we usually see numbers come down throughout the course of the year that doesn't mean the market can't go up as numbers come down because it's about forward-looking estimates but i think we need to see more confidence and the future of profitability before we can get excited about what earnings growth will be. >> david, sir, last word to you. what changes your investment thesis in 2020 it sounds like you're generally constructive what takes you off those rails to become more bearish. >> we're constructive but do expect volatility. don't get scared out of the market after sell-offs the biggest wild card is china and trade. right now it looks like you have

a little ddetente. if that fell off a cliff and there were new tariffs, we'd be much more concerned about the economy and much more concerned about the market. >> thank you very much, david katz and lindsay bell as well. happy new year to you both we appreciate it. >> thanks. china is kicking off the new year with a bang as it announces a new injection of liquidity into the banking system. the move comes as china and the u.s. go into 2020 with a trade truce of sorts president trump saying the deal will be signed on january 15, something china has yet to confirm, by the way. let's get to all of that and more with cnbc beijing bureau chief eunice yoon who happens to be right here in new jersey. it's good tosee you. >> great to see you, dom. >> it's interesting because david katz and lindsay bell just put the conversation where we're going start with you china could be the biggest risk out there. >> yeah. >> is there a scenario right now currently where things are good, or are they maybe not as good as

the headlines would make them out to believe >> oh, that's a difficult question from the way that the chinese leadership is prioritizing the economy right now, it could mean that if you lifted up the hood, maybe things aren't really going very well, but the government is definitely going to prioritize and try to make sure things don't get out of control. >> you talk to so many folks on the ground out there is there a general sense that things are in a good spot with regard to moving forward with trade deals, phase one, to maybe phase one and a half to two at some point >> in terms of a good spot, from my conversations, the motivation is there by the leadership to try to make this truce happen. a lot of that is because of the economy. so the government has already indicated that it wants to make sure that stabilization is going to be the priority for 2020. it's really seen as a make-or-break year president xi jinping and the leadership on the whole has been talking a lot about the 100th anniversary of the communist party, which is going to take

place in 2021. it's important because they have said that china will have a moderately prosperous society by then, which means a doubling of the gdp number from 2010 by 2020 so a lot of people are talking about that means 6% growth in 2020 we had to make sure that the support is there and so that's why you're hearing a lot of discussion about the different measures and liquidity being injected into the markets. >> they're trying to do their part, there's no doubt now, the reserve ratio requirement, the idea that banks have to hold less back, they can hold out more, is not per se apples to apples like an interest rate cut but it does the same thing this is not the first time they have done it over the past few years. >> no. >> does that then signal that the chinese economy needs it >> well, so there are two things going on right now with this particular injection, and that is that the luna new year is coming up so a lot of people are concerned about the cash crunch,

which happens every single year. but also there is concern that the smaller companies are not really lending enough -- i mean are not borrowing enough so the money needs to be there. the government is really trying to direct that money to the small and medium-sized companies, which traditionally don't really get enough money to be able to grow their businesses. >> we've heard that january 15th is going to be that time when this agreement gets signed, translations aside or not. is there any indication from your sources out in china right now that january 15th is going to actually happen >> there is no confirmation officially or in state media about that january 15th date a lot of people are thinking it's potentially going to happen, but because of like what i said, all these economic reasons why it would be seen as important to happen, the time actually fits into a window that makes sense. when you look at the moves that china has been making to try and improve the environment between the two sides, and then also

trade representative robert lighthizer and treasury secretary steven mnuchin are supposed to be in davos on january 21st it seems that would make sense but nobody has confirmed it. >> eunice yoon, great to have you in the studio with us. here's what's still ahead on "the exchange. coming up, walmart ceo doug mcmillon had a breakout 2019 not just for the stock performance, but also for his social stances we'll look at why 2020 could be an even bigger year. plus, the energy sector tried to play catchup in the last few months of the year, rallying 10% can that last? and, why january could be the new april in the housing market this is "the exchange" on cnbc

2019 was a big, big year for walmart ceo doug mcmillon and it wasn't just the nearly 30% rally in walmart shares. the retailer stopped sales of e-cigarettes, they banned ammunition sales for handguns and assault-style rifles after two deadly shootings at walmart stores in texas and mississippi. now with mcmillon becoming the chairman of the business roundtable, what other issues will he turn his attention to? he's got a big stage for more on this and the future

of doug mcmillon and walmart, i'm joined by the founder and ceo of r-5 capital also retail reporter extraordinaire lauren thomas lauren, we'll start with you because you're going to set the scene for us you know walmart inside and out. you talk to them all the time. >> sure. >> what exactly is doug mcmillon going to do not just as ceo of walmart but as the head of the business roundtable for this coming term? >> sure. let's back up a little bit like you said, 2019 was a huge year for doug. arguably he's the head of a company based in bentonville, arkansas, and tend to fly under the radar. a lot of their stores are in rural communities, but doug really stepped up this year and made a lot of big, bold moves so i think a lot of us anticipate that that is kind of shedding light as to what's to come in the future, whether it be obviously trade is a really hot topic and continues to be in retail right now being the nation's largest private employer, walmart immigration is another key issue some analysts anticipate doug

might have some more work to do there as well. >> so, scott, is this -- is doug mcmillon, and cnbc viewers know him, he's been on our air quite a bit, we've talked to him a lot. is doug mcmillon the kind of ceo that will relish that spotlight and use it as a platform to push an agenda through? >> as far as pushing an agenda, i think he's got to be careful but pushing socialgood, i thin a lot of times we think these things are in conflict a corporation doing social good versus shareholder concerns. i think walmart is the poster child to do both doug has talked about health care health care is a big deal for walmart. it's a big opportunity as he grabs that mic to shine light on these health care deserts and do good, and do good by shareholders. >> it's interesting that you bring that up because there have been so many debates and pieces of political commentary as to whether a ceo does need a take a

stance on things we've heard it with ed stack over at dick's sporting goods with rifle sales and everything else is this a situation where walmart can benefit because the ceo and management team do take a social stance? it seems like shareholders have given that run in shares in 2019. >> warren buffett had some comments out today in "the financial times" saying companies need to be very careful regarding social beliefs versus social good so any time you're doing a hot button issue that's hitting the twittersphere or on facebook, you've got to be really, really careful because there's a social belief -- my belief may be different than your belief so you've got to be really careful there. but social good. another example walmart could do is bringing food to underserved communities in urban areas. >> doug mcmillon is not a banker, he's the ceo of one of the most iconic retail

establishments ever in the history of modern man. so what can he do? >> one thing i might add is especially as walmart now is head-on in war basically with amazon, and they're trying to reach a lot of the younger consumers, millenials. and i think as you look at the younger generation, as they look to make purchase decisions, they're opting for retailers that, again, maybe have a good social responsibility. that's top of mind so you could see maybe walmart potentially winning over more customers that way and that could be another weapon that they pull out against amazon. >> lauren is making a great point here we just did a focus group. one of the things that came up in the focus group with e-commerce is all the packaging. walmart has the super centers where they could -- hey, if you pick it up at the store, it's more socially responsible. drive sales, drive shareholder returns. >> less cardboard waste. >> less cardboard waste. so lauren is making an excellent point. >> my apartment the past three weeks is amazon boxes

everywhere. >> you're an amazon shopper. >> the lobby of my apartment. >> you open the door to a good question to endi things on scott, as we look at walmart versus amazon versus target, which of those three companies in your mind is best positioned in 2020? >> we go with amazon amazon really, i think, through the holiday period we've seen a really big inflection point. some of it was the next day. i was actually, believe it or not, driving up to my home in connecticut and stopped at the waffle house i had a conversation with the waitress i said is your christmas shopping done? she said all done on amazon prime. i think that's emblematic of what's going on here so i think amazon is really the place to be. but all three of them are what we call omni channel superheroes. >> scott, lauren, thank you very much for that big discussion on walmart and doug mcmillon. we've got some breaking news let's get out to what's happening with meg terrell. >> well, the much-anticipated

ban on flavors for e-cigarettes now coming down from the fda essentially saying that they are going to ban flavors, including fruit and mint, but excluding menthol, for all cartridge-based e-cigarettes now, those are the pod-based e-cigarette products such as those sold by juul people are going to focus on the fact that menthol is excluded here juul already stopped selling fruity flavors and mint flavors. menthol will stay on the market and juul's competitors will have to take off those other flavors. this comes into effect within 30 days or the companies are subject to fda enforcement actions. it also leaves on the market open tank systems such as those sold in vape shops flavors presumably can remain on the market for those so there's something for everybody to hate here in this announcement because the original blanket ban was for everything, including menthol. so anti-tobacco groups are going to say menthol could still

entice children to start using these products, guys this was originally announced in september, finally coming down from the fda, this ban on fruit and mint-flavored e-cigarette products. >> something for everybody to hate that might be the sign of something good with legislation. coming up, warren buffett may have bailed out on tiffany during the financial crisis, but that doesn't mean that he wasn't looking for a long-term relationship we have new details on why he sat out another blockbuster deal. plus, april is usually the busiest month for buying a house. if you're thinking about jumping into the housing market, you may wanting to do it right now we'll explain why up ahead. "the exchange" is now a podcast. listen to your favorite parts of the show you might have missed sign up on apple cod past, spotify and google podcast 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.

welcome back to "the exchange." here are some of the movers at this hour. sinnet jewelers down on a downgrade at wells fargo they pointed to a deceleration in earnings growth so those shares off 12% then shares of amd trading at levels not seen since june of 2000 raising the price target from $40 to $58, noting new products and market share gains, so those shares up almost 6%. shares of tesla are up more than

2% on a price target increase going from $375 up to $515 per share. tesla also announced it will deliver its second batch of china made version 3 sedans. on "the closing bell" they're discussing what's driving the price increase now let's send it over to sue herera with a news update at this hour. >> thank you, dom. here's what's happening at this hour, everyone defense secretary mark esper says iran or its proxy forces may be planning further strikes on american interests in the middle east, and the u.s. is prepared to take preemptive action if it gets sufficient warning, this after a crowd of iran-backed militiamen stormed the u.s. embassy in baghdad on tuesday. new video today showing the wildfires still raging in the eastern australian state of victoria the military in victoria helped

thousands of people who fled to the shore after a wildfire reached a coastal town and threatened their homes a small home along the lake michigan shoreline fell down a sandy bluff in an area plagued by erosion fortunately, nobody was home at the time and nobody was hurt that home has been teetering on the edge of the bluff for months now. and the nutrition labels on your food will be looking a little different the fda's new labeling guidelines went into effect on wednesday. along with a larger font, thank you, the labels will have side-by-side columns manufacturers are also required to include the amount of added sugars that is the news update this hour, dom, back to you. >> thanks very much, sue herera. here's what's coming up later on "the exchange" this hour. ahead, here come the returns. berkshire didn't put a ring on it it's a new year and that means drug price hikes

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welcome back let's catch you up on a few

stories. it's time for rammpid fire here are robert frank, meg terrell and frank holland, an all-star cast. first stop, didn't like that sweater you got, didn't have the right size, you may not be alone. u.p.s. will expect to ship 1.9 million packages back to their u.s. retailer homes. that's a 26% rise from last year january 2nd is the busiest day for returns in the u.s. with about 10% of goods sold going back to retailers every year to put that in numbers that's nearly $370 billion in possibly lost sales i say possibly because not everything that goes back gets returned per se for cash sometimes they exchange it for a different size or something else, but it's a big deal, right, frank >> it's a huge deal. it's really increased the value and the demand for industrial warehousing, which is places where e-commerce returns and your shipment leaves from. a lot of companies like that outperform in the market the question is just like

wework, is it a real estate company because you own space or an e-commerce company. >> why can't it be both? >> that was the question we asked about wework i can't be the person that decides either way but what's more valuable in e-commerce, the products or the ability to return them and send them back to you we want to order two things, maybe send one back, maybe two different sizes, maybe one fits, maybe one doesn't and that's the upside of e-commerce for most consumers. >> meg, do you plan on returning stuff? have you bought more >> who in my family is watching this who gave me presents this christmas? no, i love all of my presents. i have started returning things now a lot more since i became a parent when you order the wrong size diapers, i finding the ease of returns that amazon provides incredibly great and it makes me more comfortable ordering perhaps more than i need that should be something i should consider in 2er78z of my own wastefulness. >> i feel like i can comfortably

order more than i would have normally because if the ease of returns is that much better, i can afford to sendi it back. >> i lived overseas and what amazed me is how hard it was -- many stores don't even take returns. that's what makes america such a great consumer economy is we have allowed this whole system of returns where you want to buy more because you feel comfortable if it doesn't work, you can give it back what's amazing to me is most of this is clothing that doesn't fit. that should be something that you could fix with technology. you can measure yourself and they can provide more precise measurements of what you're buying and know before you get it whether it fits. >> some people are doing that right now so we'll see if that trend takes. let's move to topic number two. warren buffett may have bailed out tiffany during the financial crisis, but this time around he wasn't so interested according to reports, he declined a takeover opportunity for tiffany. the oracle of omaha choosing to

stay on the sidelines with all of that cash berkshire's cash horde has reached $128 billion berkshire is coming off its worst year in the decade, up only 11% that's lagged the market tremendously this time robert, he's the oracle for a reason he's a billionaire, he's on your radar. what gives why not tiffany? >> on the face of it it's the perfect buffett company. that tiffany blue box is hard for anybody to replicate on the other hand, it was expensive. they were going to pay 17 times earnings more importantly, this is a fashion play lvmh was going to boost returns by increasing the design, making it more hip to today's younger buyer. among buffett's many attributes and strentgths, fashion is probably not one of them i think he said what can i add to this and probably not as much

as lvmh. >> throughout the course even if you weren't a warren buffett expert, you know that buffett is not the type to overpay. so maybe it's just the idea that he doesn't want to get into a bidding war with europe's richest man who garnered $30 billion more -- >> who is now worth more than warren buffett so he's going against the guy who's going richer than him. that doesn't happen often to warren buffett. >> robert, you've probably made the point before we've talked about warren buffett holding off on acquisitions before. people thinking that he should do something when people think he should do a, he does z but it reminds me of gilead in biotech. people were waiting for gilead to use its hordes and hordes of cash to get it back to the area it was with hepatitis c and it did a deal and people were disappointed when you've waited this long, it gets even harder to do the right deal. >> let's stay on the biotech side of things pharma companies are apparently

ringing in the new year for sure with a bunch of price hikes, increasing the list price for hundreds of drugs here in the u.s. meg, you've been following this story. drug prices a hot button issue especially in now what is officially an election year. >> of course pfizer is the biggest drug company that you often hear these headlines about. it was that company that trump tweeted directly at when they raised prices on something like 40 medicines a couple of years ago and pfizer actually rolled back those price increases, agreeing to do so until trump went through with his drug pricing reform plan, which never happened then pfizer re-raised the prices on those drugs of course this is going to be a hot topic issue for the election year it's just like clockwork one thing that's interesting, though, and i think we have a graphic showing the drug price increases over time for three different companies. >> there it is right there >> these are the percentage price increases going back to 2016. >> it's declining.

>> they have been so much bigger in the previous years. it's below 5% for the most part, definitely below 10% this year and it shows the impact of that political pressure on drug pricing. these companies are still increasing prices but not as much. >> frank, do you think this will resonate with voters this time around >> i think the public perception dies down after the headlines. i think we all remember the opioid settlement. it seems like these pharma companies, they just don't seem very responsible raising prices like this doesn't seem very responsible. obviously it's on drugs people really need like oncology drugs and things like that public perception doesn't dictate what companies do and this is a clear case. next up, we've got people fleeing in florida in droves and it's providing a huge economic boost for the sunshine state new irs data shows florida had $16 billion in gross income from new residents who migrated there in 2018. that's more than three times the amount of arizona which came in second and also marks florida's

sixth straight year as the top beneficiary of new residents moving to the state. i've got to tell you, robert, this resonates with me because i keep thinking to myself how do i move to florida because the tax situation is so much better. i'm going to be a snowbird. >> why wait until then the west palm beach bureau >> could we make it the naples bureau i'm more of a gulf coast guy. >> everyone is looking and saying the s.a.l.t. tax changes is causing all of these wealthy people to flee to florida. told you it was going to happen. these are huge numbers $16 billion. $9 billion of that came out of new york state just alone. but if you look at what's happened over time, this number of 16 was actually lower than it was in 2017. so the pace of outmigration or migration into florida has slowed the second thing is the pace of outmigration from new york and connecticut has also slowed. so, yes, we have a lot of people who get older in new york, and as seinfeld said about his parents, it's the law, you turn

65, you've got to move to florida. so i think that's the driver as opposed to the s.a.l.t. impact where you see no discernible impact from the s.a.l.t. change. clearly, look, whether it's taxes or just weather and having fun in florida, that's where people go to retire. >> you don't have to be a billionaire like david tepper or all those guys moving to florida. let's move on. finally, just breaking moments ago the fda announcing a ban on the sale of fruit-flavored vaping cartridges, including mint flavors, but allowing menthol and tobacco flavors. this restriction won't apply to vape shops that sell the flavors via tank vaping systems. meg, you brought the news here first of all, somebody tell me the difference between mint and menthol. >> from what i understand and none of us vape so we can't tell you from firsthand experience. mint is more of a candy flavor and menthol might be a harsher flavor the idea is menthol won't appeal

as much to kids as mint. however, if you talk to anti-tobacco groups, they argue that everybody who did mint will switch over to menthol so this new policy is making a lot of people very unhappy because the original promise back in september from alex azar is they were going to ban the sale of all. >> frank, you've been following this from the e-cig side as well can the industry actually get behind it and work with regulators or is this a real atomic bomb, if you will, of getting rid of everything but certain flavors? >> i think it's a lot of compromises. no side is truly happy a pod is like a juul you pop it in, you use it. a tank you can mix and fill yourself, more used by adults and mature users this isn't teenagers outside of a school mixing their own tank. >> they're using pods. >> they're using pods. this is a big political story. this is one of the biggest small

business stories of all time. >> president trump himself has weighed in on this. >> in 2014 the e-cigarette market was $2.5 billion. last year, in 2019, it was $9 billion. a lot of the people selling this are small business owners who made their money off people saying i want to get off cigarettes and vape, it seems like a healthier option. so this is a compromise. >> frank, i want to key on something that frank brought up. this is not kids with tank systems. this is not kids hanging outside the boys room or girls room doing this but could it be? is there a risk now? do we think there could be chemists that emerge that are younger in nature because they're mixing things in these tanks as opposed to using predetermined pods now >> there will be probably some solution to that that makes it easier but my question to you both is will the gray market for all this stuff continue to flourish? >> and that's bad. >> and how will that make itself apparent will these stores sort of do it illicitly? will there be on the street you can still buy pods

will there be an influx from china that are unofficial? how will the gray market look? >> i think it's going to absolutely continue to flourish. i think scott gottlieb talked about that this morning, including new products coming in from china and kids finding those as well. >> they'll be still doing it now that they're hooked on it and know how it works but it will be gray market, unregulated and could be filled with oils or substances that could be a problem. >> in the thc market we've seen those deaths and it's incredibly scary. but there's a deadline of may by which time all these companies have to apply for regulatory approval to stay on the market at all they have to improve that they have a net public health benefit. the fact that they have addicted all of these kids to nicotine has to be outweighed by how helpful they are in helping people quit smoking. that's an uphill battle. >> thank you all very much for those takes on those big stories. seasonality in housing could be changing thanks to the ongoing home shortage. those details coming up next.

take a look at shares of apple. that storm warning hittick hitte high, up 90% in just the past 12 months alone

welcome back to "the exchange." typically the busiest time for home shopping is three months away in the spring but the ongoing shortage could be changing things around diana olick joins me are you telling me spring is no longer the hottest season? >> that's what i'm saying, dom that severe shortage of homes for sale is actually changing the calendar for the whole housing market from 2015 through 2018 the peak month for average views per listing on realtor.com was april. january then lagged a full 16% in 2019, january was the busiest month on the site in 20 of the largest 100 metros those cities include new york, l.a., chicago, dallas, houston, seattle, san francisco, atlanta, denver, just to name a few

in 2018, that was true for just three of the top 100 metros. and atlanta is particularly competitive this year. >> i've gotten at least 30, maybe 30% more phone calls already to start the home search in january it's a race out here, so it's either they get started fast or they wait until the actual spring market and they miss out on all the inventory >> the number of homes for sale in november, which is the latest reading, was down 9.5% annually and the supply of homes priced below $200,000 was down a stunning 16.5% so if you want to move, you've got to do it now. >> a lot of food for thought, diana olick, thanks for those reports on the real estate market. energy finishing higher in 2019 with a strong last three months of the year but seriously underperforming the broader s&p 500 overall. is it time to play catchupnd a snap up some of those energy stocks in 2020

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of the 11 sectors in the s&p 500, energy was the clear underdog last year, as you can see there. that sector seriously

underperforming the broader s&p in 2019, but energy hitting its stride in the gas in the past three months rallying a whopping 10%. so do these stocks in that sector have the fuel to play catchup and can that trade keep going? with us now, pavel, senior vice president at raymond james and steven shork steven, we're going to start with you because we want to lay out the broad strokes and frame this discussion. what was bad and good about the energy market in 2019, and will those themes carry over into 2020 >> well, we have to keep in mind, dominic, that we ended the q4 of '18 on an extremely depressed market so prices rallies in 2019 is just a reflection of how bad the market was oversold at the end of 2018. so to that point we've only had a rally with oil hovering in that mid-50 to mid-60 dollar

range. don't see oil prices going much higher beyond that the bad out of 2019 was geopolitics. iran continually blocking the strait of hormuz, attacking, clearly trying to escalate tensions into the region now to trump's credit, he did not take the bait. he did not respond in the military fashion cooler heads did prevail geo politics will be the main driver in volatility as we look ahead to new year. >> stephen makes some excellent points as a news person covering a lot of those events, i was surprised that none of those geo political events really skyrocketed oil prices that much higher, save the bombing of what happened in those refineries in saudi arabia

and even that felt and corrected pretty quickly what is it that gets the oil market moving, in your opinion >> when we think about anything out of the middle east those are issue of supply. the oil market throughout the past year has been much more worried about the demand side of the equation that meant two big things. one is u.s.-china and the other is brexit. both of those, as it happen, got more or less resolved within a 48 hour interval in the middle of december. if you remember there was the phase one trade deal and the british election which boris johnson won. after that, oil has been rallying on a sustainable basis because the demand question marks that have been impacting the oil market have largely subsided i think that opens the door to the market refocusing on those

middle eastern risks to oil supply which are real and should not be ignored >> the macro factors at play here supportive of oil prices sounds like the both of you are saying that. is that continue then. can we expect oil prices continue to rise and benefit not just the country's that produce it but the companies within the countries that are the most levered to it. >> on the further upside, my real concern on the demand side comes from the industrial side of the economy we have been looking a t t inine statistics over the past six months it's safe to say the u.s. industrial side of economy one eighth of the economy is in recession. going forward i think a lot of that recession does correlate to the ongoing trade rift between beijing in washington. i do appreciate we have a phase one but it's not in china's

interests that any sort of meaningful resolution to the trade pact until we get through the election, i don't think i'm going out on a limb here to say that xi in china would prefer to negotiate in december with a jojo biden or a bernie sanders rather than donald trump. xi can wait trump out. i'm not expecting any sort of meaningful return to industrial demand that will continue to act as a drag, i believe, to the new year >> gentlemen, i wish we had more time we have a lot more to discuss here including what will happen. thanks to both of you. as the markets continue to post record highs in the new year, it's a great time for 2020 financial resolutions. how to sell those goals in the new year that's next. with a better way to track where you spend.

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millions of americans had a great financial year in 2019 with the stock market hitting record highs, so what steps should you take this year to keep that momentum going in your personal finances?

joining us with realistic revolutions is an acorn contributor. provides spanish language contest for invest you, ready set grow thank you for being here >> happy 2020. >> take me through what i need to do in 2020 to improve my personal situation >> you want to create realistic goals. first is to think about paying yourself first that's the most important concept because it allows you to keep more of your money in your own pocket the second thing is to automate your investment contributions. you allow yourself to continue growing. the third is to think about investing over the long term investing is a long term gain. you can't think about today or tomorrow you have to think about the long term fourth, it's compounds interest. compounds interest allows your money to grow over the long term to gain on top of the gains. think about interest rates and inflation because these can have real and material impact on your investments. >> pay yourself first.

what is that i say this because i have a small child at home. identify already got a 529 b plan set up. i'm paying her a lot right off the bat. i want to make sure i have enough situated for her college situation. what does it mean? >> it's about keeping your hands out of the docookie jar we know the temptation to enjoy your money today paying yourself first is about enjoying more of that money tomorrow by saving today delaying that gratification so the dollar you save today becomes 5, 10, $20 in future >> time value is key in that scenario i'm looking at the automated investment contributions it sure feels i'm one of millions of americans that participates in a 401(k) program. every paycheck a certain amount gets garnished or held back, is that the simplest way to go about doing it >> for most americans that's the simplest way if you take a closer look at

your 401(k) plan many offer auto increase options it allows you to set them so they increase 1% for year. acorn is an excellent app to contribute small amounts over the long term. you can see that growth. the key is to just automate investments in whatever way possible there's a number of solutions available. take advantage of them so your money is growing >> one last thing before we let you go, the mindful of interest rates, it's curious because interest rates haven't moved for a long time and inflation is non-existent in certain key parts. how much we really have to pay attention? >> be mindful of the economic environment you're in. you want to think about how much your money is earning relative to how much inflation is occurring. inflation can erodes your earnings one way to keep on track is to invest more every year so

inflation doesn't eat away at the pace your investing. that's what we're exiting to is encouraging every one to stay n invested >> thank you very much >> for more check out cnbc.com that does it for the exchange. let's send it over to power lunch. thank you very much. good and timely advice there about how to get off on the right foot welcome to the first "power lunch" of 2020 stocks are surging to record highs to kick off the roaring '20ss. how long can the party last? no ironies there we'll debeat thate that it's been a rough ride for pelonto. t -- peleton pot is