welcome, everybody to a special edition of "power lunch. the markets are down more than 200 points as the u.s. takes out major general in an overnight air strike we are just getting the minutes from the last federal reserve meeting. they come out right now. >> there was considerable agreement in the december minutes about the reasons behind calling the federal funds rate currently appropriate. the vote was unanimous to keep rates unchanged. participants agreed the labor market was strong and economic activity had risen at a moderate rate some noticed the rate could rise further while some indicating payroll would show less momentum they expect to sustained expansion and inflation near the 2% objective they agree spending had increased at a strong pace and many noted they were reporting strong demand for the holiday

season trade came of an awful lot 18 times for those of you counting with participants noting that uncertainty continue to pose some risk to their outlook. they express concern about actibasi activity in manufacturing. some participants commented on challenges to the energy and agriculture sector a couple noted that farm offsetting on farmers. as for risk, many saw it tilted to the downside. some eased trade tensions with china and the probability of a no deal brexitlessen brexit lessened further. some concerns were raised that keeping interest rates might encourage excessive risk taking in the financial sector. some said it could be useful to cushioning the global economy. they struggled with how to phrase the 2% language

some thought saying quote near 2% could be misinterpreted as suggesting that policy makers were comfortable with inflation running below that in the end they used both of those terms. >> just couldn't decide. thank you very much. we're going to turn to the other big stories. >> a couple of new developments in washington to bring you up to speed as the pentagon is saying additional u.s. troops are going to the region. about 3,500 troops from the 82nd airborne will be repositioned here to the middle east, according to folks over at the pentagon also here on capitol hill mitch mcconnell, republican senator leader, suggesting the administration is arranging a classified briefing for all senators early next week they say there will be a staff

level briefing but all senators will have access to classified information about what went on here as we still try to fill in some of the gaps about what happened in this attack, what it was that the united states saw in terms of the intelligence threat information that it was responding to and what this iranian general may have been up to in baghdad as the u.s. military honed in on home late last night at this point we're expecting the see the president at about 5:00 p.m. this evening he will be speaking at an e even je -- evangelical event. it's possible he'll top with comments explaining the rational for this strike and what the president expects to see next. >> thank you very much let's get the market reaction to all this news.

it keeps coming from bob at the new york stock exchange. >> just a point on the fed minutes. the key take away, remember jay powell's press conference, he said it would take a sustained increase in inflation for the fed to go back to raising interest rates that was the key take away from the meeting and the fed minutes as well. here is something very interesting. the big global integrated names didn't move much at all. some of them moved down in in middle of the day. if this was 10 or 15 years ago that would not happen. rather interesting bifurcation there. moving up here today, there you see them put back the dow movers. the cyclicals like 3m and c

caterpillar remain weak on the day. airlines, of course you get some pressure here. a very different situation it might have been years ago. the effect of oil on these companies, the costs for oil is much lower than it used to be overall. if you look at the cost for typical airline, maybe 35% is labor. 10 to 15% is fuel. fuel would have been 20, 25% 15 or 20 years ago. good indication that oil doesn't have exactly the flieinfluence n the u.s. economy that it used to >> that is interesting thank you. let's get more reaction to the escalating tensions with iran and the fed minutes as the markets look to be shaking off the worse of it. let's bring in john augustine. he's chief investment officer.

ron, it doesn't seem the markets are selling off too sharply. that's not so severe >> 28,000, 200 point drop in the dow is a remember day for all intents and purposes we come off the low and oils come off the highs i do think there's a suspension of disbelief about the seriousness of this event. when you listen to geo strategist, they have suggested this decapitation move is a different style of assault we have seen between the united states and iran over the last years and could lead to serious consequences down the road i don't think the market can price that all in one day. we don't know what the outcome is and what is seriousness will be it looks like rather noted escalation and tensions between

the two countries. there was the shock reaction this morning even that wasn't that large. it was up 4% it'ssuggested this would have been a 10, 15, 20 dollar rally in oil and gold. it's not what we're seeing today. i don't think we're quite out of the woods with respect to geo political risks yet. >> if we look at the energy patch with some of this. we're seeing crude oil prices up 3% when you look at the energy sector not much movement down just a bit i know energy is really under performed. how does this play into the broader understanding, your understanding of the energy market and what we could be in for in 2020. >> what caught our attention was in futures market because the cash market took oil up a couple percent but the futures market did not. the futures market does not see this in oil as a long term condition where with rising oil prices, at least at this time.

it wasn't a surprise to us to see energy, as bob talked about, a lot of those stocks move lower. we might suggest if futures market is correct, lower prices in the future for crude oil that we may see some investors trim energy positions if we see a further rise in the cash price >> gus, if i can turn and talk about the fed minutes. pieces of news being digested by the market at the same time. the fed looks like taking their time to evaluate the economy but i think we would be remiss not to understand that the fed was very supportive of this market in the last year going forward, where are you expectations for the fed will they sit in neutral or are we looking at one move or more >> right now i don't expect to see the fed cut rates in 2020. monetary policy is mildly positive for growth.

mildly positive for stocks right now. there is still a great deal of uncertainty out there. it did lessen. that being said the attack in iraq has increased on certainty but i think the fed wants to see how things will play out and they are kvrtable keeping it where it is. >> maybe i missed it yesterday but not many checked that not any of the market thinkers that i spoke to yesterday mentioned iran at all. that's changed in 24 hours the question is how does the hierarchy of risks change and does the risk rating intensify marketedly because of this for the year 2020? >> it's open question. the council of foreign relations released for the year, 13 hot spots with iran being in the top five as we heard throughout the

day. i think the geopolitical risk, matrix rises and becomes a risk. political risk is slightly higher as well the hierarchy of risk moves away from fed tightening, which i think is not likely in 2020, to these other events, looelection home we still have north korea to contend with i do think this maybe a more important turning point. >> what do i do with the news, if anything? >> i think you hold steady and see where things are going there's a lot of uncertainty out there right now. i think it would be a mistake to react too quickly. i think that emergency prices are li -- energy prices are likely to stabilize. we see how things play out >> john, as we take a look at

what's going on in bond market right now, we're sitting at the 1.8 in yields. you think we're closer to 1.5 or 2.5 in 2020. >> we're going to see a build in the u.s. economy this year we're see a build in u.s. corporate profits this year from the low levels that we saw at the end of last year we would say 2.5 before 1.5 in the bond market with what we know today we just don't know if we'll have those geo political events as ron was talking about pick up or not. keeps us balanced, diversified keeps us active in our stance for our kes mcustomers. >> john, do you have any recommendations for stock picks looking to add to their portfolios >> we would say barbell. for instance, on our equity team the last issues that they hadded to the portfolios, we came back

in nvidia chip stock we came back into procter & gamble and striker health care it's a barbell condition for us. >> thank you, gentlemen. we'll leave it there for today coming up, much more reaction to the killing of iran's top military general by u.s. forces. iran promising harsh retailuati retailuation we'll look at what could happen when we return

welcome back fouer lunch global tensions are high today as iran's top military commander, general soleimani was kill ee eed last night in a u.s drone strike news sent shock waves around the world as the government promised harsh retaliation. what can we expect in the tension further escalates? gentlemen, let me just ask you of all the retaliations that the united states could have brought to bear, i'll start with you daniel, of all the retaliations

that the united states could have brought to beare, where doe this one rank in terms of pro k provocativeness and what it might bring? >> i would say it's unprecedented. the only thing that could have been more provocative if they targeted soleimani while in iraq you're killing an iranian state official he's responsible for a lot of terrorism but nonetheless, a state official the add mministration announced this is what it's done there's no denying the culpability of the united states they have been responsible for the deaths of hundreds of american soldiers and other servicemen in iraq this is another level.

>> let me ask you, john, is this what you would describe as a seismic event in the middle e t east is it fair to call it a declaration of war or number two, merely an act of war on our part >> well it's a good question in terms of the size. i think one of the things that makes it feel bigger is it's a bill of a zig from where people were expecting donald trump to zag. if you recall earlier this year he turned down an attack because he thought any loss of life following an attack on an american drone would not be proportional most people and most people would not have been able to predict a week ago when an american contractor was killed in iraq that we would end up here i think that added to the surprise element and the size and scope of the impact of this in terms of relations in the

middle east. in terms of active war versus anything along those line, i think most people would admit we have been in a proxy war with iran for a very long time. the question i think everybody needs to be spending time with is what's going to happen next >> why did this happen now i understand we've had other opportunities, potentially to take out the general >> well, to be fair we don't entirely know why this happened. according to secretary of state pompeo he said there was an imminent threat against u.s. interests in iraq. we don't have any confirmation of that. we have to take his word for it. there needs to be a lot more information made available about what was going on.

clearly the implication was that there was -- had been some tit for tat escalation and this was a way in which the united states could establish what is called escalation dominance which is there was nothing the iranians will do in response that would be as severe as this whether that's the case is a legitimate question. there's a variety of ways in iran can retaliation but if we take secretary pompeo at his word then we have to believer there was an imminent threat posed on u.s. interest in iraq we do don't have anymore information. >> how much riskier did the world just become? how much riskier have the markets become over what

happened in the last 24 hours? >> i think we'll be underpricing geo political risks for some time to come the world is at risk soleimani goes back to the 1979 revolution it's an unprecedented move on our part we haven't tried anything like this since castro maybe. that escalation is important he also while this may be a moral and tactical victory in some ways, we still don't understand the strategy behind it and whether there is a broader three dimensional chess that's likely to be played out by the u.s. military in the region with allies and support that we'll need in that situation. >> and our alliances aren't what they used to be, let us point

out. what would a proportional response on the part of iran look like and the same question for you daniel after john finishes, what would it look like and do you expect iran to retaliation against installation, infrastructure or american people and personnel? >> well, there's a lot of options that iran has. the united states has allies and partners all over the region it has military forces, it has military installations iran has a vast cyber capability that's been used to strike american military as well as american civilian targets in the past i think the question we need to think about is the trump administration surprised a lot of people in washington with

what they have done now. the question is what the iran will do next but what the united states will do to counter that reaction that's one of things we have probably spent little less time worrying about and to a degree it's a big additional factor of risk one of the things we have not been able to get our head around is how donald trump has been making decisions here and what his next move will be. >> daniel, your thoughts on how iran is likely to retaliate. >> you asked what would be the parallel to the killing of soleimani is it would be killing mike pence it would be targeting the number two in the united states that's not obviously going to happen i don't think you'll see retaliation that that way. what you're going to see iran's power projection is much greater in the region than elsewhere their cyber capabilities is significant. i think you'll see a full spectrum response by iran. they will target facilities in the persian gulf, u.s. assets in

iraq with the idea of anything short of a full blown conventional war which is the one thing that neither the trump administration nor the iranian government seems to want. i would add seconding john's point. the true unknown is how prepared the administration is for whatever iran's counter moves are. it's worth bearing in mind that at this point we still don't have -- the trump administration still doesn't have a confirmed director of national intelligence there hasn't been a dni for close to six months at this point. there's a way in which this is happened and escalated where the trump administration national security team is still in flux >> ron, final thought. >> i think there are parts we haven't talked about which is china and russia are not just tacid backers of iran.

they informed china after the air strike whether or not we have properly prepared our allies and adversaries is an open question. it could affect our relationship with china it could disrupt some of these other negotiations that haven't been factored in quite yet >> thank you very much we appreciate it. coming up, oil is moving higher today with this escalation iran koucould mean f market ♪ ♪ ♪

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actions speak louder than words. she was a school teacher. 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 fpower lunch. aing fig in bank of america and rbc capital getting more bullish even with the shares less than 1%. let's bring in trading nation

team to discuss it bill, obviously an incredibly strong up trend. it's one year to the day since they had a terrible profit warning. the stock fell in the 140s it's up more than 100% the only question is has it gone too far to the upside? >> not yet i have a price target of 324 out there for apple. i noted that here last week. this chart is really great what i'm also looking at is the adx. it shows how strongly a chart is trending whether directionally up or down peaked last year in december it broke out of a trend line on the adx. i think there's room to extend i think apple 324 is my target it's a nice floor of 255 >> chad, i mean, the strength in apple really reflects investors flocking toa handle of very large, very, i guess, well

regarded tech companies that have these long term cash flows. people think they will be there forever. how would you approach the group? >> this out performance over the last 12 months for the tech sector up 50%, valuations are stretched with a forward looking multiple for xlk of about 22 times. we will be either neutral to under weight the group we believe with global growth, then we would stay shy away. if you're looking for a value companies within the tech sector, look no further than oracle and cisco it's remarkably cheap based off expected and embedded growth rates. >> all right apple and microsoft about 40% of that xlk helping the valuation get stretch of the upside. thanks very much more more trading nation head to

our website or follow us on twitter. back over to you thank you very much. ahead, oil is higher today really modestly so as tensions between iran and the u.s. flair up we'll bring you the closing numbers, next. plus to ipo or not unicorns like uber and lyft had a tough time in 2019 will this year mark a turn around or be more of the same. we're in final stretch of the cnbc stock draft nick the kick has taken the lead we'll take a look at the stocks that got him there and talk to him personally all of this when power lunch returns.

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welcome back here is your cnbc news update this hour.

the u.s. says it's sending nearly 3,000 more army troops to the mideast in the aftermath of the killing of iran's top general soleimani. they are in addition to about 700 soldiers who were deployed to kuwait earlier this week. new york city major bill de blasio says the nypd is increasing security at critical points throughout the city while there are no specific threats, the city remains the top terror target in the country. >> the fact is we're dealing this morning with a reality we've not faced previously it's very, very important for every one to understand that and to understand that in these changing circumstances city of new york and the nypd are acting immediate immediate immediately to ensure that new yorkers are safe a man stabbed two people, one fatally inside a restaurant during a violent string of attacks at a shopping plaza in austin, texas. the attacks began with an

assault at a coffee shop and ended with the suspect leaping off the roof police don't know what provoked the attacks. the suspect was taken to a local hospital you're up to date. that's the news update back to you. >> thank you we're going to take a look at where we stand now. we're on the lows of the day but stocks still under pressure. all four of the indices are low with the dow down 200 points tesla hitting an all time high after reporting 367,000 cars last year finally, lamb potatoes the company raising its guidance the stock on pace to close at a

record high at 93.37 or above. >> what day for potato company the oil market is closing for the day. >> military actions escalate west texas intermediate closing at an 8 month high. we'll watch the energy space as we head into final hour of trading. back over do you >> all right thank you very much. how much higher can oil go as tensions rise in the middle

east welcome to both you have bob, let me start with you are you in any sense surprised that oil has not reacted more dramatically today than it has we had the biggest spike in mid-september. that quickly unwound as the damage was seen to be light and reversible while we have to wait to see after iran completes the mourning period and conducts its retaliation, i think the market has taken the view that iran is not insane enough to open a war.

i think the market is taking it in stride. >> are you surprised that oil has not reacting more dramatically than it did and to follow on what bob just said, what kind of iranian retaliatio would cause oil to react dramatical dramatically >> i think the market is probably not pricing in the realities of what could go wrong adequately the reasons for that are fundamental in nature. there's about 2.9 billion barrels in inventories about where it was last november you've got 1.1 million barrels per day of supply ahead of demand in first half of the year, by our projection. you've got 3.1 million barrels per day. two-thirds of which is in saudi. maybe not so spare when you think about what we're really talking about here, the kinds of escalations that fall outside of betting on iranian

restraint and u.s. rationality those kinds of escalations get into targets that could be producing targets in the region. targets like the strait of hormuz, oil transit routes doesn't like iran is ready to target u.s. troops as bob said but cyber attacks can be disabling and disabling to the operations and business systems of producers all those things can move barrels off the market >> we were discussing a bit in our last several seg mentsegmens what does this move signal to some of our adversaries. we talked about russia but what about north korea. >> i think they're dialing down a bit their willingness to take on donald trump. i think everybody was surprised that donald trump personally authorized the assassination of soleimani. until then donald trump has been

showing a marked unwillingness to use military force and to confront iran and so forth i think china is sitting back and loving it. they love the idea the united states getting em meshed in the quagmire i think kim jong-un may have thoughts about provoking donald trump now. he acted out of character and everyone is taking that into account. >> he's staked his political on appeal he was going to go for peace and prosperity let's talk about what this could mean in terms of our allies whether it's great britain or berlin or paris or brussels and the possible impact that these actions could have on iran pulling further away from the nuclear agreement and reinvigorating its nuclear

program. >> well, iran has threatened in november that it would take yet another step back fromprehensiv. the deal the u.s. with drew from in 2018. that's due to happen based on their calendar tomorrow. maybe it won't be tomorrow but maybe it will be soon. it will test the europeans it's been a stance that reflects the vulnerabilities they have not just to missiles but in iran's missile range but also migrants tlrs a rel test coming in up does it push europe closer to the u.s. position. that's a calculation we'll have to be making when they contemplate what to do next. >> in other words the europeans might pull out of the jcpop or

whatever the acronym is. >> they could. it's a long slow walk for them >> kevin, thanks very much happy new year and best to you >> thank you 2019 was supposed to be the year of the big ipo but the results didn't match up that hype add some big name unicorns flopped. power lunch will be right back we'll ask that question. legendary terrain in telluride,

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2019 wads a rough yes a rour big unicorns that went public. stocks did out perform the

overall s&p. what should we expect from the ipo market now in 2020 i will start with you. we gave a very quick run down of what we saw in the ipo market in 2019 a lot of ripple effects to be certain. what carries over into 2020? some disappointment or euphoria about what's to come >> i think overall there will be some good take aways into 2020 i think the marbket will be more rational i think uber and lyft while disappointing post-ipo overall i think they did a favor to the market. i think the market now expects good companies that have a path to profitability, growth at any cost is not given. you cannot do that you have any new company coming into the market has to check two boxes which is they have a path

to profitability even if they are not profitable, that's fine and a corporate structure has to be very good. you can't just throw anything out there. i think all those things are very good. i think it will rationalize the market >> i think that seems to make sense. a path to profitability doesn't seem to ridiculous to expect that and expect that soon. kathy, there a lot of names that may be coming. what would you be most anticipating at this point in 20 for the ipos >> well, we're going to look for quality over quantity. we'd like to see another year just like we finished up this year where investors do well with ipos and the market is discerning about valuation and quality. that's going to be the way every deal will be looked at we are going to have a lot of choices. t there are a huge number of kpaekpae companies. not only these large backed yun corresponden -- unicorns but we're seeing

major packed companies like reynolds consumer and all eyes are going to be on airbnb. one of the most highly valued unicorns that we're expecting to see come to market early this year and possibly try to come in an unconventional way using direct listing >> you mentioned governance one of the things you want to drill on how does an investor do that >> read the s1 and make sure it's not disproportionate than what it should be. preferably close it 1 to 1 that's ideal that's what you want it has to be accountability. make sure there's no self-dealing going on or appearance of self-dealing in terms of the structure i think it has to be some checks and balances you need to read the s1.

make sure it's proper. >> it's clean. >> kathy you mentioned direct listing. do you think we'll see much more of that in 2020 than we have seen in the past >> well, we see a big push for direct listings because there are so many companies that are locked into the private market that are challenged to get public liquidity and the direct listings appears to be a panacea for these investors, these vcs and private investors because they are thinking we can get the highest price possible and we don't need to have locked up shares we can sell our shares right away insiders can sell at the highest price possible what they are missing is there's another side to the market where investors need to make money and the two direct listings, the large ones we have seen both spotify and slack have not performed well we think it may not be the most beneficial kind of structure

in particular, we believe the lock up is a constructive design because investors. they don't want to see insiders selling before they've seen how the insiders are -- how the company is going to do in terms of the made, in their couple of quarterly announcements. so we want to see shares held back until investors see the performance of the company so that is going to be very interesting dynamic in the ipo market in 2020 >> we're going to leave it there, but hopefully you'll keep helping us watch this as we move forward, because the year is just beginning santosh, kathy, thank you. with a few months left, nick lowry is making a bid to become a back-to-back champion, but noah siis on his heels. and nick theic kk's pix for the nfl playoffs which kick off tomorrow stay with us

all right, just four more weeks, believe it or not, until we crown our 2019 stock draft champion the former nfl kicker, nick lowry, who is the reigning champ, is currently on top once again, up more than 40%,

followed by new york mets pitcher, noah syndergaard and the mentalist ohs pearlman with us now, nick lowry. the stock draft ends at the market close four short weeks from today one of the things that is the lesson of this year's draft to me, nick, is the following two years ago, charles way, new york giants football player, had amd as his number one pick it was not the year for amd. it's sometimes not so much what you buy, but when you buy it you got amd right on the timing as well as the company >> well, most people would have said to not do it two years in a row. but i really actually love seeing what's going on with oil and gas and the worry about that with the assassination of the iranian general, because it brings to the point that ai and

data analytics are the new industry, the new industrial revolution 4.0 is no longer about gold and oil it's about amd, microsoft, nvidia, microprocessing is the engine that will drive the ability of companies, first of all, to identify the patterns of behavior, to please their clients, and then to improve productivity, right in the moment that's so important. and that's only going to get bigger >> that's an interesting way to think about it ie, data is the commodity or are the commodity and the companies that learn how to use the data, would be the oil companies and the processors are the ones who can profit from it let's turn, if we might, to the thing that is most immediate and that is the nfl playoffs you were the greatest kicker in the history of the kansas citi chie chiefs i'm going to bet you like the chiefs to move through the first

round and maybe even all the way. >> it's all about, just like timing, as referred to with stocks, it's about the stock of the kansas citi chiefs playing so well with their defense finally coming to the fore i like them. lamar jackson is great patrick holmes and lamar jackson are the amd and nvidia of the nfl. and i think it's probably going to be new orleans over san francisco, just because new orleans has been robbed, so much emotionally, they're going to use that and they have more experience in the big games. and frankly, drew brees, it's his time to be appreciated the way he deserves to be. >> interesting call there. so we're looking for new orleans, kansas city super bowl nick, thanks very much appreciate it. >> and i want to thank toby smith from transformty research, my partner, because he's really helped, as well. >> fantastic and we'll see you soon continued good luck. check,lee!s xt pas ine at leaf blowers.

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find the best instructors in the world, and tie it all together with a world-class software experience. we ended up creating, as you all know, so much more. peloton is truly a category of one and we're just getting started. now, let's do this. together, we are going further than we ever thought possible. so we had some interesting dueling analyst notes on "l" brands, tyler. so bank of america puts out a note suggesting it was a buy, which was somewhat surprising. the stock has really been beaten up and "l" brands is mainly composed now of bath and body works and victoria's secret. so the stock shot up, up 7.6%. jeffrey's says afterwards, now that the stock is up so much,

you should probably sell so a dueling analyst note to combat his colleague or adversary, however you want to put it >> a friendly rival. i would just say, watch the "closing bell," because the next hour may be very, very telling, as we head into the weekend, conventional wisdom may be that people don't want to go into the weekend long, we shall see it has been relatively a modest response to the events overnight. >> thanks for watching "power lunch. >> "closing bell" right now. >> courtney, tyler, thank you very much. welcome to the "closing bell," everyone i'm wilfred frost here at the ca caterpillar post today, selling off today in light of the assassination of that top iranian military official. safe haven assets, oil prices, they are soaring stocks, though, are selling off. we're down just over half a percent on the s&p 500 59 minutes left of the session >> and i'm morgan brennan in for sara eisen let's look at what is driving the action today stocks falling from record highs after that military strike in iraq that ratcheted up tension in the middle east plus, a big slowdown in th