look how wide that is. >> that is a thick tie >> happy birthday. >> they come in fast and furious as you see and get faster and faster, thank you. >> happy birthday to make sure you join us tomorrow "squawk on the street" begins right now. ♪ ♪ ♪ i've been feeling it since 1966 man ♪ ♪ might be over there but the feeling's still ♪ good morning and welcome to "squawk on the street," i'm david faber along with, ajim crr and carl has the morning off futures as we get ready to start the trading for this week, half hour from now, you can see we are headed for what is going to be a down open, and that's where our road map starts as well as you might expect on the geopolitical risk for stocks futures as you just saw pointing to what would be a second straight drop at the open, plus oil on the rise, gold also nears a seven-year high, this of

course as tensions in the middle east are very high also new chapter for u.s. cosmetics giant avon it's not part of the brazilian personal care group nutura the group's new ceo will join us later this hour. stocks are extending a sell-off, oil and gold prices continue to climb. this is iran and the white house, trade threats following of course the u.s. air strike that killed iran's top commander. jim, happy new year. >> happy new year. >> nice to see you, my friend. >> good to see you, buddy, way too long >> i missed you. i know you feel the same but i haven't heard you opine on this market and what risk there is in the geopolitics, in the back-and-forth, our viewers i'm sure are familiar with the president's tweets over the last let's call it 24 to 48 hours, sort of saying we've identified 52 sites that we would take action against if in fact you do something, and also notifying the congress, he said, as well,

if iran should strike any u.s. person or target we'd quickly and fully strike back, perhaps in a disproportionate manner what do you make of all of it when it comes to the lens through which our viewers need to understand and view things, namely what it means for the economy and the stock market, more specifically. >> all right, the economy, not much you know how i always say that what does this have to do with the price-to-earnings ratio of bristol-mye bristol-myers. in terms of timing, david, why aren't the futures down more i think they should be because we haven't seen what promises to be retaliation unless iran is -- i don't think iran is a paper tiger, but do they not have to do something after all the bluster? >> i don't know. and that of course continues to be a question as to how and when they will respond. it doesn't mean they have to immediately. will it be through cyber, of course, in which the iranians are adept. >> i've been working with that >> other asymmetrical ways that we talk about, as you read some of the other things that the presidenttweeted as well

>> look, i had crowdstrike on last friday, that's the natural one. they know more than anyone when it comes to global threats that they indicated clearly this would be a way iran could respond. do i want to buy a lot of stocks right now? listening to what the guy says pretty smart fella >> mr. kerr, you had him on "mad money" and as jim points out, cyber is certainly one of the key areas people are watching closely including the homeland security dhs, department of homeland security as well. here he is from last friday. >> we determine nation state adversaries are constantly attacking our corporations and critical infrastructure 24 by 7:00 and most people don't understand the extend of these attacks and the damage they can actually inflict >> right that's the world we live in. >> right >> in fact, i made this point, jim, which is that if you talk to ceos, you do the same, in fact sometimes we do it

together they will talk about the first threat they see, the most significant threat they worry about is cyber >> absolutely. >> and broadly and for their own companies as well. >> iran plays in it, north korea, china plays in it have to expect iran to step up david, how about this theory >> yep >> maybe people are more sanguine because of the biden factor, that if there are people who are worried about big insecurity, because of iran, does it not make the seasoned democrat the obvious leader versus trump >> very much unclear, biden supported the invasion of iraq >> i'm saying he's a known quantity >> right >> there's enough for me to believe that, this is going to sound a little strange but i think iran wants biden look, i know that -- >> we are now officially in an election year. >> you're now finally -- now we're allowed to talk about it >> we are getting really close

to the iowa caucuses all that said, when it comes to this and what we can expect or not and listen to all of the experts that will come on various places, jim, i mean, the price of oil is one place you can see it >> long-term still no movement >> no? >> no. >> and then you seem to think that there is more risk in this market than is currently reflected by the move that we've seen >> up 30% last year, okay. david, if you told me that there could be something errant with a couple of major companies i'd say let's take profits are people that brain dead it's up huge don't you think some funds are going to use this as an excuse >> yes, but you know the geopolitical -- geopolitics rarely seems to take a drew dent out of things, unless you're talking about all-out war. >> and even then >> even then >> even then people say -- can we be so -- so panglassiossian

it doesn't matter? no something matters. >> of course it matters does it matter -- again, we're cnbc. does it matter to the markets, to the way that ceos go about making decisions does it matter >> okay, i think you have to expect that there will be people who say there's too much uncertainty, so maybe they'll cut back on capital expenditures that's the usual rap >> right >> i'm tired of that rap >> yes >> people buy the drug stocks. >> if you get some debilitating cyber attack from iran, one would expect that that would certainly resonate or reverb rate >> but how much war talk did you hear this weekend? >> the search for the draft people that skyrocketed, will there be a draft it's frightening in some ways, without a doubt. but meanwhile, we have a decent economy.

we've got a ten-year below 180 >> i was looking at eli lilly versus the ten-year. that's what people do. they look at merck, look at pfizer they like ab v merging with allen. that's what they do. when i say they, i'm talking about big money. let's hold off on boeing but buy the drug stocks. the only reason i'm saying buy, you could expect the futures to be down huge there's a lot of people feel like we're going to war. >> there are and a lot of concern about it >> it's so garden variety. david, we wouldn't be down this much on downgraded we have one downgrade of apple >> gervais i think downgraded an until the golden globes. >> he cut his price target he's more sophisticated than that >> he may be let's get more on the tensions of course between the u.s. and iran. for that we go to nbc news tehran's bureau chief

correspondent ali arouzi in tehran good morning >> reporter: good morning. that's right qasem soleimani's procession took place this morning. it was a huge affair it was punctuated by a lot of passion, a lot of anger amongst the crowds who were screaming for revenge. they were chanting "death to america" throughout the procession when iran's supreme leader ayatollah ali khamenei red the prayers for soleimani his voice was trembling, he was crying these are scenes never been seen here before in iran, and a lot of people have interpreted that as a how harsh he wants to exact his revenge on the united states for taking out his right-hand man, and we have been hearing a lot of calls for revenge in iran, from the very top, from

the ery, from the supreme leader to the man who has stepped out of the shadows and replaced qasem soleimani, a man called general ghani he says the only revenge that would suit iran is to expel all u.s. troops from this region now, iran has a whole host of choices available to it for revenge, but they're biding their time for the iranians revenge right now is probably a dish best served cold. iranians don't want to probably get involved in a conventional war with the united states, because they're no match for the might of the military that the u.s. has, but iran has mastered its skills in asymmetrical warfare. qasem soleimani had built up a very powerful network of militias scattered across this entire region that are all very close to u.s. assets, and the

iranians have said time and time again that u.s. bases are within immediate striking distance of their own forces and of their proxies, and i was listening to you guys talk a little earlier cyber attacks is something iran have also honed their skills on. they may not be as sophisticated as the chinese or the russians, but they're not far off. they are quite technically savvy when it comes to cyber technology so they are sitting here, they are mulling all of their options, but restraint does not seem to be in the appetite here. when i was at the funeral this morning, there was a reformist member of parliament walking through the crowds and hardline elements in that crowd were screaming at him, jeering at him, swearing at him, just because he had a softer tone there was another member of parliament here that had called for restraint and his office was

attacked by hardliners today so a lot of tension and a lot of passion here in iran right now >> ali arouzi in the iranian capital of course monitoring the continued protests >> trump's not going anywhere, is he? >> say again >> trump's not pulling anybody out. >> no, we've added, we called up 3,500 troops >> he didn't care what the iraqi congress is doing. >> they want him to pay for the -- >> mainstream media is acting as if these are separate countries, that iran is separate from iraq. iraq is now a client state of iran let's call it as we see it >> that is the outcome of our invasion of iraq >> we can't reinstate a sunni regime >> thousands of men, spent trillions of dollars on. at the end of the day -- >> we created a client state for our worst enemy. >> which goes to foreign policy in the united states which we did not have time to sit and hear and discuss in terms of all the mistakes that have been made

and whether more mistakes are being made >> maybe that's the most important takeaway we're sitting here feeling, we really screwed up, our country is in trouble, blah, blah, blah. no we made some mistakes that played out really badly that obviously, do you think that anyone -- it almost seems like iran was waiting for this, they were so ready. iraq was so ready that we come in today and we say all right, retaliation. here it comes. don't buy yet? i don't know >> all right well, there it is. we're looking at futures gone up >> david, why aren't we down more >> i don't have an answer for you. >> the answer is we ought to be down more. >> we'll get back to stocks and specific ones and talk to resources harold hamm the latest on the oil markets >> is he ever bearish? >> no, not really. >> well, good. >> things are always good. >> always good >> even when he had to write the $999 million check >> even better up next though --

>> been there. >> $999 million? >> divide it by -- >> stop it >> i brought it up counting down to the opening bell another look at futures as you saw we are going to open lower a lot more "squawk on the street" straight from where we are right now, which is the new york stock exchange.

all right, welcome back to "squawk on the street. we got started with trading at the nyc 15 minutes from now. let's talk more about stocks this morning nokia is the name that has appeared for you >> right >> why >> this point has been a disaster why is it a disaster because they're competing, a high price not as good 5g. but today raymond james says it's finally right david, the rationale i love. darkest before dawn. yeah, that's absolutely true some people say darkest before over >> you look at a 20-year on this, when they were dominant, do you remember at the turn of the century. >> oh, my gosh >> before apple had an iphone obviously. look at that >> this is when we thought it

was a telco company and when we realized it was a river in finland. now what matters to me, david, they actually say good cash flow, after ceasing dividend, they like that they take the estimates down they say the business isn't that good buy! i don't know >> i don't know. >> i think that people, david, in the end, they love $3 stock and that's why i mentioned it. they'll be all over it david, i love days like today. people come out, recommend this. i was waiting for a tesla, you know hold or buy >> upgrade >> pretty much boring. i don't know, it is a great spec if you truly believe they have some technology, because the world wants an alternative to huawei >> we're not talking about handsets any long per >> infra 5g 5g by the way, just so we're sure, an unstoppable force in an era where iran hates us. doesn't matter, 5g trumps that

oops, trump. >> 5g we'll be spending a lot of time talking about >> tonight i'm doing a series of things that can't be stopped by iran >> you like that >> you like that just thought of it well something else that can't be stopped is this show. we got a lot more. by the way, check us out on our podcasts, and listen to the opening bell hour of "squawk on the street. >> i got to lose weight, i got to do this weight watchers, planet fitness i have planet fitness on tonight! >> good. you looked at your picture and decided? >> yes i looked thinner before the soft pretzels >> we'll be right back a lot more "squawk on the street" straight ahead on the market, 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.

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you're watching "squawk on the street." we'll have the opening bell six minutes from now which gives us plenty of time to talk about what we can expect when we begin trading, something i like to turn to jim and ask him, when our colleague carl is not here, is what you see is the key to this market. so one of thestocks at least that will dictate kind of broader trading other than its own. >> i'm going to use citi >> citi? >> i could have easily go to apple, needham took it from strong buy no citi. deutsche bank goes buy to hold goldman goes buy to conviction buy. so let's talk about what the market really likes. if the market is really negative, then citi will be off

from the deutsche bank call and if the market is sanguine as it appears, then maybe citi is the one to buy it's cheap it's been the best performer in the group. >> coming off the year with a great performance. >> great performance mike corback doing a great job i could have default with apple. that would have been easy. i like the citi call as a way to figure out what the market's going to do. if citi is down a lot, it says there's no reward here and there's too much risk. >> citi figures prominently in another story, one i've been following closely, xerox's continued attempts to right now to get hewlett-packard to the negotiating tables is really what it amounts to significant development this morning and the reason i mentioned citi is because it is the lead in what is a $24 billion financing package that xerox has secured. >> right >> to back its bid right now remember $22 a share, $17 of

that is in cash. you need to raise debt to pay that for hp. now, $22, is that really going to be enough to sway hp shareholders probably not not what one would expect, that is why they've got $24 billion in financing five bucks a share of course is in stock we'll see where and if they end up at a higher number. right now they're trying to get hp to the negotiating table. they have the financing. they are paying commitment fees, real money for it, which is always a question mark in battles like this, oftentimes the company that is sought will say hey, right now used to be postage stamp money because all you've done is send us a letter, these days don't have to send that, send it electronically >> one is an $8 billion company, one is a $20 billion plus. >> yes >> how can an $8 billion company buy a $20 billion company? is that possible >> it is it would be eis enshortly a

leverage buyout. you are using in part the cash flow being acquired from hp to repay the leverage being taken on to buy it at the same time, if shareholders of hp, and this is the key here, right, remember john byzantine, talks with the shareholders at hp, if there is a willingness to take a premium in cash and roughly 48% of the combined company because they believe he'll run it better than current management, jim, could you get it done. you can get it done. will hp come to the tanl very much unclear. what are they hearing from their shareholder base what are other directors as well beyond their ceo such as chip berg >> how about chip? >> or com bennett, important members of the board >> is chip distracted? >> i don't know. >> huge niner fan, going all the way. against baltimore. >> those are questions

the time is ticking away here, because the window by which xerox can act to put up a slate of directors to challenge the current slate for the annual meeting that will take place later this year, it will close january 25 it's been open as of christmas here's what they had to say "we have always maintained that our propolesal is not subject to a financing contingency but in order to remove any doubt we have maintained commitments, not subject to any due diligence or anything else," and you see "citi, mizuho and bank of america" behind that these commitments extend beyond the shareholder meeting. they are subject only to the usual material adverse change clauses that you get but nothing beyond that. so they're paying real money upon their financing they seem to be serious. >> is there a bigger read through here what the heck are they doing getting these finances so easily does that worry you? >> no, not necessarily i mean, the company will be -- the question will it really be

investment grade can it maintain an investment grade rating if it's getting up toward five times? that's a reasonable question by the way, people close to xerox indicate to me they believe they have other ability to raise money as well don't forget darwin deason and carl icahn say they'll roll their equity into a new hp xerox, if it occurs. is there an ability to do some preferred or other type of financing as well as they continue to try to raise money in need of potentially a higher price. but right now, you've only got one party at the table the other one not willing to give diligence to xerox. >> right >> and not willing to talk simply saying it's not enough. will this change matters we'll see. >> when is the ceo or the chairman from hewlett-packard going to come out and say hey, listen [ cheers and applause we're not interested in banking. we'll buy you? >> we don't know this makes it less likely we'll see a reverse, reverse takeover,

one that seems more likely, frankly, given the respective sizes of the two companies >> let's go inside the board at high pressure. [ bell ringingreasonin hp. [ bell ringing ] are they scared? >> i don't know. there is the opening bell for this monday, of course you can see our real time exchange, back at our headquarters, we're going to have a lot more red on that board at the s&p 500 here at the big board we mentioned earlier, insurance and company celebrating its ipo. we'll speak to roberto marquez, the ceo, a little while from now. at the nasdaq, ww international, formerly weight watchers doing the honors mindy grossman was on with the "squawk" crew earlier this morning. we see broadly speaking -- >> gold, gold, gold. when i see this endless buying of gold, it makes me think for the first time, maybe people are

just saying i am really fearful. it's not just treasuries the gold buying has been endless, david, over and over and over there are only a few growth gold companies. main one is nico eagle, that's the one to buy but it's relentless and feels like gold wants to go to 1700, 1800. that would be very negative >> yes, gold and oil and rates are certainly three key things that we're watching. oil is up. gold is up rates are down a bit as well >> but what's interesting, there was a piece this morning, mike, chappell trust owns schlumberger there was a negative piece, it's not happening. estimates are too high with oil up the way it is, schlumberger is down dramatically from the times. long turf. oil is not going up. it's staying in the low 50s. so the short term it's up big.

long-term, no real change and that's because american companies keep dumping on the futures, because they have liquidity problems so i cannot -- >> you should explain that to people >> okay, so there's a way, if you're an american oil company >> we are the largest single producer of oil in the world >> we're the sling producer which is why oil hasn't gone to $80, $09 if you're an american company your balance sheet is most likely stretched the only way to convince wall street that you're really in okay shape is to sell forward and get the cash in, meaning look, i'll make a promise to deliver oil out five years from now if you give us money that then makes their balance sheets look better, and then that makes it so they're not going to lose their credit grade, but it also makes them pathetic >> makes them pathetic, why? >> because there's no earnings growth >> right >> they've sold their earnings growth even an outfit like pioneer, which i like so much, great grower >> although they could say we've hedged ourselves effectively

maybe we can bring the cost of production even lower. >> well, they are. the ring count comes out friday and it's been going down, down, down production hasn't gone down because of productivity. david, in 1990, schlumberger would be at 80 it's at 40 telling. >> yes >> we'll talk harold hamm. he's always positive >> chevron is up 15 cents, david. i mean, come on. it should be up $15. what the heck? mike ware is good, good ceo. >> now it's really just as much about the permitting as -- permian as anything else >> pipelines not that positive could you imagine? we've got the renaissance of american oil and no one's making any money off that isn't that incredible?

>> that's got to change, doesn't it >> eh. too many companies, too much money. >> you get the consolidation that's required and/or -- >> i've been waiting for the consolidation. i've been waiting for pipelines to come by wmb, etp has done some combining, but it just hasn't paid off i'm discouraged. >> shares of apple are still up for the year a little more than half of 1%. >> the ecosystem >> i did reference earlier ricky gervais kiddingly. he did have some rather negative things to say about the company, when he opened up the golden globes last night, with a bit of a oast, as i said, tearing in to newcomers to the hollywood scene, including of course the streaming services, such as apple. take a listen. >> apple rolled into the tv game

with a morning show, a superb drama, yeah. [ cheers and applause a superb drama about the importance of dignity and doing the right thing made by a company that runs sweatshops in china. so the companies you work for, i bleen unbelievable, apple, amazon, disney if isis started a streaming service, you'd call your agent, wouldn't you so if you do win an award tonight, don't use it as a platform to make a political speech, right? you're in no position to lecture the public about anything. >> also sacha baron cohen, you pointed out any number of times is very important speech, roughly a month ago or so. >> yes >> he made a very brief but significant reference to mark zuckerberg take a listen. >> the hero of this next movie is a naive, misguided child who spreads nazi propaganda and only

has imaginary friends. his name is mark zuckerberg. [ laughter ] sorry. so this is an old intro for "the social mnetwork. i'm actually talking about jo jo rabbit >> wow, how hated. >> say it again? >> overly hated. >> meanwhile -- last year ended of all the analysts, uniformly were positive on facebook's business they don't believe it will face significant press or significant enough to hurt its business in any number of areas, despite this being an election year, despite the fact we can fully expect it will be under the microscope in terms of influence and how it is influenced and the free speech question that he is raising there in terms of how they treat their platform and the willingness to allow anybody to more or less say anything >> well, look, i mean facebook's been under fire, the stock's done great >> right >> one of the reasons is like it's beginning to lose its lustre i listened to the jokes and all

right, enough already. tim cook, do you think anyone pays people higher in china? >> no, that's unfair >> pay them $18 an hour? listen, i'm going right to the president and saying, president xi, listen, you guys are paying five bucks an hour i'm going to pay $18 we're now at the point where it's not funny that's stupid. it's unfair. >> the description of zuckerberg was kind of funny. come on, it was. i mean -- it's never funny when you're talking about the holocaust but otherwise. nazi is not funny. we can agree >> that's my point you don't reference it i mean people outside. >> he's not trying to be funny he's trying to point to the fact that he believes this is a platform that allows hatred to be spewed by all and everywhere. >> no disagreement >> and absolutely being used >> no gis agreemedisagreement >> with significant members of consequences members of congress on both

sides tend to agree. the question is whether anything will come of it. >> david, how much money does congress have under management versus the buyers? listen, i know people say stalin didn't say how many divisions does the pope have i think he did, to churchill but david, alphabet's up, okay it's up. because congress doesn't have a lot of money i am saying that this is all in a vacuum we're about to go into earnings season and who is going to have the best earnings year over year fang fang >> most likely >> yes >> most likely >> there is another, retail is supposed to get clobbered here, right? is it supposed to be clobbered >> every year. >> it's not going down >> every year. parts of retail get clobbered and parts of as we pointed out did extraordinarily well last year >> most of the people at home are watching this saying does the market not care at all about what's happening in iraq it's a sanguine reaction, barely

down >> we have the s&p down 0.44% right now after a lot of back-and-forth, that certainly didn't do anything to dissuade anybody from feeling that we're getting closer to conflict, not further away from it >> is there anyone at home who feels that iran isn't going to do anything? >> i don't know. i'm sure there are people who feel that way. >> market says they're not >> who believe that they will not respond. >> but every mainstream media says they will and the market's saying forget about it just go buy. w where is the fear? shouldn't there be more fear >> right >> good point. >> jim, eight an interesting point you make let's move on to some other news not that much corporate news this morning we have yum buying a small burger chain >> oh! >> habit these guys -- >> i had the good fortune to speak to david gibbs this morning, new ceo this is one of the lifestyle brands there are three in new jersey,

you and i have to go but we never do anything anyweiays. >> no, we talk about it. >> it's a test case. maybe we ought to do this with burgers. i'm a beyond meat guy if it comes to burgers, which is doing quite well but this is one of the chains that yum is so big, they can experiment. maybe the franchisees say yes. david yum versus mcdonald's. are they having as good a time as the top at yum? did you not feel like that back in your 20s mcdonald's would have been the place to work? come on! >> for those who haven't read it, jim is referencing a well-reported story in the "wall street journal" this morning that indicates the level of partying that was taking place in the upper ranks of mcdonald's including of course former ceo steve easterbrook. >> and chipotle. >> fraterizinizing and heavy

touching against top executives, it was like "madmen" up there. >> the stock is up the stock is up! what the heck. >> still the '60s back in mcdonald's >> the stock is up not a stock you'd normally sell. >> the new ceo has changed that apparently did he get rid of the cash bar i don't know >> why did we not know about this party why do i ping up the paper and find out the party culture did you and i -- one of the largest fast food companies in the world having a blast and we didn't know? >> jim, i didn't nobody mentioned that to me, or to you >> they needed tony west >> why >> tony west come in to uber, uber had that culture. >> he reined it in >> yes he caught it he killed it >> where is our cash bar >> david -- [ cheers and applause >> let's hit boeing, as we hear some cheers here as well

jim, the story of course this he may clip to raise additional financing. running back running back not that they need it but it wouldn't be bad to happen. >> greg spiff interim ceo, there isn't anyone i know who didn't feel he came through with flying colors >> hard to imagine that anybody comes through it with flying colors dave calhoun takes over on the 13th, a week from today. >> to me, the question is the dividend you can't assure, it would be foolish. there's a board. the board might say listen, everything's in play here. so people who are buying the stock have to be concerned that that yield -- >> is there. if something does occur with the dividend, what kind of downside do you think there is in the stock? it's hard to say >> stock's barely down stock isn't where it was in august of last year. i think there's just more downside i don't know, the institutions want this one, too the institutions are rabid dogs about this they want to buy it.

>> look into the out years, they don't care what's going to happen >> david, i want to know where the party is >> i'll let you know later there's no party culture here at cnbc or -- >> no, we go home and work >> i'm going to stop right there. i have been doing this for so long a reason, i know when to stop talking bob pisani, you start talking. tell us what is going on >> a modest downside day not dramatically so. standard risk off. energy upside, semis, banks, transports down. retail a little bit weaker these are all natural high sensitivity stocks to anything rated at global developments a lot of people discussing what happens when you have the kinds of events, like the situation in the middle east, where the iranian official was assassinated the important thing here is markets tend to view these events as fairly short term unless they result in something more serious like a recession.

that doesn't happen. cfr a note out over the weekend. the bo tom happens 22 days after the event. the s&p 500 is usually down about 5%, and typically about six weeks later it recoups most of the losses. this is not invariably true but most events don't have long-term lasting economic impacts and that's what matters to the stock market on retail we see weakness overall. bed bath & beyond are doing a big sale, lease back half of their properties most retailers don't own the real estate that they have other than that, it would be a nice idea, very limited. the same situation applies for 2020, as it does in 2019, and 2018 we're facing a real problem with the consumer strong but little or negative sales growth, you can't open a lot more stores and there's no path to growth. so very few companies can increase the earnings without growing the stores we know companies that can do that, the small handful of groups, the targets, the roth stores, the tjx if you put them up and bed, bath & beyond.

those groups are very rare and why there's a small group of retail winners and most of them are overall losers finally just want to point out the santa claus rally did happen we got a modest move to the upside, not much as we usually do, 1.3% the important thing is the january barometer as goes january, so goes the year, very good accuracy rate 75%, accuracy in the last 60 years jim, back to you >> all right, here is a wild one. natura, br zalecosmets could br company. closing the acquisition of avon, the fourth largest pure play i beauty and joining us now on a first on cnbc interview is executive chairman roberto marquez. i got to tell you, i spend a lot of time trying to understand the transaction. explain it >> all right, so jim, thank you for having us. david, thanks for having us. >> sure. >> this is an exciting moment for us this combination to your point

makes us the fourth largest beauty group in the world. what is exciting is this notion we have this amazing power to reach over 100 countries with amazing iconic brands that share some very important things in common >> that's avon is the international. people should know that. >> correct >> not the domestic, not u.s >> correct the international piece of avon, which is over 100 countries, plus the body shop, that is also present in over 70 countries, 3,000 stores, and then we have esop an australia brand out of melbourne and natura, actually started in brazil and with a strong presence in latin america. >> and that's ntco for those who want to do it. hand it over to david. i've had the robin hood people on a couple times, when they have money >> right >> when you talk with them, the way that the millenials invest is the first thing i want to know is sustainability if it's good, then they want to know how the company is doing. you have a particular brand of

sustainability, talk to us about big. >> we are proud that we are one of the first public traded companies certify as a b corps, means the company's balance, economic, social and environmental aspects equal, so we call the triple bottom line it's not just along economics. we think about naturo and cowith avon, women empowerment, talking about breast cancer, talking about fighting against domestic violence, then together with the body shop, that talks about non-animal testing, in cosmetics, and we have that now across all the brands in the group, that's very relevant for the millenials >> roberto, when our viewers hear the name avon, they think about a company that failed, it failed to innovate it failed to kind of move ahead, and it was bought for a very small price, compared to what it had been what are you doing to

reinvigorate avon in i know the international businesses we're the key for it but nonetheless we're in a digital age now >> right >> people are not going door to door to sell these products. what can we expect >> right, very good question, david. listen, you know, avon, we've been looking at avon for many, many years, right, because it's such an iconic brand it has a household penetration that is incredible it's unparalleled to any brand and it's a democratic brand. it's a brand that combines great quality at an affordable price and we have an army of representatives that combined with natura over 6.4 million consultants represented. here is the thing. you know, the direct selling is transforming itself. what we are really excited about is those consultants representatives are becoming micro influencers. they are using social media, instagram, whatsapp, youtube, facebook to connect with the consumers, to connect with their customers. to think about that the avon, it's evolving from what i used

to call the ding dong to click click. you know, in a high touch, high tech way, in 6 billion microinfluence every microinfluencers, we are reaching over 200 million consumers on a daily basis through relationship selling >> and what about the retails aspengt, a aaspect and body shop. >> the body shop is more retail but it's interesting that the body shop also has direct selling in two markets, uk and australia. so as you think about this multichannel opportunity, we think about retail, physical presence, online, relationship selling, and multiple brands, you know, the body shop, avon, and natura brand, a brand to your point, jim, very much in to milleni millenials, buiobiodiversity, resources minerals from the amazon forest. we have naturo outside of latin

america, leveraging the avon social platform. >> look, i'vegot to tell you, think there are going to be a lot of millenials who will just go buy it. because they say you know what this guy cares about the earth,t >> all right thank you. really great >> thank you i would just finish saying, just being the best beauty company in the world is not the aspiration we want to be which is to be the best beauty company for the world. >> thank you >> congrats on the listing today. >> thank you >> "squawk on the street" will be right back.

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all right. crude of course, you can see up 63.51 right now. perhaps a move somewhat tempered

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what's on "mad money." >> axon and planet fitness we got to get in shape the end of the year. >> yes we do all right. >> good to have you back >> thanks. >> facebook is up. what do i have to do to throw at facebook >> we'll be talking about that this year. >> i don't think he's horrible my question is judgment. still to come on some of these issues not necessarily running the business, lulu lemon founder chip wilson will talk about the changing retail giinof n das we are at the benng aewecade. keep it here

♪ good monday morning. welcome back to "squawk on the street." i'm david faber with courtney regan here at post nine live from the new york stock exchange let's give you a look at the markets a half hour into trading you see it coming off the lows the s&p 500 down a little more than one-quarter of 1%

the dow loss is a bit more than that right now nasdaq right in line with the spee that is where our road map begins on those markets. the stocks are under pressure of course over the rising tensions in the middle east how are the geo political head winds going to be impacting your portfolio? oil prices rising and gold hitting a seven-year high. the former energy secretary is with us. last year was certainly a year for dramatic ceo departures lululemon founder and former ceo chip wilson will join us to discuss that overall and as well the road ahead for retail. we're going to begin this morning with that mounting tension between the u.s. and iran we'll go outside the white house for the latest >> reporter: good morning, david. president trump taking to twitter within the past couple minutes to respond to the iranian declaration over the weekend that they are no longer going to abide by a core piece of the iranian nuclear deal the president taking to twitter this morning to say iran will never have a nuclear weapon in all caps the president emphasizing

the point there. the iranian action clearly in response to the u.s. decision last week to kill a key iranian general in baghdad the president returning to the white house last night from his vacation in mar-a-lago, florida sitting down with some reporters on airforce one to discuss his thinking on where all of this is heading. the president saying here that he may be inclined to release some of the intelligence that led to his decision to take that strike in baghdad last week. he's also saying that he's threatening sanctions on iraq if the iraqi government responds to its parliament's vote to push u.s. troops out of that country. the president saying ultimately that the sanctions against iraq could be even greater than the sanctions against iran he also says that the united states will not leave iraq even if the government requests it unless the country is willing to repay billions for an air base there that was constructed by the united states.

and, he says, he is willing to target iranian cultural sites in retaliation for any iranian action that might come in the wake of the strike on the iranian general. that decision to target cultural sites is controversial in wake of the geneva convention prohibition on targeting of cultural sites the president, though, suggesting that the united states won't be constrained in any response he says there are 52 sites the united states has picked out and targeted and is ready to go with retaliation for any iranian action that's where we begin today. they are saying it's a normal day at the white house today the president doesn't have any public events on his schedule so we don't expect to see him on camera any time soon, david. >> okay. thank you eamon. the market is down about a half percent on the dow. for more on the impact from the weekend's events we are joined by our guests. thank you, ladies, for being with us. are you surprised at the market's reaction, relatively

complacent i know we had a sell-off on friday as well after the events overseas and the middle east on thursday night but a half percent doesn't feel like much for what feels like a very serious geo political event. >> not particularly. i think none of us wanted to start the year with this as an overhang but we do view it as a bump in the road and flare-up for the base case we get back to what we were focusing on earnings, accommodate if fed and where earnings end up. you have a typical reaction from safe haven assets especially in a time where there is not a particular opportunity cost for holding commodities with real rates being at zero and a banner year next year, but the market continues to force us all into risk assets. >> we mentioned at the top of the show gold is hitting around seven-year highs looked at again presumably as a safe haven in a day when we have a lot of turmoil is that something you would be interested in adding to portfolios at this point >> we always believe you should

have a part of your portfolio in gold some private clients do that through actual physical ownership. some do it through gold bugs but this, at this point, especially, with a year that we think is going to be dominated by geo political tensions, u.s. election, etcetera, even when we have this behind us, gold has a lot of room to move up we still think it has gone past the 1552 number it didn't seem to be able to get through in september of last year and we just see everything from the u.s. dollar starting to weaken and become a tail wind continuing to support it >> we've seen oil move up, gold move up, the yield on the ten-year move down a bit is that move done in your opinion in terms of a response at least to where we stand with tensions with iran >> well, it depends on what we get next i agree i think the reaction in ft markets so far has been muted but we don't know what is coming next for us to determine whether treasures keep rallying we need to see what the response is going to be from iran. we haven't seen that yet

markets actually have been here in the past. you think about the situation with north korea which at some point looked like we were about to go off the cliff and yet both sides managed to rein us back from actually going into full escalation i think at this point it is reasonable the markets are not over reacting until we know what's next. i agree with the assessment you do need to have some sort of protection in portfolios at this point. we have a lot ahead of us in 2020 we, personally, like having treasuries in our portfolio for the reasons we think growth is starting to look marginally better but having that protection in the portfolio makes sense as it acts as a hedge. >> had a pretty good year last year do you expect that kind of gain this year as well? >> i don't see why not it would be harder to repeat the magnitude of the rally but i think we can still see treasuries doing okay this year. we think first half of the year will be dominated by the

improvement in global growth and that might cap how much of a rally we see i think the second half of the year some of the tail winds we've come into will be fading and we actually think there is a very real possibility we could test the growth of 2020. >> what do you think of global growth and how it would play into perhaps emerging markets or perhaps some of the more china directed plays now that we have a phase one deal we think that will be signed here shortly? >> so let's assume the phase one deal does go through relatively limited, relatively simple in terms of theissues it addresses. emerging markets under performed last year by about 10% a meaningful amount. we see the headline risk it's obviously there geo politics are huge. we expected a strengthening u.s. dollar it didn't happen i think the tail winds are going to support emerging markets. emerging markets usually trade about a 30% discount to developed markets. excuse me, 20% they are now trading at a 30%

discount the same kind of sentiment we watch in the u.s. in terms of manufacturing and consumer sentiment is starting to bottom there. that is where we see especially in asia given that asia represents 70% of a lot of the emerging market capitalization we do see growth, we do see movement there and we actually added about 3% to portfolios middle of last month like relatively in line with the trade deal and we see that going forward now, it is going to be more volatile than let's say staying defensive in the u.s. but it's a much longer-term play. while we expect relatively sort of mediated returns in the u.s. in developed markets we do see a potential for out performance there. >> we've talked a bit about the fed's balance sheet, particularly from october toward the end of the year and how it seemed to equate with as well the rise in the equity markets do you expect this nonquantitative easing though, we all kind of refer to it as that, will continue and will it impact the ek wilty market >> it certainly trades like qe

and to the extent there is a clear correlation between the number of reserves in the system and how risk assets are trading we expect that will be a very strong technical support to the markets up until q2 where the fed has said the program is due to run but coupled with the fundamental improvement we think we'll be generally supportive of risk assets barring an escalation on geo politics >> thank you for joining us here today. when we come back right here former energy secretary ernests munoz will join us broadly speaking about the energy markets as well as tensions with iran later the always outspoken chip wilson the founder of lululemon will join us in just a few moments. don't go anywhere. quk t see iback after this legendary terrain in telluride,

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tensions escalate and prices continue to climb. in the middle east after the killing of general soleimani by u.s. forces last week. joining us is former u.s. secretary of energy ernest muniz now ceo of the nuclear threat initiative seems like a good place to start. has the threat when it comes to nuclear in particular given the iranians abandoning any stop of their program, stoppage of their program, has it increased? >> well, clearly, their step away from the nuclear constraints is unhelpful but i

do want to emphasize what was actually announced in particular the foreign minister of iran noted two things that are important. one, that all the steps they've taken, including the new ones, are reversible, so they have left that off ramp for getting back to full implementation, but even more important in my view is we've always said right from the beginning that the most important part of the agreement is the verification measures that give confidence to the international community and he made it clear that they intend to maintain their new relationship with the international inspectors those inspectors have, in turn, said that up to now at least they have been true to their word of course, we'll see what happens going forward, but the verification is very, very important to make sure no matter what they do on the nuclear front, it is not diverted to a

nuclear weapons program. >> right so do you agree or disagree with, that we're in sort of uncharted territory though as it goes in terms of the relationship between the u.s. and iran and, frankly, the iranian nuclear deal so to speak, that we're no longer part of but they seem to be honoring previously >> yes, we are going into a period of obviously tremendous uncertainty. we already have been in a period of great uncertainty following the u.s. withdrawal as iran has taken, i have to say, up to now, measured steps away from the implementation but the, clearly, we don't really know what the reaction or the response will be to the soleimani killing. we don't know how that will impact something of great relevance in this program, energy prices going forward.

we don't know if iraq will follow through on requiring u.s. troops to leave that country, which would of course create another tremendous instability not to mention the fact that we are, frankly, a counterweight in iraq to iranian influence there. and a key to addressing isis so we have a lot of uncertainties here, and until, frankly, as the joint -- the chairman of our joint chiefs of staff, general milley, has said the ball is in a certain sense in iran's court and we will not have these uncertainties resolved certainly until we see what their response actually is. >> so i know you said we don't know what their response is. what could it be are we looking at something like a cyber attack or military action what should we be prepared for >> well, i think you're implying exactly the right thing, that

they have many, many options in terms of what they could do. it could be something of course using their militias in various countries, including iraq. it could be a cyber attack one of the outcomes that would be greatly in their geo political benefit would be, in fact, if the united states is driven out of iraq and/or has its prerogatives severely curtailed because of this. so there are lots of different dimensions and, by the way, there is no -- it's also possible that their responses could be outside the region entirely and another one, of course, would be the possibility of tensions and actions arising again involving israel so there are just many, many options and at least to my

knowledge we really don't have a very good handle on which triggers might be pulled >> get back to the energy markets for a moment oil has obviously moved up though not that much it's a different world than it was ten years ago let alone 20 as you well know, secretary, given we are now the swing producer when it comes to production of oil as the largest single producer in the world are you surprised at the muted response in the oil markets or is that something you would have expected >> well, i think the size of the response, i think, can be reasonably expected at least up to now it reflects the uncertainty, but we also understand that if for example strong actions were taken, a new tanker war, for example, in the gulf, the hurt would go around including to iran that does continue to evade some of the oil sanctions

iraq would be severely hit in terms of oil revenue in addition to saudi arabia, emirates, and the like so there would be implications that in some sense cut both ways but it's also the case we should remember that if disruptions are relatively modest, you know, a couple million barrels a day, through the international energy agency and our own strategic petroleum reserve, we certainly could fill such a gap for a short amount of time however, if there is really a major stoppage of oil flow out of the gulf, that would clearly send oil prices very, very high in a short time. so, once again, uncertainty reflected in the move up of oil prices, and i might add i would say gold prices as well, but a wait-and-see attitude i think still applies.

>> secretary, what do you make of the signal that this assassination may send to some of our other adversaries, north korea, russia, about our president and administration willing to take pretty decisive action without a lot of warning? >> well, for one thing, i think the evolution of how the administration presents to congress and presents publicly the rationale for action being taken at this time will be very important. because that could be a distinction between an understandable military action and an impulsive one so i think there's a lot of uncertainty on this side as well until the administration provides more of a justification. however, what you've raised is that we can't forget that as serious as this is we have other very important issues to deal with, with russia, with north

korea, all issues in which our relationship to our allies is absolutely critical. obviously, we all know for many reasons, including with our nato allies, the activities over the last few years have severely impacted the relationship with our allies we need to pay attention to those and keep them in good form >> secretary muniz we'll leave it there for now but certainly appreciate you joining us. thank you. >> thank you as we go to break, take a look at the biggest laggards on the dow with stocks extending their sell-off boeing down more than 1.3% and american express down about 1%. moresqwkn e re" en "ua othstetwh we return. and etfs are commission-free. and when you open a new brokerage account, your cash is automatically invested at a great rate. that's why fidelity leads the industry in value while our competition continues to talk. ♪ talk, talk

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it's time now for etf spotlight taking a look at the spider s&p ticker xtn now down about 1.5% here, transport down over a percent on pace for their worst day in over a month. trading below the 50-day moving

average. pulling the sector lower, landstar, jb hunt, matson and expeditors international volumes are expected to remain weak beyond current estimates. following the down grade of csx last month, down graded to neutral. national rail down 1.4%. csx down 1% and kansas city down about 1% >> millionaires are flocking to the south and not just to get away from the cold weather we have the why in that story and i can only guess >> it's our favorite topic, david. taxes. >> yes, taxes. >> florida attracted more new residents in 2018 and more new income than any other state and new york were the biggest loser. florida netted $16 billion in adjusted gross income last year up 3% according to the irs making it the top gainer for six years. arizona ranked a distant second followed by texas and then north carolina the biggest loser was new york,

which saw $10 billion in income leave the state while california lost $8 billion followed by illinois and new jersey. 2018 was the first year the new tax law took effect that caps state and local tax deductions at $10,000 but it may be too early to determine the impact because migration out of new york actually slowed in 2018 and connecticut had the lowest income loss in four years. now, a bigger reason may be people are leaving new york for affordability. the average incomes of households leaving was $90,000 and the number one destination for people leaving new york city was not florida but new jersey so we've got kind of a barbell thing happening. a lot of people leaving to new jersey for affordability and then you do have those at the top although smaller numbers but bigger dollars leaving for florida. so a lot of people are leaving except for those of us with jobs that keep us in new york city. >> i was going to say are these people actually moving everything, their lives, businesses, or just sort of

shifting their permanent residence? >> so the two kinds of people leaving are younger people that are just entering the work force and don't have families, homes, they can just pick up and leave because it's gotten really expensive and then those sort of retirees or millionaire, billionaire business owners who have the flexibility or they're retired and can move to florida. again, that sort of middle group, they have incomes, schools here, jobs, they can't transport, they have mortgages and therefore they're not leaving. >> for the ultra rich who leave, hedge fund managers i'm very familiar with for example and you know. >> yes. >> they are not leaving -- first of all they get the other deduction we always talk about so much but they're leaving for the estate taxes >> that's right. that is what they called the golden ticket in florida is to get the exemption, get permission to leave new york and new york to say, yes, you are no longer a resident, and the estate tax you're talking about a billion dollars in wealth the income tax doesn't matter it's that estate tax which is the big bite out of your overall wealth >> we still need to keep a close eye on this in terms of states that have high tax rates, blue

states who got hurt badly by the lack of a deduction and what it means for their ability to deliver services and whether there will be significant deficits >> absolutely. we are starting new york this year with a $6 billion deficit so stay tuned the next few months rather than lowering taxes which we thought would happen because of salt we'll see higher taxes and a move to tax the wealthy and real estate even more in 2020 >> you'll have a lot of work to do to follow all of this, robert thank you for being here with us today. >> say it's not so >> i know. when we come back new details on the carlos ghosn escape mystery we'll fill you in next when "squawk on the street" returns (upbeat music)

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welcome back, everyone i'm sue herera with your update

at this hour the daughter of qasem soleimani warning families will spend their days waiting for the death of their loved ones. she made the comment during a funeral ceremony for her father who was killed in a u.s. drone strike last week harvey weinstein arriving at a new york court where his lawyers and a judge are handling the final preparations for his trial on sexual assault charges. jury selection is scheduled to start this week. weinstein has pled not guilty to all of the charges firefighters from the u.s. arriving in sydney to assist their australian colleagues battling the wildfires that have ravaged that country at least 25 people have been killed and 2,000 homes destroyed by the blazes, which have scorched an area twice the size of maryland. >> the current situation is extreme. there are a lot of people that have been at it since september and october through november and people are tired so we're here to actually relieve and try to lend a hand and give those folks a rest that

they need. it is an extreme situation >> we wish them the best of luck that is the news update for this hour i'll send it back downtown to you, david >> thank you, sue. new details are emerging on the escape from japan of carlos ghosn the former nissan croeo reportedly taking a bullet train to osaka before fleeing the country. japan says it still plans to pursue prosecution of ghosn despite his escape pulitzer prize winning columnist and author, jim stewart joining us nice to see you. >> nice to see you >> for a man who writes books this one is tailor made. >> and screenplay. >> yes >> this is the biggest escape since el chappo tunnelling out of mexico. one thing that really strikes me, you talk about the rule of law or whatever, everybody is equal before the law, with kind of an asterisk if you have enough money, you

can do things. i mean, nobody has put a price tag yet on this escapade, but there is, you know, this high level security consultant. he's got assistance. there are eight to ten people involved in the aircraft, there are private planes how much did this thing cost a lot. the average person could not orchestrate this kind of international escapade it reminded me a little bit of, you know, the ongoing epstein mystery. again, here we've got a $500 million guy locked up under supposedly tight scrutiny and he slips all the controls and escaped in his own way, which is committing suicide, nothing i would want to do, but he still circumvented what was supposed to be very top security things and i'm sure -- i don't know the details but, again, you have a rich person the rules didn't quite apply. >> no. he managed -- his team found an airport where a private plane would have been able to leave from and they weren't searching the bags that were too large and

he got into the musical case >> just amazing. >> had the breathing holes and managed to get to turkey >> a great story another thing i wonder about, the reaction from japan has been kind of astounding first it was like nothing. i realize they were having the new year's holiday or whatever but still. can you imagine the outcry if that happened in this country? and then even now it is a very kind of tepid, well, we'll look into it. what it's like, how many days have gone by? you know, i think various media reported they hadn't even called the airport security people to get any sense of what happened, which makes me kind of wonder, does japan really care that he slipped out of there >> maybe they're embarrassed >> i was just wondering. what does this say for japan's image when it comes to doing business in the first place because they went after mr. ghosn so harshly does this sort of tarnish the image of anyone wanting to do business in japan? >> well, yeah. i think japan has two black eyes over all of this the scrutiny of the justice system there, which frankly i hadn't seen done in quite

sometime, but it was not a flattering portrait. i have not heard a single person come to me and say, oh, ghosn should have stayed there and faced the music. he would have gotten a fair trial. no one has said that to me so i think the overall sense of the justice system there has been tarnished and then the security system, the idea that the guy, you. >> under supposedly super high level scrutiny, house arrest, that he, like, gets spirited out of there in some kind of box is just, you know, incredible that makes the whole security structure there look really bad. i mean, again, their heads would be rolling if this happened in this country i'm sure. and maybe they will there but the japanese i think have a lot of explaining to do. but absolutely, their international reputation for law, justice, rule of law has been significantly tarnished >> or people learned about it when they weren't really aware of it in terms of it's different than here in the states. >> again, i think it is going to make anyone think, you know,

japan, certainly not china but if you want to do business there, have a japanese partner, you have to wonder about just how fair is that arrangement going to end up being? >> jim, also want your thoughts on a story we've talked a lot about. there is another report out today that new york state officials offered amazon an additional $800 million in incentives in order to win that highly sought after hq2 which of course they did win only then for amazon to pull out after local opposition it didn't really speak for the larger population here what do you make of these kinds of incentives? >> well, frankly, i applaud them these people act -- the anti-amazon crowd acts like the state of new york and the city of new york was writing a check or handing buckets of cash over to amazon. that's not how these things work these were tax offsets if they generated a lot of revenue for the state. and that's a simple economic calculation. yes it involves projections but you do the math and, you know, new york state and the city would have come out way ahead if

they had done this it is not a giveaway to amazon these in particular, one part that caught my eye, was they were going to provide a training center near the campus and they were going to recruit new york city and state residents, many of them, you know, under privileged kids needing education, train them in these specialized skills, and then help pay their salaries when amazon hired them initially. that is an investment i think is fantastic. it's investing in the youth of the state and the city and their futures and they are going to be much higher income generators down the road paying income tax as a result of it. none of that money was going directly into amazon's pocket. yet you could still call it an incentive. what really bothers me is how misunderstood this is. i think some cases deliberately so >> right the aoc has to understand how this works yet she continues to present it as though it was a handout, to your point, not as you say a reduction in taxes

paid off of what were already going to be paid if they were in fact meeting those levels. >> exactly if you want to have a debate about the power of amazon, the presence of amazon, should it be here or not, i'm sure there are -- >> or should anybody offer any incentives whatsoever? >> exactly let's have that debate by the way, it's not just new york these incentives, it is not a vacuum people are saying oh, they're coming anyway. they are not they have 1500 people. they do have to have a presence in new york city >> yes, adding 1500 people not 25,000 or the 40,000 who would potentially have been employed as well as a result of a campus in a different part of the city. >> that is another gross misstatement it's not the same thing. so i just -- let's just be honest about it and focus on the facts as opposed to trying to distort what these things really are. >> that said, amazon is extraordinarily aggressive in seeking this kind of aid they always are in terms of paying taxes in various states they've always been very aggressive it does differ from the likes of an alphabet which has never sought that kind of thing and

has thousands of employees in new york >> amazon did it in a highly public way they had a nationwide beauty contest with everybody competing. but is that amazon's fault you know, they're only respond tog the incentives people are putting out there. it takes two parties amazon can't do this on their own. amazon, i think, recognizes that most people see their presence as highly desirable, highly stimulative, it creates jobs, creates buzz, attracts other collateral usinesses you know, these other places, nobody is criticizing newark for offering $7 billion in incentives and i think good for them >> yep >> look at the economic equation it makes sense for both sides. great. >> $6 billion budget deficit for new york state robert frank just pointed out, not going to have thoserevenue coming in. jim, thank you >> thank you >> jim stewart still to come here on "squawk on the street" lululemon founder chip wilson, that stock up more than 300% in the last five years with sofi, get your credit cards right

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welcome back the past decade bringing major shifts in the retail landscape with the e-commerce boom causing many traditional stores to close their doors. one company that seemed to adapt is lululemon with the brand up more than 2,000% since 2010. joining us is lululemon founder and former ceo chip wilson thank you for being here with us today. i know you are no longer involved with the company as far as a board member or executive but you are still i believe the largest single shareholder with more than 9% of shares i imagine you are probably pretty happy with the performance, with shares up about 81% over the past year what do you make of his current strategy >> yes, i think calvin is the right guy at the right time. i mean, it's so nice to have an

athlete and i think it says a lot about setting the culture. i think the strategy they have revolving around men's and china is strong. it's the right story there's a lot of growth there. it is about ten years later than i would have liked to have seen it but it has, i think what has fallen out of the whole thing is that the business model that lululemon has, has not been replicated by anybody else i think having 70% of all apparel purchases and i think maybe closer to that in shoes being, coming from women, i think lululemon still has a lot of runway. >> would you be buying more shares here, adding to your position >> no, i've been selling, because i've been investing in anta in china. i think it's a four way race

going forward with nike and adidas, anta, and lululemon. anta, you know, the nike of china with 11,000 stores of their own and 1500 vertical stores, so their muscle is strong and i think it's kind of the hidden tiger that a lot of people in north america don't know about >> you mentioned nike but you did not mention under armour both having new ceos, patrick frisk starting as ceo of under armour on january 1st and nike's john donahoe moving in on january 13th under armour not a competitor here to lululemon? >> no, i don't -- i think under armour kind of lost it many years ago. i think they got stuck in the sports authority bankruptcy and nike, i think, changed its business model to move away from wholesale. i think with under armour moving into kohl's and being more of a

discounter hitting a very skinny market i would say of 14 to 18-year-old boys is not big enough to take the market in the future >> it sounds like you are still fairly bullish on the future of athleisure with those four companies that you named what else do you think will define retail as we look forward this year and maybe even this decade do you foresee many more store closure programs, are we getting closer to an equilibrium there what are your expectations for retail going forward here? >> well, i'm extrapolating into a couple things i'm seeing one is a new store by lululemon in chicago i think it's about 16,000 square feet about three stories. and it has -- it is able to show all of the lululemon product on top of having a major cafe with organic foods, etcetera, and also three studios now, what i see there is one

bigger store, rather than multiple smaller stores. and in my area of the beach area of vancouver i've seen where now you have a starbucks where they have shut down three or four of the smaller stores and opened up one larger store i think as we move more toward experiential, more to this could be the next form of department store, where a single brand can be bigger and supply more. and i'm not real sure where it's headed but i think it is really worth looking at >> lululemon also experimenting with a membership model which is something, too, that rh has done, which just reminded me as you were talking about experiential stores, because of the rh stores that have those caves, people come, they sit on the furniture, sort of lounge for a long time, is that also a model that you think is very valuable going forward if you can get customers to truly

become members i mean, you are literally buying into the brand longer term in that way >> well, i know calvin mcdonald came from sfora and i know they were very successful with it i imagine he has taken the best of that model and brought it into lululemon i have not had experience with it enough to understand the nuances behind the mirror, i guess. so i'm probably not the right person to give an intelligent answer on that >> well, i think you are the right person to talk about founders and founder led companies. you of course founded lululemon and led it for sometime as we discussed in the introduction. in the past year we saw some pretty big departures and i'm thinking adam newman departing from we work ahead of vipo it seems as if there have been some lessons to be learned by both the market and founder led companies. what is your assessment of all of that? >> well, you know, i think it's the entrepreneur versus the

operator the entrepreneur is someone who can start things, has a deep, deep knowledge of the sub conscious psychology of the customer and i think as a company gets larger, that unquantifiable part of it gets lost and the operators who can prove by metrics start to take over especially as that is really all that wall street really understands. so i think it's a natural evolution. some entrepreneurs can make it through the next level and some can't. you know, some entrepreneurs get very frustrated with the processes specially if they, you know, are under the scrutiny of quarterly earnings and the world changes when you're public >> thinking about retail leadership going forward it seems to me ceos have to have a new tool kit, tools we didn't necessarily need as much in

previous decades they need to really understand technology and how that enables the consumer experience. do you think we'll see a new type of retail ceo taking over in the decade to come? >> i mean, yes obviously, technology is a massive part of it i think it's really deciding who you want as your ceo are they a visionary do they really understand the sub conscious of the customer? if you've got that type of person and it's their job really then to hire the i.t. or the technology expert to sit next to them, i would suspect that that person that you're talking about is going to be the coo i would be very -- i'd be -- i'm always very wary when you have an operator, somebody who is not -- not doing what the customer is doing in their day-to-day life running the company. >> and that is probably why you think calvin mcdonald makes good fit for ceo because he is an

athlete and obviously lululemon does cater to athletes just lastly here, i understand you usually set some goals for yourself what is your current 2020 goal for the year >> to walk 16 days on the el da camino trail in spain and portugal >> thank you very much, chip wilson, for being here with us today on "squawk on the street." >> thank you vsm >> over the john ford with a look at what's coming up on "squawk alley. >> streaming should be on the brain the morning after the golden globes with apple, amazon, netflix, others betting heavily on that. we'll look at how that factors into the year coming up on "squawk alley. knowing we're prepared for the future. surprise! we renovated the guest room, so you can live with us. oooh, well... i'm good at my condo.

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welcome back to "squawk on the street." stocks are lower to start the day but almost flat, highs of the session right now. we see investors turning towards some of the more defensive utility names which are generally more dividend focused and stable in a market downturn. you have dominion, eversource paying yields between 2.5% to 4%

at this stage. even the largest etf that tracks, xlu is yielding nearly 3% at this stage ten-year government no yields on the u.s. sitting around 1.75%. keep an eye on that dynamic. out to rick santelli with the "santelli exchange." >> i'd like to welcome my first guest of 2020, andy brenner, national alliant securities. let's get right into it. obviously the iranian situation is big in the news but it isn't big news in the markets. 187 we closed thursday after the news, but right before the news came out, 157 in the two-year. down three more basis points in twos, eight more in tens why is the market nonplussed by what many in the newspapers are calling a wild hornet's nest >> we've had this hornet's nest year in, year out. it shows up every couple years with problems in the middle east the market is really focusing on

it for a very short time the reality is, most people don't realize that ten-years opened up early thursday morning at 194 and moved all the way down to 175, 176, 179, 180 right now. i think the big surprise this year is going to be higher rates and a steeper curve. the same people that told us in 2018 that 2019 was going to have the ten-year at 3% are the same people that are telling us this year it's going to be 180. i think the big surprise is going to be much higher yields we see ten-years maybe going to 220 with twos, tens breaking the 35 they were at in late december to maybe out to 70 we're looking for a much higher yield, but it's not going to happen today we have to get through this middle eastern turmoil or as you said hornet's nest >> really, you've nailed it. we are so compressed in yields across the globe, whether some countries have negative yields,

that the notion of being able to push yields much lower is difficult even with a geopolitical situation, which leads me to the next big obstacle, central banks, big balance sheets andy, we're getting close to levels we haven't seen that were the top of the iceberg $4.5 trillion your final thoughts as to how we are going to see these central banks deal with any surprise slowness in 2020 >> you hit it right on the point. since september, the fed has been growing their balance sheet at an annualized 30% rate. that can't continue. the repo situation shoufld have been handled differently that will end sometime in the first quarter and we think things get hairier there, including credit spreads widening, higher interest rates, steeper yield curve, but not an equity correction right away, but that will happen

>> andy brenner, thank you for joining me today david faber, back to you >> okay. thank you, rick santelli when we come back right here, we'll have an exclusive interview with harold hamm, the executive chairman of continental recourses. we'll talk about oilri pces and more "squawk alley" up next don't go anywhere.

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no one cares about movies anymore. no one goes to cinema or watches network tv everyone's watching netflix. this show should just be me coming out going well done, netflix, you win everything. good night >> well, you're not watching netflix. good morning it's 8:00 a.m. at netflix headquarters in kra yecaliforni 11:00 a.m. on wall street. "squawk alley" is live.