♪ >> good morning. welcome to "squawk box" on cnbc. i'm becky quick along with joe and andrew you will see things are off to a relatively flat start. dow futures are down, s&p up by less than a point and nasdaq indicated up by 11 points. this comes after a big day for the markets yesterday where you saw a really weak start. down was down 216 points for the day. we ended at the closing yesterday up about 68 points at the high s&p closed up by 11 points and the nasdaq up by 50 points that's the biggest interaday come back we've seen in three

months let's take a look at the treasury markets watching the 10-year back up this morning above 1.8 at 1.811. >> investor tensions remain on iran even with that snap back yesterday. tensions mounting with the u.s general qassem soleimani was buried in his home town of kerman officials have threatened retaliation against the u.s. for the targeted killing the defense secretary has made no decision about withdrawing troops from iraq another surreal day with that letter that came out from a general that was not signed. later, they came out and said that was a mistake wasn't signed, poorly woorded

wasn't in its final form but to let you know, we are withdrawing from iraq. >> let me start with that. flip the order here and start with that letter we spent several very confusing hours at the white house as officials scramble to figure out what the heck is going on after a marine corps general in iraq sent a letter in which he appeared to suggest that in response to the iraqi parliament vote to remove u.s. troops or force u.s. troops out of iraq that the u.s. military would begin repositioning its forces out of iraq. the general wrote as requested by the iraqi parliament and prime minister, we'll reposition our course of the coming days and weeks to prepare for onward

movement asking folks at the white house that got shrugs and head scratches. it turns out, the letter was a mistake. it should never have been sent and was just a draft and the united states is not considering repositioning forces out of iraq but that gave us a sense of the confusion of where things stand in the wake of this killing of the iranian general as you mentioned at the top a lot of question about what is going to happen next last night, the department of homeland security issuing a warning of americans take a look at some of the items they are warning americans about. iranian response could include disruptive and destructive cyber operations, engage in cyber-enabled threat use ieds against american targets, conduct attacks and similar attacks in the homeland or they could use unmanned

aircraft systems or drones against hardened and soft targets. a range of options there as some scarey scenarios are laid out. the challenge for the united states when you look at the laundry list, how do you defend against all of that everywhere in the world in the homeland and overseas and what action does the military actually think they are contemplating. all of that unknown. >> i'm with a couple of really excellent journalists. doesn't "the new york times"s or the "washington post" have stories for something that has happened that hasn't happened yet. >> and occasionally those stories get published by mistake. >> does the government -- do they say, god, let's start

preparing this >> sure. if it is your job to move the troops, you've got to contemplate all scenarios. you would imagine they do have draft language sitting around. but how it got sent to the iraqis is a good question. it is one thing to type it up and another thing to send it >> it wasn't snal mail >> i doubt it. >> what circulated on social media is a document that looked very much like someone had taken a picture of a physical letter >> it could have been printed out. it was not signed. >> for years, what is this when a company reports eight hours before it is supposed to >> the troubling thing is for the kurds who did not vote the sunnis in the parliament

that did not vote and would like to see the united states stay there. this raises the terms that u.s. has to be considering all options at this point. >> you went with the singular. brinkmanship >> i go with brinksman ship. >> i got a guy here who edits the oxford dictionary. >> joe is clever about equating it with a prewritten obituary. the thing is it was sent >> there have been deaths sent when a guy is still alive. it happened from mark twain. >> usually from their own system where they sent it to -- >> are you getting to that the

entire trump administration is income date. get it out there you are right. another huge f-up from these guys they have a football and ready to cause a nuclear war at any moment >> officials had no idea what this is about. two officials said this was a doctored document that was put on line as disinformation. >> the general came back downstairs after he read this himself. >> really confusing. >> can i just tell you, everybody makes mistakes >> but we are now at a level -- >> not you, joe. other people >> not me. anyway. >> in the meantime, wolf is here this morning goldman sach has a reputation for being sek secrative.

>> they are reorganizing their reporting structure. here is how things used to be. trading, investment banking, management and lending will change to the following. global markets which is a change in name. investment banking remains asset management will be a new sub heading and consumer and wealth management. >> the big shake-up here which had been seen in the latter years and a little bit of a black box that wasn't given the same level is being shut down. the investing part is going into asset management and the lending part would be split out among the relative segments. if it was lending to an

individual, it would fall. the timing comes a week after the report more importantly ahead of the big investor day ahead of the month as we continue to get more guidance i think we will get a lot more of what andrew said is transparency going forward including by segment and targets for each segment in that space perhaps we weren't expecting them to go farther at the moment, they do trade at the low price to book one of many tactics that they hope. >> they hope by showing more, it will be more appealing >> sure. that is something they already tried to do themselves >> weren't you saying that on the harvey weinstein case. >> by being more transparent >> also a focus of where david

and his team think the growth is to come going forward. they are not changing the total revenue that will add up to the same thing, this will allow them to set up their targets to see where their company is going we'll see if this generates the high going forward the two big futures is one can they settle all to suggest that is close two is this invested at the end of the month if they sorted both of those, you could see the multiple jump by 10% or 15% and match more of what morgan stanley is as you get to the end of the month. >> what is the down side on the other end. i see the down side. >> of the organization in terms of where the stock is sitting right now. everyone thinks if all these

things happened, it would go up. >> right listen, the start of last year, the question mark over the stock was almost purely on one ndb we've had delays on this that has worried people that the structure due to be laid out was going to underwell it was more tilted towards question marks as opposed to one. if all gets sorted, we won't know which one is weighing on the other. the strategy is more important than being settled >> thank you, sir. thank you for waking up early. coming up, elon musk celebrating tesla deliveries stock is celebrating, share

holders are celebrating. up $$458 closing in on $100 billion what he announced at the event overnight. getting comfortable with some of those moves. we'll show you the box that carlos ghosn supposedly hid in we finally got a shot of it. the middle with you, ♪ ♪ no one likes to feel stuck, boxed in, or held back. especially by something like your cloud. it's a problem. but the ibm cloud is different. it's open and flexible enough to manage all your apps and data securely, anywhere, across all your clouds. so it can help take on anything from rebooking flights on the fly, to restocking shelves on demand, without getting in your way.

♪ ♪

some things are too important to do yourself. ♪ get customized security with 24/7 monitoring from xfinity home. awarded the best professionally installed system by cnet. simple. easy. awesome. call, click or visit a store today.

welcome back elon musk celebrated the company has began deliveries the plant will make future tesla models at the factory in addition to the model 3 and model y. he hopes to have research and design facilities in china clearly mr. musk having a good day. japan has asked lebanon for help with carlos ghosn prosecutors in tokyo have obtained arrest warrants for his

wife on suspicion that she gave false testimony. he is set to hold a news conference tomorrow saying his escape from japan means he can now communicate freely he has said he didn't flee justice, he fled injustice the wall street journal says this is the box he was loaded in meant for movement of audio equipment. the cost of flights was $350,000. >> this whole plan must have cost millions. they apparently had 15 to 20 people going in and out of japan

for months to orchestrate it for him. it is kind of like oceans 13 >> why not oceans 11 >> there was a guy who got in a box in oceans 11 now there isoceans 8 did you watch it as it happened? he got a lot in. a busy morning more boeing including a settlement with american airlines. we have the latest developments

on the crisis with boeing and the crisis with phil's vocal cords. better today >> they are better, joe. they are fine. they were better yesterday here is the story with boeing. late in the day, they announced different assignments of workers will be doing while they shut down that line once the final plane is through that will happen in the next couple of weeks. some will be in everett. some will be out with the parked planes going through daily maintenance at different locations in the pacific northwest. american airlines like others has now reached a settlement with boeing when it comes to the grounded 737 maxs. this cover simply the loss of the aircraft in 2019

it is open ended in terms of what it could get compensated for. $30 million will go to employees. back in october, there was an sec filing they said we expect to put about $540 million aside 5% will go to employees. strip this back out. that's essentially what american will get from boeing spirit aerosystems has announced it will be suspending production of the 737 max parts at the company in wichita, kansas they kept production at 52 a month even when boeing went down to 42 a month. they have almost 100 plane parts

sitting on the tarmac. there will be some temporarily layoffs. they haven't announced how much. there is some question whether or not the state of kansas will assist spirit with compensation for those workers. this is the ripple effect we expected when boeing said they were going to suspend production of the 737 max >> thank you, phil we have rob epstein here talking about the company and what you think about the cash flow and cash on hand and earn rate all of this. they may need to raise some money. they have $20 million in cash. do you expect it to be positive this year with where they are talking about it that would be nice $15 billion. should they raise it

the debt has doubled since they had these problems with the max and the cash flow. >> by any stretch of the imagination, their balance throw is strong. a huge balance sheet like you said, this year, the cash flow will be challenged we expect the cash flow to normalize. most investors today are thinking about the stock from a 2022 point of view when we think about the valuation, we think normalized cash flow in the $30 range per share in the 2022, 2023 time frame. we are neutral on the shares with he get there. for all of this to play through the system, it is going to take at least 18 to 24 months >> they are going to take people and try to help suppliers. you saw the american news. there will be expenses

>> if you look at spirit aero systems, they were producing up to 52 a month and they just suddenly stopped it makes question marks of how smooth the ramp up can be. >> they've had one downgrade since july that was the last time they issued bonds $5 $5.5 billion same yield, no trouble there what about now >> i would expect it to be the same thing >> there is no way they cancel this program >> actually an interesting point. a lot of investors have been reaching out and asking me the question it was the question asked that went away.

i don't think they will. they are closer to the end of this thing 8 to 9 months ago my thinking is they won't cancel it. >> that is in investors minds. >> when calhoun was here a lot of people watched him and watched his answers and what looked like a lot of expertise >> there was confidence about him. >> confidence. thank you foretelling me how that was do you still -- do you have confidence in him? >> in a note we wrote to investors. he's been there 10 years >> what does that mean is that good or bad? >> he's seen everything go down. >> the things went down while he was there too. >> that's right. we would be more comfortable if there was a more broad cultural change at the company.

>> you want an outsider? >> where do you find an outsider it is a big job. >> you go down one or two paths. you go down the path of an alumni that is successful. nor northrup grum and has been successful >> in the middle of the game >> you want to change out the pilot. >> they made a decision. the decision was made. dave clearly has a lot of confidence if you go back to the interview you did with him and all of that confidence, they are missing every target in some ways, it is no different

than denis it is smooth >> the 18th, i think so you think the cache of ge school of management and -- i still there is still some cache from before. he's got a lot of private equity experience that might come in handy. >> i think about cost cutting. they may need to do that with the position they are in right now. >> the first thing they are doing is the security. you need a real operational person there >> think about it, you need to build confidence with the airline customers and regulators for sure >> neutral >> neutral >> our price target is 370 >> i've been ordering meat lately i've been ordering medium rare

plus you know how that works? are you leaning one way or another? >> the price target of 370 >> i think it is too soon to get back in. every day you look in the paper, there is a new headline. until that gets sorted out >> we are looking for a 15% prize in stock >> neutral it is neutral plus >> leaning neutral >> we are neutral. >> you are at 51 >> he doesn't want to commit because he doesn't know what tomorrow's headlines will show >> medium rare plus. >> we are neutral. >> thank you, ron. good to see you. >> when we come back, are you living to work or working to live finland wants to shorten the official workweek. you won't believe how honk they want to go we've got that story next. sfx: [phone ringing]

you still have service? call the insurance company it's them, calling us. it's going to be a week before they can get through on these roads shhh, sorry, i didn't catch that. i said ask how soon they can be here right now? what's now? he says they're surveying our property now they're probably at the wrong house i don't see any hovering his name is hovering? look up? by automating claims with machine learning and analytics, cognizant is helping insurance companies advance how they serve even hard to reach customers. cool ♪ on a flexible wealth plan. and with new brokerage accounts, your cash is automatically invested at a rate that's at least 21 times more than other advisory firms. personalized advice. unmatched value. at fidelity, you can have both.

created by apple, not a bank. with a better way to track where you spend. a new level of privacy and security. daily cash you get back every day. and no fees. not even hidden ones. oh, and if you happen to be somewhere that doesn't accept apple pay yet, there's this. nice.

time now for the executive edge if the 40-hour workweek is too much for you, consider moving to

finland. the new prime minister is proposing shifting the entire country to a four-day workweek consisting of six-hour days. that's the down fall a 24 workweek. >> what? >> the world's youngest prime minister at the age of 34, she took office in december. she said people deserve to spend more time with their families, loved ones, hobbies and other aspects of life. sweden tested a six-hour workweek and found it boosted happiness levels but shockingly, it was a burden. >> six-hour workweek >> it was a drain on the coughers >> france has a standard workweek of 35 hours i think that overstates the amount that gets done this that country. trying to order stuff in the

cafes. i don't think it works >> but you loved it, didn't you? >> i didn't. what do you have to do in italy? you walk around, you have the olive gardens overlooking the bay there. >> facebook cracking down on video manipulated by artificial intelligence known as deepfakes. take a look at yesterday's s&p 500 winners and losers ♪

through the at&t network, edge-to-edge intelligence gives you the power to see every corner of your growing business. from finding out what's selling best... to managing your fleet... to collaborating remotely with your teams. giving you a nice big edge over your competition. that's the power of edge-to-edge intelligence.

1 in 4 of us millennials have debt we might die with. and most of that debt is actually from credit cards. it's just not right. but with sofi, you can get your credit cards right by consolidating your credit card debt into one monthly payment. including your interest rate right by locking in a fixed low rate today. and you can get your money right with sofi. check your rate in two minutes or less. get a no-fee personal loan up to $100k.

good morning welcome to "squawk box" on cnbc. we are live from the marketsite in time square you can see things have turned around for the s&p and the dow do you down just over 11 the nasdaq up about 7.5 points shares to watch this morning microcompany expect microcompany -- microchip expected to rise that stock now up about 4.4%

shares of texas instrument sharz up about 1.6%. facebook said it would remove deepfakes and other manipulated videos from the platform to curve misinformation ahead of the presidential election using ai to emerge, replace or super impose content facebook says its policy does not extend to content that is par owe di or sat ire. it's tough to tell a difference or video that has been edited or emit or change the order of words. facebook says it will not remove the heavily edited video that made house speaker pelosi seem incoherent facebook says it isn't generated by artificial intelligence

>> interesting issue in terms of should be allowed and how much manipulation should be allowed >> do you know how to do that stuff? >> i don't i know how to do some things but i don't know how sophisticated i can get. >> new details emerging about carlos ghosn's escape to lebanon. we'll take you live to the latest on his escape and when he plans to speak publicly. stay tuned for more on cnbc. >> announcer: today's big number, $100 billion that's how much disney's streaming business is worth including disney plus, espn plus and hulu according to an estimate by barclays thmaetape rk c is currently $264 billion.

welcome back to "squawk box. we may be hearing soon from carlos ghosn after his dramatic escape from japan. how he got there is like

something out of a movie recordedly traveled by bullet train and then to is stan bull but private jet and then hid in a box to get to beirut we'll go now to hadley in beirut this morning >> reporter: good morning. we are outside carlos ghosn's house in this prominent neighborhood in beirut this house takes up an entire square block they finished this house about four years ago i used to live up the street and watched them building this for a couple of years. it is interesting to note all of the developments we have heard the japanese have issued a warrant for carol ghosn's arrest that gets tricky because she holds u.s. citizenship her husband who holds lebanese,

french and brazil yian citizenship. they are telling me they need to get some kind of permissions from interpoll to move japan's request any further. >>s you now, at this point, lebanon doesn't have extradition treaty with japan. we are expected to hear more from carlos ghosn at a media invite only. invitation only event. he is expected to give us some revelations about his time with the japanese and get some more detail about why he felt at the end it was best to flee that justice system more and more details emerge about his extravagant flight

from japan the great escape they are calling it involving high-speed train, multiple hotels where he could have come to the notice of the japanese and he did not. he was also able to get on to two planes via a box, apparently, with holes drilled in for air purposes so he could breath this is an extraordinary tail. the feel here in lebanon is admire operati admiration for one of their favorite sons. the feeling on the ground here is the fact that he's been able to make this great escape frames him as an international badass as far as that extradition agreement, it looks like lebanese authorities aren't going to be too keen to hand him over >> look forward to hearing more from you and mr. ghosn tomorrow.

joining us now, a look at the legal implications for ghosn's future, the visiting professor and teaching at tuks school of business at dartmoth is there any way carlos ghosn at this point could clear his name and legally be able to leave lebanon? >> yes there are some circumstances because of the duel citizenship, actual triple citizenship, mr. ghosn could travel to pass where he has french passport france does not have an extradition treaty with japan. japan only has two extradition treaties that is with the united states and south korea. the united states has 100 extradition treaties so france would not be under obligation to extradict mr.

ghosn back to japan but france also takes the position even when it has extradition treaties that it will not generally extradict french citizens. the most famous case is mr. polanski, the director from justice of the united states, there is a treaty between the united states and france, france has refused to extradict mr. polanski france widely would be a place where mr. ghosn would not be extradicted from japan however, he is under investigation as is renault in france as to the releasing of versailles palace which was done without charge it is not out of question if mr. ghosn were to go to france, he might be charged by french

authorities. >> the bigger picture here japan may be doing is using leverage with his wife who is a u.s. set zen. does this mean she cannot leave lebanon? >> she as a u.s. citizen, there is an extradition treaty between the united states and japan, the question is whether the united states would decide to extradict her if she were found on u.s. soil as mentioned in the previous piece, there is no extradicting between japan and lebanon. >> i'm just saying carol ghosn could be the one locked up in lebanon now. she's not a french citizen and doesn't have different passports. it seems like japan is using whatever leverage they can now

to say your wife is going to be stuck in lebanon >> it is not an unheard tactic to go after the spouse a bit unlikely i would think in this particular case. >> the idea that carlos ghosn has followers asking for justice to be found in a lebanese court, he's effective i will asked or suggested that the japanese hand overall their materials and that he is prosecuted in lebanon. does that make sense to you? >> it would be very unusual. very unusual in this case for lebanon to charge him for crimes that took place in japan france is a totally different situation. france may be able to point to things in france that occurred let's look at the u.s.

the u.s. did go after mr. ghosn and nissan for basically the same facts that japan has a criminal action against both nissan and mr. ghosn and the nissan paid a $15 million fine and mr. ghosn paid a $1 million fine he did not admit that he committed anything wrong however the sec made it clear that there were false and fraudulent action. >> we very much -- >> for the $140 million compensation scheme. >> we appreciate your time this morning. i imagine we'll be speaking again. thanks again. >> coming up next, a new note out from morgan stanley. it says that a good economy may not necessarily be enough to guarantee re-election for president trump. we'll dig into the details with

the analyst that wrote it. when we come right back. the digital engineering, security, blockchain, and we will be first to market! yes. when we do we launch? unfortunately, in 2 or 3, hours. why the delay? cognizant is helping banks use digital technologies at scale to advance speed to market. this round's on me.eat. hey, can you spot me? come on in. find your place today, with silversneakers. included in most medicare advantage plans. enroll today by calling the number on your screen or visit getsilversneakers.com

i can. the two words whispered at the start of every race. every new job. and attempt to parallel park. (electrical current buzzing) each new draft of every novel. (typing clicks) the finishing touch on every masterpiece. (newborn cries) it is humanity's official two-word war cry. words that move us all forward. the same two words that capital group believes have the power to improve lives. and that, for over 85 years, have inspired us to help people achieve their financial goals. talk to your advisor or consultant for investment risks and information.

>> lots of people believe solid economic growth will lead to an incumbent's re-election. not so says morgan stanley joining us to break down that argument is michael. he is chief u.s. public policy strategist at morgan stanley what gives i thought it was the economy and if you're an incumbent president and you have a good economy you're golden. >> i don't think that's a reliable rule of thumb one it's conspirely possible it's a consequence most with a good economy have won in the past. >> when you say most, what are we talking about

>> as far back as we have reliable data including polling data, we can go back to world war ii and for the most part they have good economies and were reelected. >> who didn't? is there an exception to the rule >> no, there isn't, however -- >> you have a very small sample size so it's entirely possible that it's a consequence so going back to world war ii 85% of them were positive gdp quarters and on top of that the current administration is sort of unprecedented within that. so all of those that had good economies also had net positive approval ratings >> and on top of that you have data telling you that mergameri might not care as much and at least an equally good rule of thumb has been the survey that asks which party do you trust most to deal with your top issue

and the democrats are actually ahead of the republicans on that. >> what's the top issue if it's not the economy? >> health care, probably. >> immigration and leadership are two ahead of that for the gallop survey but i think the larger point is that investors aren't supposed to look for any of these rules of thumb. they're supposed to say this is a close race and we need to behave like this is a close race more range bound markets and look for sectors that are shock absorbers as the polls swing back andforth. health care, tech, financials, energy and fundamental cases. >> do you think investors are taking this too much in stride at this point? that they haven't put the proper concern into what could potentially happen what are you saying? if people are relying on that rule of thumb, what are they doing wrong? >> they're probably too overconfident in the fundamental case for some sectors in particular, tech, health -- i'm sorry, tech, energy, financials and health care.

>> so you'd say sell some of those issues or stay away from them don't add to positions in those sectors? >> what we can know is that what tends to happen in these situations is that investors will tend to overreact to certain pieces of data telling you that one party is rising in probability or the other and things tend to be reverting. if you think about what happened last spring there's a substantial underperformance on the idea that medicare for all is about to be the law of the land in 2021 and then the truth of the matter was well if you accounted for the sizable win in the senate in order to make that a reality very quickly understood that most of the health care reforms that are less severe those were much more likely to be reality. >> thank you it's good to see you. >> thank you. >> coming up, elon musk celebrating at his factory overnight. the stock pointing him to new

highs. the prospect otef sla in china, straight ahead edge-to-edge intelligence gives you the power to see every corner of your growing business. from using feedback to innovate... to introducing products faster... to managing website inventory... and network bandwidth. giving you a nice big edge over your competition. that's the power of edge-to-edge intelligence.

a look at some names that may make a second run at success. >> elon's electric hustle. the ceo of tesla celebrating the debut of the first made in china vehicle. that story and what it means for the stock as the second hour of squawk box begins right ow good morning and welcome to squawk box right here on cnbc. take a look at u.s. equity futures at this hour the dow looks like it would open

down about 17 points off s&p 500 off marginally and the nasdaq looking up about 3.5 points >> here's what's making headlines at this hour goldman sachs unveiled an overhaul in an effort to increase transparency for investors. they'll now look like it's rivals that have stock prices that have outperformed goldmans. they believe their stuff could be trading at $400 or more well above where it is right now. also the number of irs tax audits fell for the 8th consecutive year in 2019 a new report says less than half a percent were audited last year over the last decade the likelihood of being audited has been cut in half boeing has settled with american airlines over damaging related to the grounding of the 737 max jet. financial details weren't disclosed but american did say it would contribute more than $30 million from the settlement

to the employment profit sharing plan but they're up higher this morning up about 26 cents. >> the iran risk to the market as tensions with the u.s. mount. he was buried in his hometown yesterday after he was killed last week in an air strike in baghdad. in the past 24 hours officials threatened retaliation against the u.s. for the targeted killing of defense secretary said that the u.s. made no decision about with drawing troops from iraq >> they were laying out warnings take a look here at some of the things the department of homeland security is warning americans about. conduct disruptive and destructive cyber operations, engage in cyber enabled

espionage and property theft use ieds, attack u.s. citizens and interests abroad and at home and use unmanned aircraft systems or drones to attack hardened or soft targets around the world. so a laundry list of potential retaliatory actions from the iranian side meanwhile, confusion in washington as officials scramble to understand what was meant by a letter sent by marine corps general in iraq to his iraqi counter parts. officials ultimately decided that this letter was sent in mistake although the u.s. marine corps general here suggested to the iraqis as requested we will be repositioning our forcing over the course of the coming days and weeks to prepare for onward movement. suggesting that the united states was ready to pull forces out of iraq. in the end, though, the pentagon suggested that this letter had been sent in by mistake.

it was simply a draft. shouldn't have given that impression at all. in fact, the united states is not pulling troops out of iraq but there was confusing hours yesterday as the white house grappled with that and tried to figure out where that letter had come from after it started circulating in the media in the end though, the united states says we're not pulling troops out of iraq any time soon despite the vote in the iraqi parliament over the weekend asking the united states to do, in fact, that. guys, back to you. >> it was a nonbinding vote and there were several members of parliament that did not vote including some of the sunis and kurds. >> the post, when i say that, i mean the new york post, but anyway, the post is running a piece and i'm just wondering -- any of these targets that we're

talking about, we had a false sense of security before 9/11 and we still have that -- i don't know whether it's false anymore. i heard about sleeper cells but you know what, we heard there were 5,000 sleeper cells after 9/11 and i'm not sure how many there were or may or may not have been. do you think there's anything to an attack on our homeland? dhs has definitely ramped up their surveillance of things. >> sure. >> but do you think that iran would try to strike us in the homeland here? >> two things, if question is a what is possible and b, what would the iranians decide is in their best interest to do, right? does iran want to escalate this even further to an attack inside the united states. that would be a big escalation but we saw the united states engage in a big escalation last week so escalations happen. the question is, you know, in the iranian decision making

chain when they look at this and say we have to respond clearly, politically, emotionally, you get the sense that the iranian leadership thought they had to respond to this. there's a real emotional response in iran so as they channel that, what kind of response do they want to select and how do they see the united states responding to that response and as you stair step up this cycle of violence, where do they want it to end where does the united states want it to end those are the questions you should be thinking about because presumably they could engage in all sorts of behavior all around the world at any time depending on what their capabilities are and we just don't know what that is but your point is well taken there is a false sense of security but you have to look at what the iranians hope to get out of this. could they engage in stuff inside the united states maybe they could but will they? that's a different question. >> i want a true sense of -- i'm sitting in times square.

so i don't like false senses of security >> would an attack on american civilians be proportionate they say american military forces in some way but who knows. >> thank you let's talk markets now how the geopolitical climate could effect stocks. joining us is the chief investment strategist and here on set, the managing director of resear research we just heard someone tell us that all the advantages previously that incumbent presidents with strong economies have had were probably a consequence and if you don't like trump probably all bets are off in terms of the economy

being a win. do you think that's true >> no, the way i tried to model out the effect of or likely outcome of the election is, if you go back to november and you think about what happened in the vote that took place then, texas made it all but impossible to ever implemented an income tax colorado shot down a weakening of the taxpayer right act which meant that any surpluses went immediately back to the taxpayer and even washington state has a voter advisory that voted against taxing the richest corporation, luxury homes and so forth. so i think there will be a taxpayer revolt. also, elizabeth warren was releasing her plans for medicare for all and her tumbling in the polls. my perspective is the public may think some of these are good ideas but they're not going to pay for them so when you model out who is going to run and what their positions on taxation are going

to be, the democrats have put themselves in a box where almost every proposal is for significantly higher taxes that's a really hard thing to overcome. >> we do have energize people in the suburbs and millennials and young people and it is true that previous presidents that have strong economies may not have been underwater in terms of approval do you think that we can't look at the economy this time and say it's the economy stupid? it is the approval rating or it's the tweets or it's t you know, trump derangement syndrome it could be any of those things that control the outcome >> no, joe. >> would you change your portfolio based on that? >> no, unequivocally the economy goes in favor of the incumbent when you have a second term candidate president vying for that term it's generally positive in terms of markets and economy for said president so look, that's unequivocally in

trump's favor and i think participants, voters specifically, are going to be really focused on the economy. but let's face it, people get a little spoiled, right? you feel like things are going to stay as they are and you get a little nervous so i would say the markets are going to get nervous if we get a completely different scenario which is the bernie sanders type of candidacy if it's a biden the markets are not going to react in a very negative way even though as your other guests said, even bidens proposals aren't really moderate to centrist. they also include a much more heavy hand from the government and much more regulation and much higher taxes. >> that was the sort of broader point here is that the taxation issue is the economy so if you think about the one recent incumbent that lost, bush

senior, his broke his pledge no new taxes. >> every debate the democrats bring up a poll that say 70% of people want higher taxes on the wealthy. he's in the 30%. >> undoubtedly but people are not stupid in as much as they realize that there's not enough money to tax the wealthy to pay for medicare for everyone. >> maybe not medicare for everyone. >> but there are people that think -- bill gates is out again saying i want to pay more taxes. >> write a check, bill. >> right. >> bashing the rich is like good politics but anyway, just take -- like i said, take the last november election and look at how things unfolded. >> the last midterm didn't go too well for republicans. >> that's almost always happens.

are there sectors that you would recommend where you don't have to worthy either way? >> well, s&p of course ran up 30% last year. so what we're looking at is those sectors that if current trends continue, which is namely market friendly policies, no trade war, and excluding an escalation of the conflict with iran you would have those sectors that have not performed as well gain traction. i think we need to get more defensive this year. there's a lot of complacency in the markets and i think that investors that have seen the 30% returns in the s&p need to protect them so what i have been telling our clients is look, get ahead of political risk get ahead of any democratic nomination that could take the markets a little bit lower or anythingelse so the rebuilding

and manufacturing renaissance is on the way the two sectors that i would look to buy on weakness related to the election would be the health care sector and energy sector but from my perspective i think you should stay long, cyclical sectors, financial, tech and industrials until around about april or may at the point when the fed is looking to unwind qe-2. we'll get our ninth policy regulation this cycle. we've had one every cycle since world war ii this one we had 8 so far then we'll get the correction and on that one you could probably buy the energy sector and the health care sector because the political heat will

have built on those as well. >> they may be out of the game for now. don't count them out when making a come back. a look at names back in business this year and with mideast tensions on the rise, a look at the economic impact. why congress is concerned. we'll speak to former senators right after this break squawk returns in a moment

our retirement plan with voya gives us confidence. we can spend a bit now, knowing we're prepared for the future. surprise! we renovated the guest room, so you can live with us. i'm good at my condo well planned, well invested, well protected. voya. be confident to and through retirement. before we talk about tax-s-audrey's expecting... new? -twins! ♪ we'd be closer to the twins. change in plans. at fidelity, a change in plans is always part of the plan.

beyond the routine checkups. beyond the not-so-routine cases. comcast business is helping doctors provide care in whole new ways. all working with a new generation of technologies powered by our gig-speed network. because beyond technology... there is human ingenuity. every day, comcast business is helping businesses go beyond the expected. to do the extraordinary. take your business beyond.

welcome back data showing the number of tech founders or ceo getting stepped down end up winding getting a second chance. she is here with names from 2019 who are maybe making a come back this year. there's those that exited one company and subsequently launched another now they have quantified their advantage. first, experienced entrepreneurs have earlier access to capital they raise a first round of venture capital nearly nine months earlier

not surprisingly they gain access to top investors. it's not that surprising but what is considered a successful exit well, travis was famously ousted from uber amid controversy but less than three years later he has a $5 billion evaluation. investors include kraft ventures and also an early uber backer. also ousted in 2018, he raised $50 million for his block chain start up less than a year later. now last year, of course, controversial exit so it makes you wonder could they be planning. >> i got a couple of questions one is this idea that the entrepreneurs, do they end

upkeeping their ownership stakes typically in their firms >> you can see he is completely sold out of uber but yes, cashing it out does give them a way to put more money into their next venture so what the data shows is that even though they have been through it before they tend to give up more ownership when they create their new businesses probably because they're raising larger rounds at higher valuations so they're giving up more it doesn't make them afraid to give up more of their stake in the companies that the new companies are creating. >> the ceos that leave, what do they end up doing? becoming venture capitalists i'm assuming >> yeah. a lot of them become angel investors. they look under the fewer percentage that actually become more institutional bigger vcs but a lot of them do become angel investors and that creates this that we see here in the valley where you're seeing entrepreneurs who have started successful businesses put money

into not just their own but other businesses 4:20 a.m. on the west coast. thanks for waking up so early. >> thanks for acknowledging. >> still to come this morning, elon musk celebrating delivery was of made in china vehicles as tesla shares hit an all time high this morning. we'll talk about the growing market cap and what it means for the auto industry. you're not going to believe some of the comparisons of other companies. check out the futures at this hour right now the nasdaq is up by about 10 points. squawk box will be right back. and ask your doctor about biktarvy. biktarvy is a complete, one-pill, once-a-day treatment used for hiv in certain adults.

it's not a cure, but with one small pill, biktarvy fights hiv to help you get to and stay undetectable. that's when the amount of virus is so low it can't be measured by a lab test. research shows people who take hiv treatment every day and get to and stay undetectabe can no longer transmit hiv through sex. serious side effects can occur, including kidney problems and kidney failure. rare, life-threatening side effects include a buildup of lactic acid and liver problems. do not take biktarvy if you take dofetilide or rifampin. tell your doctor about all the medicines and supplements you take, if you are pregnant or breastfeeding, or if you have kidney or liver problems, including hepatitis. if you have hepatitis b, do not stop taking biktarvy without talking to your doctor. common side effects were diarrhea, nausea, and headache. if you're living with hiv, keep loving who you are. and ask your doctor if biktarvy is right for you.

what it means for the stock which is creating more new highs this morning squawk box is straight ahead i can. the two words whispered at the start of every race. every new job. and attempt to parallel park. (electrical current buzzing) each new draft of every novel. (typing clicks) the finishing touch on every masterpiece. (newborn cries) it is humanity's official two-word war cry. words that move us all forward. the same two words that capital group believes have the power to improve lives. and that, for over 85 years, have inspired us to help people achieve their financial goals. talk to your advisor or consultant for investment risks and information. talk to your advisor or consultant whatever happens out there you have the hilton app. will the hilton app help us pick the starters? great question, no.

but it can help you pick your room from the floor plan. can the hilton app help us score? you know, it's not that kind of thing, but you can score free wi-fi. can it help us win? hey, hey! we're all winners with the hilton price match guarantee, alright? man, you guys are adorable! alright, let's go lose this soccer game, come on! book with the hilton app. if you find a lower rate, we match it and give you 25% off that stay. expect better. expect hilton.

is. wrer joined now with the latest from the region, chris. >> that's right, guys, you heard about the stampede in iran this among multiple memorials being held in recent days for the general, a beloved figure by many however also reviled by many if you consider opposition figures which makes this particularly tragic because a lot of people turning out to the streets to mourn him have done

this because they have to. the targeted killing has brought together many of these groups not just in iran but throughout the region in solidarity which is making it a lot more difficult for the united states military to keep it's footprint in the region, specifically in iraq just across the border from iran where there's 6,000 u.s. troops and thousands more on the way. meanwhile you have iran and groups like hezbollah calling for the united states to leave the region as soon as possible that the leader of hezbollah has said that troops will come home in coffins but you have the opposite happening more troops coming to the region just as these cries for them to leave from the region are intensifying it seems like a recipe for conflict and possibly for disaster guys. >> chris, thank you very much.

let's welcome here on set max, the former u.s. ambassador to china and also the former senator from montana welcome to both of you let's talk about what these latest developments mean max, we'll start with you since you're here on set with us what does this mean in terms of tensions racheting up and what the likely out comes are from here. >> the mideast is fraught with difficulties and all the tensions among the countries, religious animosity, it's a very, very difficult part of the world to control in anyway i frankly think that iran needs to push back but on the other hand i think it would be wise for president trump to consult at least the leadership in congress before taking such a dramatic action. generally politics stops at the

water's edge at least that was the case when we were there and that's an important principle to follow. it does depend upon the president to consult in some degree so that if politics does stop at the water's edge when it comes to foreign policy. >> that meeting is expected today. how do you think that's going to go >> was that question to me, becky? >> that's right. >> well, hopefully it will go well he was a terrorist, is a terrorist. taking him out was the right thing to do but the president should have consulted with the 8 leadership members required under the rules that we have and also european allies our ability to function in the middle east is circumscribed if we go in there unilaterally.

we need support from our allies and in many instances this president has walked away from those alliances or at least treated them indefinitely and that's a mistake because when you get into issues like this you need those folks to help you out. you need the european nations and our allies in the middle east. >> what do you think happens next obviously we can't determine where or when the response is going to come but we have heard the president draw some fairly stark red lines at this point if there's american causalities from any response. >> we don't know nobody knows the number of targets is almost limitless relative to iran's options. but they are under serious economic stress and if they do something that aggravates that economic stress by attacking americans somewhere and having retaliation that causes them

further economic distress that's going to be difficult for their government to retain stability i don't think they know what they're going to do. they have to respond in some way because there's the outrage that is apparent throughout the country about where they're going to respond, i have no idea i suspect however that it will not be the type of response that causes other nations to come to our side because they need those other nations in order to limit the economic impact that they're getting from our sanctions. >> i looked at how we set this interview up and i was thinking max is going to take that. who do we have to push back? i'm already exhausted today. andrew has me on the ropes already. he's in rare form. i looked at a recent op-ed you

wrote. impeach pelosi and schumer and not president trump. i can get some support here from judd to talk to max about. we're not going to get you at the iran thing but how about that yell at max about that, jud. >> i'm not going to yell at max but i don't have any problem yelling at the house of representatives. >> that's why we book you two. you are hyperso the one to put up against you judd is just too nice. >> just one person has that view. >> just me here. >> on the issue of impeachment it's inexcusable what's happened in the house in my opinion. >> not passing the articles on to the senate. >> passing the articles to begin with the first article makes no allegation of a crime or nothing ever near a crime so the term high crime and misdemeanor is totally abused and that article is an angry rant and the second article that he's obstructed the congress, well, that's what presidents do.

it's an adversarial situation. it's called checks and balances. these two articles of impeachment are on their face not substantive and are basically political the purpose of which is to undermine the president as we go into the next election so i think it's a really unfortunate event that we're using impeachment so liberally. >> i'm watching max tapping his finger in a way that makes me really nervous i saw you. >> you did >> yeah. >> what's your response to that? >> well, house action has already passed whether they pass the articles on to the senate is question now we have new questions. is bolton going to testify what is going to happen now with the senate. >> new articles. >> it's getting more dicey in the senate at this point obviously pelosi is hoping more will come out so she's delaying sending the stuff over and if

you're going to pass articles of impeachment you pass it and send them over and let the senate do their things in addition to that, each body is very, very proud of itself. the senate is proud of the senate house proud of the house so the senate is not going to let the house tell them what to do the senate is going to do what the senate wants to do that's where we stand. >> if you would have asked me two weeks ago what the biggest threat would be in this new year i would have said china, the trade talks, whether something gets signed, whether there's additional talks beyond this the situation in iran has taken that off the front burner for sure. >> it has. >> as the former ambassador to china, what happens? >> well, it's interesting to me, there's parallel developments and to some degree we're decoupelling and drifting apart. the sad thing is also happening in the mideast

and that's causing a split and the mideast, the more each side can fight one way or the other it's not good. >> and i guess the alignment, there are times when the united states alignment may line-up with some of our allies from the past but there's other times where it's not as obvious as it used to be as in the case of saudi arabia. >> it's pretty obvious today we're aligned with them basically. >> although, look, there's been a lot made of the idea that we did not respond when the saudis were bombed, when the refinery was bombed we didn't respond to that. we waited until it was a u.s. target, on the embassy. >> we're getting in two camps. >> that's my concern.

>> judd, how about you again i would have thought our big concerns at least from an economic perspective and markets perspective would have been china and what happens on that front that fell away pretty quickly. obviously this could come back strong at any point but i think people's attention has been turned elsewhere. >> that's true but china is still the issue and max is much more expert on that than i am. i still think china is the issue. they are the world's second largest economic power we're always going to be integrated with them and we have to figure out how to deal with them and i actually respect what the president has done to try to push back on china in a number of areas especially intellectual property and currency manipulation but the chinese, i suspect don't think in terms of four years they think in terms of decades and i'm not sure that we're

going to get a deal before this administration is up for re-election. >> phase one was an agreement to agree on something that we might agree on and i would be interested to be substantive agreement on intellectual property and management of currency before the end of this term. >> what do you think >> we all hope hope is not a plan i think we're at odds for a significant agreement. >> you mean before the election. >> before the election there will be something. it will be papered over. it will sound good but it won't be. >> how does that change with the election, either with president trump being reelected or with a democrat taking the reigns >> i think china will always be a problem but whether there's a republican president or democratic president and i just hope that whoever is elected

president in this next election is -- we have a president who really settles down and realizes this is probably the greatest x problem the united states faces. >> at least we know. >> it has to be handled very, very well and so far -- >> you could have told us before trump got elected. hey, judd where are you? your down in sarasota. is mrs. greg around? could you say honey come over here and take over if joe asks could you do that? is she in the vicinity >> she's not in the vicinity immediately. as you'll notice behind me we bought this couch up the street. it said free on it. >> someone put it out there to be selected and you said hey, honey. >> that's exactly what happened. >> yeah. >> but in general, next time -- i had that piece for you to get you energized a little bit but

if i need her next time, can you just tag team -- can you just bring her over >> the problem is if you put her on you'd never ask for me again. >> i know that >> she's more conservative than you are. >> you're just barely right of max but she's worse than i am, right? >> on some issues that's probably true. >> why don't you listen to her >> i do all the time i listen to you all the time but i listen to becky more >> all right >> senator greg, thank you for joining us >> it's the same thing my wife is far more left than i am. >> no way. that's impossible. >> talk to her. >> there's no such thing. >> there's a wall there. >> thanks for being here it's great to see you. >> coming up, stocks on move ahead with the opening bell and then elon musk and shanghai after the debut of the first made in china tesla.

a live report. what it means for investors is straight ahead we're coming right back. ♪ ♪ ♪ ♪ ♪ ♪ don't get mad. get e*trade, dawg. we're changing what's possible. for instance, we know how your customers shop. and what they've already purchased. like this lamp. and we use those insights to show you what they might consider buying next. mid-century modern, nice. that way,

you can keep sending them offers for the perfect products. and that keeps them coming back. how's that for changing what's possible?

>> let's kick things off with a look at shares of micron roughly 76,000 shares of premarket volume up by analysts that upgraded that stock from a prior reform to a former market reform and put the target price to $70 it was 50. they cited other things including industry trends and memory chips and more demand from smartphone makers so you can see 3% rises there. smartphones in the coming month a big deal next up shares of fireeye up 2%. 16,000 shares of premarket volume the cyber security company getting upgraded from bye to hold over at suntrust and the target price goes to $22 it was 15. they think the recent events have put cyber security threats in the spotlight and that it will boost both government and private sector spending on cyber

prevention and we'll end on shares of square up on 46,000 squares of volume. the payment services company getting upgraded from buy to neutral at bank of america it goes to $75 it was 70. they think the recent under performance makes for a good spri point also better revenue trends will prevail this year in 2021 so those shares will be higher too. >> square shares coming up, elon musk showing off dance moves. showing off the made in china tesla. what it means for the company's plans for expansion and the auto market is it straight ahead. check out shares of tesla hitting a new high i consulted with your grandmother's doctor.

we can do the screening at her house. hi. this is the man that's going to check your eyes grandma. cognizant ai solutions are helping healthcare companies advance diagnostics and prevent blindness in patients with diabetes. everything looks good. you have beautiful eyes. ♪

everyone has something to say. but in a world full of talking, shouldn't somebody be listening? so. let's talk. we are edward jones. with one financial advisor per office, we're built for hearing what's important to you. one to one. edward jones. it's time for investing to feel individual. looking to get your business off to a fast start in the new year? it's go time! switch to comcast business and get fast internet on the nation's largest gig-speed network. plus, complete reliability with 4g lte backup. and, cloud-based security to help protect the devices on your network. greenlight your business in 2020 with fast internet and voice for $64.90 per month. switch now and get a $100 prepaid card when you add comcast business securityedge. call today. comcast business. beyond fast.

more on tesla's trategy. she joins us from beijing. good to see you. >> it's good to see you too,

becky. so founder elon musk did a little jig at the event today. this came as the country was delivering it's new china-made model 3s to ten new customers and when the company announced its going to start production of the model y suv at the plant as well he believed the model y would have more demand than the others combined they also said the factory was going to be the site of future models in addition to the model 3 and model y. production capacity is 150,000 and the plan is to produce 250,000 vehicles out of that plant a year now musks move comes at a time when the auto market here is slowing down china's very aggressive subsidy program is also drying up and of course there are the trade tensions between the u.s. and china. however, the public reaction so far has been pretty good and would be seen as positive by

tesla. most of the chatter has been about how people don't really mind that the cars are made in china since most of the cars sold in china are manufactured in china and instead, most people are focussing on the price and at $43,000 per vehicle for the model 3, people are saying that this is good value and also, they're talking about how, unlike you, they think elon musk has good dance moves. >> becky likes the -- >> no, i don't. >> the strip tease. >> yeah. >> no, no. >> thank you >> thank you it was to talk more about tesla's strategy in the u.s. and abroad,

the founder and managing partner. senior research analyst. that's still a lot of money. most cars cost less than 100,000 in china and this is 300,000. is this as positive as it seems, craig? >> so the big question is whether or not this is a comp to the luxury vehicle market in china or if it's more of a comp to the ev vehicles in china. most people looking at tesla are saying no it's not comparable to the vast majority of vehicles being sold luxury vehicles? yeah there's a lot of automotive companies that make most of their money actually selling into china so tesla is going to have to compete against them rather than take a pre-existing slice out of

the mark. >> you buy into this completely, right? $145 billion market cap estimate it was 80 before the move today. probably 90. do you think this is not hype. it makes a big difference to the company? >> it's measurable and just to put more context on that, china is the longest ev market in the world. 60 to 70% is average 15,000 u.s. dollars and so well below but i this i the right anlage here is what's happened with apple and their china business right now is 17% of total revenue and right now china, for tesla, and the most recent report for the september quarter was 11%. so they're not going to hit the sweet spot of the china market they're just too expensive if you start to put the pieces together and say that they could have 17% of tesla's businesses

in china, you start to build the model out where you can grow their business at 20% year over year you're almost at my punch line here if you do that, 20% growth for the next few years they'll probably grow 30% this year and put a 10% upgrade margin on that a few years out which is debatable but achievable and you get to $150 billion so there's room there's room there and i think that ultimately despite all the companies flaws, i think they are two undeniable truths that investors will reward with even higher market cap. it's also like a lot of people out there assume tesla is operating in a vacuum. we'll see whether or not the price points he's talking about

are aspirational or realistic. you know, there's several coming to market. this year and next you know, just friday there was a confidentially filed ipo of a producer that probably does have a shot they have only produced you know, maybe 100 so far but aspirations. i don't think tesla operates in a vaccum i think that they'll be strong competition and i can't think of a stronger signal than hey we want credible evs as the market cap dislocation in tesla right now. >> excuse me just do the math what price is that for tesla if we get to $125 billion. >> let's do 150 because that math is fresh in my head, that would be $900 a share. >> so almost a double from here. >> i think so. and this is not going to be a nice linear path there there's going to be a lot of

chop in there but that's how these trends happen and, you know, you talk about -- he talks about more competition that has been happening the last few years and tesla has >> mar maintained their share in the u.s. but we're talking about 450,000 vehicles this year in a market that's 90 million globally so when i think about that road to a higher mark cap there's some asteriks there, that elon needs to continue to behave but the market and their technology has this ten year head start very similar to what happened to aws and a lot of people ignored but that's fundamental to whether it's battery life to advance in this story. >> good. thanks. >> thank you. >> okay. coming up, former defense secretary joins us to discuss the president's strategy for iran and later new details about

his escape from japan. it's a wild story you have to hear some of these new parts of the mystery. also, programming note, chevron's ceo michael wirth is going to join the gang at 9:00 a.m. eastern time and hear his thoughts on oil prices and the mideast tensions squawk returns right after this. ♪ where others see chaos, we see patterns. ♪ connections. relationships. ♪ when you use location technology, you can see where things happen, before they happen.

♪ with esri location technology, you can see what others can't. ♪ the unparalleled landscape of park city, or the famed peaks of whistler, you've faced the hassle of lugging your gear through the airport. with ship skis,

you're just a few clicks away from having your skis, snowboard and luggage shipped from your doorstep to your destination. with unrivaled pricing, real time tracking ship skis delivers, hassle free. ship ahead and go catch those first tracks on fresh snow. ship skis. your skis. delivered.

elon musk busting a move. >> a squawk box returns. their top ten surprises from 2020 the final hour of squawk box begins right now.

good morning and welcome to squawk box on cnbc live from times square i'm joe kernan along with becky quick and andrew ross sorkin and the s&p is by half a point yields 1.8% on the ten year. >> here's some of the stories that investors will be talking about today. boeing and american airlines reached a settlement over damages incurred because of the grounding of the boeing 737 max jet. they are offering voluntary lay offs amid a lot of uncertainty about how long production will remain idle.

and goldman sachs announcing an overhaul in an effort to try to increase transparency. goldman executives have been frustrated over the stocks lack of performance and those executives believe the stock could trade near $400 per share. right now the stock is trading at $235. also homegoods retailer pier 1 is closing up to 450 stores and cutting jobs as it tries to deal with on going losses and slumping sales it may not be able to continue is a going concern in a tough retail environment take a look at shares of the stock, right now down by about 13%. that's a line of $4.50 the company before these losses had a market cap of over $22 million. >> and the funeral for top iranian commander soleimani has been delayed following a stampede in the hometown emergency services official telling the news agency that dozens of people were killed in

the city and more than 200 people were injured this morning. iran's foreign ministry told cnn that his killing amounts to state terrorism and iran will respond proportion natalie investors surrounding the rising middle east tensions may be the political impact to the u.s. economy and since nobody knows how those play out, we're going to steve that has three scenarios in mind. >> that's the way economists and analysts into a base case >> we'll talk about more about that in a second you can't rule out a ground

scale attack but a activity is our core bet it will trigger a real war and likely put a premium on oil prices for the next few months at least with the u.s. now a major producer and exporter, it has a different impact than it once did. take a look at the data. go back to october which is the latest data vailable it would have come from a decline. and they also have to be factored in.

i don't want to talk too clinically but that's the way you have to. it takes a major event to have an impact on a big economy like the united states. >> right i like how you do that, breaking it down from how an analyst would look at it and economist would look at it you have to play out scenarios. >> and nobody is ruling out the worst case scenario but they think it's very unlikely and i listened both to the counsel on foreign relations in the discussion yesterday as well as some stuff by the former head of the johns hopkins school, sais and other folks and that's an unlikely scenario. the worst case scenario is that both sides stumble into something that neither wants and that is part of the investment scenario >> rational thinking on either side

and i remember when it started in complete shock and then we had iraq one, iraq 2, afghanistan, and all of those. >> the mark up didn't really -- >> it's not a bad proxy for any of these things. gulf war was a 20% decline so it fell back down. >> the first one. >> the first one. >> when clinton launched missiles in 1999 that was a 3 or 4% decline and both were sort of on the short lived side of things so those are not bad proxies for potential economic reaction and then comes the question what brings the fed back in and that's the sort of thing that they're looking at something sustained. something that goes on for a long time. the weird factor here, the thing that i have been thinking a lot about even before this conflict is the role of oil it is just different and not to spin a worst case scenario here but it makes iranian oil

targets -- it puts them on the list because we don't care as much about that. >> right. >> then we might have otherwise. >> because of the u.s. production. >> because of the u.s. production now the president doesn't want higher oil prices. he has leaned against that so i think it makes it unlikely. >> but why are you putting it on -- when you say putting it on the list. >> because when i spin out some of these things and talk to some people i talk to, its like a mutual destruction thing we know we might target it and they know we know so that might keep things at bay it could create a best case scenario i don't think that that's what's going to happen but it's something that is out there when you talk to military strategists. >> stay where you are steve. for more on the various potential impacts stemming from the tensions, we want to bring in our guests, the former defense secretary and chairman and ceo of the cohen group

good morning to you. as you're listening to steve play out the scenarios that economists are thinking about, how did your own scenario planning match up. >> i think they're going to do something. former secretary of the pentagon said there's no knowns and there's known unknowns we know they're going to do something. we don't know exactly what it's going to be. my own guess is they will be very careful in calibrating whatever decisive move they make i think they have to be very careful that they don't overstep and make a big attack on the u.s. or our forces and force against them and then it starts off. >> does that include any physical attack? or would you put a cyberattack in the same category >> cyberattack would be i think

they'll do something more than cyber but again, i think it will be fairly modest and low level at least if they're rational they will act in that fashion. there's a second element and that's president putin i believe that president putin is going to try to step in and be the peacemaker here he is already arranging meetings with the president of turkey he is arranging to meet with angela merkel of germany he's meeting with macron of france i think he's going to move in and say let me help solve this problem for you, donald. >> but help him and elevate -- not just elevate himself personally but elevate russia how? >> well, russia has a big role in the region and big supporter of iran. >> they don't want to. >> so their goal would be get the americans out of iraq. that's something that the

iranians want and something that the russians would be happy with they are now a major player in syria and throughout the region. they're going to come to the rescue at some point on iran as well so i'm more optimistic that they'll come in and say we have a deal for you iranians, you have to make a better deal on controlling your nuclear facilities a longer time frame, et cetera i don't see it spinning out of control. anything is possible but i think that wiser heads are going to prevail here >> how much of this is the new politics of oil out there where on the one hand, that region of the world matters some what less to us at least economically. on the other hand it looks like it's spinning more into chaos.

so obviously those two things work against each other. >> well, it may not effect us directly in terms of the oil and conflict in the mideast and the amount of oil that goes in and out. if that were to be stopped the price of oil would increase and that would effect the economies globally so the united states might be okay but when the economies are hit we're not selling as much of our goods until you had a real slow down of the world economy so even though we might be okay by having more oil and having it at a higher price the rest of the world is going to be in much bigger trouble. >> the relationship with china, does it change the situation with china at all? >> i'm still having hard hearing in my ear, sorry. >> i'll switch gears to the

economic issue i don't know if you heard what steven said around the idea of oil. we have a view in theunited states now that given our own oil independence that iran's oil is less important than it used to be. >> sure. >> but again, i don't think it will get to that i really believe that the russians are going to come in and be the peacemaker. and i think the iranians want us out of there and now we have a situation where the iraqis may want us out of there that will be to their detriment and the notion that the united states is going to stay irregardless of what the iraqi people want i think is -- that's

folley we're not an occupying force >> okay. >> mr. secretary, thank you so much good to see you. >> i'm not sure what happened with the communication between putin and trump. trump must have misinterpreted what he said because if putin didn't want him to do this, he must not have been listening closely enough when putin is giving out the marching orders for what to do, right? and i'm kidding this is not me talking, this is me pretending that a certain segment of the population would say it. you know what i'm saying if he's a putin puppet there's a lot of ill literation there. >> don't look at me. >> i lived in russia. >> was it russia by then >> yes. >> really? see when bernie visited it was still soviet union. >> i did go to the soviet union

once. >> you did >> happened to buy some lemons on the street. let's talk off camera. elon musk celebrates tesla's latest milestone in china but it's pretty clear that he can't move like jagger we'll bring you details. >> you can. >> the latest deliveries and musk's moves and congress seems to have it's plate full but it's still trying to get a major trade deal signed with mexico and canada after a break, chuck grassley joins us about the road to rad fireworks kags you're watching squawk box on cnbc it's a thirteen-hour flight, that's not a weekend trip. fifteen minutes until we board. oh yeah, we gotta take off. you downloaded the td ameritrade mobile app so you can quickly check the markets? yeah, actually i'm taking one last look at my dashboard before we board.

excellent. and you have thinkorswim mobile- -so i can finish analyzing the risk on this position. you two are all set. have a great flight. thanks. we'll see ya. ah, they're getting so smart. choose the app that fits your investing style. ♪

beyond the routine checkups. beyond the not-so-routine cases. comcast business is helping doctors provide care in whole new ways. all working with a new generation of technologies powered by our gig-speed network. because beyond technology... there is human ingenuity. every day, comcast business is helping businesses go beyond the expected.

to do the extraordinary. take your business beyond.

>> what do you think is going to happen today and where does this get us in terms of seeing this bill turn into law >> you'll get out of committee and it could have within the next ten days by the leader mcconnel what he doesn't know is when impeachment happens in the senate, it has priority over everything so he can schedule this pretty soon unless articles of impeachment come over and then we have a big problem. it might not be done until the end of january but it will pass the senate sometime within the

next few days or at the most the end of this month. >> it has to be exactly the same because trade agreements are different than other legislation. they can't be amended. so as it's submitted to the congress, the house had to vote it up or down and we have to vote it up or down. >> what's the support in the full senate at this point? >> i can't tell you whether it be 70-30 or 80-20 but it's going to be overwhelmingly approved. it's better bipartisan. >> what do you think the difference will mean to the economy once this does get passed what will change >> i'll quote the international trade commission of the united states federal government, create about 170,000 new jobs.

increase about .3 of 1% which will be more than a 10% increase. it would be very good for agriculture particularly because we have never been able to get it in canada and not much of so it's going to be very good for manufacturing. 25 years ago when nafta was approved there weren't even issues for negotiations. let's say data trading as an example or intellectual property

as an example. it covers a lot of things that would have never been thought of 30 years ago. >> senator, you point out that there is not a lot of bipartisanship that takes place in washington these days but much of that is because of the impeachment hearings however you and senator from alaska wrote something earlier talking about one place where there is bipartisanship and that's talking about passing reform from drug prices that is an area where you can break through the partisan sound barrier. what do you think has to happen next what are the plans on the table for trying to tackle some of that >> well, you read that article and that article spoke about the by part is on approach to bringing down drug prices by mostly putting a cap on the yearly price increase no more than the rate of inflation

and just announced most of the companies that would be closer to 2 or 3% it was in support of the bill. it's the only bipartisan bill that can get through the united states senate. and so the president supports it, we have bipartisan support in the senate. what the main thing we have to do is if we can convince speaker pelosi that the bill she passed before christmas can't get through the united states senate because it can't get 60 votes, and see legislation and that's pressure on the leadership of the united states senate to get our bill up because there's no

other bill that can get to 60 votes that's required. >> the price fixing is something that can get 60 votes plus, do you think? and it's through the united states senate. and they have to remember, we're not setting prices and research and development and everything that it takes to get their product on the market which is about $1 billion. and it's always willy nilly. >> what did you say? >> why wouldn't they just start with higher prices >> it takes to develop a drug and what it takes to get it on the market

that's not congress's responsibility but it seems like we have some responsibility to have a reasonable increase in prices from year to year. >> okay, northern iowa is at home against indiana state should i take iowa i haven't heard of indiana state since larry bird. >> i saw unib saturday night and i think that if we play the same way we did then we'll take indiana state very easily. >> 7.5 points. i don't need to worry. >> that's very good. yes. >> okay, senator thank you. all right. >> giving youbetting advice. >> telling me to go with it. it's legal. >> getting ready to speak to the world after dramatic escape from japan which we're told now cost more than a quarter million dollars. the latest details in a plot that seems only ttgeing more

cinematic as it gets squawk returns right after this.

brki enoeangcomic data is next right after this break stay tuned you're watching squawk box on cnbc

live breaking news our november read on trade balance which will be a deficit comes in at minus 43.1 billion that's a tad smaller than expectations sequentially the 47.2 in the rear-view mirror drops below 47

billion to 46.9. now 43.1 is the smallest trade deficit since october of 2016. so making some progress there. of course we have durable goods yet to come. we have popped over 180. remember, we're right around the 185-187 level on thursday before the iranian news and earlier that morning we're in the 190s so we're coming back dollar index is up although it's hovering at some of the lowest levels since july and the chinese currency, is at the best level since august of this year. becky, back to you. >> rick, thank you very much steve is here. he has been looking over the numbers too. he has some insight to it. what do you think? >> there's so much going on with this data here. >> the boeing situation. because of -- >> brilliant becky quick it's boeing. so i have here exactly that number i was just looking at a decline in aircraft exports.

a decline in, actually an increase in november for agricultural exports but overall we're running below year to date by about -- it looks like about $4 billion. >> that's interesting though, the increase in november in agricultural is that because the china started buying or is that before they agreed. >> it might be too early it could be a situation where u.s. exporters were finding alternative markets for some of their goods. >> which could be even better. >> it's a commodity. the other thing that's happening is you have a decline in imports but exports also declining and not as much and to tie everything that i have done this morning together, the reason why u.s. exports have held up reasonably well given what you talked about earlier which is boeing is because of oil exports. that has helped the u.s. trade position. >> because they're exporting oil as we continue. >> right now you could get happy if you wanted to about the improving u.s. trade position to which i would suggest go ahead and get happy but it's a little early.

we have a lot of gyrations in the data from the trade, right we got rid of the possibility of the additional tariffs in december but the tariffs of september remain so i would say we're going to need a couple of quarters to really understand a, how the tariffs are going to effect trade and then second of all to let it all even out and get a feel for where the real true trade balance is and the effect. remember we bring it in and if we bring in less of it that helps gdp but inventories don't go up as much. >> you're talking about a few months of data that we still need to get. we're not necessarily going to have a very clear outlook on some of the things with the chinese and trade negotiations and potential agriculture for years to come. >> and not growth. because where we are is somewhere in this 1.5 to 2.5% gdp range. >> big range. >> we came into the fourth quarter looking at 1.5

now they're closer to two and what i have seen is because of the trade situation, economists are boosted the fourth quarter but they're taking it away from the first quarter because of the inventory and the -- >> right. >> so what we're looking for here is we had a growth slow down that's for sure. the more important question for the market is where is the bottom of this slow down here? it had thought to be the fourth quarter. now it seems to be pushed ahead to the first quarter with us having easing trade tensions and that helps business confidence comes back which helps business cap ex come back which means a rise toward a 2, 2.5% growth rate toward the end testify yof. >> i read the article about the number of bankruptcies in the united states. we're at the highest level in 2019, we were at the highest level of job losses from bankruptcies since all the way back to 2007-2008 potentially. it had been quite awhile

we're talking today about the pir one bankruptcy and additional lay offs coming from other retailers. it starts to make you wonder is there something happening beneath the scenes that we're not measuring closely enough or does it not matter because there's so many new businesses making additional hires? >> it matters. it's not at a level where it's like oh my goodness we're on the brink of a recession but you know there's tremendous change going on in the retail business and the fall out from that is something that i don't know if you remember, i haven't really heard it yet, a couple of years ago, year after year in january, companies, retailers would not make their christmas sales goals in the stores, announce store closures and lay offs. it may be that this is the month that we hear more of that from the retail side. what's going on in retail relative to what's happening online. >> i don't know how you measure in terms of the jobs that are

being added in ware houses or logistically for deliveries and other things i don't know if there's a net-net, if it's positive or negative. >> ultimately it's probably positive for the economy which is lower prices and better productive you would think that we would, all things being equal, gravitate toward an optimal sales method of doing things but what does that mean? it means that stores close, it means real estate values decline. it means you have pressure on the banks that did the lending a lot of destruction it's the creative destruction that we talked about that we really want but that doesn't mean it's painless >> steve, thank you, good to see you. >> next, nissan boss carlo carlos ghosn may soon be ready to speak since his great escape from japan look at this board

when he was arrested in tokyo and charged with financial misconduct that's impossible to see it's too far away she has been the subject of an arrest warrant out of japan they're accusing her of giving false testimony during a hearing in 2019. not surprising that you can expect if they issue an official statement to call this an absurd charge another example of japan going overboard. also we have heard from nissan

it will not affect nissan's basic policy of holding him responsible for the serious misconduct uncovered by the investigation. the company will continue to take appropriate legal action to hold ghosn accountable for the harm his misconduct has called nissan remember he went on a bullet train. how did he get there well, the belief is that he was in this equipment case and he was loaded on to a jet chartered from osaka to istanbul the white markings and the dust that you see there, that's because authorities and this is a picture we obtained in turkey of authorities, they did the finger prints on this case after trying to investigate who helped him out. by the way, we also learned that

when he did that flight from osaka to istanbul. the charter lease agreement it was $350,000 that's how much the agreement was to pay for two flights one from dubai to osaka and then once they picked up mr. ghosn, unbeannounced to the crew apparently and went to istanbul. a payment and they have not received the other $175,000. somehow i wouldn't be surprised if they're not going to get that money. don't forget, we'll hear his side of the story tomorrow that's the beginning of he said versus she said. they're going to be throwing out their side of the story. >> what are the biggest answers that you'd like to hear from the press conference tomorrow? if it answers your biggest questions? >> the big question that everybody wants to know is not

what carlos ghosn wants to hear but the main question is how did you arrange getting out of japan? he's not going to talk at all about how he was ai believe to orchestrate escaping from japan. separate from that there's the questions of the allegations against him, of not reporting or underreporting his compensation and he claims he can show that he was set up by his company i'd like to see the evidence that he says is clear that nissan set him up for a coup that it was executives within the company that made this all up that's what i want to see. >> all right, phil, thank you. when we come back, elon musk celebrates in china by busting a move

also predictions of big fed movements and change in the balance of power in congress the latest chapter in an annual squawk tradition is next stay tuned >> don't forget to subscribe to our podcast. you'll get interviews, original content, and behind the scenes access look for us on apple podcast

>> shares of pfizer are higher by about a percent of show and pfizers best in class growth profile and see upside to drug franchises focussing on heart disease and cancer as well as it's relatively conservative balance sheet and robust dividend their words. so those shares up .5% next up shares of kohl's down about a percent or so. it gets downgraded to a hold to buy. the target goes to $52 it was $65

they like traffic driving initiatives like partnering with amazon for returns but they see competitive pressures continuing to provide head winds to things like comp store sells and margins and then end on shares of paypal which are up 2% around 183,000. and gets up to an outperform and goes to 130. growth acceleration from key partnerships like uber and it is up nearly 2% back over to you, sir. >> thanks. we're going to move on and this will be fun. we have a couple of gentlemen here from boeing fixing it's plane problems to oil prices and millennials making eye contact making some big predictions for the new year as he has done for the past 35. joining us as chairman of private health solutions at blackstone also joining us is joe zidle

it says we're talking about a wall street firm i have a problem with what they wrote for this also his partner in crime at blackstone >> right. >> i think we just mean in developing the surprises >> the investment strategist at blackstone you have been doing this for awhile. >> right. >> 35 years? >> 35. >> come on every year. it's hard to do because you make it hard on yourself because these are things that no one is thinking about. >> not no one. >> we talk about the difference between unknown and unknown unknowns and you're dealing with unknown unknowns. >> improbable events. >> you helped? >> i did help. we started working on this in august and it's been a lot of fun working on it. >> how did you do last year? >> it was a goodyear. >> it was a goodyear what was one of the best things that you got right last year and what was the most glaring thing

that didn't happen at all? >> the most glaring thing that didn't happen? we were negative on gold and gold went up we were dead wrong on that. >> you didn't think the stock market was going up 30%. >> no, we thought 15 which was a reach at that point. >> okay. i would say the other thing that we thought that emerging markets, particularly china and brazil would be leaders and they had pretty goodyears and we also thought that the fed would stop hiking and if you go back to the end of 2018, they ended up cutting of course and weaker and the fed would stop. >> you're about to tell us surprises but you start in august so the question i have is do you have any views in august that changed between august and now? and do you start with surprises that you had to adjust >> we started with a longer list of surprises for sure and then got that down over time to the ten surprises of 20 and then published five surprises where maybe we don't have as much

conviction or maybe they're not as market moving >> the next two or three years though. >> so let's go into -- do you want to do them? >> let's go. >> i'm going to do them as long as i can. >> take over. >> let's go. which one. what have you got? what's going to happen what's your surprises for this year >> well, i think the fed is going to ease. >> fed is going to ease. >> the economy is going to be weak and the fed is going to step in and ease i think the democrats are going to take the senate that would be a real surprise. >> just one issue on this, you think the fed is going to ease and you were working on this long before any of the middle east so you thought the economy was going to -- >> we did have an iran surprise and we thought iran

there's likely to be some evidence or some stories that are coming out that causes people to defect from trump's camp and to support more liberal candidates at the state level. >> the senate people stick with trump or by not sticking, or if they stick with trump, then they get voted out or vote for impeachment? i don't understand what do they do? do they vote for impeachment or

stick to their guns and then that gets them in trouble? >> they stick to their guns, and that gets them in trouble. >> so you're assuming something else, there's another shoe to drop >> right, that there will be, right, could >> okay. so what about the 2020 election? >> no, didn't make a prediction. thought. >> you are going to lose the senate because the guy is, you know -- >> it's different. >> we could lose the senate because people are so mad at him getting impeached but still gets reelected? >> no, they're mad at the people -- >> who stuck with him but not mad at him >> they're not mad at him but they reelect him >> they reelect him possibly >> we didn't include it in the surprise >> you say no comprehensive trade deal with china. >> right phase one deal but no phase two.

>> i don't think that's an dimew >> no. i think most people say there will be a deal before the election that will involve intellectual property. >> a second trade deal >> yes >> okay. self-driving cars, we just had elon musk dancing doing a little risque dance about his teslas in china. pu think self-driving are not coming soon? >> i think it will be delayed. the technology is not moving ahead as fast as everybody thought it would >> what else is on our list here we've got, you say ukemerges successfully from brexit?surpri. >> it's a winner in the divorce. >> what's the surprise >> it's a surprise >> why is that a surprise? you think that brexit is going to somehow, you're still -- >> who is the winner versus

europe or the winner versus others >> they're going to do something with us immediately bilaterally for trade. >> for most of the last two or three years people are projecting their worst fears into what brexit might be. >> growth has gone from two to one. >> back to wherever. >> everybody thinks brexit is bad for the uk if it turns out that the uk is able to survive it and thrive, that's a surprise. >> you say that boeing which we talk about literally not just every day but maybe every hour, that the max is back in the air. you don't say, when you say this year, i can make the same prediction potentially but when do you think that happens? you want to put -- >> don't you make it because it won't happen >> you can put a month on it >> i can't put a month on it probably in the second half of the year >> how about your partner in kroo im? >> i wouldn't put a month on it but the other part of the surprise the stock will be the leaders in 2020, and one of the -- >> stocks you said plural, airlines as well

>> the industrials, the airlines, manufacturing side and one of the other themes is the s&p on an equal weighted basis will outperform on the cap basis. >> is the s&p going up this year and how much or down? >> the s&p is going up 10% this year >> then you wimped out and took his side then because you've been mr. gloom and doom every time you come on you threw in the towel you buried the lead. so you finally capitulated >> i knew that's where we were going to go. >> am i wrong? you're at 3250, supposed to be at what according to you >> a combination of enthusiasm, right, and i think there's this, you saw massive outflows in 2019 it could be that investors begin to capitulate, you get in-flows. something pushes the s&p above 3500 >> oh, my gosh >> byron, you got some good -- >> i saw the hundred number. >> byron, you win.

he wimped out totally >> i didn't wimp out >> last time you were on people were mad i was getting you to make a real prediction instead of waffling. >> we stuck with 2900. >> now you're at 3500 okay you threw in the towel and now at 3500 because byron told you to that's okay, all right >> here is the question, you also say we'll have corrections at the 5%, that's a natural thing, what are we at for the year so far, 2%? are we back now? >> we were just at a new high. we went down 200 points. >> you think we're going down another 5% >> we'll see multiple 5% volatility that's something we didn't see almost at all in 2019. you have the shock and awe of the central bank policy from balance sheet tightening to easing from heightening to cutting. a lot of that is wearing off >> if the senate goes and bernie wins, we're going down more than 5% >> we're not saying bernie is

going to win >> if the senate wins and bernie gets in, people don't get scared of biden because republicans will still have the senate >> if a democrat takes the presidency -- >> and the senate goes >> and the senate goes, it's going to be a very different -- >> sol my friend thank you, and thank you meantime we've got some breaking news overnight from tesla. show you some images of elon musk dancing right now, elon musk celebrating the rollout of the model 3 deliveries to the general public in china. jim cramer, get his take on mr. musk's dance moves and maybe the stock as well. jim? >> look, i think he built that plant in ten months. that's extraordinary talk about 150,000 cars and 250,000 cars this car i think is he's got two models will sell like hotcakes and we keep hearing wait a second it's almost as big as gm and ford together. it could double. it could be a lot bigger than that the reason why is they have

growth and this market thrives on growth. it does not thrive on value, so it does not thrive on ford's dividend which some people are worried about. i say dance all you want, man. you got it coming. you've done it you've succeeded in a lot of ways nobody else can >> i'm glad your wife drove one of those, likes them, because it got you wrong right at -- long right at the right time. >> it did, one of the luckiest things that happened caught most of the move because sometimes -- i was with the cfo of the company if they want $2 billion they it raise it like that my daughter had been in one and my wife drove it and then i looked at the, read the balance sheet after the upset surprise and said you know what gotta own a car, gotta own the stock and thank heavens. it's been a good move. >> jim, we'll see you in a couple minutes on "squawk on the street." >> thank you guys. >> you have the big interview with the ceo of chevron taking place with the ceo of chevron in the 9:00 hour. we're back in just a moment.

when it comes to your customers' expectations,

there's one thing you can be sure of. they're changing by the nanosecond. that's why cognizant created a unique engineering approach to design and build new digital products. learn how cognizant softvision designs experiences and engineers outcomes. ♪ cool. ♪

let's get a final check on the markets before we hand things off to "squawk on the street." futures have taken a dip at this point, dow futures have gone from up through most of the

session to down about 65 points. >> senate prediction >> byron wink. >> zidl got long >> nasdaq down yesterday the markets managed to close higher watch all day long join us tomorrow right now it's time for "squawk on the street. ♪ three that's a magic number, yes it is ♪ ♪ it's the magic number ♪ somewhere in this hip top sou community ♪ good morning to tuesday. welcome to "squawk on the street." i'm carl quintanilla with david faber and jim cramer futures lost some ground this morning as the market weighs the impact of the u.s./iran conflict europe is up, oil takes a breather but gold near six-year highs. stocks opened lower but within striking distance of new all-time highs as investors look to shake off middle east worries. >> plus chevron is pulling u.s