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>> good thursday morning i'm carl quintanilla with jon fortt and morgan brennan dow, s&p, and nasdaq at highs. we'll be watching for dow 29k here names like facebook awfully close to an all-time high, fall bet, apple, microsoft going back to their ipos. we could use yoosome insight fr you today, bob what's behind this rally why is it so powerful? is the street behind in their numbers? >> we think coming out of twooi2019 the nasdaq was up about 39%. but we were coming off an artificial dip, so maybe look from october 1th to the end of 2019, that dip is more like 15%.

strong year, don't get me wrong, but not as anomalous as some would think. a go-year stack basis, how have we done, up about 30%, growth rate of about 15%. once again strong, but not anomalous. >> you mean in line with historical patterns. >> exactly right you think about the impact of the averages from apple, facebo facebook, microsoft, of that 35% growth they're about 15 points of it. pull them out, it would be a 20% growth again great, strong, but not anomalous. it reminds me of what bill miller used to say from legg mason. he beat the s&p 15 years in a row. his line was accidental fault of the calendar only from january to december did he beat the s&p. it's not just january to december but accounting for that anomalous dip at the end of '18 to get a better fear for how the

year was >> mow great do earnings have to be the next time they come out for this to be maintained? valuations have kind of stretched. >> it's a great thing. the recent part of the rally has been driven by multiple expansion. so the s&p historically over the last five years trade around 16.8, give or take we're over 18. if you look at high-growth tech stocks, typical multiple on that, revenues, about 7 1/2 times. now we're at double digits multiples have expanded. can earnings expand with that to get further growth what was interesting was coming out of 3q if you recall it wasn't a great earnings season it wasn't a great rally. there were -- there was a lot of conservativism to carl's point, wall street has overemphasized the conservative. >> what does this mean for the m&a outlook this year? >> we're coming off, you know, a

$4 trillion year it taos fourth best year in history. sort of tremendous m&a year that we've had. we think the m&a trend is going to continue into 2020. and because of that, we think that's going to also help support valuations, whether we take it out to competition in the marketplace, it's supporting the valuations from here when we think about going into 2020 and what can drive valuations, one thing to think about is the macro you should be willing to pay a higher multiple for a high-growth name also trades and tariffs, right that comes back down and being more reasonable. that helps support it. regulatory can help support it earnings growth can help support it there are a bunch of different things that can drive these trends into 2020 and beyond. >> but what's cheap to buy in m&a? >> great question. some of that is going to take some of your view on time frame too. is it cheap off of this year

some of the p/e players, they may look expensive at first but may turn something around, cost-cutting sh cost-cutting, getting the company ready to come back out so what's underreported for 2020, software, semis up strong. when you think about caps, the large caps did very well i mentioned apple, facebook, all that so the mixed bag there, there could be value found there as well. >> are we going to see the impact of the collapse of the softbank vision thesis maybe beyond just the starters they're invested in. >> great question. i'll take it from softbank and say what we're hearing, yes, absolutely we think so we think what's happening, we tell every one of our companies we talk to, meet with their boards, is that you need to be

able to show a path to profitability or at least strong underlying economics those questions have weighed on uber, lyft, obviously questions around those things. so every company now from the c suite to the board of directors needs to have that path to profitability and using those economics if you're not already profitable in 2020, we should see some of these ipos come out that are profitable you'll see that mix as well. >> exactly my next question. what does that mean for the ipo pipeline >> the ipo pipeline, if you look at the 2019 class, right, the average return of all tech ipos was somewhere in the midteens, 16%, 17% or so however, you think about a portfolio manager this, they can't buy the full position on the offer. if you look at the price in the first 30 days, where the retail market is, you're down about double digits or so from that point. that sets the backdrop for how 2019 did

as we look towards 2020, you have over 450 unicorns in the private markets. we think a lot of those are coming in 2020, particularly when you see 2020 first half loaded i think the second half a little murky because of the elections we don't know who the candidates will be now. but companies are thinking about going in 2020, you want to go in that first half before you get to the election questions. >> you mentioned uber, lyft, peloton, smile direct. none have recovered their ipo price. how does that weigh on the calendar for those this year >> when you bifurcate it and split it out and look at sass-type companies or this companies with predictive revenue, recurring revenue, they've done well, up about 40%. the companies that don't have those haven't done as well they're down about 20% or so i think you'll see a greater emphasis from investors on the

predictability of these revenues, the stability of these revenues once again, back to the unit economics, are they strong >> i thought it was interesting. chase is altering the terms of its sapphire reserve card, all the rage, and the two big perks are lyft and door dash subscriptions. does that say anything about where this subscription economy and the refr knew models for those kinds of companies might be headed in the next year or so >> a really good question. investors love subscription companies. you can count on that predictive nature, particularly a low amount a lot of people are looking for those models to evolve how do you expand those subscriptions, get more customers in or keep increasing the prices of the subscriptionings it's an interesting point. >> i want to go back to -- talking about the macro backdrop real quick given the fact the geopolitical risks are front and center, does

that make it point to these being bought up? >> cfius, they're weighing on cross border so as far as m&a cross border, it definitely weighs on that as far as valuations, take the recent conflict with iran, up at all-time highs i think investors are look through some of this the interesting part is everybody has been expecting a recession, a recession that hasn't come. there's almost this cautious optimism looking toward 2020 >> steepening the curve solved problems in people's minds bob peck thank you. >> we are getting a news alert on airbus. >> two most popular planes, the 737 for boeing and the a 320 for

air buggs. airbus will increase production of its a 320 in the plant that it has the plane being built in in alabama it is going up to seven per month by the beginning of next year it's currently at five moves up to six per month in a couple weeks and the company is saying it will add another 275 job, pump another $40 million into its alabama plant and increase the a320 production to seven per month early next year. back to you. >> phil lebeau, thank you. when we return, tesla passing the market cap of both gm and ford combined. where elon and company go from here is next and a reminder watch us live on the go on the cnbc app i am totally blind. and non-24 can make me show up too early... or too late. or make me feel like i'm not really "there." talk to your doctor, and call 844-234-2424.

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welcome back to "squawk alley. facebook not budging on its political ad stance saying it will not limit how those ads are targeted to potential voters it said it would give users tools to see fewer of them joanna stern at "the wall street journal" and eli patel of the verge join us now. welcome to you both. joanne, i don't think it's necessarily surprising they sort of drew a line in the sand strongly around this. it does seem like the bigger issue isn't necessarily the idea of whether they're fact checking or not but the microtargeting of those ads. >> not surprising.

this is another -- we hear all the complaining. we are just not going to do anything about it, except for make some small tweaks to the tools and let you think you have a little more control. yes, they're doing a little more on the microtargeting segment, a little more control for users to take themselves off certain lists, to not get ads. i'm knomost interested in the nw set where you can limit the amount of political ads you see. just make that turn on by default, which is obviously bad for business, so that's why it's not turned on by default >> facebook says it continues to think the government and not private companies should set the boundaries of what advertisers can do in an election. >> facebook keeps talking about the honest ads act mired in congress for a year and a half, two year, isn't going anywhere they say they're implementing parts of it, require some of the disclosures, require them to

keep a library of who's buying what the other end of the spectrum is twitter, which banned all political advertising. this isn't a huge market for any of these companies michael bloomberg is spending $115 million in the last cycle on television advertising, but outside of that it's not a business on the scale. the coast of monitoring, fact checking those ads is very high. the reputational cost of making a decision that might cut candidates is high we need rules that give us cover to make some of these decisions that could be, unpopular when we fact check and we say you can't run your campaign on our platform campaigns are running an extraordinarily high number of ads. the trump campaign put out 800 ads after the assassination on iran that's a huge amount of advertising for facebook to fact check without the cover of a law

that requires them to do it. >> i can't help but wonder how this would read if the facebook were a texas-based, conservative-leaning company and it were seen as the political ad environment was tilting things towards democrats. would the same voices be saying, wait a minute, we need to limit political advertising because there are all these liberal ideas getting out into the country running rampant? there is a political overtone to all this, is there not >> sure. there's definitely a political overtone to this and facebook has been smack in the middle of a all that talks of zuckerberg meeting with some politicians on the left and the right but a lot on the right certainly. there was this leaked memo or email a couple days ago printed in "the new york times" from andrew bosworth, one of their top executives, talking about how they need to take a stance down the center and being very aware for the first time, you saw him and facebook executive being very aware of the implications of the consequences of facebook on elections and on

politics >> a remarkably convenient memo to leak, by the way. not saying, hey, we're in the camp so we really have to be down the mid >> especially facebook, anything written internally they have to expect they're writing it for the world. >> twitter is saying it will experiment limiting replies in an effort to combat online abuse. good idea? >> i think it's a great idea i think if you are particularly a young woman on any of these social platforms, if you are moderately this -- if you accidentally go viral, you're suddenly beset by a lot of replies to your tweets or sud n suddenly attacked. we see it and cover it a lot twitter giving tools to people to say you can control your conversation here is long overdue. i think these particular

features are rolling them out slowly, being careful with them, but thefsh ney have been neededr long time. i need a button to edit tweets i wish they would give that to me >> absolutely. >> i need that i write flawless tweets unlike eli here fact checked you don't know how much money he has to spend on fact checking for his tweets >> good thing he has a good 409k >> all of these controls are great, the new settings are great. it's not only to talk about discourse but i think it will make the platform easier to use for most people. >> next topic. call it an electric shock. tesla's recent run bringing its market cap higher than ford and gm combined. joanna, i mean, pretty incredible to think about this electric vehicle company do not produce the same quantity

or level of vehicles as some of those traditionaled but it's climbing higher. >> do you not have footage of elon musk dancing? >> we played a lot of it there it is. >> there we go >> we played it against ballmer's dance, every way, up and down, sideways from here to sunday i've been in front of a mirror practicing my own routine of this dance. i mean, look, can't talk about anything while he's going. you mentioned car companies. the big thing about tesla, is it a car company. that's the big following of tesla and musk, is it a car company? the following, the excitement that happens around even a truck that isn't coming out for a number of years, this is what's pushing this company ahead of course also lots of success in the last couple weeks, lots

of success with him dancing in china, rolling the carrings off the line there, announcing the model j coming out a lot to dance about >> are we out of the danger zone when it comes to elon musk and erratic tweets is it smooth sailing, cruise control from here, as far as that element is concerned? >> i don't think we're ever out of the danger zone when it comes to elon musk and erratic tweets. our editor, liz, writes a somewhat infrequent newsletter called "this week with elon. she says there are periods of high and periods of low with elon scientists have not determined the cycle. opening a market in china. they have a lot of demand for the products people are excited about the truck. obviously pickup trucks, one of the biggest categories to enter enormous volume.

ford f-150, the best-selling car in america for years, that's a big slice of the market to try to take share from i think a market cap getter than 40g combined, it reflects those companies are stagnating and they need to change. tesla is growing and they have an enormous amount of ability to take share from them as they enter new categories and markets around the world >> stock market gap bigger than 40g. thank you for join us today. >> thanks. still ahead, how are your 401(k)s doing? the president tweeting that earlier on today's rally the biggest movers to watch as we aappreciate 29,000 on the dow next and after the break, the s.e.c. chairman signing off on huawei and 5g we set out to make the best bike on the market,

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welcome back i just got back from the consumer electronics show. tom wheeler has criticized for the way the c-band spectrum has been handled it is midband protection in the sweet spot for cell phone and video. they said not to expect an option that would make it available for 5g until year end. we'll continue to aim for an option to start by the end of 2020 it's obviously a very complicated proceeding many of the midband proceedings we've got outstanding, 3.5 gigahertz and others have been complicated. part of the problem is we started from scratch we didn't have any initiatives on this front so we've been washging hard in the last couple years to put the u.s. in

position to lead on 5g overall but midband spectrum c band has been on the board for urs. >> i also talked to him about huawei and he said essentially it doesn't matter if huawei's equipment itself is secure the problem is that the chinese government has rules that allow it to force huawei and others to compromise their technology down the line i spoke with huawei's vp of risk management and part ler relations about what he's telling potential customer who is worry that buying from huawei will get them in trouble with the u.s. government. listen >> i think they should talk to their congressman or senator about the fact that we need to put pragmatic solutions in place, not fear-based solutions. >> test the equipment for back doors, dank is saying but pie is moving beyond that, arking just because of the way the government and china is set up, equipment manufacturing shouldn't be trusted

it's a sliply slope because iphones are manufactured there there are lots of different government policies around the world. we have to decide is it about the equipment or is it about the ideology of the place where it was created? >> that's key. is u.s. tech assembled in china the same as china tech assembled in china >> the same constitution you have the civil military fusion written into the constitution in china and i would imagine that is a part of what has driven lawmakers here in this country to take a close look at some of nies chinese tech companies like huawei >> what are the implications the other way around when certain countries might say we don't like that u.s. policy or law and therefore -- we'll see how that shapes up. another quick story from ces has to do with trade u.s. china trade war opening up opportunities for other countries. taiwan brought 82 start-ups to

ces this year, up from 44 last year and 32 the year before. the director of xilinx and technology says the trade war has prompted more tech companies to bring manufacturing back to taiwan from mainland china >> so the companies, when they're moving there, because now if it's more manufacture in taiwan, you know, they have separate channels to local industry and also to the u.s., right. also the whole global ecosystem. you look in the future that the start-up ai, iot industry is much easier to do the whole integration by application >> particularly important for taiwan because they're strong in chips but recognizing they have

to get stronger in software and other areas in the coming area the mayor of seoul, korea, was at ces there were 294 south korean companies at ces this year, 49 more than last year. i asked the mayor whether they're able to gain advantage from the trade war >> of course, yes. i can safely say that. seoul is very safe, advanced and strong in terms of high tech and the environment and so on. as i mentioned, seoul has modern cities with more than 5 million populations within two hours so there is a reason why there are so u.s. or western companies are coming to seoul. >> chinese companies on the

other hand have 5% to 6% less exhibit space at ces this year bp the organizer of ces wouldn't tell me how many fewer chinese companies were there, china the an important partner, they gave me numbers on all the other countries but not on china but they said less exhibit space japan had less thailand had seven start-ups for the first time >> reflecting global trade that's interesting ces is a window for that great stuff all week, jon. european markets about to close here as we see s&p 3,270 >> how quickly the nature of the market can change things, sending european stock fos a record high. the dax up 1.3%, a two-year high

for the german index the latest data offering some hopes of stabilization industrial output rose higher than expected. even as its key auto sector saw production hitting a 23-year low due to slowing export, individual automakers are reporting strong delivery numbers for 2019 bmw said it was a record year. today volkswagen said sales were above 2018 levels, not flat as previously forecasted. marks and spencer plunging over 10% following disappointing earnings, a cut to its 2020 guy dance, citing supply chain challenges lastly, takeaway shareholders approvering the acquisition of britain's food company, justeat.com.

the deal follows an intense battle in the last five months shares are higher by nearly 2% >> it is time for a news update. sue herera has that back at hw as well. >> indeed i do here's what's happening at this hour, everyone the judge in the harvey weinstein sexual assault trial declined to step aside as jury selection continued into its third day. weinstein's lawyers questioning judge james burks' impartiality. weinstein has denied all the charges against him. rail workers, teachers, doctors and lawyers joining other parisians in a nationwide day of protests and strikes to protest macron's plans to overhaul the pension system. no talks between the government and the unions has been reached. a second town on australia's kangaroo island has been evacuated as fire crews deal with flare-ups and new blazes. a total fire ban has been

declared across the island as temperatures and winds rise. pope francis warned that increasing tensions between u.s. and iran were setting the stage for a broader conflict in the middle east while gjeopardizing refr efforts to rebuild iraq. back to you guys when we come back, one stock, two upgrades, sending shares up more than 6% what tock is it? we'll tell you after the break - when i see adversity, i find a way. - when i hear never, i say now. - [announcer] southern new hampshire university is education made to fit your goals with over 200 degree programs, flexible class schedules, and some of the lowest online tuition rates in the nation. (cheering) - so when i face barriers, i can break through. - [announcer] breakthrough at snhu.edu.

dow is inching closer to 49k. bob pisani is on the floor >> thank apple and microsoft but we are off to a great start for the year and very good early indicators for a good year ahead. first five-day indicators, a very good brommer to we're up first five days 0.7%, when that happens, the rest of the year is up 83% of the time the other major indicators lagging a little bit but i'm not worried about that that's a good start for the year overall. 2020 looks a lot like 2019 in tern terms of the breakouts semis and industries gold, a six-year high three days ago in gold. emerging markets another star towards the second half of the

last year also on the upside for 2020 this new highs looks a lot like 2019 highs apple, alphabet, microsoft, facebook, familiar names nvidia, many of the semiconductors up. we're looking for a broader breakout in the overall markets. two sectors i want to point out, reverse trades going back. with remember in the second half of december retailers, particularly apparel and department store, had modest little rallies as people bought the losers for the year. jcpenney, gap went from 16 to 18 in the middle of december. this is reverting back back, bad and beyond a loss. kohl's, jcpenney overall, you see what's going on here quickly settling the brief rallies we had in these stocks instead they're going back to the old days ross, tjx, lowe's, the discounters doing well today at new highs.

that very small group that continues to do well in retail the other main reverse group, buy oil names in the middle of december eog went from 72 to 88 in the middle of december towards the end here partly this was on iran janish shoes but also we also saw a rally before all of this as oil started moving up. this also is starting to revert back in. remember, let's buy the losers towards the end of the year and hope they do yes, that will work providing you have fundamental support you can't just do a mechanical thing and hold onto it for weeks and weeks assuming there will be a fundamental change in the department stores, you sent the stocks back down, same thing here with these energy games. back to you. >> bob pisani with great insights as always thank you. meantime, snap is getting a boost after receiving two upgrades that stock up 6% jeffreys also publishing its top

2020 predictions with bold calls on ammon, facebook, and ebay the analyst behind that upgrade and those calls brent hill joins us at post9. >> good morning. >> snap, market cap-wise it's neck and neck with twitter that raises the question for me. twitter has been kind of this second-place social media choice for a long time. if you think snap is going to pull far ahead of them, what's really going to power that are they going to be able to gain a lot more users, or do you think the little group they've got thus far -- it's big, but comparatively little, it's good enough >> a good point. twitter is down, snap is up, so why upgrade snap we think there's a lot more left user growth, monetization and the pathway to profitability we like a lot we like the position they're at with the younger audience. my kids are completely addicted. i have to rip the phone away from them to get them off. i think that addiction continues as they age up

we think there's a lot of different ways they can monetize in map, they have the talked about this half the time the kids are spending time looking for their friends. why couldn't they see an ad for chick-fil-a or another advertisement or a discount to go into a store? we think there's a lot of opportunity for monetization going forward. >> what happens when the tide goes out in the digital market facebook and goog le are so strong does snap get hit? >> facebook is number one. they're number two in social twitter still has some opportunity year obviously to snap back from what happened last year with the issues on their product. so again, historically, when you have issues related like that, the stocks can come back we would say twitter is down but not out, so we like the fundamental position

it could take quarter or two to shake out. >> you talked about that amazon outgains google and others for 2020 what do you like about amazon given the fact it did underperform >> we like the underperformance as you mentioned we like the continued investment that they're making. one day we think that investment will pay off historically, amazon does well when they're in harvest mold, and they're in investment mode right now. it will take time to play out, but we think it will be a tailwind for them coming out of this we like the business a lot it's multiple times the size of microsoft and google they're number one by a large margin the retail business is lower margin and less unpredictable. >> you downgraded ebay >> they're not only competing

against amazon but target and walmart in their online initiative we still favor amazon's position >> can you characterize how the elect will impact advertising overall this year? >> it should be a catalyst with the olympics, with everything that's going on. so it should be a good tailwind. i don't think advertising dollars online are going to be -- have any issue this year we think there's a strong tailwind the economy is good. you have big events that are happening. they're trackable. this is effectively as you're seeing, this is one of the biggest areas of spend that continues. we're still pretty positive about what we're seeing in the overall advertising market >> all right, thanks hope to see you soon >> thank you >> we'll hit the other big tech movers in today's rally next but first, rick santelli, what are you watching today >> i'm watching the great big stock rally. many think it will continue. lots of upgrades but is there a fly in the ointment hey, saved you a seat.

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we'll start right away negotiating phase two. it will take a little time i think i might want to wait to finish it until after the election because i think we can make a better deal, maybe a lot better deal. but phase one is a phenomenal deal could be up to $50 billion in farm product, so that's something that -- the most they ever did was $16 billion, so they go from that to up to $50 billion. that's numerous times more than they were buying in the past it will have a huge impact i see farm prices are going way up i see corn has had some big increases in the last little while. cattle has been doing really well and the farmers like me anyway that's what i like about the farmers. what i did do, and you know this better than anybody, i was able -- they were targeted by china. look, china's negotiating. i don't blame them they say the farmers like trump so we'll talk about the farmers

and they did the first year it was $12 billion. i asked sonny perdue, secretary of agriculture, i said what do you think, he said it's $12 billion. that would have caused tremendous consternation they were hit for $12 billion and i took $12 billion out of the tariffs. we had tens of billions of dollars left over. i gave et to the farmers next year it was $16 billion gave that to the farmers the farmers did pretty well and now they're dow jones industrial average great and prices are going up substantially and china is kicking in. china has started to buy, japan, the deal is done, thefy have bee buying a $ho billion deal the question i have is if the farmers can supply all that much it's the biggest contract ever signed i think it will be great for the farmers but also great for regulatory, great for bank banks, great for finance companies, a lot then we'll be covering the opening of china and various other things in phase two.

>> on impeachment, sir, would you support a deal for witnesses if that included testimony from adam schiff and hunter biden >> well, i'm going to leave it to the senate, but i'd like to hear the whistle-blower. i'd like to hear -- >> that's the president talking about the phase one signing next week, calling it the biggest contract ever signed we'll see what kind of clarity we get on it next week also mentioning the relaxation of some environmental regulations, allowing the industry to have greater involvement in environmental reviews. it could take ten years to build a simple road. let's get to rick santelli and get "the santelli exchange." >> some of the issues the president raised, many are excited that the signing of phase one and -- the signing, only important to make sure china doesn't come up with some last-minute asterisks. doesn't look like that's the case i look at the dollarer/yuan.

but here's the point opinion we know we're going to get more of a resurgence, whether it's in manufacturing, agriculture, signing this, supply chains may wake up a little bit they are now more diversitied. all those are good things. the big issue today, melding these topics together the president has raised is if you look around today, there are upgrades on many of the stocks the reason there is is because many haven't had the confidence, those that measure, analyze, the economists, the high-profile people on wall street may have underestimated the horse power investor capital pushing stocks high we are all ter with all th. they had a cfo survey. 77% of the respond ents think that the economy is slowing and stocks thus are vervalued. if you dig deeper, there is some optimism in china and europe but not much as a matter of fact, if you look at north america in the survey

versus china and europe, 69% think north america's going to hold out okay whereas 18% think china will and only 7% think europe will. let's bundle all this together you have you have surveys pointing that out. you have upgrades because the markets move faster than logic but in the end all that matters is capital flows and time you why because even though many investors think that europe and china improvement is going to draw lots of capital what you they have been underperforming, the reality is china is the slowest economy in three decades. in the three decades on the other side of the mountain when it is going up, when you are coming up on the right side of the mountain, those comparisons really don't underscore the notion that the rate of change is working against you it may have an economy in the 6% neighborhood, but the fact of the matter is it really has structure all iss structural issues. but europe, think germany, their

car manufacturing is really one of the backbones of the eurozone economy. and i don't think that it will do quite well in the coming future add in interest rates and i'll tell you what the best signal is for all of this, to stick with your stocks, watch the middle of the curve. why the middle of the treasury curve is this because short rates will be glued to what the fed isn't doing which is raising rates. the long end is investors around the world rktsz we hawhere theyo play the mudd middle of the curve gives you a signal and that will be either higher rates or if it starts to slip of course that will be the area that will displace stock weakness back to you. and i think that we'll go back now to president trump as he continues to make -- we are not. i apologize for that >> and we're just about 30 points away from 29,000.

and this morning apple and goldman sachs leading the way on the push there boeing too which might be a bit of a surprise, but this morning it is also one of the better performing dow stocks on the way perhaps to 29,000. >> boeing has made a run here in the last hour or so and cbs news has some reports that u.s. officials believe that this ukranian jet coming out of tehran may have been shot down obviously far from confirmation on that, but boeing will give you isssome leverage in moving indic indices. less than 29 points away from 29 k. we hit 28 k in november and then 27 k was in july so really in the last six or eight months, you are talking about 2,000 point milestones >> the percentages -- >> all large numbers no question. >> and i'm sure mike santoli will have some good insights for

us as soon as he gets strapped in mike, you good can't wait for mike santoli because you always have great insight into these numbers what got us here and where it looks. >> a lot of it is just like the fourth quarter rally only more so i think that the things that were in favor were the mega cap growth stocks. and it has bayeen the familiar nasdaq names that have gotten liftoff against the sectors that were telling us the economy was going to be better this year so that is where we have to i think adjust our view of what the market has been conveying coming out of the late summer slowdown fears we said great the cyclical sectors are working well, small caps are participating, transports reviving. that has gone sideways it hasn't undone itself, but i think that it is just a pile into the large cap growth stocks and it is helping everything

with long term cash flows that you can promise to investors it will get overheated at some point, but at this point what is working is continuing to work. >> this morning saying inflation risk still to the down side, repo operations will go into april, consumer and aggregate better than ever i mean, it is hard to imagine the fed will be the threat. >> the question is do market interest rates decide that this will be a little bit too much and you have long term rates go up on their own without the fed. initially that will probably be good and then maybe pressure valuations but that is all out on the horizon perhaps. so what is left, politics? >> i think once you get stretched on valuation and sentiment, it doesn't take much if anything of substance it takes just a slight unexpected hiccup in something

the iran conflict just gave people an excuse to say i'm smart for buying this dip, i height do it t might do it the next time as well >> and 32.75 on an 18 number is almost $182 in earnings. so you want to see some evidence of -- >> that is why 18 is not necessarily the high i think everything that you are looking at, you can complain where valuations are, the fact that people love the leading big favorite benchmark growth stocks and my answer is, yep, that is a bull market. that is kind of how it works it doesn't mean that returns will be set up well from here, but if you don't see a recession in the next two years, which i think is what the market is trying to say, then you can live with flattish or slow growing earnings i am worried about the instability of the nasdaq 100

taking flight, top five stocks in the nasdaq now worth 4 trfld a trillion >> and peter had a nice post this morning saying that the price to sales ratio in the s&p and the ev to ebitda ratio of the s&p are 1999 -- >> yes, the least flattering ways to look at the valuation of the market why? profit margins are higher and ebitda excludes interest and taxes, structure aly lower than they were in 2000. so it is not a cheap market but not telling you what really changes this dynamic >> and i wonder where inflation takes on a greater focus this year we've had a number of people that have come on air and said that you have this gang busters job market, wage pressures will start to kick in and start to crimp margins for some companies. and i wonder whether that does actually become a bigger more dominant theme this year and thus maybe have a bigger impact on the fed >> i definitely think that would be the big surprise.

so that is the thing we're not really prepared for, inflation becomingen a unfriendly dynamic. what we are, we love the fact that the fed isn't afraid of inflation because it means that they will keep rates lower than they otherwise would but if you start to see the inflation and the market has to price it in various ways, yeah, sure, that could be the thing out there that will pressure valuations >> we want to go back to this time president trump who just took a question on boeing which is moving higher in the session right now. >> i have my suspicions. other people have those suspicions also. it is a tragic thing when i see that, it is a tragic thing but somebody could have made a mistake on the other side. could have made a mistake. it was flying -- it was flying and not our system, has nothing to do with it us, it was flying in a pretty rough neighborhood and somebody could have made a

mistake. some people say it was mechanical personally, i don't think that is even a question personally. so we'll see what happens. >> do you think it was shot down by accident? >> i don't know. that is up to them at some point they will release the black box. ideally they get to boeing, but if they gave it on france or if they gave it to some other country, that would be okay too. ideally, that will be released i have a feeling that something very terrible happened very devastating >> and the situation in venezuela has not gone as smoothly as some have hoped. what are you prepared to -- >> all right that is president trump who is continuing to make remarks at the white house right now. mike santoli, just looking at the markets, fresh highs again today. we're less than 25 points from 29,000 >> yeah. obviously the high priced stocks in the dow are doing their work right now. i'm more focused on is 3275 for

the s&p -- i mean it is pretty much in the zone for year end targets. so i think that there is a bit of an -- you can seeing it on the fundamental analyst side to chase the market, decide are we raising price targets or let it settle out from here there is an undertow of profit taking day to day it has not been as strong as the top line indexes but that is one of the things that doesn't matter until it matters. >> keep us smart what should investors think or not think about the dow milestones >> the dow, 1,000 points is a minor move by the way, 100 point move in the dow right now is less than the average daily move through history we've had. so if you talk about 100 points, it is just not what it used to be on a daily basis. 30 might be interesting as an opportunity to assess three times that 10,000 landmark from 2000 >> and of course it is all a

precursor to the jobs number tomorrow as adp up 202, although rich bernstein pointed out lowest year on year gain for adp this cycle so interesting and claims at 214 way down, one of the sharpest declines from a peak over five weeks let's get to the judge and thanks very much i'm scott wapner, front and center this hour, the race to dow 29,000, the industrials average closing in on yet another major milestone. this resilient rally just continuing to roll on. good to have you with us on this thursday our investment committee at the desk today and we have the ceo of res asset management and we begin with stocks extending their record highs nasdaq crossing 9200 for the first time ever. we mentioned the dow is 20 points away from 29,000. and joe, it just keeps