good morning, everybody. welcome to "squawk box." we're live from the nasdaq market site in times square. let's start with the markets this morning the dow briefly touching that 29,000 mark for the first time on friday before stocks ended up pulling back however, if you look at the u.s. equity futures at this hour, the markets would be making up most of those losses. right now at the open, dow futures indicated up by 113 points, putting it back above 29,000 s&p 500 up by 11.5 and the nasdaq up by 41. in the treasury market, let's take a look at yields. you'll see the ten-year is yielding 1.842%, two-year at

1.852. now to the latest in iran, where we are seeing massive protests over the downing of the ukrainian passenger jet, killing everyone on board. protests are taking place in tehran and other cities, condemning the government for shooting down that plane and then denying it. it's a diplomatic crisis for the country. president trump issuing new warnings to leaders in the region as well saying on twitter, one in english and another in farsi, president trump calling on iran not to kill the protesters as the usa is watching. and then in another tweet telling the demonstrators that the usa stands with them we'll have a lot more on that throughout the morning. >> have we decided they're massive protests now they were small all along? have they been growing -- the journal points out, while the protests have remained relatively small with participants seemingly numbering in the hundreds. i'm just wondering - >> tear gas and rubber bullets

used on them. >> live ammo. >> live ammunition iranians have said they wouldn't use live ammunition in tehran. >> are they massive? topping the weekend box office "1917" brought in $36.5 million in opening weekend, bigger than analysts' expectations the universal film won two golden globes last sunday. it centers around two british soldiers given the seemingly impossible story to cross enemy lines with a message to save fellow soldiers. it's a big week for trade. china's delegation heads to washington today for the phase one deal signing eunice yoon joins us with expectations from u.s. companies. good morning, eunice >> good morning, joe hey, guys. the u.s. business community here

does have an expectation that the signing is going to happen on wednesday there are several executives who are supposed to be there along with the negotiators specifically i was told in finance, agriculture and energy. the understanding about the text is that it's going to include a lot of stuff that people do -- a couple tidbits that people find exciting one of them is on greater trade secrets protections, i'm told. also purchase targets are going to be included that would, for example, commit china to buy 40 to $50 billion of agricultural purchases every year the pledge -- another point people are excited about here is that individual companies will also be named in some of the pledges for opening, in particular, say, the finance industry also sports broadcasting is going to be included, a change there. the thing people hear are

concerned about after being told about the text is, one, just how realistic the purchase targets are going to be. there's a lot of talk about the agricultural purchases but not as much on manufacturing i was told, for example, car purchases is in there as well as aircraft and there's a serious question mark as to how much the chinese would want to buy or be able to buy given the slowing economy. the second point that was brought up to me was on the enforcement mechanism. and that it's still very unclear as to how this deal is going to be enforced. also the way that -- the structure looks as if american companies, if had a problem, would go to the u.s. government. if they have a problem with the chinese. but that now it's being done individually, individual ceos might have a problem with the idea of bringing up issues individually to the u.s. because

of, again, fear of retaliation from the chinese government. so that is another big question people are discussing over the past couple of days ahead of the phase one trade deal and then the third point is that this truce is, again, just temporary. there's a feeling that the bigger issues, the one the trump administration had sought to go after in the first place, some larger unfair trade access, a lot of these have still gone unaddressed. it doesn't necessarily ease the tension between the u.s. and china and in their planning. guys >> trying to figure this out, eunice, cut through all the stuff. one person says, this is great protects american innovation creates a level playing field. oh, he's a white house spokesman. and then someone from the council of foreign relations

china is said to do little more than agricultural purchases, front page of "the wall street journal," and nice words on finance and intellectual process. i wonder if this is all a phase two -- if we lead to it in phase two, that's one thing, but if we don't and we've cut gdp down to 2% basically, i just wonder. the trade war takes a muted toll it's not horrible, it says here. most of the -- obviously we're at new highs and a lot of companies are doing fine. >> you're not the only one wondering, joe, for sure even here, too, a lot of people in the business community, it's been described in various ways to me, one of them was that it's a big nothing burger because, you know, they feel like a lot of these issues, we talked about this at length, have been discussed in the past. even back in may but i think what people --

people are hoping that at least it could put a truce and a band-aid on the situation at this point it's difficult to see exactly where it's all going to lead. >> the nothing burger. it's different than the impossible burger. >> eunice, who described it as a nothing burger, is that -- is that on the chinese side they see this as not a big deal >> no, i haven't been able to talk to people on the cli niece side as to exactly how this is going to go down but, you know, i think it's mainly in the u.s. business community because there's some concern that what -- from the chinese perspective that the -- that there's a belief that the chinese have been looking to buy time, right? that president xi and the vice premier had been looking to buy time and that china was able to get

that time. in the business communities there are folks who have been, again, worried about this enforcement mechanism. that one of the great strengths of the trump administration's approach has been to have a whole lot of leverage on the chinese and present as a united front. for example, to have the voice of the bhis community and push even if some in the business community don't agree with you and can be hurt by your tariffs. the trump administration was willing to put out that approach, but now with this -- the way that the phase one trade deal is being detailed, it looks as though the enforcement mechanism is on much more comfortable ground for the chinese because it means that individual companies then would have to go to the u.s. government as part of this mechanism and the chinese, i mean, any business person here would tell you is very good at

divide dwooividing and conquerig and playing one side off another and picking off individual companies. that's been the approach that has been very challenging for a lot of individualamerican companies to deal with so, there's -- so, that's one of the things that is of greatest concern right now for this phase one trade deal >> eunice, we do have senator rick scott coming on he's been -- >> very bearish in china. >> angry about china all along he wants us to tie everything to freedom, human rights and everything else. eunice, thank you. we'll talk to you later. when we return, the futures pointing to a higher open after the dow briefly touched 29,000 on friday. we'll talk strategy with market watcher mark grant right after this >> announcer: today's big number

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go beyond the expected. to do the extraordinary. take your business beyond. welcome back there's a section in the market where investors can find double digit yields and one our next guest calls the last man standing joining us to explain is mark grant, chief global strategist at fbr it's great to see you. we know you've been looking

around in the bond market for a lot of places but there's not a whole lot of yield, as you point out in some of your more recent notes. >> by the way, it could be last women standing as well, so -- in any event, i think the biggest problem for this coming year, and i mean the biggest problem in the markets for this coming year is the lack of yield. as you point out earlier we're 1.84 on the ten-year but we're seeing corporate, munis all compress and this lack of yields and it's a matter of absolute value, not relative value, is hurting tremendously insurance companies, pension funds, university endowments, retirees, seniors. i think this is going to be an overriding theme this year last year it was made up, of course, by the equity markets

and you're up 25%, 30%, so you get some balance there i don't expect anything like that this year i think we'll be up equity markets 5% or of%, but i think this lack of yield will be a giant problem in our economy and for investors in 2020. >> mark, though, lack of yield in the bond market maybe makes the stock market look all that much more attractive, which could lead to additional gains as people forsake the bond market and double down, put even more money into equities. >> that's what we had last year, becky, but i'm afraid, in my opinion, that we're not going to get those kind of returns this year it's almost never happened that we've had two back-to-back years like last year i have identified, as you pointed out, one area, a small area, but i think a very positive area where you can get double digit yields. that's closed-end funds. >> how long have we had low

yields you finally noticed? what's new about low yields that has become so portencious for you. >> i think we're -- >> i why this year is the overriding concern you have when it's something we've been living with for ten years >> because we haven't had these kind of low yields, joe. we've had 3%, 4%, but we haven't had a 1.80 on the ten-year -- >> we've said that for the last three years, haven't we? >> no, no. we're just getting to these -- >> well, 20 basis -- >> -- levels in the last year. >> we haven't been to three. we've been 2, 2.5, so 20 basis points suddenly -- >> well, you get two effects, joe. one, you start getting closer to zero, you know, people aren't getting any return on their money. and also we're talking about the ten-year but if you look at the two-year and 1.50, anybody trying to get short-term yields

is getting even less i just find it -- it's great for the government because the government can borrow at lower costs but for investors shg i think it's very problematical. >> five years ago we talked about insurance companies having trouble investing premiums and pension plans and anyone with a defined plan was on the hook for whatever -- that's been such an old story. i just don't know what's new about it >> i think it's more true now. here we are 1.50 two-year and 1.80 ten-year and it's very difficult to find any yield, so it's much lower than it was. plus, i will make one more point. as we went down from, as you said, the 3% and 4% to where we are now, it's been a positive because it's a borrower's paradise it's been positive for real estate, positive for the equity market, positive for margin

accounts and so forth. and now we're getting to the point where as you get close to zero, you don't get the same momentum push from lower yields that you got before. >> that's why you have to buy fo those stocks at&t, pfizer. >> those are always options but if you can get double digit yields and a monthly payment, i think that's also a very attractive alternative and there's some specific closed-end funds that pay monthly and the yields are over 10%. they're double-digit yields. >> mark, thank you it's good to see you we'll talk to you again soon. >> thank you, becky. thanks, joe. >> see you. coming up when we return, crisis at boeing the playmaker facing more bad press over the weekend with the release of embarrassing employee emails to the golden parachute for dennis muilenburg. treasury secretary steve mnuchin said the grounding of

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tech o . welcome back to "squawk box" this morning boeing entering a new era. david calhoun taking over as ceo. it happens today as he told us exclusively last december, getting the 737 max

back in the air is his top priority >> this control system will be fixed and it will be safe and it will have been tested like no other control system in -- at least in my history in the aviation industry. and this airplane will fly and it will be safe. and i'll fly it and my family will fly it and there's -- the only way to win a brand back is not to advertise it or talk about it, but to win it with every next flight. >> phil lebeau joins us this morning. he has a lot more on boeing's next chapter let's hope it's a new chapter, phil. >> well, yeah, i think everybody at boeing hopes it's a new chapter and certainly the end of the bad news we've seen over the last couple of weeks, andrew david calhoun out with a new email to employees this morning. in this email he says, look, the time to act is now and the time to perform better starts right now. he says, this is a crucial time for boeing we have to work to uphold our values and to build on our strengths. i see greatness in this company.

but i also see opportunities to be better. much better. that includes engaging one another and our stakeholders with greater transparency, holding ourselves accountable to the highest standards of safety and quality and incorporating outside-in perspective three weeks ago dave calhoun was named ceo. since then as he's wrapped up other activities that he was involved in at blackstone, he has been working with executives within boeing. it's not like he's, a vacuum and he hasn't been doing anything. oh, no, he's been working extensively with them. that's part of the flush of bad news that whhas been ut over the last several weeks what is his agenda it comes down to three things, i learned from talking to other executives, those close to dave calhoun. he wants to streamline the 737 max process. doesn't mean throwing out all the work that's been done but making sure they can zero in on, what do we need to do?

what regulators do we need to work with, more closely with also, make quicker decisions not just with regard to the max but on a number of issues. this is a company -- i wouldn't call it paralyzed but it's definitely a company that has been sloging its way through a number of decisions. finally, get boeing back on track. as you take a look at shares of boeing, yeah, it's holding up in the 330 range. but this company has the 777x, first flight will happen in the next couple of months. and then the middle of the market airplane they haven't even started working on and they basically ceded the early market to airbus. a number of areas they need to do better. you can bet dave calhoun, he's going to try to streamline on focus on, a, get the max going again and, b, get the company back on track. >> all right, phil we were talking about boeing off

camera, trying to figure everything out when did mcnerny leave. >> september. >> hey, hold on. phil, real quickly are you going to cover this hummer thing i mean, you remember you used to talk about hummers all the time. look at me, look at me. >> yeah. >> they're bringing back the hummer. >> yeah. it's an electric truck look, that's a smart move in your general motors to bring back that brand. that brand still has equity. when it comes to electric pickup trucks, there's a belief in the industry this is going to be the next battleground. this is where you'll see a number of automakers, ford, gm, yes, i know the cyber truck gets a lot of attention but in terms of pickup trucks, that is where the focus is going to be and the battle in this industry. i think it's a very smart move for general motors to bring the

hummer back, but you're putting it under the gmc brand it's not going to be its own brand. it will be a nameplate, an electric pickup truck and it will be not at the plant in detroit that was scheduled to close and the uaw said they would save it. >> we've been describing since friday this golden parachute for dennis muilenburg, the $62 million. my understanding, though, was that he wasn't provided with any severance. at least half of that 60 was deferred comp, money from his salary putting away. >> yep. >> and the other half was, i think, restricted -- not -- or vested shares, rather. >> yes. >> in some of -- when there was a defined pension plan and other things the question is, how should we really describe it and, was it discretionary? because there is a big debate in the world of these deferred comp plans whether -- because that money sits on the balance sheet of the corporation, whether

technically it's discretionary for the board and the company to provide it or not. >> well, that's a great discussion and one that, i -- look, there's two ways to look at this one way of looking at this is from dennis muilenburg's perspective. remember, before he was ceo, guys, he ran the defense division at boeing he's been on the board for a number of years. so, there is a long history here of getting, a, deferred compensation and incentives as far as stock compensation. so, there's no golden parachute here that is not an accurate way to look at the compensation that he walks away from the company with but -- >> on the screen there, as you're speaking, it says, former ceo leaves with $62 million. >> well, yeah. and -- >> this goes all the way back to - >> i know. that's why i'm raising the question. >> all the way back to grasso, remember >> i remember very, very well. >> we understand this, having covered the markets, having understood deferred compensation, knowing he set

aside some of his compensation to take away with this but it doesn't read well in the mainstream media and where people are looking at that and kind of getting the idea. >> what do you do, becky >> you can't take it away from him. >> you you can't it was his money - >> andrew thinks you - >> i'm not suggesting you should. >> you might be -- >> that's a separate discussion. >> i believe deferred comp in most instances, i think you could probably sue for the money and then there would be an interesting case whether it's truly discretionary or not i think that's the first piece i think the second piece is the piece that becky raised which is, in the public consciousness unfortunately, and it's unfortunate because people don't wanted this is hiss salary he had been laying away effectively over many years. people would look at this, i would aare gu, wrongly, and say, this is what's wrong with capitalism they say people are failing -- >> you missed the debate because i was on "the new york times" side telling andrew, well, the

deferred comp was deferred fat cat overpaid ceo comp in the first place. and he wasn't there. i'm like -- we were switched again. it was bizarre it's like you were not where i wanted you to be on that he was getting overpaid and he deferred his overpaid comp. >> how this plays out to mainstream media and the rest of america matters because now you have congress, these - >> and you have liz and bernie. >> they are looking at boeing and whether they can bring this back look, that's fodder for anybody -- >> elizabeth warren was on twitter with that. >> sure. >> it's fodder for any of these oversight committees that are going to have say about -- >> you're absolutely right, becky. no one is arguing with you that the optics are not appropriate i side with where andrew is on this it's deferred compensation it's deferred compensation unless you want to go change the laws, well, then it's a totally separate conversation. >> well, the minute andrew said deferred comp wasn't guaranteed, my stupid agent isn't already up yet. i already have a call in to him. he's out in california and he's

going to be hit with a series of panic texts. >> i will ask. >> are you sure we can't -- ca we -- i mean, are we at risk here our deferred comp is not - >> i believe if you're terminated for cause, just deferred comp is not necessarily guaranteed. >> he was fired but is that terminated - >> this is where it gets interesting. phil, before you go, i wanted to know, does dennis muilenburg still plan, as he said to me and i believe he said to you as well, that he plans to make these huge donations to the families that -- >> great question. >> -- of those crashes given what's now happened to him >> great question. and as you know, andrew, a lot of those families, like he wanted to go over on the anniversary, lion air, they were like, we don't want you here who knows what he understands up doing. >> it will be very interesting phil, thank you. great conversation. >> i'll get a call you have really -- yeah, you

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good morning welcome back to "squawk box" on cnbc we're live at the nasdaq market site in times square by the way, with a beautiful new floor. the cameras can see what's going on here. it's very -- it's a beautiful wood new floor can you so he that anyway, take a look at u.s. equity futures while you're taking a look at the floor at the same time. maybe you can take a look at our shoes, sneakers, things go on on with you are feet. the dow likely to open up 101 points higher. s&p higher as well, 11 points higher the nasdaq looking to open 40 points higher. separately, ford sales in china falling in 2019 marking the third straight year of

declines the 2019 sales numbers were down 26% from just a year earlier they were less than half of ford's china sales at its peak year in back in 2016 ford says it expects china's auto market to keep shrinking in 2020 now, the automaker has plans to launch more than 30 new models in china over the next three years. over a third will be electric vehicles gas prices jump four cents a gallon over the last three weeks. according to the lundberg survey, the national average is $2.64 a gallon that is up 33 cents from a year ago. japanese billionaire yusaka maezawa is going to space in 2023 as the first private passenger on elon musk's spice x rocket but he -- the piece in the new york post, he's looking for love entrepreneur is producing a documentary called "full moon lovers" that will follow him as he attempts to find a girlfriend

to join him for his voyage around the moon. candidates must be 20 or older and be someone who wishes for world peace. applications close this friday selections will be made in march. the billionaire recently split from his actress girlfriend and said feelings of loneliness and emptiness are beginning to surge upon him he says he wants to find a life partner and shout their love and world peace from outer space i guess he didn't see the movie "ali "alien" because you know in space no one can hear you scream i would also just mention, if you don't know this person well, you know, there's no getting off this thing like halfway through the voyage. >> don't you think we should call netflix and get a reality show made. >> he might -- >> this may be for peacock. >> you said slektsz. he's choosing more than one? >> i'm want sure. >> i think it's only one.

>> that would be interesting >> it would make the show better >> like "the bachelor" in space, you get a rose and get to stay. >> have you ever been on a cruise >> no. >> there's nowhere to go in that state room. >> by the way, a cruise ship is a lot bigger. >> a cruise ship is a lot bigger it does stop different places where you could get off if you needed to. coming up, earning season kicks into gear this week. we'll have a preview of what to expect from the big banks next later, senator rick scott joins us to talk about this week's expected signing of the phase one china trade deal a reminder, you can always watch us live on the go on the cnbc app. if you're living with hiv, keep being you.

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welcome back u.s. equity futures are rebounding from friday we're up 94 this morning we were triple digits earlier. nasdaq indicated up 30 s&p up 09 and change some of the nation's biggest banks, i know you've been waiting, reporting earnings. jpmorgan, citi are out tomorrow. morgan stanley on thursday the question is whether the benefits of the rising stock market will offset the impact of

the interest rate reductions first of all, you just got to calm down. wilfred frost came bounding in here -- >> xfs that exciting >> you didn't even mention them all. >> just calm it down i mean, you were -- he was breathless talking to us on break. >> it genuinely is one of the most exciting weeks. >> i know it is for you. >> let's get into it the main challenges joe mentioned, compared to a year ago significantly lower rates. guidance on expectation for net income is perhaps the most important part of reporting. the expectation which strong loan growths can be offset trading revenues are expected to be offset by decent fee income for those with exposure to asset management wet management margins will be pressured given the recent broker price wars.

advisory revenue and banking revenue should be strong, offset, though, by softer equity capital markets as ipos dropped off. 2020 is shaping up to be a year where revenues may well be flat year over year, so there will be plenty of focus on cost control, especially branch rationalization and shift to digital distribution bottom line, the setup is hard banks rallied last year, especially in the last four months over all of 2019ing bank stocks rose 38%. all of which and more, 47%, was multiple expansion as earning expectations actually declined 6% of all the banks reporting this week, probably the most interesting individual stories are wells far dpgo and goldman sachs, the announcement last week gave them 5% outperformance compared to the kbw report.

>> who was the best performer last year? >> citi outperformed came in with the lowest multiple, it still is towards the lower end of the expectation. you still have the same kind of theme which is the pure investment banks, and citi at the bottom jpmorgan at the top. bank of america started to catch that up a bit. i think the point on multiple expansion is that the -- so the ten-year average of banks is always a little less than the s&p 500 average. the ten-year average is 68% of whatever the average whole market is. for much of the first half of all year, we were below 60%. it was a sector, they were incredibly chief relative to the rest of the market they've closed that gap. it's now about 64%, 65%. whatever way you look at it, you say the easy work for the sector has been done. you now need to see earnings deliver. it's a hot environment to see them deliver earnings growth.

>> let's talk about what's coming up this week for the banking sector, jeff hart, managing director at piper i just want to warn you that, you know, raise your game here because wilfred frost is still here are you going to be probing and answering questions for jeff hart here? >> am i answering questions? >> well, you probably could answer them but you can ask him questions. jeff, let me start with the original proposition that wi will f put forward. that is declining rates. what about the offset to that, stock market, credit quality improving, loans improving do all of those offset from what could be missing from a better yield curve or whatever banks normally do? is it still going to be pretty good >> i hope so i say hope not expect. it's absolutely right. it's looking like a -- kind of a grind higher next year as far as what's going to drive earnings growth, assuming we get a lot of earnings growth as opposed to the catalyst we've had in past years.

but i think the important thing to compare to is what are unvesters' expectations. expectations have come down pretty far for the group the yield curve is more favorable now than it was a couple months ago. i think, you know, as we look to next year, i think things look okay as you mentioned, credit, gdp growth continues there are some good things also the interest rate environment is tough loan growth is decelerating. that makes me look at next year as universal bank guys, the big guys, for two reasons. they have a lot of investment and trading as opposed to income and, two, they have scale. scale matters more now than ever in banking i think their cost advantage - >> how was trading in fixed income or, you know, wherever you want to look, will it be monolithic across the group or winners and losers and how they manage through the last three months >> well, so the last three months were okay now, the numbers are going to

look pretty good versus the fourth quarter of 2018 because it was really bad, especially in fixed income trading i mean, there will be some variance there all in all, i think it was a fairly consistent trading environment where equities were okay fixed income was a little tougher, specifically in rates and some of the macros you would expect, you know, companies that are more skewed towards some of the macros to maybe have a little bit of a tougher quarter. but i think, i think the key this quarter is not so much what happened in the fourth quarter because guidance is clear there. it's what's the outlook in the next year and can refuse news grow some? i think trading is an area we can see revenue growth and hopefully teams will talk about that. >> in terms of overall perspective for the upside ahead, i was looking at goldman sachs' upside for the top seven banks they cover and it's only 5%, share price upside in the whole year ahead, which i think gives perspective of some of the -- of how their price is coming into season what's your typical upside for

your coverage and what's your top pick >> as i look at my coverage universe, i think they'll be up. i like the universal banks they have scale when it matters most i like goldman most coming into next year. part of the reason you don't sees much upside in the consensus numbers is a lot of people haven't updated yet i think as we get the rest of earnings updates coming out and we get some potential catalyst, like a settlement and a positive investor day they were going to do it last year they postponed it until this year i think there's a reason they're choosing to go this year i think goldman sachs is going to be a good one this year i'm thinking you're talking 15%, 20% upside, maybe kind of strong it's not going to be a mroe wbl year but a good place to be. i will say when you look at how strong citigroup or even goldman sachs was in 2019, you have to keep that in the frame of 2018 was a tough year especially the fourth quarter.

a lot of that rebound we saw was recouping what they gave back at the end of last year >> jeff, we're going to end it there. jeff harte, piper sandler. that's different that's a different -- all right. anyway, piper laurie piper sandler, how long has it been piper sandler >> for about a week now. it was announced last july and closed at the beginning of this year we're brand-new. >> so, it wasn't -- usually i ask that question and they go, like '96 is when we -- >> no, you're within a week, so you're safe, joe you're right on schedule >> we'll see you soon. coming up when we return -- thanks, wilf great to see you you have to come in and do more on - >> on the royals. >> you packed that all into the break, joe. >> but that's what we all want to know about. >> speak for yourself. >> oh, come on. >> i think joe cares more about

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i would encourage this. >> last year 17 million people took the day off after the super bowl this year we can do way better. >> the ads launched last night fox wants super bowl viewers to stay up late after the game and watch it's show the masked singer without having to worry about working the day after. should we talk about the podcast as well? are you encouraging? >> not if i have to watch the masked singer to get the day off. that's not part of the deal, right? >> to watch the show. >> it used to be that the church

would create new holidays and now companies. >> hallmark created holidays. >> when i was growing up black friday after thanksgiving wasn't a thing. that was a creation of amazon and other companies actually after 2001 to create a new holiday. >> we ought to just stop and go to four days a week and do, what is it? six hours a day. what is that sweden >> the whatever she is the prime minister wants to go to that you're looking at -- oh, are we just showing that? that's all we're going to show that's all we got? i thought we had more than that.

what did you say >> no, i didn't understand were you looking for a sound bite or something? >> no, we were showing a video event together i had a question i was going to go to about facebook and all of that but i'm going to ask you a different question because both of you followed this and this is what is happening at google or alphabet this is the chief legal officer at the company stepping down after all of these reports after all of this time with everybody now out of google, meaning larry, sergey, david, is this a different company than it was even just six months ago >> this is an important fresh start. you speak to anybody at google and they always end the conversation with why is david drummond still there this was a real source of angst among employees. they said they were turning the page and weren't going to be handing out $90 million settlements or pay outs and then they have david drummond with a lot of skeletons in his closet

this is a fresh start. we saw these companies that started because there were small teams of founders that came together and created a culture and now we see google the giant wiping out everyone that came and started the company and bringing in a professional class. the question is how long does it take for others, facebook. we have already seen it at apple. this is a mature technology sector and at some point we'll see the professional class come back through. >> the nfl is going to be broadcast on youtube >> i hope so as a football fan i tried to

stream the nfl on their sunday ticket package and it's terrible >> you can watch the 49ers out there. >> listen if i wanted to watch good football i would watch the 49ers. >> are habits good or bad? >> as charles can atest to -- >> the only thing i would say -- >> are they good or bad? >> are they good or bad? >> habits are sometimes, the pressures of today's world can make it tough to take care of yourself. but nature's bounty has innovative ways to help you maintain balance and help keep you active and well-rested. because hey, tomorrow's coming up fast. nature's bounty. because you're better off healthy. car vending machines and buying a car 100% online.vented now we've created a brand new way for you to sell your car.

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>> also the chinese delegation heads for phase one deal signing. >> and how tax cuts to play a role in the 2020 election. the second hour of squawk box is beginning right now.

we have the do yw looking like would open higher and the nasdaq looking to open about 26 point highers. >> amid a flood of companies reporting weak holiday season sales a noble obsession has emerged this morning lululemon raised it's fourth quarter sales. that stock is up by 2.5% also a bidding war for networking equipment maker it's finally ended industrial products will buy anixter for $100 a share in cash and stock. anixter originally struck an $82

a share with the bidding going back and forth several times they now raised the right to this offer and two boeing suppliers are merging. >> in the unemployment rates and historic lows, most of congress agrees that the pace of hiring remains strong enough to support the longest economic expansion in history but a closer look does show some pockets of weakness in the labor market and steve joins us now with more when did you start looking for this after friday and then did you work on it all weekend long >> a good chunk of the week. >> you got out though. >> i did get out a little bit. tight labor market, joe, it's offering a mystery to economists why aren't wages rising faster

and why is the work week falling? you'd expect a low unemployment rate workers would have leverage to bargain for higher wages and if the work force is so tight you'd think employers would give their existing work force more hours but take a look, the work week declined by 0.3 hours. it's declined from 4.9 to 3.5% and those represent a lot of workers. after increasing nearly four years wagegain decline for mos of 2019. jp morgan writes the generally soft pace of wage growth isn't a puzzle given extreme productive growth but it's more mysterious. morgan stanley writes even with a 3.5% unemployment rate it's not so tight that it's creating price pressures. there's three reasons out there why we're talking about this substitution young workers are replacing old. they have to come in at lower

wages. they may result in a trade war where you had some fall off in manufacturing wage job growth and increase on the service side workers have no bargaining power. overall it gives the fed room to keep rates low and this animates a lot of the political debate. >> which of those reasons is responsible for most of the effect of not seeing higher wages.

>> they all play a role. the idea that you have young workers replacing not necessarily the lower wage the mix can be a big factor and you can't do too much about the mix. the mix is the mix the private sector is going to create the jobs it's going to create this issue where it is increasingly the data shows when it comes to rural manufacturing and rural jobs, workers don't have a choice about their employer so the employer has the bargaining power >> let's talk about earnings season the chief investment strategist. we know he's a human we know that but his name is actually hyman. >> it's the prompter. >> see you say simileon and we'

wondering whether you're human or primate or whatever. we're always ready for anything. i'm going to start with you because you bring up a couple of the biggest names ever in investing. buffet and ben graham with sort of different things and i'm wondering which you are. you say the most important thing is follow a trend when it's evident and that's higher. if you take care of protecting the down side the upside will take care of itself. i never thought of you of taking care of the down side risk type guy. is that always in the back of your mind? because you have stayed pretty long and bullish but you're always thinking about whether there's a risk to the down side? yeah, you have to manage the down side in portfolios. because the upside takes care of itself we had a good start to the year. you had the santa claus rally.

you had the first week of january up that tends to bode well for the rest of the year when you have that sequence set up you get an 11% gain in the year that's what we have been looking for this year. we have never seen anything like this before. there's never been an impeachment. you need to navigate that we're in the middle of an impeachment with a guy that's at this point predicted as favored to win re-election. and we're in the middle of an impeachment. that's so bizarre. how can you decide how to invest based on this? >> predominantly the markets are going to ignore the impeachment and look at the economy. i like the payroll set up because that's key to what's going on right now.

and that's keeping us in that gdp growth that can keep going and keep the fed at bay. that's good for stocks. >> does that make sense to you you like the consumer? as long as the consumer goes you figure this recovery stays intact >> yeah they are at all time highs. >> i wonder if that is built into the market. this idea that we're not going

to be at 2 you think about 29,000 dow and 2% gdp, they seem a little bit out of kilter to me. >> unless one is artificially low there's another catalyst that people forget about in 2018 net margins went from 9 to 10% temporarily from the tax cut. that was priced in and half of it went back now we don't have to do that anymore. there's a little bit of an extra tail wind to earnings because we had it already priced in >> we got your target. we stay above 3100 or? >> i think depending on what multiple you want to put on the

$177 and operating earnings that i have for this year anywhere between 343,600 and i think that's reasonable given the backdrop and the inventory overhang i think goes away and i think that allows gdp to grow closer to 3% >> you know, i took the saints because of you i want to thank you for that i don't know what that was can you change that logo to something different? the seattle logo >> i didn't lose kansas city because at halftime they allowed me to get some of my money back. >> did you watch that? >> i did it was a great job i didn't have any money on it and i still enjoyed it

i heard it's a good movie. have you seen it already >> i have. >> nobody needs that. >> why would you put that in there? how does that possibly benefit -- is it a universal film >> it's art. can't unsee it though, can you? >> thanks. we touch on all kinds of things here coming up, will china deliver on their deal we'll discuss it after the break. later, the impact of president trump's tax cuts and the role they could play in the 20

election that report is also coming up. we got a lot on our plate right here when squawk box returns ♪

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, everybody. wednesday is supposed to be the big day for united states and china reportedly set to put pen

to paper for the trade deal. joining us to talk about what happens and what could come next is leland iller. let's talk about what wednesday means. >> an agreement has some benefits but it's not what everyone is looking for. a lot of of things are still left off the table and still a lot of uncertainty which i think farmers and workers making investments. >> still you said you wouldn't fade this deal the white house is invested in the idea that this is not a

small baby deal. they want this to look like something very meaningful so they're rounding up lots of business people and they're going to make a big deal of this is it a big deal well, it's a truce so that means something. it's not a large deal. it doesn't involve any of the structural stuff that we talked about in the beginning but it's something and that's what the white house wants to convey to everyone >> it's a purchase agreement we're going to buy these things. it's not really fixing the underlying issue. >> is there a phase 2 deal on the way or is that something that's going to be in the long distant future. >> behind the curtain like the wizard of oz. >> what do you think >> you know, he's really hard to predict. i think to get the changes in china are extremely difficult. it's not like no one has tried to make these changes efore.

having said that, china has suffered and they want this to go away. >> they have their own downward pressures because of domestic reasons. they want to take this nightmare scenario of this 550 plus billion in tariffs off the table. they can do what they want to do this year my guess would be that companies aren't going to be investing as much in china if they're planning to do that with

bringing goods out and exporting them into the united states. >> right i think when there was the most favorite nations i remember traveling to china with secretary daily at the time that opened up the door because it made it easier to plan around. less uncertainty i think the uncertainty around china and the uncertainty around president trump and china is going to put a chill in the air for that and that's also what the president wants. >> so where do those companies go other places in asia >> they can go other places in asia the challenge is the supply chains are really sophisticated and well done. the iphone, i put that in my book is assembled there. it doesn't really manufacture. it's assembled there because it's a very sophisticated supply chain that you can produce those products and produce them quickly and cheaply in china probably far better than many other places that's hard to replicate. >> ten years from now, will we be talking about china the same way or totally drgifferent

>> i think this is just not possible we're very well integrated and i think that we'll have to find a way to make this thing work. i just don't believe there may be some decoupling certainly there's some on the digital and technology side but the idea of a total decoupling i just don't see how we make that work. >> i think we have to wait until the 2020 election to see if that happens. but over the next year what president trump has done because he had such a small phase one, a shrunken version of what was originally contemplated for phase one, he has the ability to go in there and award china for actually purchasing what it said it would or pulling back tariffs in order to make the stock market happy but the idea that we're going to

step up to the next stage of the trade deal is not going to happen in 20. >> intellectual property, at what point does that ever get addressed? >> that may be easier than a technology transfer. >> meaning if you want to do business here you have to bring in a joint venture company and allow them to see how this stuff works. >> i want the coca-cola formula. >> that's not for sale you can't buy it and that's very difficult. >> why would we give that up >> well, we have been for years. >> what companies have done and i saw is they would provide, if it's medical equipment, they would provide two or three generations ago. >> but if they're assembling the iphone they have to be able to reverse engineer. >> they haven't yet.

>> what are you anticipating this year and how could that be on future talks? >> this is not necessarily going to pan out in the gdp number that comes out later this week but underneath the surface there's serious problems so you're seeing significant cash flow deterioration. it doesn't matter what top line growth is if you don't pay what you grow you're seeing high borrowing and things are not falling apart and you're in a quite stage for the first couple of months of the year and you're going to continue on. >> i want to thank you for

coming in today. congratulations on the new book. >> coming up when we return, we're going to head to the j.p. morgan health care conference. trying to drive drug pricing down and launching a new company and hoping that health insurers and hospitals are ready to shake up the drug pricing system take a quick look at futures at this hour. we're in the green across the board on this monday morning squawk box returns right after this

later a big day for boeing as the new ceo takes the reigns but not without fresh backlash over the ousted chief's exit package. that's coming up first up, meg joins us with a special guest. meg, who do you have coming up good morning, of course the price of drugs is a huge topic in this election year as in all years. next up we have a man that just founded a new company to undercut the price of drugs so much so he's comparing his new company to amazon. we'll bring you that coming up

we could see more big moves this week. it kicks off today and is considered the sectors investing event of the year bringing together industry leaders and start ups that hope to shape the future of medicine and mega is t the event in san francisco. >> that special guest is the founder and ceo of a brand new company called eqrx which just raised $200 million to start a new company whose sole goal is to undercut the price of drugs you're talking about prices a third to a fifth of what current medicines are. why has nobody done this yet and how is this possible >> so this is a golden age of innovation for new medicines for patients so why is it at this moment in time when we have such powerful new medicines that people when they have the ill fortune of needing one of those that they worry can they afford it will they even be able to have

access to it at all? do they need to skip doses so we think the time is right now to be able to bring equally as good or better new medicines to patients and society but it's radically more affordable priced. >> the industry where you worked your entire career founded more than a dozen companies has argued that it's not the drug industries fault it's the middlemen that keep the lower priced medicines from getting to patients and cause the access issues. are you saying that's not the case if you come out with lower priced drugs it will be able to help people afford their medicines. >> there are genuine issues with the middlemen. however they have gone up even more at the same time, technology, what we can do in both creating medicines and proving that they

work and delivering them and getting them to patients through the health care system, there's things that we can do today that are radically different than what we can do before. >> why would your company be able to do this in a way to lower the prices of medicine and just get more profitable. >> so when you look at disruptors in other industries it's often been very hard for the legacy incumbents to be able to make these types of changes it's not one technology. there's lots of different technologies and all sorts of different parts of how you create the drugs, prove they work and bring them to patients. so if you will, we're literally reengineering this entire process. like disruptors in other industries, often times what you need is a purpose built new company to be able to make this

happen. >> so who here at this jp morgan conference where everybody from the industry is present? who are you going after? >> our ambitions are large we want to have our first drug out of market within five years. we'd like to have ten on the market by ten years. by 15 years literally dozens and dozens of great innovative new medicines at a radically more affordable price on the market if that could be at some point a third of new drugs, that's something that then we think we actually would be getting to bend in the industry. >> how do you choose your first targets? >> that is a really important question so we haven't disclosed exactly which targets yet but we're focused in the areas of oncology and immuno information we're looking for the areas where you have a very heavy burden to society and where you have that really high patient need. >> so when you think about me too drugs, i mean, this is essentially what you're creating you're not creating generics or

becomes bio similar drugs. the pricing structure, they don't typically compete on price the way you're talking about sometimes we see bigger rebates but why don't we see that now? >> it's a great question me toos have been a standard part of the industry for a long time but nobody has ever competed on price on it. i don't think you can do this one drug or two medicines at a time you need to do this systematically on scale. we need this as a purpose built disruptor to do this if you're going to change the way the whole system works and there's so many things deeply messed up about our health care system and how drugs get all the way to patients. you need to do this at massive scale doing this on dozens and dozens of drugs. so that's what we're trying to do. >> if you do this on dozens and dozens of drugs, going back to the amazon comparison that you made before and jet blue as well, the industry argues it needs to charge high prices to support innovation

if you undercut the price of all of these drugs, if you're talking about a third of the drugs in the system, are you killing innovation in the drug industry in the u.s. >> i think the opposite. we're trying to create the basis for sustainable innovation in our industry for the long run. i think if people think that going forward the next ten years that pricing in the pharmaceutical industry is going to look what it's looked like in the past ten years then i think that they have another thing coming we're trying to create a company that has the efficient infrastructure all the way from creating drugs, proving that they work and bringing them to patients so that we can provide that innovation in a sustainable manner for society and for the patients >> we talked a little bit about your history founding companies and one of those companies is blueprint medicines. just got a new cancer drug approved last week and the price tag is $32,000 a month you're on the board of that company. can you sustain these kinds of relationships while also founding and running a new company designed to undercut the price of new drugs >> i have often said that i'm a

man of many hats. >> literally you wear a lot of hats. >> not at the moment. >> and fundamentally the most important of them all is about bringing break through medicines to patients is i also recognize the industry and what's possible today. the spread between where prices have gotten and what technology makes possible to be able to be done today and that spread is an enormous opportunity at eqrx what we're trying to do is very simple but very difficult to go and execute is we say we see that opportunity

and we want to reengineer the system to bring these medicines to patients. >> we look forward to hearing more. >> thank you. >> back over to you and coming up of course later today many more guests including in squawk on the street bristol meyers. >> thank you we look forward to all of that we'll see you throughout the day. when we return, this morning's market movers. and then a look at how the president's tax cuts that were signed into law years ago could play in the 2020 election. a reminder you can always watch us live on the go on the cnbc app. we'll be right back.

>> and the nasdaq open about 33 points higher. >> let's take a look at the early market movers. dom joins us with that. >> good morning to you as well, becky. let's kick things off this morning with a look at shares of tesla up 1.5% this morning roughly 140,000 shares of premarket volume they get a target price hike by

analysts to $612 a share it was 385 they maintain the overweight rating on the stock. is they're also boosting their evaluation multiple. so those shares up in the premarket. then you have shares of apple that are up .5% or more. roughly 100,000 shares or more at this stage. they also get a target price hike by analysts at ever core isi to $360 a share. it was 315 they maintain the out perform rating they expect sales growth to continue to accelerate for iphones. they see more upside in air pod sales and more services momentum as well. so those shares higher at .5%. then we'll end as well shares of microsoft up .5% or

so a target price hike as well. it will go to $180 a share versus a prior 155 target price. they also keep their out perform rating based on among other things more optimism about how big microsoft can grow their commercial cloud business in the coming half decade so those shares on the move as well three big ones back over to you guys. >> thank you coming up, 2018 tax cuts help some states, mainly swing states how will they effect the 20 election robert frank joins us now with a preview of what's coming up. hey, robert. >> good morning, joe wealthy texans and floridians got the biggest tax cuts in the country while high earnings in blue states faired the worst we'll e w sehothe numbers effected job growth and voters coming up after the break. we know how your customers shop. and what they've already purchased. like this lamp. and we use those insights

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robert frank is here with a look at which state benefitted the most and which states benefitted the least do i live in one >> you do. the 2018 tax cuts helped some states more than others but residents of florida and texas got tax cuts quite as large as residents in new york and florida. among the ten most populous states florida ranked first in the nation when it comes to the average tax cuts for its residents.

floridians got a 2.2% tax cut. and in pennsylvania just under 2%, the average taxpayer got a tax cut of under $1,400 compared with $1,000 to the rest of the country. california residents, they faired the worst got just under 1% and those in illinois got just over 1% now the wealthy in the top states they did the best in texas, if you made 20 to $50,000 you got a 2% tax cut so pretty good but if you made more than a million you got a 3% tax cut or over $30,000 a year so why is this happening that's the main reasons. changes to the lower top tax rate and a very high number of people in texas, florida, and the other top states that take the standard deduction that also helped a lot of those states

but everybody got a tax cut. >> i thought there would be some states that saw a tax increase. >> no, it's about between 6 and 8% of total residence denlts that saw a tax increase so the vast majority saw a tax cut and it wasn't enough at the very top to offset it. >> thank you >> for more on the impact of the tax cuts by state, i want to bring in our guest joining us right now is contributor and former senator who is chairman of the conservative partnership. >> you have been listening to mr. frank discuss this tax situation. go to heidi first. can i call her heidi i'll call her senator. >> you can. >> what's your take. >> you can call me heidi. >> what's your take on all of this. >> well, my take is that first

off state by state comparisons aren't really very valid given that you should be looking at income categories to income categories and then comparing states based on who you're looking at but the bottom line is think about this think about the deficit that we have now driven in part by this tax reduction and when you can brag about this being even less than 2% of a tax reduction across the board on average, per person, it seems like we gave up a lot in terms of fiscal responsibility for not too much in terms of tax forgiveness for individuals, especially those in the middle class that depend on a deduction that are now paying more taxes so you know, i think the more valid comparison isn't the state to state it's the income bracket to income bracket and then look at the states. >> respond to that. >> well, look, she is absolutely right. add to that that when you look

at texas, the job growth that's been generated from the tax cuts is just under .5%. so they estimate that of the 300,000 jobs that were added last year, a large percentage at least in terms of growth came from the tax cuts so it is generating job growth but more in these states and many of them swing states that could help the republicans in the next election. >> do you think that this was done strategically i mean, that seems to be the implication. >> well the revenue is pouring in and that's not the problem but the tax law applies equally to allstates the difference is some states have high taxes. state taxes. property taxes and you look at texas and florida and they had no income taxes. so what this new law did is it capped the amount that wealthy people could deduct from their

federal taxes because of state and local property taxes it's actually a very good thing because what the former tax law did is it allowed rich people in states like new york oracle cal to deduct a lot of their state taxes and people from other states actually had to help them pay that so my hope is that we can reduce the federal taxes even more. >> that's not true if you look at the givers and the takers in the grand scheme of how our tax system works. california and new york were the major contributors everybody else is -- not everybody else, but there are a lot of welfare states that are now benefitting as a result of this process >> i think you have to be careful when you regionalize fiscal policy. when you look at it you -- >> over 70% of americans don't even itemize so the law didn't effect them and as was said

before, it was small but for the federal government to have a tax plan that incentivizes states to have higher taxes is not a good idea and i think the cap on deductions is going to push states to reduce their taxes and be more fiscally responsible. >> if you look at -- what i want to say is if you look at who are the givers and who are the takers in the states, they are the takers so if i'm a congressman from new york i say look, you know, we're paying lower share of our medicaid than they are in alabama or they are in mississippi. we think mississippi ought to pay 50% and not just 20% that's the problem when you regionalize your fiscal policy you can't just look at taxes look at expenditures and what states are taking out of the federal system compared to the larger states. and you're going to see a lot of

the larger states saying look you want to penalize us for having high taxes, we're going to penalize you for having low taxes and not supporting federal programs the way we support federal programs so this is dangerous >> it's not just penalizing high tax states you're penalizing high cost states so you don't have to be rich in new york or the surrounding areas of new york city to have combined income and local and state taxes of over $10,000. >> right. >> and a lot of the reason the other states benefit is because the cost of living the wages are low so the standard deduction is more affordable and makes more sense for those people it's not really a high cost issue as much as a high tax issue. >> well, every state is

different. >> they pay the same federal tax rate so the federal government is not responsible to balance the cost of living in every state right now. if you're just talking about the tax law itself, it's equal it's doing good things to encourage states to have lower taxes and the federal programs that heidi is talking about are certainly important but they're unrelated to the tax law what all of this tells us though is that states need to be competing for the best cost of living, the best environment, the best regulation and that's what we need to be doing now and not be a high cost state or a low cost state so the tax law does what it should. it is the same for everyone. but again, my hope is that we could completely eliminate all the state deductions on federal

taxes and just keep the federal rate as low as we possibly can >> i think i would disagree with everybody being treated equally. if you live in new jersey you will have a higher effective rate than in florida so you have taken the equalization out of your federal tax system because high earning, high income tax or state tax states are going to have a higher effective rate now than if you live in states that don't have high taxes. >> before we go, do you see a day in which some of these high tax states like new york and new jersey, california, ultimately are forced to lower their taxes and what that ultimately does in those states >> i think it's going to depend on that out come.

>> people have been fleeing. >> they have been bringing people in for years. people are looking for a better place to do business and raise their families so we don't want these loopholes that give states like new york a chance to actually raise their cost of living and a lot of the cost of living like higher minimum wage and other things are being forced by state policies so i think there should be a competition between states and the federal government should stay out of it and not create loopholes. >> you're not in favor of some of the minimum wage requirements that have been put into place. largely, by the way, responsible for the increasing wages in this country over the past year that the president has taken credit for. >> well a lot of these minimum wages, it's varies by the state

and it's none of my business what new york does but they have to keep in mind if they raise wages to a point where start ups cannot get jobs, we have seen that in a lot of states that raise the starting wages but that's not what we came to talk about. the federal tax law should be the same >> if new york oracle cal run into true economic trouble would you see that as a win? >> no. i wouldn't but -- >> if other states benefitted? because it's very interesting what will happen to this country. >> well, california, illinois, a lot of these states are getting close to bankruptcy. what i don't want to see is the federal government come in and bailout states who have not been responsible and a lot of states need to get their act together on pension reforms and other costs. there's a lot we need to do at the state level and what we need to do is push to power out of washington and let them compete -- >> senator thank you. we have to run

>> yes. >> great to see both of you. thank you for the debate. >> thank you. >> when we return, senator rick scott will join us to talk about the latest on phase one of the china trade deal and later, david calhoun takes the helm at boeing today we'll talk the mounting challenges the new ceo faces stay tuned sqwkoxilbeig bk. ua b wl rhtaci. a new kind of credit card. 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.

a big week for the markets about to begin investors paying close attention to markets and tensions. >> rick scott will join us with his thoughts on president trump's phase one deal. >> and changing of the guard dave calhoun takes over oday we have that new animation we have a new set. and now, finally --

>> a new floor. >> finally. >> finally we have a new floor. >> take a look at that floor. >> we got that going for us which is nice. >> you can't really get a shot of that can you? >> it looks nice. >> it's like a fancy house where you rip out t you know, the 70s carpeting, the shag it looks good and the futures

are responding treasury yields, taking it all in stride as they have been for like as long as i can remember it's 183 184. actually i can remember things from way, way long ago >> stocks rallied over recent weeks and we're expecting another milestone this week. the signing of the phase one deal he joins us now from washington on what it all means good morning. >> good morning, we saw the treasury secretary on fox over the weekend saying that they finished with the translation process of the deal making sure that they say the same thing he said the terms did not change during the course of the translation. that was one of the worries going into the final end game

here before we get to that phase one deal signing later this week take a look at the truth 15% tariffs reduced to 7.5% on $120 billion worth of goods and then that 15% round on $115 billion worth of goods has been called off that's the trade and tariff truce that we're going to see in addition to the lower tariffs we're going to see agricultural purchases and we'll see an enforcement mechanism to be put in place all of that to be signed at the white house on wednesday morning and we're told that the white house has invited quite a number of people. about 200 attendees or more including lawmakers and farmers or business leaders as well. and then the big question is what comes next with the phase 2 deal as the two sides continue

to talk. president trump had initially said phase two negotiations will begin immediately after phase one but i asked the president last week about phase 2 and he suggested last week that he might let it wait until after the election he thinks maybe he can get a better deal after the november election than he can into the run up to the election he's presuming he's going to win in november but ultimately hinting we might have a much longer lead time than many people had thought guys. >> i see when you do that. i like when you do that and you make us proud. you're very famous. >> don't always take a shot at who is asking questions but i saw they took a shot at you. i said i know that guy. >> oh. >> we don't get to use that briefing room very often so we have to make the most of it. >> small little place. >> it's tiny.

>> it's become a greyhound bus waiting area these days

i mean they're not going to stop they are taking away -- trying to take away the rights of hong kong citizens. i mean, i don't think they're going to comply and i think it's bigger than trade. they're the world's worst human rights violator. i don't believe they ought to hold the olympics in '22 either. it's a leadership that doesn't care about other people and they're totalitarians. >> it would -- complete decoupling would impact us and the global economy do you think that would be worth paying that price? >> well, nobody -- look, we all want more trade. i mean, i'm from florida i want more trade. i want more trade but you can't

trade with somebody that lies, cheats and steals. look at all the technology they keep stealing from us. i mean, do i really believe that's going to stop i don't. do i believe they're going to open up their markets? they're not. so it has to be fair to american workers. they have to quit selling all the fentanyl and killing our citizens they have a plan to take over the united states. to beat the united states. they don't care about american workers. i care about american workers. i know president truch does so i'm appreciative of what he is trying to do. >> so you would take a harder stance what would that entail not trading with china or making more demands >> i think we have to hold them accountable. >> is it worth the price >> we all want more trade. whether it's with china or

wherefore it is. we want more trade we want that but we can't sit here and let china steal our technology and not open up the markets and say we're okay with that that's not fair to the american worker it's not fair to people trying to put food on the table in this country. i want american jobs i'm not as worried about chinese jobs i don't believe they'll buy what they're going to buy >> do you know the time line where things get rolling this week at the trial? do you know how that's going to happen >> no. >> i mean, clearly what pelosi has done is just a sham. she said it was so important to get it done in december and didn't have time to have witnesses come and now she wants to tell us how to do the trial in the senate. i have no idea it's frustrating to me i have been up there a year.

we ought to be doing things that are important. secure the border, balance a budget, lower drug prices but we're playing this game that pelosi has she just hates trump and you listen to whatshe soefrd the weekend, hates mcconnell >> what is it going to look like at this point? the notion to whether there's witnesses hasn't been decided yet. do you think there will be a couple of witnesses on both sides? do you think -- how long do you think it eventually lasts? will it last two weeks three weeks? >> we're going to follow the path and listen to both sides. senators will have the right to ask questions in writing and then we'll make a decision if we're going to have any witnesses. unfortunately, you know, trump,

the democrats didn't prove anything but that he is innocent they said this horrible phone call he ruined their day. they're saying if the president goes and defends the right of the presidency that that's obstruction. give me a break. this is just an absolute sham what they're doing. >> senator before we let you go, i wanted to get your thoughts on what appeared to be news over the weekend. curious whether you were satisfied with the president's explanation of his decision to kill soleimani given comments by the defense secretary that he didn't have as what he saw specific evidence related to an effort to bomb four specific embassies that were imminent. >> sure. i was at the briefing. i think they did a good job at the briefing if you look at what iran has been doing whether it's shooting down our drone or attacking our

embassy or killing the american citizen and hurting three others, i'm glad he killed soleimani. i'm glad somebody is going to stand up against them. -- >> i'm not going to dissuade you from that. >> i'm not going to try to dissuade you from that view. i think the very specific question is whether the president misspoke or as some people describe it as lied about the specific evidence that he had in that moment not whether he should have or shouldn't have but the explanation for it. >> i talked to the president about it i'm comfortable that the president acted properly he's a murder and a thug and killed a lot of american citizens so i'm glad he did it. >> >> that's not the argument.

>> it's whether he had it or not. >> but he could probably defend it on knowing that there was more mischief planned. >> 100%. >> one embassy has already been attacked. >> nobody is debating that the debate is he specifically said something which now is not true. >> i understand where you're coming from. i have been living here. i understand where you're coming from. >> anyway, senator scott, thank you. we're going to have a lot

more on the changing of the guards at america's biggest companies and what it could mean for investors. also you can always watch us live do it now on the go on the cnbc app. check it out it's pretty cool stay tuned you're watching squawk right here on cnbc 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. ♪

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welcome back to squawk box this morning boeing beginning a new chapter today. not only does he have to get that 737 max back in the air but now some questions about the company's culture and that's something that he addressed when we spoke to him exclusively in november >> that question of culture and anybody's willingness to trade safety against anything else, never seen it, never touched it, don't believe it now don't confuse that our culture on this subject can get better we can do more with visibility, everybody knows that we can strengthen all of the independent arms that are meant to put judgment against every decision in favor of safety.

we can strengthen those. we can increase. andrew, the word of the day is transparency. we started seeing that as he was forcing the company to get all the bad news out documents that had been turned over but not released to the publ public like we saw on friday, well that's all changing he addresses the fact that they have to do better. he sends to the employees in this e-mail, this is a crucial time for boeing. we have work to do to uphold our values and build on our strengths. holding ourselves accountable and incorporating outside

perspective on what we do and how we do it it's been three weeks since he named dave calhoun as ceo. when you look at his resume, make no mistake. he has the pedigree in order to do this. he was on the board of directors at caterpillar when they were going through a tough time and helped steer that company on a better path. a couple of things stand out they tell me first of all he's going to streamline the 373 max process. it doesn't mean getting rid of the work that's been done but streamlining and focussing it and refining the focus so they can get to the heart of what needs to be taking place also expect them to make quicker decisions. dave calhoun was brought into this job in part because as the chairman he doesn't have to sit there and say okay what do i need to lerge aboarn about this company? if they brought in an outcider

-- outsider he's going to move as quickly as possible not recklessly but as quickly as possible to streamline the process and get the max back in the air and if he's successful it's written into his contract that he gets a $7 million bonus when it's a safe return of the 737 max. >> joining us to talk about the challenges and culture at boeing is the former chairman and ceo and previously he served as the vice president and general manager at boeing where he was responsible for the 373 and 757 airplanes. also joining us is the senior associate dean for leadership studies at the yale school of management also a cnbc contributor. let's start with you

>> i can understand you can't control a work force of 100,000 people without criticism but it does get to an issue of attitude toward getting certification reinstated on the airplane which was the goal today and i think that's what mr. calhoun has addressed. so this disclosure means you give the good news with the bad and some of the bad news is some of the inside culture of the company which he has committed to change. he'll be good at it too. >> do you think calhoun will be up to the challenge? >> yeah. absolutely i was thinking of using that line myself but after our discussion last week i thought maybe we shouldn't use that phrase but yeah, he has the perfect resume he has everything and unlike gordon he's not a former pilot but he certainly managed engineers, managed massive manufacturing. the only thing that i might add

to what gordon and phil had to say is that gordon is the best authority on this is that there's a team there having gordon's successor as chairman brings incredible credibility. and he's the head of strategy. >> gordon, what went wrong what happened? >> well, they got off track and maybe -- i'm used to the discourse between james versus the need to keep the transition to a minimum and there's a flaw there but at the same time, i think some of the assumptions of

proficiency, they didn't take a option so you can't assume that everybody flies the airplane the same way. >> what's the next step? >> they're going to recommend pilot training and a simulator so i think that's the last deal that needs to be closed. that's going to hurt them financially and hurt the air carriers because they have to pay for this it's expensive but at the same time it answers the faa's

question he has to deal with potential oversight coming from congress >> i think that in terms of those constituentcy and what's hard is the congress of course has for good reason a great deal of skepticism and bipartisan skepticism and of course the regulatory bodies and national and international and the other groups we have to address all of these at once. and i think that will come through well in congress i think he would have been very helpful there. >> he didn't go so he could step in as a fresh voice.

>> there's some skepticism out there that he's been on the board a decade you know, that old proverb, the rest of the proverb is yes but all grooms know the corners and that's something that he brings is great knowledge >> gordon, you were starting to say something. what was it? >> no, i was just agreeing he is going to add to the confidence by visiting some of the secretaries of transportation so i have a lot of confidence. i wanted you to help end the debate the headline was $62 million but you also know this was not a golden parachute it was deferred compensation and vested shares and the like the question though given the optics of all of it and given

potentially the discretion that the board had in it and i think there was debate about whether they had discretion on it is what you think they should or should not have done related to the compensation he is a 30 year veteran with a whole lot of differed compensation >> i agree. >> now that he stepped down though the other question is, does he have to continue to pay the families and victims of the crashes? >> he was likely to do so. he was moved when meeting the

victim families face to face but that past differed compensation was not any bonus whatsoever as you pointed out with your surprising role reversal with you and joe flipping corners on that one i have often be critical but truly they were not exit packages it was differed compensation contractuall d contractually due them there's been no illegal activity there's no reason to not pay him. his past earned salary over his career. >> just saying the new york times approach when they shame the ceos every six months. the list of shame of who makes a lot of money they are already overpaid now they're just getting differed overpaid i just wanted to be consistent

thank you. you're an inigma sometimes we're the same other times we're totally opposite but that's what makes it interesting. >> moving target. >> coming up, next generation inventory robot. body scanning technology made to cut down on clothing returns and more we'll get you up to speed as the industry gets ready for another year of disruption stay with us is uber coming back to live? could the rebound we have seen in the last two months signal the nightmare is over for investors? a pair of top analysts will join squawk box to break it all down. stay tuned

you leave it to me. i'll get your taxes in an ok place. what? just as soon as my audit's over, this gets my undivided attention. you take a lot of trips to the islands, phil? pretty great, right? oh phil's legally dead. fell off a boat. going by denis now. celery. long story. what do we got here. oh. not going to want to see this. i don't think this is going to work. just ok is not ok. at&t has america's best network, now with our best plans, at our best prices, starting at $35 a line for 4 lines. new from at&t.

that decision was a mistake but in an interview. let inaccurate reporting influence the time line of the

transition plan. there was an article that went viral. the former employees accused her of creating a toxic culture within the company and one example korey told employees that the customer service team couldn't submit vacation requests or couldn't work from home until it was resolved she plans to start today and said in an interview that corey was selfish in trying to diffuse the fire storm in social media but created a misconception that she was exiting the business that was never the intent. that's the story we should say the verge says that responding to our reporting at the time by saying her behavior and comments were wrong, plain and simple and then choosing to step down as ceo speaks for itself. >> so she didn't choose to step down i'm confused >> no, steph korey. >> not curry. >> i stopped listening and now i don't know why i did go ahead. >> i think the suggestion that

the verge was making -- >> never mind. >> is that the reporting was accurate >> you wrote a peace on this in the new york times. >> okay. >> glad we got this out. >> fastest growing start ups in retail land. >> at the moment when we come back is the uber come back real we want to know if investors can expect the 5-star deri this year or if there's bumps in the road ahead. stay tuned you're watching squawk box on cnbc e best-in-class platforms and education. i see award-winning service, and a trade desk full of experts, available to answer your toughest questions. and i see it

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welcome back some of retails biggest players are gather in new york to talk about what's next. courtney reagan joins us right now with more on that. >> so the national retail federations big show is like consumer electronics show for retailers. now that the holidays are in the rear-view mirror retailers are looking forward to the future

and big technology players for google ibm and small delivery start ups they want to be part of the future so we'll hear from starbucks, lowe's, mastercard. satya nadella spoke yesterday as did michelle goss and when you want to look forward you have to fix what isn't working right now. amazon returns and is working. >> the returns are working we're seeing the traffic and getting new customers and we're getting a younger customer and to what we expected some of them are buying >> so companies like textile, it's 3d body scanning and they're all courting retailers here those looking for new solutions

to improve their operations and improve what happens for customers when they're actually in stores >> meantime, uber is probably happy to be leaving 2019 in the rear-view mirror shares are now on the road to recovery up more than 25% over the past two months joining us to talk about whether the nightmare is finally over for uber investors, your managing director and senior equity analyst and tom white, senior research analyst, good morning to both of you

>> likely going to grow faster and profitability on time. uber is building a bigger platform, global in scale. it's going to require more investment there's more businesses so they're going to appeal to different investors at different times. >> what's a fair price for this? >> for uber -- >> yeah. >> we have a $45 price target. uber is pretty interesting here. that scale will translate into a margin advantage more liquid marketplace so that could put it in a greater position it's just in the near term the visibility is a lot more limi d limited. >> politico is reporting this

morning that they think california's law that requires you have to pull fiem employees -- full time employees they think that's going to heat up for the middle of the year that's when it will go for the state supreme court there. are you betting that uber is able to win on that front or are you putting it off as something that you're not addressing until right now? what do you think? >> i think the most likely outcome is that california legislators and economy companies basically hashed out a middle ground. i don't think the governor of california wants to be the governor of a state that squashes this economy with punitive actions so that's what is happening right now. they're using that as a way to pressure legislators to kind of come to the table and hash something out. >> interestingly, if it isn't

hashed out until late june that goes on the ballot. >> what does that mean to the stock? >> well, we have -- >> if you look at the financial impact it ends up being a couple thousand more dollars per driver per year. >> but clearly they think it's a big problem which is why they're fighting it and it could get picked up in other states. >> i think the real issue is does it happen in other states beyond california? this whole debate is likely to peak in volume around the time of the november elections. most of the state legislators in california that are supporting this bill being put into action. >> how worried or happy are you that they're shifting the model or strategy to try to get to

profitability and what that means about long-term growth prospect. >> is that a good thing or a bad thing? >> it's neither. i think what you're going to have is when you have more permissive environment you'll have companies building huge platforms for the long-term and when you don't have that you'll have companies growing a little bit more slowly but maybe a little bit more responsible. >> i think one of the biggest right now is that both exiting or some of the issues they are eroding. and that doesn't mean that uber can't be a great profitable business over time but it just means that the denominator that you're using to

base multiples and margarket sh is smaller grub hub might be looking at their alternatives ending down the competition on that. that was the last few dollars bumping the stock. if that's not true -- >> i think you're saying that food delivery space is an important part of their business what you have seen them doing is coming out of a lot of international markets where they maybe don't have the real aggressive category position that they look to have >> what you have seen is a lot of investment from a lot of players trying to gain share the same dynamic is also impacting a lot of the private companies in this space so that could rational. >> do you see a potential activist coming into uber stock? it's the only unicorn that is a

single voting -- single vote stock. i mean, everybody else has shares this one does not. unclear to me what an activist could do either try to run the business more for cash or try to grow the business at the expense of cash and whether investors could go along for that ride. >> there's potential given the stock class issue that you mentioned. in terms of what they would do, you would see them accelerate exiting some of these less profitable markets or markets -- >> that would make the denominator even lower, long-term. >> it's again sort of this -- it's always been a trade off between short-term interests and investors versus longer term focused investors but i think uber is trying to stem some of that buzz by, you know, potentially exiting india. they announced over the weekend they're going to step out of columbia where they're having a lot of regulatory trouble.

the minimum wage component of that is .4 it's not as good as 3.9 and not as good -- pre-2000 is 5% but 3.5 is solid it maybe some what skewed in the way we look at it from the .4% from the minimum wage increases in the states but it's not all due to the minimum wage. that's a paper you did a good job on that it's in the new york times. >> thanks. >> i looked at it. well, coming up, what to watch ahead of the open on wall street that's also where you find your piece today. >> true. >> i thought it was tuesdays when was i looked for your pace. >> tuesday with maury and mondays with andrew. >> don't you write the column? >> but often times i'm moving the days around. just to keep you on your toes.

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>> all right so shares right now of nvidia, the computer chip maker is up 1.5% or so roughly 70,000 shares of premarket volume helped along by an upgrade to a hold from underperform and those shares in focus right now. shares are up .5% around 30,000 shares of premarket volume the oil and gas exploration and production company gets from overweight to equal rate by analysts at morgan stanley and they call them one of the top picks in the industry. they cited things like better execution after their acquisition and expected future asset sales and they're getting a bit of a boost and then we'll end on shares of spotify that

are down a percent on 6,000 shares of premarket volume the online platform gets downgraded by analysts to underperform from a prior in line the target price stays at $115 they see it as a pure play on a loss leader category even though it's still growing it's s subscribers and revenue so those shares off 1.5%. i'll send things back over to you. >> to talk more about the markets, let's bring in crkrist. could be kirsten, but it's not another morning where there's pressu pressure is it all real i wonder if it's something that we're not talking about. is it great consumer great conomy

if you look at 2019 it was looking at the markets which is risk on in terms of performance but risk in to cash, they went into u.s. treasuries, this he went into investment grade debt so the question is who is participating in this? our advice to our clients is, stay invested or get invested. >> i saw an article over the weekend that said the most overvalued s&p in history, and so i went in to see exactly what they were talking, about found a couple of metrics, i think it was cash flow or ebitda or gap earning. they did find two metrics that the highest they've ever been. >> okay. >> therefore be ready for, you know, have one foot out the door, or just know that the market's not cheap is it justified? >> when you look at anything in isolation, i think if you pull out one metric or two metrics, and so we maintain a bear market

checklist at citi, where we're basically saying should you buy the dips is there concern about a recession or should you actually go in and buy the dips right now, there's three and a half red flags out of 18, so the important part is, how many flags are you looking at 18, three and a half, to put that into perspective, in 2000, it was 17 out of 18. in 2007 it was 14 out of 18. we would start to see some concern if it was 7 or 8 but at 3 1/2, we're buying the dips >> pretty unprecedented, i guess, just the length of not just the recovery, but of the bull as well, and we are closing in on 30,000 >> here it the other thing equity markets versus fixed income, another anomaly, last year, the bond market was more of an anomaly than the equity market if ex-the u.s., 53% of the world's debt is negative yielding, the average year globally right now is 1.6%, that

includes emergingmarkets, high yields >> that's crazy. >> what are investors going to do just think about that. we normally had fixed income as your steady income, so one of the things we're talking to investors about is stocks for bond people. you need to find your yield somewhere. >> that in itself may propel markets this year because you have people switching in who hadn't been there before >> exactly we're advising our clients not to stretch too far in the bond market, and we're seeing that, right? when you look at credit spreads, you're seeing that in the bond market there is some much better values in the equity market >> high yield is only yielding like 5.3% for u.s. corporates. >> when you get to these what looked like unheard of numbers on all the averages, it just feels like since you've never seen them before, that it can't go much higher and i think that that, as long as you have that feeling, maybe it does go higher because it's even more surprising than going down >> i think people felt that way the at the beginning of last year, they felt that way two years ago.

now, two things we're keeping a close eye on, so one, obviously trade. this phase one deal coming to completion, i don't think the market is that concerned about phase two right now. i think phase two has been basically pretty well signaled that that could happen after the elections. trade's very important and also a turn-around in informimanufac. the recession a lot of investors may have been anticipating was the recession we saw last year in manufacturing what's happening right now, you have the situation where demand exceeds supply and if we start to see a turn-around in some of that data around manufacturing, some of that is priced in, but there's still some that we could see come through in earnings, come through in the economic data that would be a support to equity markets >> what would -- we got to leave but what would cause consumers to rein things in? i mean geopolitically, we thought we were on the verge of war. we worry about constitutional crises with impeachment. is there anything that would

cause people to say maybe there's a problem here and i shouldn't be quite as free-wheeling? what would it be >> you can't trade around political events, geopolitical events, anything you don't know. that's one mistake investors are making right now where you kind of look and investors are taking too long of a game i'm nervous what could happen in 2021 or the outcome of elections. >> sooner or later we're all dead but it would be nice to leave a big chunk of change unless you get those estate taxes too high, andrew >> that's a whole other issue. >> we got to do the step-up basis. let's start with that. i know i know you like a book kristen, thank you >> thank you let's get out to the jpmorgan health care conference in san francisco jim cramer is there and he joins us, jim, what are you most excited about from out there >> i think a lot of companies pre-announced the upside here. i think you'll get a lot of companies that there l say you know what? i know that we're not at the end of the quarter but we have to

tell you, things are better than expected when they do that, of course, it exhibits to the upper bias of the market >> jim, do you think that's unique to health care or hear that from retailers in other places, too? >> i think it's not unique the icr conference in orlando and lululemon saying things are better than expected lululemon is an outlier, given the fact most apparel is weak but you see lulu doing well, baxter is doing well, bristol-myers, i think bristol-myers says things are doing well, glaxosmithkline. companies say i can't wait i got to tell a better story than we've been telling. >> that could add to the momentum we've seen. >> yes >> nike jim donohoe taking over, the fourth ceo we've seen in the company's entire history, dow component. what do you think about nike and its prospects right now? >> this is like kevin johnson moving over to starbucks,

succeeding howard schultz. you need a technologist right now. there's no way that you can do personalization like nike wants to do without someone who really understands both the cone sumer, consumer, ebay and the enterprise which is service now. the combination nike pulls away from under armour and adidas it was a great move by parker. >> jim, thank you. we will see you in a few minutes and look forward to everything you've got coming up from out there today. >> can't wait. a great line-up of guests from the jpmorgan health care conference all day on cnbc, including the ceos of cvs, glaxosmithkline, and zowetaso on "mad money" tonight. stay tuned quk x"ilbeig bk. you should be mad your neighbor always wants to hang out. and you should be mad your smart fridge is unnecessarily complicated.

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>> final check on markets, what's going on this monday morning ahead of the open, looks like we're going to start in the green. dow jones looks like it will open up 81 points higher, nasdaq up about 33 points, s&p 500 up about 8 points you know, it's been like this almost every morning, we've had sort of these green screen every single morning >> algos, computers, the fed

>> if jim is right and we're looking at another round of companies giving upward guidance, it's going to be more fuel to the fire >> we'll see big bank earnings this week. >> what is the forecast in davos, have you looked >> the weather >> snow. >> i don't know. >> snow and cold >> anyway, make sure you join us tomorrow we'll hand it off to the gang on "squawk on the street" and jim, of course, in california today ♪ good monday morning. we welcome to "squawk on the street." david faber at the new york stock exchange, kramer is at the 38th annual jpmorgan conference in san francisco, a host of ceo interviews an including with bliss toll myers later on this