and "squawk box" begins right now. ghcood morning, i'm melissa lee along with joe kernen and mike santoli yesterday we notched record closes for all three major indices and we're looking to build on those s&p 500 looking up 19 at the open, dow by 165, nasdaq by 55 taking a look at treasury yields, we do see them moving a little bit lower compared to yesterday. we have the ten year at 0.943% two year at 0.127% >> and the boeing 737 max returning to the skies for paying passengers today. american airlines will carry about 180 passengers from miami

to new york this morning phil lebeau will be on that flight and he will join us at 6:30 a.m >> what's capacity and do we know -- is it full capacity how are they doing it, middle seats, what do we know, 180, that's not full, right but that is how many people will be on it have to get to the bottom of this >> phil will have the bottom >> fuller than most planes right now. >> reading the articles and all the scuttlebutt, just so many factors of the confluence of so many different things. you had the whole 737 max problem and then you got covid, so now you are reintroducing it when there is probably still some fear with passengers. and then combined with the fear of being in an enclosed place where it is hard to social distance so you have to feel for boeing, but the stock -- what was the

low, santoli ho more than double, right? >> off the low, yes. but it was above 400 >> so we'll talk a lot about it. we have gordon bethune, former ceo of spirit airlines all to talk about this. in the old days, most people get on a plane and it could be an airb airbus, it could be a boeing, it could be -- much less which boeing usually people never knew. and within a couple years, i think it is boeing's hope that it gets back to where people don't even realize that they are on a 737 max and i guess that is in the cards fingers crossed. they have done a lot for software, a lot of pilot training so we'll see the house of representatives siding with president trump voting to increase the federal direct payments to 2000, also voting to override the president's veto

it is now the senate's turn for both issues. eamon javers is joining us now are you not actually whipping any votes down there, are you? >> it is my job not to whip the votes. i'm a journalist >> so what do you know >> one very funny story. the late great sonny bono once came to the house floor after a number of drinks at a local location called bull feathers, it was about 1:00 in the morning and he ask which side are we on and i said i can't tell you, there is your whip, he is the guy who can tell you so as a reporter, i can't even tell sonny bono how to vote. >> you tell people you met bono. to me, that is -- honestly, i met him once too, and i'm more impressed with that bono than the other bono because this really was this guy's name he didn't make up a name for the

edge or all the -- >> you meet cher and i'll be impressed. >> all right you know, he was the former mayor of palm springs. had a restaurant out there >> yeah. great guy. tragic story anyway, moving on to the present day -- >> skiing. >> and this was close, speaking of houses voteses on the house , just a couple votes to get them over the hurdle. they did pass to increase stimulus payments from $600 to $2,000, which is what the president says he wants. a name of republicans followed along with the president, they got just over that two-thirds hurdle that means this goes to the senate now its not at all clear what will happen in the united states senate we do expect that chuck schumer will try -- the democratic leader in the senate will try to take up this vote today. any republican could block it.

it will put the republicans now in an awkward position of blocking the measure that the president of their own party says he supports and a number of the republican colleagues in the house went for. so we'll see whether they even bother to take it up but at some point they will have to block chuck schumer if that is the road they decide to go down instead of simply throwing up that are hands and voting for the $2,000 checks. interestingly the house bill would give $2,000 to adults and children and adult dependents. that is a little bit more genero generous so that is something to watch for as well as republicans are looking for their concerns about the overall deficit here it is $464 billion bill. meanwhile in the house they also overrode the -- voted to override the president's veto on the defense bill, we'll see if the senate can dothe same thin today. senator bernie sanders will try to link the two at some point here and say you don't get to vote on the defense bill unless you vote on the $2,000 check so all of that is up in the air.

very unclear now where it will go at this point so for investors, the one thing you know for sure is that treasury is suggesting that they think that they can get the $600 checks out into the economy as early as this week and then if there is a $2,000 check behind that, that will have to go separately depending on what congress does here treasury doesn't look like they will be able to process that as quickly as the $600 piece which they have been expecting now for some time. >> the op-ed pages in the "journal" have not always been the president's favorite but scathing today trump gives schumer an assist, the president writes a $2,000 check to make democrats the majority talking about how this could backfire in georgia. mr. trump's narcissism isn't news but if republicans lose the georgia seats and the majority, republicans across the country can thank mr. trump for their 2021 tax increase. so they are not --

>> how are the two georgia republicans going to vote on this this puts them in a tough box. that is one of the political questions here and the fascinating ideological question here, the president has not been -- has not always been sort of a traditional conservative he is more of a populist conservative and things like giving checks to people in a pandemic, that appeals to that populist conservative side of this president. something that republicans on the hill though don't necessarily embrace.sis a divide there. and this president already lost. so -- >> both sides demagog, one side says everyone less than $75,000, and the other side says tens of millions who kept their job and had a pretty good income would suddenly get a $2,000 check. and that is just to throw so much at the problem that they would argue that this is another

$350 billion added to the deficit. 350 we used to think about before we did it, remember what was obama, 850, right are, that stimulus that people were still complaining about the shovel ready 850 this is just 350 that we're talking about as a rounding error. >> yeah, it is amazing how big these numbers have gotten and the question is what will it do to the economy next year, will it really juice growth overall in the u.s. economy or is this going to fill potholes in an economy that is battered >> potholes that we didn't fill last time with the shovel ready. >> and we just don't know the answer to that i don't think i'm sure the economists have a million studies, but this is unchartered territory. and of course the democrats are accusing republicans to suddenly waking up to fiscal conservative after running up the deficits for years under president trump and now saying oh, well, now you're concerned about that. and republicans frustrated with

democrats putting them in this box this morning >> and after the sum total of every president was doubled the previous eight years by obama. so let's not forget that >> and the deficit is just something that for a while now people decided that they won't pay any attention to in washington and now this week they are mick mulvaney told me a year ago that he realized that there simply wasn't any political effort in washington, no political momentum around the idea of cutting the deficit. there is a lot of momentum on spending money on defense, tax cuts, stimulus checks in this case but not around cutting the deficit. that is sort of where we are we'll hear rhetoric about it, but they won't do much about it. >> don't try to impress me with your name dropping i talked to mulvaney yesterday, okay, on the show. >> i was off yesterday >> all right, big man. thank you. we'll see you again. we got a lot of stuff happening in the senate, we'll need you.

no whipping though, just talking. >> i will not whip anyone. coming up, alibaba shares rebounding after regulatory ra a crackdown sparked a slide. hey, dad! hey, son! no dad, it's a video call. you got to move the phone in front of you like..like it's a mirror, dad. you know? alright, okay. how's that? is that how you hold a mirror? [ding] power e*trade gives you an award-winning mobile app with powerful, easy-to-use tools and interactive charts to give you an edge, 24/7 support when you need it the most and $0 commissions for online u.s. listed stocks. don't get mad. get e*trade and start trading today.

new this morning, planning

put ant financial into a new holding company. it would be absorbing any unit that would require a financial license. the stock rose after a two day decline. meanti meantime, the u.s. government strengthened an executive order barring investors of buying securities in chinese companies. the november executive order applies to investors in etf and index funds as well as s subsidiaries since the order, index providers have already gun shedding some of the companies from their indices. joining us now to discuss this, long view global managing director and former obama defense appointee. guys, joe, i'll start with you yesterday we saw a real bounce in alibaba shares and i'm wondering if you think the stock is calling the bluff of chinese

regulators and/or just reached values, levels we haven't seen since june, that account for all of this. >> i think that the suggestion would be that speculators believe that in fact it is an opportunity and as you stated, it is calling the bluff. i would argue that is not necessarily the right strategy looking forward. i think what happens here is the action on the part of chinese regulators really highlight the investment opportunity that remains with large and mega cap technology companies in the u.s. apple this morning is going to be approaching an all-time high exceeding the september 2 high so i think that it illuminates that i think if you are looking for opportunities here, the first place you want to look is the etf, the mchi, that is the ishares china etf, four of the largest holding are the chinese internet giants, 35 prl% overalf

that etf and to a lesser extent duo ppd, that is an opportunity as well if chinese regulators exclusive differencity >> and i think a lot of investors were sort of caught off guard by regulators in that that the conventional thinking was that these companies are state champions and that there is inherent backing by the government it make sure that these companies succeeded. what is the game plan of the communist party do you think >> i think you're right, a lot of people assume that because of the ongoing or soon to be u.s./china tech war that these guys were the new masters of the universe and untouchable but the problem requewith that,e are a lot of things at home domestically with the com new

mist pa c communist party was unaccept with, showing contempt for egg regulators and damaging consumer rights bring forcing consumers to buy on one platform so ultimately the delchinese wee going to have to regulate the sector so that they can control what they are doing going forward both at home and abroad. and this is not just an alibaba story or ant financial the chinese have signaled that they will crack down sector-wide and that they will deal with some of the exclusive or captive ecosystems and that will open up the sector a bit more to other companies in the space. regular late tor regulators have made it clear

that l l alibaba can't squat on it anymore. >> and so it isn't necessarily it sounds like an effort to allow the smaller companies, smaller relative to alibaba at least, to thrive it sounds like it is a sector-wide crackdown that no company is immune to this tightening of restrictions >> that's right. there was about 27 or so other companies in the sector called in for meetings with regulators and basically given the order that you will have to fall in line, that there is a way in which we'll expand the sector. but you it will be controlled. so the message is clear. i think the jack ma situation, investors saying that he was smarting off at the mouth and that is the reason why we see what happened with alley aibaba

ant. that was an axle rant, bxlccele the reason just like in the u.s., they are not the new masters of the universe despite many of them are champions. one last thing, there is no indication the chinese want to break up any of these companies, alibaba included but they do want them to pair back what they are offering and get back to the basics in many ways. >> pairing back though at least for ant financial, joe, means potentially styling the growth that it has seen in recent years, whether ali pay or lending. those are the high growth areas that really afforded alibaba the higher valuation that it had prior to this recent selloff so in your view, is alibaba attractive at these levels >> i think it is i think that you will have to

endure some volatility and i think specifically for 2021, there will be volatility surrounding the relations between the u.s. and the chinese overall. president-elect biden, what will be his position as it relates to the existing tariffs, will he vacate the tariffs, will he lower the tariffs. but what i think about alibaba, i think about the fact that it is dominant in the ecommerce platform and i do believe that they will move towards the wishes of the chinese regulators here in 2021 and ultimately it will be a good investment. but as i said, you will have some near term volatility. they have attempted to buffer that with a buyback. a little bit disappointing on the size of the buyback, but i thought that was a good initiative for shareholders. >> and it is already under way but joe, given the choice, i mean you had mentioned that this is sort of getting swept up in the desire for technology. we saw that clearly yesterday with big cap tech really

catching a bid very decisively is that enough or would you choose to be in u.s. tech over chinese tech in '21? >> the answer to that really lends itself towards what your view is overall in 2021. i think overall there is overwhelming bullish consensus you don't want to be sitting in cash in 2021, but let's face it, i don't know if we can identify a specific equity size class or asset class in itself that will outperform the other we seem to be predicting which one is going to, but not necessarily having the evidence to support that. so i think that we're coming into a year where we're all bullish, but yet we just didn't know exactly which is going to be the better outperforming asset or equity size and i think what you want to make sure, that you have ownership of all and really do not remove yourself from any particular investment

>> all right, good to see you both thank you. and coming up, airlines hope the covid vaccine will help jump start the travel industry, but passengers trying to rebook using pandemic vouchers run into restrictions and frustrations. details next and here is a look at the biggest pre-market gainers in the nasdaq 100 17 education & technology is a

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value is used and another is just one shot. so if you rebook for a trip less expensive, united pockets the difference and you can't book on their partner airlines american airlines meanwhile, their pandemic travel credits don't lose their value, but there are restrictions you can't use them to book flights for other people for example. and southwest and delta have relatively simple terms, you can apply the credit to multiple trips. and all these rules are a pretty big consumer issue as consumer think about traveling in 2021 using those vouchers that airlines forced them to take instead of refunds and i guess just another reminder that vouchers, credits, miles, reward points, they are not really money, just a promise of some sort i'm sure it is all in the fine print. >> like 2020 vacation days >> there you go. >> what do you mean, joe

there is no fine print you use them or you roll over five you've been here long enough, right, you know what the policy is >> when would we have used them? actually, there is an article about it is a big deal for companies trying to figure out what to do that is money. i mean, that is money. >> true. >> i don't know. >> in some states you get paid for vacation days that you don't use. >> that's an idea. all right. coming up, it is a big day for beg. t boeing, the 737 set to return to commercial service. ph phil lebeau will be on that first flight

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good morning u.s. equity futures looking ready to set some new highs again after all three averages closed at records yesterday. the dow up 146 points, nasdaq indicated up 46 or so. s&p indicated up 17. i checked boeing, helping a little bit this morning on this news first passenger flight of a fixed and updated boeing 737 max scheduled to take off later this morning from miami, and that is where we find phil lebeau. you'll be on the flight. 180 passengers confirmed and what is capacity >> reporter: oh, man, you come out of the gates firing. how many people on this flight the plane has the capacity for 172 seats. i looked at the latest booking chart. looks like its about half full that is not a surprise most planes right now are flying at about 50% to 60% capacity

so what you are looking at here is a plane that is probably going to have, i don't know b, between 85 and 95 feats that willing filled on that flight. some of this will be the geeks who i got to be on the first flight there will also be regular customers on there we'll talk to them and take a look at the airlines that have the max in their fleets you have american now bringing it back into service today you will have united doing it on february 11th. and then sometime in march you will have alaska which will start flying the max as well as southwest which has 34 max planes those planes obviously have been updated. pilots have gone through enha e enhanced training. for american, it will fly most of its max planes by the middle of this year they are gradually getting the planes undated and then they will feather them into their fleets the passengers by the way, if it is on a max, you will be able to see it when you are booking it

and if you are not comfortable with that, and we'll see it from other airlines as well, they will put you on a different flight to accommodate you. american by the way will also be rehiring about 19,000 workers who were furloughed, that is part of the stimulus package all of the airlines will be bringing back all the employees who were furloughed back in october. finally take a look at the airline index as you indicated, the airlines moving higher yesterday. likely going to be moving higher today as well, at least that is the early indication we'll be on the flight it will be interesting to see what people will say and clearly they know this is the first delight of the 737 max coming out of grounding, 636 days since the last commercial revenue flight here in the u.s >> so you're just flying around, phil, just fly to miami, get on another fly, fly back here what are you going to do when you -- >> reporter: that's how i

operate. >> are we going to see you, where are you landing, did you say, jfk >> reporter: it comes into laguardia. i'll be at your house for dinner i just call up the boss and say i want to get on this flight, book it, and i hang up the phone. that's how it works. >> you should do something when you are back here, seriously, should you come in if like a cameo at the nasdaq or something. don't waste it >> reporter: believe me, i will be put to good use and i'll be doing a lot of reports today the not only leading up to the flight, we'll be talking about the president of american airlines, we'll be on the flight, you'll hear from us after the flight you will hear from me a lot. >> i think it is great that you are doing it i want to warn you, melissa has a question i don't know why i say warn -- >> i don't have a question like you had, joe >> i was worried anyway, go ahead >> i'm sure phil lebeau knows the answer to this

has american given you any indication as to what demand is on future flights? i assume this is a route that will continue going with the 737 max. so when you take away the people who want to be on the first flight, what is demand really like >> reporter: it will be a daily flight we don't know what the demand -- i will find an answer to that. my sense is like most of the flights not only for american bruh all the airlines right now, there are about half full. and we're looking at capacity or the flights being half full, 50% to 60% full. and remember, we're going into the slowest time of the year you will see some of these planes being less than half full and that is for all the airlines >> all right, phil, thank you. enjoy it i think it is a great experience for you to be doing that we want to hear about it, see how it goes. let's talk more about -- >> reporter: you will. >> good. let's talk more about what will get travelers back on the boeing

737 max. joining us now, former spirit airlines ceo nothing like a little time to put between the two incidents and then flying thousands of flights. how long will that take? you think by the end of 2021 that the flying public, it bts would be in the front of their mind that they are on a 737 max? >> i think that's right. the public has relatively short memories if you you remember the 787 airplane had batteries that blew up on it now, that plane didn't kill people, but people get on 787s all the time and don't think about the batteries blowing up i think that customers want low fares, they want reliable on time flights and they don't necessarily think about what is the specific airplane i'm getting on. now, the first couple flights because they will be covered heavily by the media and because the airline will be allowing people to rebook will get some maybe avoidance.

but i think after a few months this is just another plane in the air that people board and didn't think about it. >> they will be reminded obviously. there are some people that probably aren't completely up to speed on the travails of the 737 max, but people will be talking about it, the return to service, so i would figure that the number of that have worries will spike initially and then slowly come down again. but all with the covid as a backdrop, which makes it, you know, that is another variable that goes into the equation. >> that's exactly right. and you know, if you look at the investigation into the crashes, it highlighted two primary things, an engineering issue with the airplane and a training issue with the airplane. and both of those things were very actively addressed in the time this plane was grounded and by the airlines that fly the plane and boeing

so i think that the likelihood of additional issues with this airplane are really behind us. i think that phil will have a great flight to laguardia actually >> exactly what was the fix and are you confident that everything that needed to be done has been done in terms of pilot training and software and modification >> well, i'm certainly confident that boeing and the oversight regulators have addressed the right issues one issue was with the software that automatically affected the pitch of the airplane. that has been changed in a couple of ways, adding additional sensors that can check each other, the original airplane only had a single sensor and if it froze, the system didn't work. it also doesn't move the plane quite as much. and the bigger issue is now pilots are going through simulator training to learn

about how this system really works. in both of the crashes, it was identified that the pilots knew what was happening but didn't know how to stop it from happening. and that is now being addressed proactively in the simulator training that is new costs for airlines to have to train their pilots more for this plane than airbus flying airlines for example have to train them to fly the a-320 which is the competitor airplane to this. but it is good that pilots are doing this now and i think the airlines are addressing it correctly. >> what does the faa have to do to have an arm's length from the manufacturers and carriers and everything else? >> that is a great question. obviously they had a bit of egg on its face with this issue

because it certified the plane when it had the issues after the two crashes that it had. i think one of the reasons that it took this plane so long to come back over 200 days, they wanted to be absolutely sure, they knew because they had certified it too early, they wanted to make sure that every i was dotted and ts were crossed so i think the long time of delay is evidence of the fankct that they took it seriously and were going to do it right. the engineering fix was probably made relatively quickly. they probably understood pilots had to be trained more relatively quickly, but they took a long time codifying those rules and testing. >> are let's switch to covid one more time. you are optimistic about business travel returning now that we have the vaccine

it will be leisure travel first? >> i think leisure travel is going to come back full eventually i'm less confident about business travel. there was a study that was provide produced maybe you saw it that estimated that 19% to 36% of all business travel will never return because of a combination of work at home, technology and just risk profile. so i think that the airlines that are highly dependent on business travel will be thinking about their capacity and thinking about how do they refill some of those seats with more leisure travel. because i think the leisure travel will have a stronger rebound than the business side but i think both of those things will take time and i'm somewhat pessimistic about the summer 2021. i think with the timing of vaccines for people to feel really comfortable when they may

not even have the vaccine yet or may not be getting it until june or july or something makes the summer potentially problematic >> okay, ben, thanks >> thank you, joe. and coming up, with only three trading days left in 2020, where should you be putting your money? and a reminder, you can watch or listen to us live anytime on the cnbc app

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welcome back we're looking to build on the record close that we saw yesterday for the three major averages dow looking to add 130 and the nasdaq looking to be up by 47. of course yesterday we saw the reopening trade do well as well as large cap tech stocks some news about a "squawk box" regular now, kathy wood is retaining majority ownership of the firnlt sm she founded. ark hired her with an option that gave her the right to have the controlling stake in the company and that option became more attract it i have ofive af

performance of companies in like tesla. ark bought out the option for an undisclosed such wood will remain the majority shareholder. it is worth noting that some of the arc etfs, top performers in 2020, that is up i think 150% or so >> yeah, that is just the price gain and i think it has become a massive phenomenon total understatement to say it became more attractive to own the firm inflows have been phenomenal to the point where people are worried about the self-fulfilling prophecy from under 2 billion in assets under management to more than 18 billion. and down actually 5% or 6% from its highs because they own 10%, 15%, a lot of these companies. and i do think that it has almost perfect sweet spot effect but then you wonder if a lot of those strategies come off the boil, what happens ultimately to

those funds. just very hot money in there, but certainly good news for the management company and kathy wood coming up, stay-at-home stocks on a tear are this year, but with vaccines rolling out, will those names still be a good play for your portfolio in 2021. don't forget to subscribe to our podcasts you will get interviews, original content and behind the scenes access. look for us on apple podcasts or on your favorite podcast app pd a s and subscribe to squawk pod today. yeah...uh... doug? sorry about that. umm... what...its...um... you alright? [sigh] [ding] never settle with power e*trade. it has powerful, easy-to-use tools to help you find opportunities, 24/7 support when you need answers plus some of the lowest options and futures contract prices around. don't get mad. get e*trade and start trading today.

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we are all hoping that a lot

of things will look different next year but are their stay-at-home stocks worth holding on to. greg hahn, chief investment officer, greg, good morning, i guess let's start with, i mean, should we all assume that things are going to look much different in terms of consumer behavior, in terms of corporate priorities, relative to what they have been doing in the pandemic how do you make that assessment in trying to figure out whether some of these stay-at-home stocks just had this kind of brief moment in the sun or you can extrapolate some gains from there. >> good morning, michael our base case is that the first half of 2021 is going to be slow, and that we'll see growth in the second half of the year but part of that equation is the business models that these companies work under because this is sustainable revenue, and really strong operating margins, and these balance sheets are generally pretty clean, and so from a -- then it becomes a growth story and an evaluation

story, and that's where the problem is around the valuation piece of it because traditional valuation measures just don't make sense when you look at these companies like paypal trading at 89 times earnings but when you look at the growth in the volumes in some of these companies over this last year, we think it jump started really these business models and it's really about the business model these companies operate under. >> something like paypal obviously has been riding a very long-term trend of just, you know, electronic payments or digital money of some sort of another. i wonder if there are targeted stay-at-home plays, in other words, if there was a wind fall effect that companies pulled forward a lot of demand or got a lot of mass adoption in a hurry, and can we assume that's going to go from here. you mentioned in your notes here, you recently sold peloton, is that on that rationale. >> yeah, it's partly that. when we look at the landscape for the stay-at-home workout regime

we love peloton, they had supply chain problems but the barriers to entry, we think, are actually lower than what the stock is warranting right now, and the apple and apple is a great company with a great platform, but apple's rollout of its workout app we think is going to gain some traction, and nautilus has its equipment. we think there's just going to be competitive threat to peloton's business. >> and i guess the other question is not just how these businesses fare. you mentioned valuation is the key piece, also it's, you know, investor priorities and where the next dollar of investment in terms of urgent buying goes to, so we just saw this phase where you have these so-called reopening stocks just cyclical stocks, ones that are going to get a boost if we get back to normal they consume oxygen in the market, how do you balance those things out in a portfolio? >> this is the tricky part when you look at the size of some of these companies, mike, like apple, facebook, amazon

when you add the market cap of those companies, that's almost $5 trillion, and global gdp is 20 trillion. 25% of global output is recommended by the market cap of three stocks these companies are going to continue to grow that's going to be the challenge of investors we're going to see companies grow and our gdp is not going to grow at the same rate. we're not going to look at a paradigm shift in how we look at large cap stocks when you also look at apple, amazon, their net debt is zero these are huge companies that have very little they issue debt. that he is are the next triple rated companies that are going to be out there. it's going to be a real shift. to answer your question when you look at companies like zoom and etsy that benefitted from the stay-at-home thesis, the amazons, the microsofts, the apples, those are still stay-at-home stocks because they have segments of it, but it's really about the business model. >> yeah, so i guess just to

infer what you're saying there, zoom, etsy, had tremendous moves, but they have actually come off a little bit from their highs. you are suggesting that they are just over benefitted from this period or maybe got too much credit in the harkt fmarket for. >> they have and the challenge is that these are monofocused business platforms. they have one or two businesses or products that they're pushing out. they're based on one product when you look at these larger companies that have been able to integrate numbers of products and they've got different levers to pull in terms of revenue growth, i mean, like you look at amazon is two different companies. it's a tech company tucked up under the consumer discretionary sector with its cloud business, that's what we're looking at is the diversity of the revenue >> just quickly on netflix because that obviously is riding a very long-term trend, now a little more crowded in this space, and the stock is actually kind of gone sort of sideways for a while, how would you see

that coming out of this period. >> this is tricky, we initially sold netflix when friends went off their line, i think they're going to lose the officer or the office is going to go off amazon prime. the way that we're looking at netflix right now is that production, their businesses right now, their ability to produce content like the queens gambit has been remarkable, and so it's a global growth story, so we're looking at the subscriber growth overseas, but we're probably at a point where growth is slowing here in the united states. >> yeah, and maybe overall has been growing into the valuation arguably, greg, good to get your thoughts this morning. thank you very much. >> thank you, michael. >> coming up, we're getting an update on the health of the economy and the strength of the consumers as we close out the year that's coming up next, the latest on the virus, as cases surge and the vaccine is being

uny.uguthed throho t cotr "squawk box" is coming right back

good morning, the house

okay's $2,000 stimulus checks for americans, backing president trump's call and turning up the heat on senate republicans ready for takeoff more than a year and a half after it was grounded by the faa, boeing's 737 max is set to return to commercial flight. we'll bring you all the details. and believe it or not, we broke a record for cash race through ipos, should investors be worried about a bubble. the second hour of "squawk box" begins right now good morning, welcome back to "squawk box" here on cnbc, i'm joe kernen along with melissa lee and mike santoli becky and andrew are off today if they weren't, there would be like five people squeezed into this shot. >> mike and i would be nowhere near here if they were here. >> you wouldn't just come in

just as a back up maybe. >> do you ever see us when becky and andrew are in. >> no. well, it's good. i think becky is back tomorrow you guys, we're going to give you tomorrow off, i think, and thursday as well i was trying to think of what today is it's the eve of the eve of new year's eve, i think. anyway, u.s. equity futures at this hour, the dow, the s&p 500, the nasdaq, the nasdaq 100 all posted record highs yesterday. for the nasdaq, it was the 55th record close of the year, but who's counting treasury yields this morning inching slowly one way or another. .943 we'll see what happens maybe it will be a big day if we ever go back over 1% we will, i guess, at some point, mike. >> most likely here's what's making headlines at this hour the house green lighting $2,000 stimulus checks for americans, and sending the measure to the senate lawmakers narrowly approved the

legislation bit 2/3 majority senator majority leader chuck schumer says he'll try to pass it today and the measure may simply die in the senate. last week, president trump shocked washington by calling the latest coronavirus relief package a disgrace that bill, which trump ultimately signed this past weekend included $600 payments to millions of americans the other big news out of washington yesterday, the house voted to override trump's veto of an annual defense spending bill the senate is expected to follow suit this week and boeing 737 max is set to return to commercial service today for the first time since it was grounded following two fatal crashes about two years ago. the initial american airlines flight today will head from miami to new york city, and it's about half full. american will fly most of its updated max planes by the middle of next year united will bring the jet back in february. for alaska airlines and southwest, it will be in march. and southern california is looking at renewed coronavirus lock downs as the disease slams

the region governor gavin newsom said constraints on social and business activities would very likely be renewed for another three weeks. the formal decision is expected today. icus are struggling with little to no remaining capacity, joe. thanks, mike, the u.s. economy will still be in recovery mode when the new year arrives in a couple of days. right now, we have our final 2020 look at the road back with steve liesman. it's like the 5th look at second quarter gdp or something, steve. this is the snapshot how far back we going here when did we get these? >> no, joe, it's the first look at the year end high frequency data, joe, that's what we're looking at. >> that's fair >> and joe, we are ending the year with a set of mixed high frequency economic indicators when it comes to travel, jobs, and consumer spending, and that pretty well sums up a year of mixed and contradictory data here's a look at new datasets

that forecasters have been using throughout the pandemic to figure out what's going on in the covid economy in realtime. let me show you three gauges that is a record for the pandemic 9 1/2% down year to year on jp morgan credit card spending. not a terrific holiday when it comes to overall spending, and the uk shift work going against the other high frequency data on employment, showing a turn around in december employment, and this really raised my eyebrows, let's go through these one by one, the u.k. shift data, you can see it's done a pretty good job i don't know if we have it there. maybe we don't have it, look at the next there it is, thank you, gentlemen, and ladies in the back there it's done a pretty good job of following the overall jobs day it it missed a big one in september. there it is ticking up again, even while jobless claims have been terrible and other high frequency data have been

terrible as well looking at the chase credit card spending data, down 9 1/2% i talked to jesse eggerton from jp morgan who puts this together he tells me that you did not have the late surge in holiday spending that you had last year, and the good sector has done well, but not the service sector finally, put the tsa in context. it's running about 50% of where it was on the same day last year, and that's an important day, the 27th. it's the big day of travel after christmas. it had been running about 40%. it's up, and joe, i don't know what do you want to see here do you want to see more travel or less travel because you had a surge in the virus that followed the travel at thanksgiving, but i guess as long as the vaccine is on the way, the fed is easy and stimulus has been adopted, the market's okay with that, despite what's happening with the high frequency data. >> it all depends on the vaccine. we want more travel. i want business travel to come back i don't know people were making the case.

someone with sort of a horse in the race was saying, you know, for business there's nothing like the in-person handshake, which i don't know if we'll ever have that again, but nothing like the in-person meeting for closing deals and stuff. i don't know you think business travel comes back a lot of companies have realized, wow, it's a lot cheaper not to do it that way, and they haven't skipped a beat. >> i absolutely do, joe. you know, i did a panel with, you know, sam zel, and a bunch of other folks and they all talked about the importance of actual meetings with their employees, meetings with investors, i don't think everybody was stupid ahead of time, before the pandemic, right. people were like, okay, we went to meetings. we had the zoom, we had the other stuff. we didn't use it we preferred to meet in person you know, joe i would like to be right there with you talking across the table, and we could

get a lot more done more quickly rather than the interruptions and stuff. the technology isn't that good, and meeting people and shaking hands, i did talk to one investor, though, who was able to raise like $23 billion over zoom because he's an established person if you're just starting out in this business, it's not easy >> when you do close a deal in person, and you know, you're both really happy, do you think the elbow is going to work for, like, let's elbow each other to close the deal i don't know the handshake. >> that's how big a deal it is. >> you might do a handshake if it's big enough. >> you might do the hug anyway. >> even a hug or handshake. >> we can only hope, but a lot of companies have, you know, you can imagine, steve, you look down at how much money they saved and it's like, wow, and then -- >> until they lose the deal, joe. until they lose the deal because some guy got in a plane, and went over and elbowed or shook

hands with that guy, and got the deal you know, i think that will work for a little while until they lose the deal. >> right and then you got las vegas and hotels in the area, and restaurants, all the things that come from people going to close these business deals, so it's kind of important and there's a lot of, it affects a lot of people hopefully it will come back, steve. >> joe, i know we got to go, but i have met, i think, every future economic adviser to every president over the last 20 years at the american economic association annual conference in january that i do. it would be this coming weekend, i have met the future person who would hold that job. i don't know if it was by accident or whatever, and that created relationships that have helped me in my reporting. you can't beat that. i could never have done that over zoom. >> wine, wine. champagne. i think it goes all the way down

the list of things that happened when you're actually out meeting people and doing business and commerce and everything else hope it all comes back, thanks, steve. >> thanks, joe >> we'll see you how does a year with a global pandemic end with the most ever money raised through ipos, we can thank a previously dull corner of the market that grew up this year. first, a programming note, don't miss tonight's premier of cnbc's prime time series, streets of dreams, with marcus lemones, the most iconic and flinfluential streets in america it starts tonight, 10:00 p.m. pacific time here on cnbc. "squawk box" will be right back.

welcome back to "squawk box," futures right now are about what we have seen for most of the morning kind of looks like yesterday, actually, at this time up 152 points on the dow we're up on the s&p a little 19 points. 57 on the nasdaq all closed at highs yesterday. and check out xrp falling sharply, after coin base announced it's halting all trades of that cryptocurrency on its exchange xrp will be officially delisted on january 19th. although coin base will continue to support xrp wallets until then it said it made the decision

after the s.e.c. filed a suit against the currency's creator, ripple the s.e.c. claims that xrp is a security and should be treated as such, requiring more disclosure to allow investors to assess risks 19 cents that didn't work >> there are actually a number of exchanges that have moved to delist xrp or ripples cryptocurrency on this notion that it does not want to deal with securities, obviously, that requires more paperwork, a lot more regulatory burden for the exchanges and for coin base, which is preparing to ipo, it certainly wants to steer clear, so the risk/reward here is, you know, it definitely tilts to the risk side on the part of coin base on dealing with the security as opposed to cryptocurrency even if xrp fights this, it could take years for the court to come out with a ruling. this could be a long battle that

ripple faces. meantime, no one expected a record volume of ipos in 2020, but as we approach the end of the year, $170 billion has been raised and that is the most ever can the frenzy continue to 2021. leslie picker joins us now with more hey, les >> hey, melissa. 89 billion in ipos of operating companies. $81 billion worth of special purpose acquisition companies or blank check vehicles used to fund acquisitions, combined the grand total for 2020 is $170 billion, and that is the most ever on an inflation adjusted basis, it comes in just shy of 2,000 levels, though, excludeing spacs, activity was the highest in six years spacs, of course, a huge unique driver this year in particular these are remarkable numbers, especially considering the ipo market was shut for much of the first half of the year with the pandemic, and the economic fallout from that. the biggest spac of 2020 was

bill askman's pershing square. the largest was snowflakes experts say the surge in issuance is lofty, low volatility muted private markets and strong after market performance. 48%, that's more than double that of the russell 2,000. with such a flurry of deal activity, some are drawing comparisons to the .com bubble that seems to be actually just propping the window open in 2021 we're looking at companies such as robin hood, coinbase as you were just talking about. posh mark, road blocks, bumbo. all on the docket for 2021 ipos, not to mention the slew of spacs in the pipeline for next year, guys. >> included in those figures, leslie, i'm just wondering now

with the s.e.c. ruling that direct listings can be on the new york stock exchange if these numbers will be impacted going forward because they will be siphoned off from the ipo category into direct list something. >> right so historically, direct listings haven't raised any capital that $170 billion doesn't even include direct listings because they weren't able to raise capital in the first place now with the new s.e.c. approval of the nyse proposal to allow for direct listings to actually raise capital in the process, that could be just another avenue for companies to try and get public and to raise money in the process. so it will be interesting. i think 2021, will certainly be a year of continued experimentation, whether it's through spacs, whether it's through direct listings or other mechanisms in order to try and improve on the traditional ipo process. >> how about the private markets, how do they play a role in the listing frenzy, were they looking for exits this year, in

particular >> so interestingly in the last five years, we saw this dynamic where the private markets were wide open and vcs and private investors were willing to pay pretty much sky high valuations for the start ups that they wanted to invest in. now that dynamic has really shifted this year, and the private markets, especially after a couple of deals that have led to some down rounds, the private markets have gotten a little more skittish about their willingness to pay up for these companies and the public markets are the ones, as we saw with some of these deals this year, snowflakes, airbnb, door dash, not only was the market willing to trade above the range, they traded way up and continued to remain above those levels ever since. that has been kind of a green light to a lot of start ups saying, well, i used to turn to the private markets but now maybe i'll look more to the public markets because that seems to be the place where i can get the highest valuation. >> valuation equals lowest cost

of capital, public markets beckening the companies to become public in a way thank you very much. ipos come off a long road in the private markets, one of them is messagebird, the billion dollar plus club, a 9-year-old cloud communications platform and one of a number of tech companies whose valuation jumped during the pandemic bumped the company's valuation to $3 billion, and joining us now is robert viss, founder and ceo of messagebird, and will reid general manager at spark capital. will now sits on the company's board. welcome to you both, guys, good to have you this morning robert, we mentioned you guys have been at this nine years, been some acceleration, i take it, in growth over this period talk a little bit about specifically what market, what the tools are that messagebird provides and why it's been, you know, experiencing this kind of growth during this period.

>> yeah, thank you well, look, i mean, first of all, as i believe sometimes this gets forgotten, i'd just like to say, we're obviously super fortunate to be on the right side of the market, and our sympathy and heart goes out for everyone who is suffering in this crazy time. at message bird, you know, we're on a mission to make communicating with your business feel as natural and as easy as talking to friends if you connect to friends, you have the context of the last conversation and businesses don't have that same efficiency. we're building the entire infrastructure for a business to be able to communicate with their customers, and to make it feel as easy and natural as a friend. >> okay. so it's essentially, it's automated, messaging and customer service, customer communications type thing, how would an individual encounter your software out in the wild, so to speak? >> i mean, that's a great question, we talk about it a lot

on how to explain to people. on the business side, the way you would see this is we give business businesses access to all channels we focus on the data that generates and we create work flows, automation, and on the consumer side, what we really focus on is we make absolutely sure when you interact with a business, you get a faster response back, and it's way more efficient than e-mail or voice think about the time you have sat on hold for 40 minutes, waiting for a representative to pick up the phone and help you with your problem. we think messaging is a way more efficient way to do that. >> talk a little bit about what you saw here as the opportunity and what's happening in the market right now in terms of adoption of, you know, digitization of everything and whether, in fact, it's going to continue this way. >> yeah, totally >> i'm sorry, for robert. >> oh, sorry >> sorry it's fine, will. >> look, covid has been a tail wind for our business, right, but it's been a result of 20

years of digital transformation. at our company, we always move at speeds, 200 miles an hour, 24/7, 365 days a year, and when covid hit, we had a surge in demand and accelerated in the same way we always do. so covid helped our business, but the acceleration was long before covid happened. >> yeah, and will, i'm sorry, if you would just weigh in, i guess, from a broader perspective, as you're looking at other start ups, other opportunities in your portfolio, how does this all kind of get played from here, i guess? >> yeah, totally, like robert alluded to, i think, you know, we continue to invest behind the same trends we were invested in prepandemic. we're seeing the next handful of years of digital adoption being pulled to this year when in march, basically, every business's store front became their digital footprint, and the most forward looking businesses

are partnering with tools like messagebird. >> and, you know, longer term, are these companies going to be kind of best as a stand alone or incorporated into a full suite i mean, you can think of very obvious example of something like slack is going to get folded into salesforce, is there a dynamic down the road where this is going to get recombined and you're going to have a huge menu of software tools within a big company. >> i think, you know, if you consider the c pass market or the communication platform, service market, i think what you're seeing now is consolidation around vendors like the message board, and really what it is is going from a world where you're working with one vendor for geography in a particular channel toward a world where you're consolidating spin, where you can talk to any of your customers on any channel, and we think messagebird is going to be a con

sol day t -- consolidator in this market. >> the market has an appetite in this general area. what are your thoughts on becoming publicly listed and how might that happen? >> i was listening to the segment. it sounded like i should go public yesterday look, you know, it's interest g interesting, 10, 20 years ago, the public markets were about making the most amount of money in the shortest time frame today a lot of focus is on companies providing as much value to customers and making their lives more easy and the consumer more easy you know, we believe our business to be at the forefront of something that is going to take a very very long time to actually fundamentally change. if you think about it, 80% of the world is on hardware, not on software but to answer your ipo question, the second we think it provides the most value to our customers,

we'll come ring the bell and that might be remotely when that's going to be, we'll keep you posted. >> if it's remotely, one would hope soon. maybe back in person down the road a little bit. we'll keep you to that we'll check back robert and will, thank you very much for your time this morning. >> thanks. >> have a good day >> thanks. awesome. thanks coming up, the coronavirus about to make its last major stand that's a message from former fda commissioner dr. scott gottlieb who will join us in just a couple of minutes. don't go anywhere, please. please "squawk box" will be right back. time now for today's aflac trivia question. on this day in 1845, what territory became the 28th state? e sw wn bcsqwk box" continues break this down for me? coach saban... i crutched out to the mailbox and there it was - a medical bill for twelve-hundred dollars.

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the latest op-ed in the "wall street journal," former fda commissioner, dr. scott gottlieb says the next six weeks will be the most difficult in the fight against covid-19

but light at the end of the tunnel, dr. gottlieb joins us with more, currently serves on the board of illumina and pfizer and a cnbc contributor christmas just ended and the holidays just ended and i guess this could be before an even worse period, but weren't things starting to get a little bit better in certain data, hospitalizations and things over the last week. do you expect that to reverse and start to get bad again. >> well, look, there's going to be a bump coming out of the holiday, like there was after thanksgiving we don't know the magnitude of it there's no question things were improving heading into the holidays, when you look at the midwest and west and great lakes region cases are clearly coming down. positivity rates coming down right now, the national epidemic is really being led by the coasts, california, massachusetts, new jersey, new york, states that were later to get hard hit are still going to have to go through some level of

increased spread before they start to see their peak. other parts of the nation where the epidemic started earlier have peaked and are declining. another state that looks like it's increasing is florida nationally, you may see cases starting to plateau and come down over the next couple of weeks. but when you look inside the country, parts of the country that were hit earlier clearly are coming down quite sharply. there will be a bump after the holidays, but hopefully it's not enough to overtake the broader trends which is that cases are declining. and once again, the final point, hospitalizations and deaths are going to peak two to three weeks after cases peak, so if cases are peaking right around now, we're still going to see the hospitals get pressed for three weeks, four weeks, they have a hard road ahead of them. >> has anyone been turned away, anyone out in the hall we have heard some anecdotal things, and i heard it wasn't true where are the real trouble spots and is it above 100% in some

places >> well, it looks like southern california is a difficult spot right now. i think parts of florida are as well in the tristate region, new york, new jersey, the hospitals so far have been able to keep up i think they were able to expand their capacity and put in place certain measures from lessons learned from the wave during the spring you're starting to see more hospitals suspend elective surgeries and take more extraordinary procedures to deal with the increased capacity. you know, hopefully we're not going to see the system become simultaneously overwhelmed, but we are going to see certain intense hot spots where hospitals do get pressed and there is real care rationing going on in southern california right now looks like the most worrisome part of the country, given the density of the spread they're experiencing and the level of, you know, level of admissions you have at some of those hospitals right now. >> where are we with the vaccines, what are you hearing about -- there's 50 states, obviously, but what are you hearing about how it's going, and when would you actually see

some type of positive benefit from these early vaccinations? i can't imagine it would be -- has to be some time early in the spring, maybe, at the earliest or is it possible some late winter >> well, i think before that, i mean, we know that these vaccines, and i'm on the board as pfizer, as you mentioned, we know that the data is partially protective after the first dose. we don't know exactly what the magnitude of that protection is and how long it lasts but there is evidence that there's partial protection after the first dose. it's better in younger people than in older people, but i think if we can get the nursing home population vaccinated we're going to start to see some impact of that shortly after we get the first doses in the population unfortunately it's been going a lot slower that many hopes georgia just started vaccinating nursing homes yesterday, and the vaccine has been on the market, and authorized for three weeks we're late getting into some of

these facilities but you will start to see an impact on the most vulnerable population, i think, soon after we get these vaccines in some people. some nursing homes started a couple of weeks ago. there have been vaccinations going on i don't think we're going to be able to distribute the 20 million doses that were promised that 20 million is half of the available doses that we had in december, so it's been a slow start. hopefully it ramps as we get into january >> dr. gottlieb, i was wondering if you could comment on novavax. novavax became the 5th vaccine maker to enter final stage testing in the united states yesterday. it seems to be the vaccine at least has a different mechanism than the pfizer moderna, as well as the astrazeneca vaccines. could you comment on what you think this vaccine will yield in terms of efficacy? >> well, the early data on this vaccine looked very encouraging. it generated a very robust antibody response. there's a presumption that this is going to be a protective vaccine. it's a different mechanism

it's a protein vaccine in the case of moderna and pfizer, you're getting a genetic sequence of rna, the code is the production of the spike protein, the part of the coronavirus that we want to put in our bodies so we generate antibodies against it it's a big protein on the surface of the virus if we can generate antibodies, those are going to be protective what the novavax vaccine does is instead of giving a genetic sequence that codes, they're giving a piece of the spike protein itself in the context of the vaccine, so it's a protein-based vaccine, you know, a more traditional approach to developing a vaccine, so a nice complement to the other vaccines that are in development. sonofi is doing this as well they have had to go back and reform late, but the early evidence is the novavax generates an immune response i'm encouraged by this vaccine, and it's very nice to see different approaches work out. we have the viral vector vaccines like j and j is making

and that seems to be working as well that seems to be promising, so we could have a situation, you know by the spring or before the spring where we have another manufacturer on the market if i was going to bet on one, i would probably say it would be j and j given where they are right now, but it could be another one. >> i was going to ask about the manufacturing of the novavax vaccine because the protein you mentioned is grown in insects. is that better is that faster is that more controllable than the other manufacturing processes for the vaccines >> all cell lines are grown in cells that would sound unusual if we talked about them. the fact that it's grown in insect cells by itself isn't that unusual i think the issue isn't necessarily going to be the underlying technology but just the ability to scale it. there's a lot of complexity in doing these things at commercial scale and transitioning over to commercial scale manufacturing and producing tens of millions of doses of these. that's going to be the question. i don't have a lot of insight

into where novavax is in this process. that's going to be the question, how much can they make of it hopefully the phrase 3 trial continues to confirm what we saw in the early trials of the vaccines is it has a good safe profile and is very effective. >> that's an understatement, right, doctor, there's a movie about henrietta lax and her life story, and anybody that's done research, knows hela cells, widely used, are derooiived fro henrietta lax, some kind of uterine cancer from 60, 80 years ago. cell cultures to be traced back to a single cell is pretty unbelievable well, let's keep our fingers crossed. there will come a time where you're on here smiling like that and maybe you will cut down on your appearances, you know, maybe they won't be three, four times a week that's possible someday. right? hope springs eternal

>> it's going to happen. i mean, we're going to get through this difficult period right now over the next four weeks, six weeks, and i think as we enter spring, we're going to see cases come down really sharply, and we'll have a quiet spring and summer. we'll have to put in place precautions heading into next fall i don't think next fall and winter is going to be like what we've gone through we'll have to be more mindful, and make sure we get people vaccinated. >> yeah. all right. dr. gottlieb, thank you. we had other questions about novavax, other things, but we'll, you know, we need as much as we can get and any of them sound good at this point so and i think they're quickly going down the list of people eligible, and hopefully it comes before we know it. anyway, we'll see you again soon thanks, doc. melissa. coming up, the house okay'd $2,000 stimulus checks for americans, will the senate follow suit, the uncertainty spotlights the lingering question over dc's just passed covid relief bill.

are $600 payments too small to juice the economy. we'll debate that. >> and check out shares of wo boeing, the first commercial 737 flight since the aircraft was grounded, is set for this morning. stay tuned more "squawk box" is on the way. has longer lasting vitamin c. plus, herbal and other immune superstars. only from nature's bounty.

box," futures look to build on yesterday record closes for the indices, dow higher by 138, the nasdaq up by 57 points with the reopening trades continuing to do well this morning royal caribbean, the air luns - lines all posting solid gains. a few stocks on the move this morning check out or please check out, if you would if you don't mind, the shares of alibaba. stock recovered from yesterday, from thursday's more than 13% drop all coming amid increased antitrust scrutiny by chinese regulators, and cisco is pulling the plug on its smart cities project, known as cisco kinetic

for cities according to a spokesperson quoted by the "wall street journal. the project was part of an effort to expand cisco beyond its traditional networking equipment and hardware into the more lucrative software services business mike. >> coming up, what does the new coronavirus relief bill mean for the incoming administration in washington that's next when "squawk box" returns. don't forget to subscribe to our podcast, you'll get interviews, original content, and behind the scenes access look for us on apple podcast or on your favorite podcast app and subscribe to "squawk" pod today.

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welcome back to "squawk box," the futures right now are up 139 points. on the dow, up 57. on the nasdaq, s&p indicated up 17 i'm having deja vu you just told us this, didn't you, melissa >> it feels like, you know, the markets change constantly, joe, but it feels like deja vu because it's pretty much the same from three minutes ago. >> anyway, people need to know >> you need to know. >> you do. need to know basis the house has approved $2,000 stimulus checks for americans siding with president trump and putting senate republicans on the spot we'll see before the week is out whether they pass that bill and increase payments, boosting the

$600 already approved in the latest stimulus legislation. now, the other big political issue in washington and for the economy, the senate runoff elections in georgia they are just a week away, one top concern for republicans, if the democrats take georgia, the biden harris agenda on taxes joining us now to talk about this, megan green, a senior fellow at. and rohit, are all the plans that the biden administration may have in terms of rolling back some of what was done to taxes under the trump administration, does that go out the window if the republicans can hold the senate? >> well, look, at some level, i think all of the plans that president-elect biden campaigned are on already out the window, even if democrats sweep georgia, it would be a 50/50 senate with vice president harris breaking ties in a narrowly divided house, democrats would end up in the neighborhood of 222 seats in the

house of representatives, giving the speaker a working majority of four votes. a lot that president-elect campaigned on isn't available even now, and certainly to your question, if republicans can win one or both of those georgia races, then at least for the next few years, significant tax increases are probably off the table. >> even if the senate flips, then, rohit, you are telling clients right now, don't worry about the corporate tax cuts being rolled back. don't worry about your income taxes or capital gains taxes going higher. >> i'm not saying don't worry about it i'm saying it won't be as significant as that which biden campaigned on. for example, he campaigned on raising the corporate rate from 21 to 28%. that seems probably in excess of what the political traffic would bear in a narrowly divided senate and house that, you know, again, best case scenario for democrats is a 50/50 senate. in order to overcome a filibuster, which they can do to raise taxes and do some spending

you, need a majority in the house and a majority in the senate that means getting 268 out of a possible 272 elected democrats to all agree on a common set of tax increase proposals, and a common set of proposals upon which to spend the money, i'm not saying it can't happen in fact, i think it eventually would happen, but i think the scale of the change would be much narrower than that which biden campaigned on. >> megan, what's your take given the two possible scenarios after the runoff elections in georgia? >> yeah, look, it's hard to disagree with the idea that the biden campaign's tax proposal, as it campaigned out the window, that doesn't mean a biden administration can't get anything done, even if the democrats lose the senate in georgia, tax policy isn't necessarily a democrat versus republican issue it's an individual versus individual issue, and so i think there are some things that can be done, things like tax breaks for manufacturing that could still happen

removing the tack for salt deductions, that could still happen if the democrats were to win in georgia and could remain united, you could still get an increase in the top tax bracket, and you could still see capital gains tax and deductions taxes income for those earning over a million dollars. and depending on how georgia goes, if the democrats win, you'll get more done, if they don't, obviously the administration will have more constraints, that doesn't mean any tax reform at all. >> in your view, what are the most likely tax changes could happen, even if republicans maintain control of the senate. >> as i mentioned, i think tax breaks for manufacturing, and made in america tax break is likely, but also i think you could get agreement on removing the cap on salt deductions, and finally, any kind of stuff inversion, so antiinversion measures, i think you could get bipartisan agreement on those things, so i think we could expect those, but some of the

biden administration's more, you know, their bigger reforms, i think, on the corporate tax side in particular would be more difficult. >> same question to you, rohit. >> i agree in some part, and disagree in some parts i think there's some bipartisanship there, there are some derogatory changes that follow from the 2017 law related to research expense and interest expense. i think those could be delayed in not outright repealed i would be more than a little bit surprised to see bipartisanship around lifting or repealing the cap on the state and local tax item mized deduction. i think republicans feel strongly that's good tax policy. that one, in divided, government, frankly, even in a 50/50 senate, you could see around the margins, relaxation of the cap, but repeal of the cap outright, i don't see that on the table for the next couple of years >> go ahead, megan. >> yeah, i think if you don't

look at it as a republican and democrat issue, look at it as a rich versus poor, removing the cap on salt deductions seems more likely because rich tend to like that. i don't think it's dead in the water. i think other things are dead in the water regardless of what happens in georgia, any kind of green tax breaks, i don't think that unfortunately is going to happen that's the main one. i think that's off the table now. regardless. >> why wouldn't green tax breaks happen >> you know, i think that the republicans are staunchly against it and i think that some of the democrats might not be united on that one either. >> you know, megan had mentioned, rohit, this is an individual issue, and maybe the same could be said for stimulus as we saw with 44 republicans siding with democrats on the $2,000 checks, is it a fore gone conclusion, rohit, that with the democratically controlled senate that we would get more stimulus?

>> you know, well, i think there's likely to be some additional covid relief legislation in the spring of next year or q1 of next year, kind of one way or the other, but remember, that stimulus bill, that covid relief bill, those are generally 60 vote bill, so even in a 50/50 senate, you know, democrats and the president would have to appeal to at least 10 senate republicans in order to overcome that 60 vote hurdle. it would be very difficult to do it effectively and it's sort of in a time efficient way to try to use the budget reconciliation process to overcome a filibuster, so i think the next covid relief bill is going to have to be bipartisan. it's a question of how bipartisan is it going to have to be, do you need ten senate republicans or do you need more. >> megan, i wonder what has happened to the overall fiscal debate, specifically when it comes to things like revenue measures given the experience we've had with this massive fiscal response to the pandemic, you had $3 trillion out of the congress in a hurry, and almost

none of the hypothetical bad stuff has happened we haven't had interest rates shoot higher, essentially, the revenue side has not really been relevant in terms of determining the cost of money, an interest expense for the government is relatively low does that shape at all, the longer term debate on what the government is able to do in terms of spending, investment, without necessarily the pay for, so to speak. >> look, so it should, politically speaking, i think we'll hear more and more, coming out of the wood work to suggest it's a problem we're borrowing so much. i'll die on this hill. borrowing is incredibly cheap. the fed has promised to keep rates low for the foreseeable, begging congress fo borrow to spend to fight this war, so any discussion about austerity or pulling back or reigning in our fiscal dynamic would be completely inappropriate now come the middle of next year,

once we've hopefully widely distributed a vaccine, i think we're going to hear more and more about that. come springtime in march and april, we will see an acceleration of inflation, not for a fundamental reason, just because of at statistical quirk in the comparison, last march, april, as we shut down the economy. i think we could get some coming out and saying, look, we told you there would be an acceleration of inflation, central banks will have to hike to get ahead of this this will be a problem, and i think we should ignore those entirely i think there are constraints on spending and for the foreseeable, given that every global central bank said they will maintain accommodation for a long time. >> megan greene, rohit kumar, thank you so much. >> thank you. >> it's interesting to hear them talk about things not being clearly happening even if the republicans maintain control of the senate or if it flips. because market consensus seems to be that republicans remain in control and what's not being priced in is if democrats flip

but they're saying even if it flips, not much can get done. >> right, and it's unclear how high the stakes are to be honest with you, in terms of what the policy implications would be depending on, you know, how either of those races go, so. >> we've got phil coming up. coming up, we're standing by for the first commercial flight of the boeing 737 max since it was ungrounded this is more than a year and a half after the faa halted flights nationwide phil lebeau is on deck with a live report. phil, what's coming up >> it's back but are passengers are ready to get on board, we'll tell you about the latest attidererdg e 7 tus gainth73max when "squawk box" rurngs returns. eturns returns.

. good morning, a big day for boeing, american airlines will fly a commercial route using the 737 max for the first time in more than 20 months. phil lebeau will be on that flight he will join us straight ahead. election count down, the georgia runoff is just one week away we'll tell you how the battle for control of the senate is shaping up. plus, big changes to your local coffee shop could be coming soon, we'll show you how it could alter your morning routine. the final hour of "squawk box" begins right now

good morning, and welcome to "squawk box" here on cnbc. i, as you know, am joe kernen, and i'm with melissa lee, and hopefully you know mike santoli. becky and andrew are off today u.s. equity futures where they have been similar to the rest of the session. very similar to yesterday where the market ended up. dow couple hundred points, closed at record highs we're seeing more highs this morning. we'll see what happens in the actual trading session the s&p indicated up 16 points, nasdaq indicated up 54 let's get over to mike santoli he has been digging through into some market trends, and now, were you doing this during the show, mike, or you did this beforehand while you're anchoring, you're digging through market trends. are you able to do that? >> i don't know if it's digging

in i have been sort of skimming the easy loose stuff right off the surface, more than digging, but yeah, sure, i can do at least a couple of things at once you take a look at the two-year chart relevant in the s&p 500 right now. you mentioned today looks a lot like yesterday, half point gain in the futures kind of what we were looking at 24 hours ago, this ratcheting up, the seasonal strength at year end, looks like we've got this clock work, methodical rally going, after a chop in a couple of months the reason for the two-year chart is we did have a lot of chop in the summer and into the fall of 2019, and then we got on that very steady clock work glide path through the 4th quarter. it carried over into january, and then a little bit of a 3% gut check. very over bought tech was too high. saying the same things now it's a higher evaluation, more air under the market. look for something like that people start saying, we've got january shakeouts, last year, we got one in 2018. we'll see if we have the makings

of it, you know, it's very persistent, these up trends. it's not as if they stop once they get rolling the momentum story is interest here's the nasdaq 100 etf versus the momentum etf they were basically synonymous through the whole period, very close, very close, and you see what happened yesterday, you had a nasdaq 100, led by 3% gains in apple, amazon, facebook. alphabet and then you have this backing off of momentum, basically the stuff that was really winning through december has come off the ipo, etf, big drop, zoom, big drop, we talked about the arc etfs yesterday, they also came down. the real overheated stuff has been cooling off the super bowl case is if that stuff starts to calm down and it gets rotated into the megacaps, if not, if it is a shot across the bow, we're setting up for a broader correction, that's the question for january

melissa. >> mike, i mean, do you feel in your gut that this is just a lot of liquidity propping up the market from the fed or do you think that the liquidity from the fed helped the underlying economy so a lot of the covid stocks, if you will, the stay-at-home stocks, were able to post good numbers, and therefore there is an underpinning to the moves we have seen. is it just all fluff or is there something to it? >> there's certainly also substance to it, but also, the liquidity backdrop, liquidity is psychology, to be honest with you. it's not a quantity of a substance provided by the fed. it's the fed's promise that they're going to be there, and by the way, the fed promising next year that they're not even going to think about changing rates or even necessarily change their asset buying program, with the market at all time highs, with credit spreads already very tight, the market is sort of taking that to heart and believing that the fed's promise right here is at least good for the time being, and i think that liquidity backdrop is definitely

giving people the conviction that they can focus on reward versus risk. at least liquidity risk, we're not seeing signs of financial stress but the overall economy has outperformed most expectations as well. >> it's the pockets of strength are a little concerning. some of them just looks a little frothy >> all right let's move on and get to american airlines here preparing for its first commercial flight of the fixed 737 max this morning. phil lebeau will be on the flight, joins us now from miami with more. when does it take off, phil, when are you boarding? >> 10:30, melissa. 9:55, something like that. we're going to be talking with the president of american airlines in just a little bit. look, a big part of not only today but over the next several weeks and months will be the reception of the flying public to the 737 max how comfortable are they getting back on board. yesterday, ipsos and reuters release add poll where they talked with travelers, and a couple of interesting things here first of all, just 37% of those

questioned were familiar with the two crashes involving the 737 max, one in late 2018, another one in early 2019. of the people who were questioned, 57% when asked about the max understanding all the issues that have taken place over the last year and a half, two years, they say they are unlikely to fly the plane. 37% say they are willing to fly the max, but they want to wait a while. they want to give it six months when it's in service, they don't feel like there are in potential issues that might pop up american airlines, getting people comfortable starts today, flying daily between new york and miami, the first flight to laguardia, about half full, coming back later today, it's almost completely full they have 24 737 maxes that they're going to feather into the schedule the first half of the year, if you take a look at the airline stocks, moving a little bit higher, not necessarily because of the max coming back in service but a number of other issues regarding the stimulus package being

passed and belief that perhaps we'll be coming out of the pandemic soon. quickly also take a look at shares of boeing we have talked about this for some time. boeing lost a lot of orders this year for the 737 max more than a thousand were taken off the books, but they have logged 98 max orders this month, guys so for boeing, the hope is that this is the beginning of turning the page more completely with the max, in terms of starting to fill out the production schedule over 2021, and then in to 2022 guys, the flight takes off at 10:30, we'll be in new york by 1:30 back to you. >> in time for fast money. we've got a bonus hour we look forward to that. in terms of the 98 max orders, we make a big deal, and of course aircraft are never sold at list price, there's always a discount should we be concerned that the discount is greater for these particular orders. >> i'm sure it's greater than it was when they first introduced

the max. boeing is going to have to work harder these were two established customers who placed these 98 orders one of them, 75 planes with ryan air, which is one of boeing's core customers in europe, and you heard last week from alaska airlines adding on another 23 737 maxes to its existing order and by the way, those alaska maxes, those will be delivered in the first quarter they plan to start flying the max sometime in march. >> phil, we'll see you later >> you bet. let's talk about what will get travelers back on the 737 max. gordon, a cnbc contributor joins us now >> good morning, melissa we were talking earlier that not too many people look at that card in the front pocket of the airplane seat to look at the kind of aircraft it is maybe this time around they will do you think that will be the case >> maybe some.

i think we understand a whole lot more than the average person and follow it closely. i know from experience that people rarely know what kind of airplane they're on, unless they look as the card as you noted. i think there will probably be some interest. i doubt anybody will get off the airplane. >> what is fascinating to me is that the comparison is always to previous aircraft that had been grounded because of some sort of flaw that didn't actually result in fatalities, and yet we are here in this case with an aircraft that did result in many fatalities, and you think that the public's memory is that short? >> well, i do. i'm not trying to be critical. but it's a fact, the issue of course is that you couldn't find an airplane that has received more attention and more review for safety than this one anywhere in the world, so if any airplane is going to make it, it's going to be the max today it's just a wonderful airplane. >> you were the head of an airline, and i asked phil this question in terms of the

discount what kind of discount do you think boeing is giving out to notch those orders because orders beget orders, confidence begets confidence in this aircraft in the industry. >> discounts can be in other ways than cash, melissa. obviously cash is a big one. they can give you options for orders and a fixed price they can do a lot of things. move you up and down in the schedule as you wish, and give you some flexibility to cancel, more or less in the order, so boeing has a lot of ways to help a customer make their decision >> good bargaining power for the airlines, that's for sure. in a difficult time, gordon, and we have some pretty incredible numbers from this weekend, the tsa is screening 1.3 million passengers on sunday alone there are a number of days in the past six days, ten days or so, where the number of passengers screened exceeded 1 million. phil pointed out earlier that this is seasonally a very strong time to travel at what point will you take a

look at the numbers and think, you know what, maybe the worst is behind us we may not be fully recovered in terms of air travel, but the worst is behind us. >> i think that's the feeling. this is a lot of pent up demand. i'm pent up myself, i'm ready to go as soon as this covid thing gets under some kind of control, and it looks like it is. i think you're going to see a greater, greater number on a daily basis, just momentum has yet to show itself, but it will be there. >> until then, do the airlines continue to cut fares? >> well, they'll do whatever is necessary to get the load factor up, as you mentioned, it was half full going up in new york, and full coming back it's all a question of demand, and they'll restrict availability to get the load factors they need to be profitable i'm not sure you're going to see them drop further today. it's been quite a significant drop as you know, and i think it's kind of reversed coming back the other way slowly albeit, definitely coming

back. >> and do you think the advantage is still in the court of the airlines that focus on domestic travel, versus international travel, with the bet being that domestic will come back sooner than international, which is a lot of business, and of course requires longer flight times. >> that's absolutely true because it's much more stable, and what we know about cities internationally, like britain turns the switch off and refuses to let people leave or enter the country, so internationally, it's so complex with the number of countries, the number of restrictions, and then a short fuse to change things dramatically, so domestic i think will be the barometer for the airlines and international following for sure >> gordon, great to speak with you, thank you good to see you. gorgeous d gordon bethune. check out shares of online

insurance company lemon aiade, e lock up period expires following the ipo. the stock has fallen sharply ahead of the expiration losing 7% last thursday, another 14% yesterday, but as you see, up tremendously over the last few months stay tuned, you're watching "squawk box" on cnbc it's moving day. and while her friends

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welcome back to "squawk box," the equity futures showing gains across the board, the s&p, dow jones and nasdaq all indicated higher by about 4/10 of 1%, after also some gains yesterday. the covid-19 pandemic is changing the way we consume many products that includes the morning cup of coffee kate rogers joins us now with some coffee talk hi, kate >> hey, mike, good morning, consumer routines like grabbing that cup of coffee on your way to work in the morning have been upended by the pandemic. coffee companies are taking note and leaning into new store formats in response. starbucks announced on its most latest earnings call in october that it would be closing 800 locations across america in 2021, and is opening up 850 new locations in varying formats next year including starbucks pickup stores, those with

curbside options and those with drive throughs in fact, at investor day, it said the new store formats, including pickup and drive throughs would expand to 45% of the u.s. portfolio by 2023, up 10% from the mix today businesses bouncing back faster than expected and new trends like stores in the suburbs with drive throughs in particular are seeing a boost dunkin announced up to 800 unprofitable store closures in 2020, more than half in speedway gas stations, but dunkin, too, has been working on a next gen store, pre-pandemic, catering to on the go preferences, freeing up franchisees, like stores with drive throughs dunkin has 800 across the country today, and while consumers may be going into coffee shops less, when they do go in, both companies say they are spending more money, treating themselves to fancy lattés or iced beverages. mike, back over to you. >> those are the two, i guess,

obvious big players in the industry, reformatting things. what about responses by other chains, other brands in the industry >> yeah, mike, it's not just the coffee companies that are leaning into these new store formats. we have seen, you know, more sped up changes from brands like chipotle, burger king, shake shack, all kind of leaning into new store formats that lean even more heavily on mobile order and pickup, drive through, contactless options because those changes that have come up throughout the pandemic will really stay with us, many executives believe, even moving into the future. it's speed and convenience from here on out. >> it seems like the companies feel like that's a profitable way to go long-term. kate, thank you so much. >> reporter: thank you. coming up, a big step forward for drone delivery we have the details in the new faa ruling straight ahead. right now, though, as we head to break, here's a look at biggest pre-market gainers in the s&p 500.

welcome back to "squawk box," the futures indicated higher after record closes yesterday. dow jones indicated up 146 points, nasdaq up about 59 and the s&p indicated up almost 16 points.

the faa as we were talking about ruled that small drones will be allowed to fly over people and at night in the united states. that's a significant step towards their use for widespread commercial deliveries, the faa will address security concerns by requiring remote i.d. technology that will enable drones to be identified from the ground that technology has been described as like a digital license plate for drones i don't know, what's the world going to be like >> are you scared of them, joe, it sounds like you're scared of them. >> does it >> there's trepidation in your voice. >> i don't know if i want to look up and see a bunch of them. i guess it's futuristic. they're quiet. they can be quiet, right they look like big like dragon flies sometimes. i guess it's good. if i can get some, you know, the nearest taco bell to my house, and there used to be one -- >> it could deliver you a

chalupa. >> there used to be one three minutes away, and now it's like about 25 minutes, and it has affected me. it's affected my life. >> you lost weight >> could it get there quickly enough like would the nachos, would the cheese be all gross and. >> congealed. >> hardened. >> we'll have to see we'll have to see. coming up, we'll take you live to washington for the latest on the bill to send bigger relief checks to americans. plus, frank luntz is here to talk about the georgia election just one week away "squawk box" will be right back ♪ said he's going back ♪

the house of representatives siding with president trump voting to increase federal direct payments to $2,000, also voting to override the president's veto of the defense bill it's now the senate's turn for both issues, eamon javers joins us now with more i don't know if you've got more info about what's going to happen when is it expected to happen in terms of whether the senate moves on these things, eamon. >> look, joe, the thing to watch

for today is at noon, we're going to see mitch mcconnell, the republican leader in the senate come out and talk on the floor. we expect to get some kind of gauge at that point, for what his plan is here because now the sort of political hot potato has landed in his lap it was a close vote yesterday in the house of representatives they did get the 2/3 vote they needed to move forward on increasing the stimulus checks from 600 to $2,000 per person, including children, interestingly enough, so now that moves to the senate mcconnell is going to have to decide what to do. republicans oppose that idea but now president trump supports the idea so that puts him politically in a box, especially those two republican senators from georgia, ahead of their runoff next week now, treasury says they anticipate they can start getting the $600 checks, which were in the bill that the president signed over the weekend, after dragging his feet on that, they can get those out as soon as this week the question is, if they pass another $2,000 check, that

doesn't seem like that's going to be able to go out this week it will have to be in a follow-on round of checks. there's a lot of politics here some weird cross currents lily in a politically in all of this chuck schumer has suggested he will try to move that measure on the floor today as quickly as possible democrats really pushing for this republicans not so sure, whether they're going to stick by their guns or take the side of the president on this one, joe >> especially the two that happen to be in a runoff election down in georgia that god knows how they decide. >> it's tough. >> with this as a back drdrop >> what's the best vote for them, send the money or fiscal discipline, and what are their democratic opponents going to say, and remember, control of the entire senate is on the ballot in those two races. if democrats sweep georgia, they will be able to control the

senate under joe biden, and that's a totally different presidency for joe biden if he's got a republican senate. >> we're going to talk to someone now, but meantime i keep checking twitter do you think cher will answer us we have tagged her on all of the discussions about her late ex-husband i keep checking. >> my guess is cher is waking up this morning somewhere very confused about what all of that twitter activity is about. but i would be thrilled if she did. >> i mean, i know that he sang it for you, "i got you babe," but for some reason i think that song is better if cher is a part of it. >> it's much better with cher in it i only heard the version with s sonny bono and a bunch of drunken interns, that's not quite the same. >> people need to check the twitter account.

look, we called it up. >> there you go. >> i remember when it came out it's a beautiful song. it is a beautiful song >> it's a fabulous song. i'm a child of the '80s, i like the ub 40 version also but this is a great song >> but your hair is as white as a sheet. anyway, thanks, eamon. president trump plans to hold a rally. >> but you have some you have a lot president trump plans to hold a rally, here with the latest on what the polls are showing. a very famous gentleman, pollster and political strategist, frank luntz. you're on abc, here, there, everywhere, so the journal is not happy. the journal, i think, is even madder or more critical of president trump even than you, saying, you know, his narcissism isn't news but if the republicans lose the two georgia

seats and the majority, they can thank president trump for his 2021 tax increase. that was the nicest thing they said in the op-ed today. >> you want my comment, well, first off "i got you babe "is one of the five greatest songs of the 1950s i talked to sonny bono when he was a member of congress about it, and the joy he had recording it with cher he used to record with phil specter, the great music producer of the 1960s who's now in jail for life that song represented to him what the song was all about. and on days like this when we're look at politics and the division and the anger, i miss those simpler times. in terms of what's happening in washington right now, the president made a very smart decision by agreeing to sign the legislation. he made a very bad decision by opening up the $2,000 personal checks because it's going to cause one hell of a nightmare for those two republican

senators either vote against donald trump or vote against conservatives in their state, and third, the idea that they're going to dalton, georgia, tells you that they are still strategizing, that it's a smart decision it's an hour and a half from atlanta. dalton is one of the most republican areas of all of georgia, to get a high turnout there can counter balance what's happening in atlanta and the suburbs of atlanta so i got to give them credit for making the right geographic choice but the fact that the president has only gone down twice, frankly, he's playing golf in florida, he ought to get on his helicopter, get on air force one, fly over to georgia, even unannounced because the president still has impact, he still can turn out voters and would not vote for anybody else, and they're going to need him. joe biden has been down there. kamala harris has been down there. the democrats have raised more money than any two senate democrats in the history of

american politics in the last two months donald trump is needed in georgia to ensure that those two states stay republican >> the choices for senator perdue and loeffler on whether they back all of the president's initiatives are kind of an interesting dynamic at play there. they certainly don't want to ostracize any of president trump's biggest supporters down in georgia, but they also, you know, there's a moderate republicans might think that they're enabling the president to take this too far, that they think that they should have wrapped this up already. so i wouldn't know which way to go on a lot of this. >> quite strangly, because this is a lot different, they want to spend as much money as washington can, they support the stimulus packages by 60 to 70%, including the narrow majority of republicans that they think it's

better to spend the money now than it is to try to bail people out after they go bankrupt, that it's better to inject money into the economy and cut spending later, and of course we know that under a democratic administration, it's very difficult, if not impossible, to cut spending, and in fact, we just had to vote on the defense authorization, which is increasing money for defense this is a fascinating time in american politics. georgia is ground zero, and i agree with you, i don't know what i would recommend them do i do know that a majority of georgia voters would say vote yes to the $2,000, and i know that the "wall street journal" of conservatives would go nuts over that. that's where the american people stand right now. >> there was an article that our sister nbc news, sister parent, wow, i sound like jack nicholson almost, anyway, from chinatown, but from our colleagues over at nbc news about senator schumer

and what his attitude is about the democrats chances, and it's not necessarily, i don't know if you would agree with it, but they're reporting that senator schumer is pessimistic about the chances in georgia, he stopped trying to raise money because he doesn't want to ruin relationships with the donors, and he thinks this is a lost cause. this is from nbc also, the betting sites, i think, have better than average chance that the senate stays in republican hands what do you think the final outcome is or is it still too fluid to really know >> it's too close to really know it's not fluid at you wiall. in fact, everybody's made up their minds. the decision is to vote. the democrats have voted they voted early a fair number of republicans are going to wait until election

day. with a surge in covid across the country, that puts that vote in jeopardy, and the question i have, the only fluidity at all is whether or not to participate if you think that donald trump won the election and had it stolen because that means that you're participating in a system that you simply have no faith or confidence in. that's the only question if the republicans turn out their vote, they've got a 4 point generic advantage. we polled this two weeks after the election by 46-42, the public wanted, georgia public wanted republicans to win those seats. over the last two months, it's become more narrow no democrats are participating we know that virtually everyone, 98% of the georgia vote will either vote for both republican candidates or both democratic candidates there's only 2% that are going to split their tickets so on that, the decision has been made. this is going to be a nail biter. it could go on for a day or two, and in fact we're going to be

doing a focus group that i hope to bring to cnbc among those people who haven't decided whether or not they're going to participate. they know who they're voting for, they just don't know whether or not they're going to vote. >> we know about the suburban gop women and other suburban goppers, college educated goppers that maybe had a problem voting for president trump, and i'm sure there's that type of people are down in georgia i don't know if there's as many as there are maybe in some other states, new jersey and others, but isn't it possible that moderate gops that were not in the president's camp would look at the senate, if they are republicans, they would say, i'm much more aligned with what a divided government or what a republican senate would bring for the next four years than a democratic senate with a democratic house and a democratic president isn't it possible that they say this isn't about trump anymore

this is about washington, and about, you know, what kind of government i want, and they can show up now, the ones that didn't vote for trump. >> you're correct. you're absolutely correct. it's not only possible, it's probable, if not definite. the problem is there's about 3%, which is enough to make the difference, 3% of trump voters that simply don't want to participate because they're mad as hell, and they have simply shut off television, they have left fox, they don't follow politics anymore they think that the electoral system is hopelessly broken, and fraudulent, and they don't trust it the question is do those people come out and vote on election day. can trump himself on the election eve be focused on those senate candidates and the consequences because they are huge in all the time that i have been active in politics, which is now 35 years, we have never had a senate race more important than the two races in georgia races that are going to determine tax policy, budget policy, immigration, energy

policy, foreign policy, it's incredible how impactful this is going to be. but for those 3%, as of now, they're not willing to participate which is why this election, both senate seats are within 1%, and the surprise is that david perdue is actually 1/2% behind and kelly loeffler is 1/2% ahead because her opponent is weaker than perdue's opponent, but you could have the day after the election, a situation where only one of them get elected, that's enough for the republicans to keep the majority and for the agenda to be quite different than if the democrats take control >> frank, will we know the day after the election or will it take days to tally the results and will we have decisive results? >> so i went through this with you all three weeks before the election, and it actually turned out quite good in projecting that we would know by saturday after election day who was the

president, and in fact, that's exactly what we knew by. i don't think we're going to know by midnight i think it's going to take until the next day, which is quite coincidental because on the 6th is when the electoral college declares its vote to congress, and congress votes to ratify it, so you've got control of the senate and the electoral college. that decision will happen within the same 24-hour period. a remarkable situation considering that we are now two months away from election day, and we are still engaged in this democratic process >> frank, we only got a little time left. i don't know how many times i have heard president trump say how much "the new york times" owes him, and how much the mainstream media owes him, and how much cable networks owe him for the ratings that these last four years, whatever you want to call it, have brought. so my question is simple to you, who's going to have a harder time for the next four years, fox news or cnn?

>> oh, that's good >> or both >> i occasionally appear on both i think that cnn is going to have an easier time of it over the coming months. fox always gets its sea legs and it will get its sea legs within two years. >> they'll be the resistance. >> when barack obama got elected, fox ratings cratered and they came back six to nine months later, and they came back in a big way about two months later. we're going to see fox still having trouble cnn is enskrjoying this right n, and i think they'll enjoy it for months to come, but it will become difficult. >> how many times can their anchors ask the question, how does he do it so well, day in and day out, how are his picks in the cabinet so awesome, you can only ask that so many times, frank. >> yes, but they're going to prove that you can -- this is going to be the guinness world

book of records komcompliments a president-elect. >> oh, good. i'm a little concerned you know what, if they were covering business news in the stock market, it would be like, you know, it doesn't really matter politically they should have thought about that but they didn't. you know what i mean, live by the sword, die by the sword. thank you, frank luntz, we'll see, it's a week from today. i don't know whether you're counting but it's a week from today because it happens on tuesdays, but as you say, we may not know. thanks, frank, we'll see you mike. coming up, it's been a wild week for alibaba, the stock plunged on a regulatory crack down in china, but rebounding after ant financial reportedly has a new regulatory approach. details ahead.

welcome back to "squawk box," the futures showing gains across the board the s&p, dough jones, nasdaq up 4/10 of 1% noontime, ant group is reportedly planning to fold its financial operations into a holding company that could be regulated more like a bank alibaba owns about a third of ant financial, and this of course comes as china increases regulatory pressure on that company and its founder, jack ma joining us to break down the implications, derek scissors, resident scholar at aei, and deidra bosa. if you could set it up a little bit, is there a sense this is a

regulatory fix that's going to appease the chinese authorities, and investors can look past it or are we going to be dealing with this for a while? >> over the weekend, the chinese regulator said that ant group should return to its roots in payment. that spooked investors its credit business has grown larger than its payment business which is where it started. its credit is really the lucrative part that makes it this fin tech giant. the fact that there may be a holding company may sort of allay some of those fears, however, it's essentially sort of a break up, right, you're splitting this off, and it's going to be apparently reportedly regulated like a bank, so it's not going to be worth that north of $300 billion valuation that it saw just before its ipo was pulled. >> right now derek, big question for investors, whether this is a targeted bout of pressure on alibaba because of jack ma not being necessarily, basically

frictions between jack ma and the authorities there, or if there's a broader sense out there that the government of china is looking to crack down on large tech companies that have gone outside their lanes or have gotten too powerful what's your sense of that? >> i hate to give a wishy washy answer, it certainly started as the first thing, a clash with jack ma. the way these things work, it could end up as the second thing which is to say in the middle of october, all of the ant financial, awill all know, and nobody seemed to care. jack ma opened his mouth and criticized authorities and now we have this investigation it appears to be political, aimed at him, could be solved by a move like this, but once the door is open to regulators, and they start looking around, you never know what's going to happen, and chinese track record is they may decide, well, you're the largest example of this, but there are plenty of others now that we've got you to do

what we want, everyone else is going to have to turn their credit operation into a bank holding company or a sweeping fix. >> is it your sense that the concerns are specifically about financial businesses, and threats to chinese oversight and control of the payments and credit system or, you know, are other big tech companies potentially also going to have to be concerned about, you know, other regulatory measures? >> i think this is concentrated on the financial side. the chinese have this thing about antitrust that if you're a private company, you can't be a monopoly, and if you're a state company, of course, you have to be a monopoly. you always have that risk of antitrust violations being directed at private firms, but this is a one-two combination of jack ma doing a very strange thing and openly criticizing regulators in late october, and also that his operations drains the most money from state banks and that money that he's

draining from state banks, ordinary deposits is how china intervenes in its economy. that's something the big tech firms don't do, they may be threatening, but they're not openly criticizing the government >> and derek, to be clear, i was just going to say, jack ma, yes, he criticized the chinese financial system and essentially beijing at the end of october, but this is far from the first time that he has spoken out against the government he has said things like he would never ever do business, you love the government, you never marry them he has been outspoken for years. that hasn't really changed, but what has changed is, you know, he's known as the people's billionaire. he started as an english teacher, he's an aspirational figure over the last few years there's been a growing resentment over the growing wealth gap in china, perhaps beijing is willing to tap into this. i'm not saying this doesn't have to do with risks to the financial system that ant group proposes, but perhaps beijing

saw its opportunity to take down jack ma and teach sort of him a lesson, and others who might want to be outspoken. >> does that make sense to you >> yeah, it certainly could be part of this he's gotten in trouble with the party before that's certainly true. it's some speculation, that's why he bought the south china morning post is to kind china mt pay off the party, he has to do something like that again, that would again argue that it is more specific to the financial side the tech companies are big, but they're not as visible, as prominent as he is the only company that is really close to alibaba and market cap is ten cent. they're keeping very quiet i think this is confined, including for the reasons you brought up, he's gotten in trouble before and he's a symbol, taking him down might scare everyone else into line and be enough for beijing. >> so, derek, what we saw in the markets in terms of the reaction to the probe is that a lot of the chinese tech companies saw a turn lower, i don't want to say

a sell-off necessarily they were soft in trading. but your message to investors is basically if it is not a financial company, you don't really have much to worry about. you don't think china's crackdown is going to be broader than baba? >> we don't see evidence of that yet. if you look at the chinese press, there is a lot of propaganda about rectification and proper behavior and blah, blah, blah they say we'll do whatever we want it is all aimed at alibaba and mostly ant, but some mentions of the parent company it hasn't broadened out to there are lots of other examples of this kind of corruption we need to fix so, you know, as i said, there is a door open here to discovering problems, but i think the discovery is going to be on the financial side tech is important, finance is central to the operation of the chinese economy. as deirdre said, it is more visible than the tech giants are, you use the alibaba or tensent app almost every day >> great perspective, derek,

thank you very much, for your time coming up, we'll talk strategy ahead of the opening bell with three trading days left in 2020 and two programming notes, don't miss a special edition of "fast money," 5:00 to 7:00, two full hours adjust it. two hours. the second hour, we're taking questions from the viewers, send us your questions at cnbcfastmoney. also tonight, the premiere of the new primetime series "streets of dreams," he travels across the country pulling back the curtain on the most influential streets. bc all starts tonight he o ren ren cn ♪ ♪ ♪ ♪

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we're almost at the end of 2020 winding down starting to look ahead to what the markets might look like in 2021 markets probably look the same, just which way they're headed might be different here to discuss more, paul hickey, bespoke investment group, co-founder i want to ask you, this is what

i'll posit it is possible, serat, that the stimulus increases and the fed is on hold as it is, and so while we have an outlier year in terms of returns with the head winds, is it more likely that we paid it forward and had our gains, or that the additional stimulus will keep it going, in your view? >> i think it is more likely we paid it forward. i think this narrow leadership we keep on seeing, especially in the big five tech, i think will have its day and if rates do start moving up, with this increased stimulus and consumers start spending money, you'll see the rotation going through. doesn't necessarily mean stocks can't go up. it is going to be the sector is what you look at, cyclicals, financials, it may mean some of the air comes out of the balloon, stocks trading at 25 times earnings are at 40 or 50 and we're looking at price to

sales and all the stuff that we looked at before and said, hey, valuation does matter. so the market could be flat on the indexes, but you could have some sectors doing really well and stocks doing really well and some on the other hand, especially the momentum stocks coming down. so as an investor, be very careful, this is the time where you got to prune the portfolio and say, hey, what do i want to own going into the next 12 to 18 months, a consumer will come back, interest rates will move, and companies will start spending money and it is just not going to be zero interest rates and, you know, top line growth >> you feel, paul, closer to what serat is saying or do you have more differences? >> no, i think i feel a little bit closer to what serat has been saying. coming into next year, you know, as we get towards the second half of the year is one of the questions going to arise if covid does recede its grip on the economy, which we expect it will and if the economy starts to recover, which we expect it

will, then the question is going to be, okay, now where do rates go and rates are historically low levels and, you know, as serat was saying, valuations don't seem to matter now that's because rates are so low. when rates do start to rise, you're going to see more of a focus on valuations in the market that could be a problem as we get out further. one pro here is whether, you know, for the long-term, maybe not, but in the current environment is that the fed is basically told us that they're not going to be doing anything for some time. mike santoli was saying this year and next they're not going to do anything to change their course if that's the case, that's, you know, that's a tale wind for stocks looking forward what it portends down the line years from now is another question in the short to intermediate term, a fed on hold, and janet yellen at the treasury, that's going to be an easy monetary backdrop for the market. >> so sitting around watching

santoli on tv, don't you have work or things to do or clients? >> well, joe, what i'm more surprised at is that a taco bell actually closed near where you live that's breaking news whose fault is that? >> i try to organize the community. i swear i did. i'm not kidding. tragic both of you, so serat, in terms of rates rising, we have had jim paulsen -- oh, my god, 59 -- we have no time paulsen says not until 3% do rising rates hurt the stock market do you think 1.5% on the ten-year would hurt, real quick? >> i think it is perception. if the rates start rising and they start getting a little bit out of control, the markets will react before they get to 3%. react when they move really quickly. >> thank you and, paul, what is your -- what would raise a flg fag for you i the level of the rates >> under 2% we're pretty much

okay on the ten-year >> all right fantastic. the futures, thanks, guys, thanks, serat, thanks, paul. i want you to watch. i want you to hang on every word, all the way up to 5:00 every day. make -- i said that just for mel. i'm kidding. all the way to midnight, make sure -- thanks, guys thank you, mel thanks, mike join us tomorrow "squawk on the street" is next good tuesday morning welcome to "squawk on the street." i'm david faber with morgan brennan and bob pisani nice to have bob here this morning. let's give you a look at futures as we get ready to begin training one half hour from now. as joe just was discussing and mike, and melissa, we're going to be looking at a higher open here and potentially some new records. let's get to our road map this morning. it begins with that rise in futures as stocks are looking to build off those record highs >> then, a return to