the business lines >> thank you, both we'll talk to you coming up soon probably not until next year, but that's a couple of days away thank you. >> thanks. >> thank you happy new year >> 30th, 31st, right, a couple of days. i'll see you tomorrow. new year's eve >> i will. >> make sure you join us >> see you >> "squawk on the street" is next good wednesday morning, everybody. welcome to "squawk on the street." i'm david faber with morgan brennan and mike santoli carl and jim have the morning off. let's look at futures as we get ready. we got to more trading days of the year, right? there it is. wi we look like a slightly higher open at this point after another gain yesterday for these record-setting markets let's get to our road map this morning. and it begins with some news out late yesterday, involving, well,

potential changes or at least activist campaign at intel third point calling the chipmaker to explore strategic alternatives >> then, green light for astrazeneca and oxford's covid-19 vaccine in the uk the country deals with another surge of cases and new variant of the coronavirus >> and finally, futures pointing to a higher open this morning as david mentioned, the dow, the s&p and nasdaq closed lower for the first time in several sessions yesterday >> and let's start there, of course, with those markets as mike just mentioned, futures indicating stocks near record highs in today's session as we do count down the end of 2020. thankfully i think most people would say, mike, at this point, but we rely on you to sort of give us the highs and the lows there have been plenty of highs as we end the year here when it comes to the markets perhaps unexpectedly given where we were some seven, eight months ago. >> yeah, almost completely unexpectedly, i guess, by most observers. what is interesting about

existing in the markets is that we have been living in 2021 for a while because that's a lot of what the rally in year and the recovery and valuations frankly are pricing in just obviously this rebound, this sort of sense that we had a kind of flash recession, a major shock, massive policy response and market has been benefiting from a look toward that rebound that typically follows one of the shocks what i find interesting is the overall market, the big cap index, they have been one of these very orderly grinds higher for most of this month yesterday, s&p 3750. who knows if that means it is short-term running out of gas to a degree, but a lot of the stuff everyone was pointing to and saying this market has gone wild, a lot of speculative stuff happening here, they have come off massively in, you know, in large part so you want to look at lemonade down 14% off its high, snowflake down 29% off its highs, palantir 26%, moderna, 35%.

the ipo index down 10% all the stuff that people were getting a little bit exercised about, saying this market has gone around the bend, that's come in. at the same time, the overall market has hung in there, so who knows if we could just kind of bleed the patient in that way and have it feel better. but no doubt market is overbought, no doubt people are overconfident about how next year looks nothing should surprise anybody in terms of a little bit of a shakeout in january. we had some of those in recent years. but the overall structure of this market really hard to argue with what is happening under the hood. >> it is incredible. it is not surprising per se to hear that you have some of those high flying names that have come off notably in recent days if you have been invested in one of those names, you made quite a bit of money, presumably, on your investment so why not take some profit there and basically, i guess, play with house money and will be interesting it see what happens in january. the s&p, i realize that the

market closed marginally lower yesterday, but we still hit fresh record highs again earlier in the session 37th all time high for the s&p, 21st for the dow this yore, by tear, nasdaq, 66. if you were on some remote island, completely cut off from civilization, and humanity as we know it, and you were just dialing back into the market here, you would probably think that 2020 was a pretty good year not realizing how incredible it was, the fastest plunge into bear market in history i believe the fastest recovery as well to then see record high after record high. i would also just note, i'm like a dog with a bone with this, i continue to watch the dollar two-year lows for the dollar index. as traders are ignoring some u.s. stimulus delays, though we are going to get that $600 check and that's already going out according to the tweets from secretary mnuchin, the dollar falling to the lowest since april 2018 you got the pound strengthening

against the dollar on this astrazeneca oxford vaccine approval in the uk other pretty notable fx moves now. but of course we see this weaker dollar and that gives a lift to things like commodities, materials, industrials, some of these sectors, some of these stocks that are part of that reflation rotation, if you will. right, mike? >> without a doubt it is really all pretty much in tune, so dollar goes down, things priced and dollar goes up dollar goes down means risk appetites are in recovery mode and we expect just globally central banks to stay pretty much promoting the liquid story for a long time. it all works -- credit markets, we both used those as a touch stone, been incredibly firm. and here we have this story where credit spreads are back to where they were before we got the covid shock. the absolute level of things like junk yields is record lows. and we're talking about perhaps incremental shortage of new corporate debt next year,

because issuance was so heavy this year. so what happens to all that money and people are chasing the same paper at this point >> yeah, hard to imagine those junk spreads having tightened that way, mike, given where they were for at least some period of time as we were so concerned as the credit markets were deeply concerned about not just the recession back in april, but the possibility of a depression is what people were talking about and numerous bankruptcies, didn't happen, did it? the ability to raise capital, obviously with the great help of the fed, helped a lot of companies, the question now becomes are there zombie companies out there that simply, by virtue of the nature of their ability to service their debt kind of keep going even though their business model isn't necessarily one that would point to great growth ahead? >> without a doubt you know there are the question is, you know, to what result. they can kind of just be off to the side of the overall market, we have a couple of different

markets, you know, operating at the same time. on the one side, you have companies with cash flow and they have been priced to a level that is basically matching up with where bonds are priced so things that seem like they have steady -- flows or dividend yields, they look expensive because bonds look expensive and now you have this other market where it is like this public venture capital kind of casino type deal happening where basically people are looking for massive winners and just spreading their bets around and a short-term speculative piece of that. it feels look a seller's market, no doubt about it. you see the spacs, the ipos, but that can carry on for a long time without it having a reckoning. >> all of this speaks to just how incredibly involved the federal reserve is, in these markets now and buoying what the -- the activity we have seen essentially and not just the fed, but central banks around the globe in this broader conversation right now and that is one of the debate,

that is one of the discussions that has been starting to surface in recent weeks on wall street i've seen quite a number of notes circulating about it, about this debate on whether we are going to see inflation begin to raise its head in a more meaningful way next year regardless of what the fed says in terms of policy and where it is going to -- and anticipation of standing pat on low rates for the next couple of years so that i think will be one of the key things to watch is go to be the yield curve and what long rates, for example, are doing and how the fed has to react or doesn't have to react depending on what we see in terms of an economic resurgence next year on these vaccine rollouts, which i know will be something we're going to talk more too, the vaccines, we have more news on that front, david. >> yeah, we do though history is any guide, man, it is not going to be any inflation, not going to see higher rates i think, i don't know, we have been sitting here every year for the last 11 years talking about that possibility. >> modern monetary theory, there

we go, being tested, i guess, in real life, real time >> we'll see yeah exactly. you mentioned the vaccines, of course, the uk did grant astrazeneca and oxford emergency authorization use for their covid-19 vaccine cases, of course, continue to rise around the world, certainly here in the u.s. and as well, morgan, some concern in terms of the distribution of the vaccine, the moderna and pfizer vaccines being distributed here, but not going to come anywhere near what had been the hope of having as many as 20 million people inoculated by the end of december and at our current rate, we're not going to get anywhere close to where we hoped to so there is going to have to be a significant increase in inoculations fairly soon to start to hit some of the targets that have been out there. >> something president-elect biden talked about yesterday, stressing his plans when he comes into office, the end of next month to ramp that up and be more aggressive about it, and invoke the defense production act more

aggressively as well that being said, it is curious to see where the bottlenecks are happening. you had, what, more than 2 million as of monday, 2 million americans inoculated, receiving one of those first doses of one of those two vaccines that have been approved for emergency use here in the u.s. and it is something like another 12 million that have been distributed and that are basically either at the state level or lower than the state level, being distributed and awaiting, i guess, being -- awaiting being administered if that's proper english, not so sure if it is, but so, yeah, it does seem like there are vaccines that are being created and being delivered but getting into people's arms seems to be another story right now at least. i think one of the other key things to keep an eye on, from an investor stand point, is how many -- i know we have been talking about this too, david, how many people who are able to get that vaccine right now are going to get that vaccine right

now. especially as we do get -- i realize these are in the minority, but we are getting those reports of adverse reactions, you know, uncomfortable or painful side effects in the day or days after. how many people are going to be willing to do that and from a wall street -- investor standpoint, whether that's even factoring into some of the models out there that are forecasting a strong return to economic growth and normalcy if you will, next year, upon this idea of herd immunity. you know, mike, also in terms of premarket movers, we do have some of these and we have got some of those names up on the board right now. some of those biotech and pharma companies that have been developing vaccines, we're seeing some more movement because we had some more headlines this morning >> yeah, if you wonder exactly how much more is in that trade, you know, i keep pointing out that the day of pfizer monday

when we got those great results from the vaccine candidate, november 9th, we traded up to 3645 that morning. and even though it seems like the market has been going nothing but up, we're a few percent above that right now so it seems like more vaccines the better everyone wants to see the rollout be successful. but you almost -- if it is the premise of what has been happening in the markets right now that we are on this march and going to get more choices on the vaccine front. >> yeah, finally want to come to a story that hit late yesterday. i think reuters broke it dan lobe, third point, urging intel to explore strategic alternatives, a letter sent i'm told 20 minutes prior to that, had a phone call letting them know it was coming intel has been under fire for any number of reasons including vast underperformance versus some of its peers, its miss of a cycle in terms of manufacturing. a lead being taken to some extent in terms of the ability to produce smaller chips by the likes of taiwan, semi, and

samsung. and others you see it, it did have a nice pop yesterday. you can see it there on the story. i have a bit more to add here, of course. one of the key things is the fact that the nominating window here is january 15th, closes and so one would anticipate that third point, which has a position of roughly a billion, let's call it, all in-house, by the way, there is no side car as we say, where they raise money from other investors, perhaps existing lps and the like. it is right now in swap, they filed hard, they can put it in their name pretty quickly. you say, well, as a percentage, still not that big but, of course, third point has a great deal of influence, and one would imagine there are a lot of long only shareholders who share in the frustration that is out there in terms of what intel has failed to accomplish over these last couple of years as it has -- well, it lost the lead, hasn't it take a look at the loss of market share to amd and the performance of that stock versus amd, for example, that is simply

one example of sort of the frustration we're talking about. and in its letter, third point did not go after specifically bob swan, of course, the company's ceo, who joined us not long ago, for an interview sort of talked more just broadly about the loss of talent at the company, and how this they can start to rebuild that need for talent at intel. interesting to note, of course, mike, this is a company that trades at close to, like, 10, 11 times earnings, far below the group, far below, of course, the likes of some of its key competitors as well. and so if you're lobe, i look at the track record there of third point, they went into sony, which has done extraordinarily well, even though sony did not actually follow much of any of its advice, but the right stock, maybe not necessarily the battle won, but they did great. disney, well, they sent that letter in and disney did a lot of different things. that has performed extraordinarily well so oftentimes it is much more about the stock selection than the battle but in this one, it may be about

both because they do feel there is little downside given how undervalued intel is, and if you can get the municipality up to 15 times you would significant increase in the stock price, and there is frustration as i said among long onlies, and one would imagine they go to iss for example, how do you prove your case if you're intel that's interesting for them to do they also brought on evercore as an adviser we'll see what they can do in terms of that. this larger question of, well, can you do something with manufacturing that really adds value? can you sell some assets potentially as well that adds value? unclear. is it a national champion? i actually asked bob swan a few weeks ago, we had him on, morgan, about this idea of national security being embedded in the overall play that intel is in terms of semiconductors given it is the largest u.s. manufacturer here is what he had to say >> we power 95% of the digital

infrastructure today and we have a large u.s. industrial base. and we play a very important role in national security. and a safe and secure supply chain for the manufacturing and development of chips and whatever decision we make, we will continue to have high volume manufacturing, and invest in technology development here in this country. >> well, yeah. mr. swan under a lot of pressure already in terms of that decision, morgan and now a lot more pressure coming in the form of mr. loeb and third point. >> yeah, and it is interesting because it does seem like part of the way this argument is being phrased by third point is that essentially it is a national security issue and in addition to being a company specific and investor issue here and, of course, it comes as the government is looking to do things like incentivize more chip manufacturing here in the u.s. i don't think we're done talking

about semis by a long shot not to mention the key competitors with the big merger news that you've been covering so closely, david. speaking of notable investors, it's back in the black for bill ackman in 2020 we'll break that down after the break as well. so stay with us as futures point to a positive open ok, just keep coloring there... and sweetie can you just be... gentle with the pens. okey. okey. i know. gentle..gentle new projects means new project managers. you need to hire. i need indeed. indeed you do. the moment you sponsor a job on indeed you get a short list of quality candidates from our resume database so you can start hiring right away. claim your seventy five dollar credit, when you post your first job at indeed.com/home.

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leslie picker explains leslie >> bill ackman is on pace to notch returns offer inially 70% this year, making his pershing square one of best performing hedge funds of 2020. those gains weren't captured through his typical activism style, pushing management to make changes with third point and intel. these returns at pershing square were driven by a hedge in the credit default swap index markets put on back in late february and early march over concerns about the pandemic and subsequently ackman unwound the hedges for a $2.6 billion profit which he then plowed into his portfolio companies and reinstating some holdings. those include some companies that have been depressed by the shutdowns, including restaurant brands and hilton. others like chipotle, starbucks, lowe's, have outperformed this year and then ackman raised this year's largest spac or special purpose acquisition company, $4

billion there in hand to find a future acquisition even though it has yet to find one, that spac is up 20% since its debut earlier this year. while ackman is -- his fund is up about 80% this year, all in ackman is now managing $17 billion. now it is worth noting that this year's returns follow last year's gains of nearly 60%, putting the firm well above its high water mark to collect incentive fees those gains follow several years of negative returns, guys. >> wow yeah you could have played him right, man, you would have nailed it. leslie, thank you. two years in a row, strong performance for bill ackman. a look at futures as we head to break. opening bell about 8 or so minutes away you see the bottom of the screen, 8:32 in fact and there we are, looking for a higher open. stay with us on "squawk on the street." we love the new apartment. the natural light is amazing.

hardwood floors. there is a bit of a clogging problem. (clog dancing) at least geico makes it easy to bundle our renters and car insurance. yeah, helping us save us even more... for bundling made easy, go to geico.com

watch cat today. caterpillar. its top idea of 2021 and raising its price target on stock up to $2.20. ilahwkn e re" stet stl ead. so stay with us.

the trump administration's plan to distribute vaccines is falling behind far behind as i long feared and warned, the effort to distribute and administer the vaccine is not progressing as it should a few weeks ago, trump administration suggested that 20 million americans could be vaccinated by the end of december with only a few days left in december, we only vaccinated a few million so far and the pace of the vaccination program is moving now as -- if

it continues to move as it is now, it is going to take years, not months to vaccinate the american people. >> that, of course, if it were to continue one would expect might change investors' opinions about how quickly we can fully reopen the economy unclear, of course, at this point, you know. our former colleague rebecca jarvis tweeting as well. i read her thread earlier about some real problems in florida, with senior citizens lining up, and failing to get vaccines, staying overnight, some kind of bad scenes there so it is worrisome at some point, over 200 deaths as well in the united states from the virus. >> and there has been a little bit of a stutter step in the reopening trade, i would say, in the last couple of days. it goes back and forth but it is very unclear what truly is embedded with any kind of precision in terms of an expectation of what we're going to call a return to normal as it, you know, at the end of the

spring, midyear, market seems to be okay with the idea that we're trending in that direction and that slovak seen rollout is frustrating and probably holds things up in terms of an economic rebound, but, each person vaccinated is better than not. so it is very -- also, difficult to know what president-elect biden might be able to do, willing to do, in terms of trying to create more of a sense of either urgency on the vaccine rollout but also in meantime, if we try to push for more restrictions market shrugged a lot of this off, feeling like the underlying forces are in favor of more activity next year than less at this point. >> and it almost seems like i don't want to say bad news is good news, but if it takes longer for the economy to reopen, there is an expectation baked in that stimulus will continue to happen in some form or fashion, which is not necessarily bad thing. it is probably a stabilizing thing for the markets at these

levels as well but, again, we do have some of these positive, i guess, news headline for names like astrazene astrazeneca, to keep an eye on in terms of more vaccines that could come on line next year we have the opening bells, david. and it does look like more green than red for the s&p to start here, we're starting the day up .3%, 3738 is the level for the s&p. >> yes and you see it, of course, the nyse and the nasdaq as well and real time exchange at headquarters. mike, sometimes i ask jim cramer when it is just the two of us what the key to the market is. i might ask the same question of you in a broader sense, what you may be focused on, in terms of trading today or when you're looking at that may be a trend perhaps that you'll be following as we head into the year, the new year >> the trend really, and i think

the key factor has been the calendar to be honest with you. the very strong seasonal period, very difficult to fight and for weeks we have been able to say sentiment is looking a little bit extended, people are getting a little too happy with this market, feeling a little too easy to trade and make profits and that usually requires some kind of a retrenchment or flattening out of the market during the seasonal period, very difficult to say now the question as we roll ahead into january, you know, we did have carry over of the rally, in 2018, which looked like these conditions, and then you got a big air pocket other things have to come along. there has to be a plausible excuse for something like that all that stuff i think is the backdrop but the things to watch is the real risk appetite tells in the last couple of days that have hit some turbulence. bitcoin is at a high now you did see it back off a little bit. i mentioned the ipo etf. can we talk about the arc etfs

down 9% or 10% they become almost a bellwether for this type of, you know, huge momentum trade in disruptive type technology. phenomenal performers, gathers of assets and when the market is rough, those stocks become a target because they own so much of them. all that stuff is -- are we basically bleeding away some of the recklessness in pullbacks, routine pullbacks, sharp ones, in some of the crazier stops and leaving the rest of the market more or less in tabct all those things i think are coming into play everyone is pointing to the runoff in georgia, next tuesday, obviously market is going to be watching closely it is totally unclear what the main inference is going to be, almost on any outcome because between stimulus probabilities, tax increase probabilities, and anything else you might think that change of control the senate might bring, it is

unclear. >> yeah. meantime, one name that has actually continued to move higher is moving higher in trade so far today are the cybersecurity names, bug, for example, it is up modestly this morning. but month to date, 23%, really speaks to the pockets i guess of tech and of software, we are still continuing to see that demand and perhaps no surprise, david, given the fact that we did see that massive solar winds hack and more seems to come out about that and i think the read through there is that that is only going to continue to drive demand for cybersecurity names that are publicly listed and also potentially bring some more that are private on to the market in 2021 we'll see what happens on that front. >> yeah. i'm glad you brought that up it is funny. it was a focus for us not that long ago that massive rush in infiltration, we still don't really know how deep they are, where they are, but it is kind

of fallen off a bit in terms of the news flow lately but to your point, i guess, there is no doubt that it is going to continue to fuel the need for more and more security, right? >> yeah. definitely and just to go back to the broader markets, mike, one thing we haven't even brought up this week, really, is the santa rally, which we're in the midst of i wonder, given the fact that we're -- this word is so overused this year, we're in the midst of this unprecedented scenario from a macro standpoint, whether that's going to hold up coming into 2021. >> is so far is. we had a positive bias, hit the new highs. this is talking about the five last trading days of a given year, it is a one little patch of the calendar that tends to be the strongest of any and mostly it seems to be portfolio positioning and flows into the new year and anticipation of the relief of tax loss whatever the factors might be. but i think you got what you on average get out of that upside

so it was considered to be more of a warning signal if in fact you didn't get strength during this phase, then the following year you might hit some rough patches. very difficult to extrapolate too much out of it, except to say it has been strong on a quarter to date base i the lais two months of the year extraordinarily strong i saw some data, we had massive gains, surprisingly enough, the strength tends to continue, good implications if you go out several months or the following year haven't been many instances of this the almanac doesn't tell you how to run things. it is interesting that when we get these trending markets, it has been tough to knock them off course i look at the bond market, treasury yelledyields, no real t them not really backing off no matter what the news has been you see credit spreads incredibly strong, very tight.

so all of it is fitting together and we're not seeing a lot of signs of stress. that's what i would watch for going into january >> yeah, something else i'm watching for, mike, every day, spacs, we talk about them every day for a reason the year of the spacs. >> got a full screen for us? >> oh, yeah. i've always got them you know that, morgan. we haven't brought it up three times before we talk about it. today we have got -- well, three different -- remember, you know, there is -- to explain it our viewers, we like to come back to it, it is still new to some. you got -- when a spac issues its own shares and raises money, then you got the day when they announce their perspective deal, their merger, so to speak. by the way, the bankers love this because it gets counted on the merger tables and it is obviously also a way to go public so it is an ipo root as well but it is considered a merger even though it is not really your typical merger and acquisition. and then you've got had they

actually close the deal. we got all three today or at least two of those three perella weinberg there was reporting on this a few weeks ago. they announced it this morning dmy and rush street, you see it there. that's a gaming company that they're doing. and romeo power will join us later, potentially a competitor for quantumscape, which we know well, one of the great performers, it was kensington the spac, it is quantumscape now, the new generation of battery technology for ev cars let me focus on perella weinb g weinberg this is only the advisory part of perella weinberg, not the asset management part, own the by the partners, will remain private, this is advisory, around $975 million, the current

partners and management of the firm will roll in some of the early investors, some middle eastern investors, qatar and the like will use this as an opportunity to sell some of their stock to the spac. some of their ownership, 110 million. the rest of the money that will be raised they'll use for general corporate purposes there is a pipe of 125 million coming in as well. we're talking, mike, about a $500 million revenue number this year they're saying as much as $575 million next year. you see how it is performing at this point this is betsy cohen from thi fin tech acquisition corp. she's done a number of these spacs. but it is interesting, mike to see an investment banking firm, an advisory boutique going public in this manner, of course, the company that is in fact advised other companies on this spac route. >> absolutely. slightly amusing we're talking about a nomanomaly of fin tech

spac it is interesting that the ones that are already public has been very profound. molis up, evercore, all up more than 40% this year it has been one of the stronger parts of then s of the financi sector it is a sweet spot for the business and sophisticated seller and buyer in this instance, just seems like the more efficient mechanism to get to a public listing. >> yeah. and -- >> you pointed that out, yeah. sorry, morgan. in terms of the performance of some of those boutiques, whether it is evercore or pjt, it is interesting. we're talking here as much as perhaps 16 times net income, the margins are quite high at these firms. they're not huge taxpayers as well and you base it off of revenue

multiples and high margins and potentially, morgan, good proxy for economic activity. everything indicates it will be a fairly strong m&a environment so far as we head into next year. >> yeah. i also think it is going to be interesting to see how this trades, how this performs as well versus the other high flying spacs that we have seen this year. it is has become -- the vehicle has become, i guess, a preferred mode, i guess if you will, for as you mentioned ev and some of these other sort of newer emerging technologies, space, we have seen a number of space companies that are now doing these types of deals now as well so companies that are a little more unchartered, like still very low revenues, let alone not even close to profitability, so to see a company like perella weinberg use this type of vehicle, interesting to see how it is received by wall street when it does start trading. >> i was going to mention, just

slightly off this, david, jd.com today, stock is up 1%, not that much up yesterday reports that they're considering spinning off the cloud and nai business and you have to imagine that we have incredibly ripe atmosphere for this kind of thing where it is a larger company, looking for pieces of their corporate structure that look something like some of the hottest tech sectors in the market intel doesn't have a lot of that it is still talking about let's find ways to surface value of embedded assets that we can comp against some of the hottest stuff out there. some of the spacs are doing this and less mature businesses that would seem like there is a ton of kind of potential energy in that part of the m&a deal market next year if, in fact, things hold together economically, if $2 trillion of cash and corporate balance sheets and a lot of agitation probably for companies that have not performed as well and the stocks have languished for them

to try to catalyze things. >> yeah. and, again, you're referring to jd's cloud and ai business being explored, the feasibility in terms of potential spin. intel owns mobile i, one point that would be more vie haily valued in the public market again. they bought that business a number of years ago. and being pushed by dan loeb potentially, think about selling noncore assets, not clear. i don't think they considered it at all at this point based on what i heard at intel. let's get a check of what else is driving today's market action with bob pisani. good morning, bob. >> good morning. good to see you, david so we're essentially at new highs. let's not quibble about a few points this is a market that doesn't say no to anything vaccine news, good, bad, all right, stimulus, not sure what exactly is go on with the $2,000 checks but market is okay. take a look with what's going on you'll notice emerging markets have been doing great recently new high on the eem there, weak

dollar helping that out. we have china, one of the best performing markets in the world. want to watch mchi, that owns hong kong, mainland china and u.s.-based china stocks. that's up 25, 28% on the year. tech, of course, has been the outstanding performer on the year, up 40% consumer discretionary as well, of course. that's got amazon in it. that's up 30% or so. the banks had a nice little rally in the quarter, but it has been flashish for t iflattish everybody thinks there is some massive bank rally going on. there has been a bit of a revolt on valuations in last few days some of the smaller names at all the traders love to play have been down this week, up a little bit today. you see the palantirs and doordashes, plug power, that's a favorite trading stock for the day traders. cloudflare, peloton, crowd strike, and etsy, they're all

kind of down this week these stocks have high valuations but they're favorites of the crowd i want to point out, this exuberance is not just these smaller favorites, the megacaps are really pricey too. look at this apple's 31 times, 2021 numbers, that's really pricey maybe it was higher in august, a little bit but other than that, you got to go back many years to see apple 31 microsoft too, at 30, alphabet at 28, these are really high maybe a little higher couple of months ago but historically, really high. facebook, that looks like a bargain. 26 times forward earnings. just bear this in mind, with the fact that we're paying a lot of money for this stuff you pay a lot of money for industrials too. all our favorite industrials, we're looking at honeywell, 26 times forward earnings, i've been watching honeywell for 20 years. put up the industrials i don't remember when honey wales with 26 times forward earnings

caterpillar, the big upgrade today, that's an absurd territory too, ingersoll rand and norfolk southern, you going to get big industrials that trade in the 20s very often. this is a sign of optimism, sign of optimism on the reopening want more signs of optimism? it is all over the place this etf flow in december, i follow the flows carefully, good way, instead of looking at prices, look at the flows. people have to come in and track creation of the new shares people get enthusiastic, the demand goes up they have to go in, create new shares, buy the underlying stocks, great popularity contest. guess what they're buying. "titanic" inflows. record inflows in the last couple of months whatare they buying? not big cap, not megacap, they're buying small caps, emerging markets, large cap value, and even investment grade bonds. this is the reopening story, right there. you want -- put it all together. i don't want to be curmudgeon about this we have record stock prices, record in etf inflows, a sign of

exuberance overall we have high margin debt levels, we had thomas petterfy on yesterday talking about that and we have high investor optimism so what the market is saying is we are anticipating one lollapalooza of an earnings rebound, beginning largely in the second quarter of next year. let's hope that happens. because the market is very much positioned for exactly that to happen guys, back to you. >> it is interesting, bob. especially when you put up some charts of the industrials, honeywell, an industrial tech story in the last couple of years as well. so it seems like investors are buying into that, got to wonder the expectations around a big infrastructure deal, how much of that is also fueling some of those names too. bob pisani, thank you. it is time for a bond record and some data and rick santelli has that for us. hey, rick. >> hi, morgan, yes, indeed we have our december, our final read for chicago pmi, last look,

last month's final 58.2. 59.5 59.5, which means the entire back half of 2020 from june to now is in expansion territory, above 50 what is really interesting, we know covid, of course, has changed everything for 2020. but this particular number set has been sub-50 from july of '19 all the way through june of this year, when it popped in july back over that level so it is very interesting to monitor, of course, the strength we're seeing we haven't been in the 60s, higher than 62.4, which is this year's high, going all the way back to 2018 so it is really gotten quite powerful now, let's get to the charts look at two-week of 10s. which should jump out at you we get to the mid-90s under the current high yield close, all the way back to march, we'll

call it ten months today, it is all about foreign exchange look at the dollar index this is april 2018 chart the lowest levels of more than 2 1/2 years, keep april 2018 in mind, euro versus dollars, best levels, 2 1/2 years. pound versus dollar, with brexit coming very shortly, basically at the best level in 2 1/2 years. this one is toying with the best level. it is pretty much equal to where it was trading a few days ago, the 17th of december we really want to watch these current levels the dollar versus the chinese yuan, best levels in exactly 2 1/2 years in favor of the yuan that's june of 2018. and finally the dollar versus the chinese yen. a 10-month high back to march of this year. so the dollar index is really suffering under the weight of deficits, of course, as we continue to monitor not only how central banks are going to have it deal with it, as we start to clear the covid zone, but all central banks worldwide.

debt is universal in 2020. it is every country and every economy you look at. david, morgan, mike, back to all three. >> rick, thank you very much covid-19 one year later after the break. stay with us hey, dad! hey, son! no dad, it's a video call.

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we we'll break it down at the top of the next hour stay with us

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covid-19 after a 34-year-old in china posted a mess and in a wechat group alerting other doctors a new disease had emerged in his hospital. eunice yoon has more >> thank you so much after that doctor posted that mess and, he was silenced by the police, caught the virus and then died from it. still very much seen as a hero here in china. since then, life has relatively come back to normal. at this sports bar restaurant, it is pretty full considering the concerns of the pandemic because of the lockdowns of the year and travel restrictions the pandemic has actually, largely subsided businesses have been coming back

the economy is back to post 8% growth life isn't entirely the way it used to be in beijing, there are several minio minioutbreaks. 1.2 million people have been tested on a personal note, my new year's receive plans have been canceled that shows businesses here are still losing money despite the efforts here to control the pandemic >> we wish you a happy new year nonetheless. major averages are still higher. we have another hour of "sqwawk on the street" coming up new projects means new project managers.

you need to hire. i need indeed. indeed you do. the moment you sponsor a job on indeed you get a short list of quality candidates from our resume database. claim your seventy five dollar credit, when you post your first job at indeed.com/home. welcome back to "sqwawk on the street." we are a day before new year's eve. new year's eve eve pending home sales for the month of november. home sales have been on a

terror down 2.6% is our month over month number the third negative in a row which isn't good the most negative since covid hit. if you go wide view, year over year, you get a bigger picture we are at 16% year over year, which is still light because we are expecting around 21% in september we were at 22, october, 19.7, now at 16 these are some of the best numbers in about 10 years. it really show cases how we are losing momentum year over year it has been a good year for housing. morgan, back to you. >> inventory is also part of the puzzle here. good wednesday morning, i'm morgan brennan

carl has the morningoff. highs yesterday as well. we gave back some gains throughout the session brokers joined us on squawk alley. take a listen. >> fantastically unusually thing happened about a week ago.

it was an interesting situation. it never happened in our company but as of yesterday, that is the case >> at other firms, suggesting those customers are taking advantage of that option his customers may be taking the other side of that really taking the out growth and offset from his customers. >> yes tonight, we are going to party like it is 1999. we continue to hear these

comparisons with the tech bubble it is interesting to hear him talk about that. especially since we have seen this incredible rise in retail and that has been getting a lot of attention in the pockets for the skub rens. i'll take a deeper dive into what this means for quant funds and other things as well >> it matters a lot if it is january 1999, or december 1999 or december 2000 maybe it is a whole new year all together that's a good place to start with our next guest you look

across all markets regions and assets across the world. looking at what opportunities lie in this market >> if you go into 2021 to the tale of the detail market. the market will absorb this rally we've seen we think there is really a risk of down size in the first quarter of this year we are watching valuation, covid cases and hospitalizations at a record high. the fact that vaccine distribution that will be very important.

our clients are long-term investors. so we are looking into the second half of 2021 and beyond where we think the combination of the policy and stimulus will really help to accelerate much further. you go in the second wave of pent-up demand the travel economy, movie theaters getting back to some sense of normal si. this is an area that may benefit from that. the international market as well that may be the resurgence at the global level getting the rotation of value as we've seen strong markets through the end of the year tend to beget strength down the road what are you seeing down the

road in terms of some of the risk in january? >> i think it will be on the georgia election i don't think the market is priced in. i don't think it will price stocks in the long term. it has the opportunity to create chaos. just because i don't think the market is pricing in the potential flip the market always thought it would remain a divided government, which in the end would be good for the country because it would force compromise more to the center because it is where the majority of the country lives there is a real possibility that this flips on january 5. as of january 6, this is pricing out. they are pricing in a complete sweep and then a two-year controlled station which would

create another conversation about energy, financials, regulation and technology. when you talk technology, you are talking faang names. breaking up the faang names. i still think there is massive opportunity in technology. when people say technology, they think faang stocks and technology is so much bigger than those five names. >> that is a key point the other piece to this puzzle in addition to d.c., which is what we are seeing in terms of covid and the vaccine roll out and commentary about that supply or distribution is not happening as quickly as possible what that will look like in 2021 is will enough people get on

board and actually take this vaccine? >> that's one of the things we'll be watching. not just the vaccine roll out but once we get beyond the health care workers and first responders, it is those americans that are able to get the vaccine that will get it to get that immunity and second half to return to normalization. if we don't see that, that's another risk to the market >> the fact that we are seeing weaker data, we have covid cases surging, at least right now or in the near term expected depending on who you speak to in the medical community potentially getting worse in the coming weeks will we see angrier, nastier

numbers? is that what is priced here or maybe being overlooked >> i think we've talked about it about how the next three months will be the dark winter. people don't understand that or recognize that, they are living under a rock they do believe they are getting that surge you are seeing that update on covid and how the cases are surging. icus are at the fullest level and they are talking about rationoning out health care. i think what will flip that is if suddenly, you see that spike. i think that has the toblt of

disruption once we get through the winter and getting vaccinated, we should see more of a return. we'll see more people that had it i've had it. am i now part of that herd immunity group or do i still need the vaccine, which i'm happy to get if he says i need it but there will be the conversation of people saying i've already had it and there for i'm okay >> thank you very much happy new year, too. >> we'll look around the globe at covid one year after the first case don't go away. stock slices.

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>> united kingdom became the first to approve the astrazeneca vaccine for emergency use. in the u.s., still observing large-scale trials we are joined by dr. penny and dr. helen gail who spent 20 years with the cdc thank you for joining us dr. wheeler, i'll start with you. in terms of the rollout, how is that progressing so far? we've had a lot of discussion it has been the experience and has been a positive sofar.

the we have all told about 35,000 we've been able to immunize over 7,000 in the two weeks >> it is about what we've anticipated that federal release to us, sometimes numbers change and we have seen the weekly allocation it has been all of our health care workers immunized since january. i'll take it >> in the rollout in the chicago area it has been hard hit this year

like so many cities due to this pandemic what are you seeing and how are you working with the different institutions to ensure there is equitable distribution for those who need it most the health care workers are daily motivated. what we are most concerned about is the broader rollout and the rollout to the public. it is important we have the

national response we know there has been a lot of money spent but there has been a lot of dollars mader for this distribution and made for the cost of the vaccine but also the cost that states and localities bare for administration of the vaccine. we need to make sure that all of those different pieces of the rollout are well resourced to get as many people vaccinated as soon as possible >> dr. gayle, what are you hearing on that front? i would think in a hospital setting, it would be fairly straight forward what about seniors we have heard reports out of florida of seniors camped out

overnight. >> i think that's where some of the challenges will be because each state will be doing it differently. we badly need a national blueprint so this can be rolled out in an equitable way. we are hearing stories of places where people are lined up where the nonessential workers and the jobs they do there is some approach to this and we can ensure the equity those that need it most get it and the populations that are most hard hit by this are prioritized and have access

early on >> don't want to forget the virus is still raging and we have icus that are filled up what are you seeing in minnesota right now? things better than before? >> they have just before thanksgiving, we were perillessly close we are down about 55% where we were at the peak we are better. we know other geographies are still seeing surges and struggling >> we'll leave the conversation with you there for now thank you. happy new year don't miss oxford professor john bell. that will be at 3:00 p.m. eastern today. coming up, apple up better than 13% this monthout doing

some suppliers much more on the future of stocks after the break

2020 has seen some historic gains. newly added tesla tops the charts by a wide margin up over 7% nvidia, paypal, l brands there is a surprise along with rysy at number two ve happy if you own any of those stocks this year we are back after this personalized education experience for teachers, students, and parents. we are so honored to have 17 education & technology join the greatest new economy companies on nasdaq to make the world a better place.

apple finished on a strong note up 13% this month alone outperforming many of the suppliers. bringing in our guests tom, let me start with you on apple here you've had a buy on it

$133 price target. here we are. and here we are. what is driving the strength is it iphone and accessories or something broader? >> great questions happy holidays i look at the recent strength of apple and attribute it really to the iphone which remains their core product you think about their 5 g launch, carriers are behind it consumers have a more discretionary income in the open table numbers, they are dining away from home less

is that something we expect to continue >> that's a great question here is where it benefits from the continued build out of 5 g the initial wave of consumers and the official buildout that looks like a five-year event >> there have been a variety of changes how does this speak to the chip side in terms of the news for this week and like amd and nvidia buying companies in

multimillion dollar deals? >> it is really nothing new when you look at it on the face value they know what the street has 20 do to be behind to catch up. amd will continue to gain shares intel has a long-term problem. unless they change the number of engineers that work there or they have a new product to sell. they are two notes behind and microsoft also trying to create arm-base chips and you'll see intel continue to lose share on the arm side and amd

>> mitch, there is a few well listen at reduced multiple, there is an upside here you don't seem to be a believer you can do that? >> that trap now for the value investing. now at these levels. it is a pretty consensus buy they'll down grade the end of the year i would argue probably the e is normal so that is fair right now. the real numbers are lower than what the streets are modelling >> i'll talk about apple the i foerch iphone is the comp

bread and butter i thought that was the whole point of the company's valuation? >> that is the point created at the top line and bottom line. it was a services year up and until you launch the next generation iphone devices with 5g that's a great year for apple. >> granted it has been very difficult to take a value approach in tech like semiconductors you have intel about $200 billion. nvidia and just buying the top line growth, will those trends remain in place? >> i don't see anything that will remain in place, i wouldn't be surprised if they become the first trillion dollar chip

company. right now, the issue is value tech that means the company is losing market share unless you saw those two problems, i don't know why the argument makes sense if i were to put a big picture on it, our interest rate would be 5% or negative 5% that answer doesn't really matter whether you think it is negative 5 or 5. nvidia and amd are clear examples of that that can outperform in the negative environment. >> on the subject of multiples, apple is at 30% or so. >> that is concerning. the big risk for apple is the president-elect, depending the outcome in georgia may be raising corporate taxes.

if apple is not the largest core corporation in the u.s., they are among them with the possibility of higher corporate tax rates with the new regime coming in >> leave it there, thank you very much. >> thank you it is time now for cnbc covid update >> the last half hour, an announcement in the uk that more regions are moving to the tightest covid restrictions and almost all over areas are going to tier three. >> the family of luke letlow says it appreciates the prayers and support after the 41-year-old died from covid-19 days before he was to be sworn in as the newest representative. the governor says he's de

devastated for his wife and young children president trump saying "get moving" on the vaccine the biden advisory board says the pace is also too slow. >> the best use of vaccines within their immediate needs does not mean you leave them without meaningful support to be able to actually carry out the implementation of vaccination of the american people. >> i'll send it back to you, morgan >> thank you, ev companies have seen some massive gains. another battery maker hitting the market today more coming up next. don't go anywhere. (♪ )

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the senate stimi those stimulus checks. a proposal with a hujs catch democrats won't support it the united states is nowhere near its vaccination goals

the first generation headed our way. find out how to brace for the impact more "sqwawk on the street" coming up. for as little as $5, now anyone can own companies in the s&p 500, even if their shares cost more. at $5 a slice, you could own ten companies for $50 instead of paying thousands. all commission free online. schwab stock slices: an easy way to start investing or to give the gift of stock ownership. schwab. own your tomorrow.

welcome back 10 of 11 sectors in the green today. energy is the leader in hopes that the stimulus will increase demand for oil. phillips 66, marathon and other big names. copper prices up about 4% this month and will close the year on three positive months. communications services teeter between positive, negative and early trade. alphabet and facebook bringing the state lower on news they are looking at a price fixing deal between the two. i'll send it back to you, david. >> thank you, frank.

today's spac, we have a few of them. romeo power makes batteries for electric vehicles. the transaction ha been announced previously but today is closing and will trade as rmo. let's bring in the companies. >> it seems to say the battery does similar things to yours like the shorter charging time >> good morning. thank you for having me on it is a privilege to be talking to you today at romeo, we are a leading edge

value company that takes the plans of our customers and brings them to life. quantum scape is not a is competitor they make cells. we take our leading edge cells and package with our propry terry design, battery packs and systems in the hands of our customers. we make the electric sector go to actually glo ahead and achieve that we are the foundational technology in the new quest of

ele electric >> what specific advances does your company have that allows us to do it better than the past? >> sure. romeo, we have expert he's in every part of the value chain. science, industrial engineering, battery formation. we have been able to quote innovation levels. we package the cells, pow you are cells, any chemistry nca to ncn. the reason is because we want to be on the forefront of technology we have tested upwards of 200 cells from global players so we can tell you who is the best now, who is the best tomorrow and 10 years from now.

>> lionel, the company is still relatively young forecast of 2022 revenue growing to $200 billion by 2025. how do you get there with the contracts you have in place? >> sure and good morning, morgan what matters to the customer is really why we are winning. safety, energy density enovation peru knit time is the most important we are enabling our customers to go forward as a single charge and we have the best charging capabilities today we are charging large commercial batteries in 30 minutes or less. technology, innovation is less operational excellence, we have

partners with them since 2019 for the plan we have partners with them getting the cost up and from the sales standpoint, while we are focused and take the market share. >> so you have -- you have a forecast for how you you are going to ramp growth i'm curious why you decided to go public now through this spac vehicle? >> sure. why we choose now is to accelerate the growth we are seeing okay we are winning today it is important to your viewers, we are not a prerevenue company, we are delivering to the largest audience and up and comers we are winning today once people get in a romeo powered vehicle, they want with to get that truck in their hands immediately. we decided to go this route to

get access to the capital necessary for the plan we see. >> lionel, in order to achieve the projections you've made, what has to happen in the underlying market? how much ev penetration must there be >> sure. first, the market is there right. it is attractive there is regulatory tail winds as well as from the oems and the fleet managers what has to happen, really get us, get our product. what we've been able to do is achieve the technology portion you have romeo powered technology and driving the industry forward what we see is that those rates that have been forecasted today, frankly, are really low. we plan to win even if it is 2% or 2 to 4% on the forefront

toad, we'll be winning. as you drive a romeo powered vehicle, that will double or triple in a short time >> and finally, lionel, how much do you have to bling your cost down to the target of 0% and ebita of 20% by 2025 >> sure. again, that's leveraging our partnership. some of the materials we use in our products today is the largest procurer of those materials so already gaining from our partnership with them we'll be doing smart innovation design we employ the value engineering mantra and not just focused on supply base down but going back ensuring we are designing and also improving performance then of course the pricing level, we are not a small margin

business we put the cutting edge margin on the road and do require that pricing. we are unbeatable. >> we'll be watching appreciate you joining us. thank you. >> thank you so much coming up, theaters and live event venues on the verge of collapse stimulus support on the way. will it be too late?

the newest covid relief bill includes funds for live entertainment venues and theaters that have been crushe . that's right live entertainment was one of the first things to go away and probably will be one of the last things to come back. now relief is on the way $15 billion was carved out to help these businesses recoup lost revenues.

this was added to the deal in the final weeks after months of intense lobbying senator klobuchar and cornyn spear effort then the superstars got on board. billie eilish, willie nelson and even alice cooper with this personal plea. >> i don't know one major band that is worth their salt that didn't start in small clubs and without our help they may never reopen >> now, under this program businesses would be able to get a grant worth 45% of their 2019 revenue with the hardest-hit businesses being able to apply for the money first, starting with those that have lost at least 90% of their revenue the legislation specifically prohibits the relief money from going to large or publicly-traded companies because the idea here is to

target the relief to those smaller businesses that have really become both the economic and cultural touchstones of their communities. back to you. >> it's a key story. i love having alice cooper sound on our air, but i wish it wasn't because of this. thank you for bringing us the latest our next guest runs one of the companies that may benefit from that relief alan reagan is the ceo of bricks brew house, it has cut its employees from over 1,000 workers to just five because of the pandemic and he joins us now. thanks for being here. >> thanks for having me. again, i wanted to echo the salutes to our senate champions, senator corner, klobuchar, and senator schumer. i'm glad you gave a big shoutout for them without their efforts, we wouldn't be having this conversation >> so in terms of this conversation, this $15 billion in the covid relief package, is that something that you are planning on tapping into i know you've taken out a ppp loan in the past is that next tranche of ppp also

something you're looking at? how would this play out for your company? >> it looks to us that the sos, which is what this act is called that's buried in the bill, stands for save our stages, save our screens, is going to result in a better outcome than another dose of ppp. the two are mutually exclusive you can't double dip. >> got it. so we just introduced you by saying that your head count has fallen from 1,250 so just five during the pandemic. how many locations are currently open, and i guess how many would you be able to reopen depending on how this aid plays out for you? >> well, we have ten locations in total they're all closed right now some have been closed for the entire pandemic. we've got a beautiful, beautiful theatre in albuquerque, new mexico, and new mexico never reopened for theatres under any

circumstances. so we're definitely in the category of hard hit with this money, i'm going to be a little bit cagey we would like to reopen every single one of our theatres we still have a long way to go in some landlord negotiations. unfortunately, the amount of money available in this isn't going to be able to cure everybody's back rent. so there's obviously going to have to be some accommodations made with the landlords and everybody is going to have to pull together. but we're looking at this funding as the means that enables us to go forward so that we're paying next august's rent not last august's rent. >> in addition to obviously having your locations close skpd having people reluctant to gather and dine out and see movies, so many changes in the film business have been happening in parallel, and obviously changes to the release window for theatrical

exhibition does that affect you longer term there is talk that places with dining and such might not be all about just seeing the movie on opening night. >> well, i think you hit the nail on the head we're anticipating somewhere -- we look at, say, 2022 as to a more normal year the total attendance based on the traditional curve might be down 15% to 25% on a permanent basis. so that's the way we're looking at this permanently. we're hoping that the industry, which is a little bit overscreened right now, loses some screens due to natural attrition. i don't think anyone is going to be building new theatres right now and i absolutely do believe that the dine-in operators, which includes us, we're actually a brew pub that shows movies 87 screens in ten locations. and we think we've got a pretty good shot at surviving you can get any sporting event that you want in your living

room all weekend long, but we still have sports bars, right? we still have buffalo wild wings and all kinds of sports bar concepts for the same reason people want to get out and they want to have somebody take care of them, they want a little bit of entertainment and we also need to broaden our entertainment offerings beyond just filmed product. >> we're having this conversation about the impact both on your business and the industry more broadly from covid. but there are some regulations that are on state levels getting ready to kick in with the new year as well, including the fact that half of u.s. states are poised to raise minimum wage in 2021, at a time where you are trying to acquire some of this aid, perhaps get some of your locations open again and rehire some of your employees what would that or what does that do to the equation for you? >> well, we actually applaud increases in the minimum wage up to a degree because the core of

your business is the people and it's the frontline people. it's not the guy that's on the tv right now it's the dishwashers and the servers and the cooks and those folks, and i think there's a pretty good argument that they do deserve a wage increase there's also -- dol just relaxed some rules on tip pooling and tip sharing that came out this morning. this may have an impact on folks' compensation as well. but we're also one of the by-products of covid, and it's been looking at how do you keep the hospitality in the business but strip out some of the labor costs by going low touch in certain areas that used to be labor intensive, using technology to replace labor and that enables us to provide the same experience, same cost, pay people a little bit better, and i think the equation works out >> thank you for joining us and

good luck. >> thank you very much we're going to have more on third points call for changes at intel. that's next on "squawk alley," which starts on the other side ofhibrk. ts ea

good morning it's 8:00 a.m. at intel headquarters in california, 11:00 a.m. on wall street, and "squawk alley" is live ♪ ♪ good wednesday morning and welcome to "squawk alley." carl and jon both have the morning off. we're going to start this hour with intel third point urging the company to explore strategic alternatives after the chipmaker continues to lose ma