Transcripts For CNBC Squawk On The Street 20240713

Halting max production plus, iff is merging with duponts biosciences and nutrition unit it is a deal that will create a new consumer giant valued at more than 45 billion. Iff ceo and duponts executive chairman will be joining us to discuss the deal in just a few minutes. And record rally, the iss p and nasdaq new highs lets start with boeing, moving lower in the premarket, the journal is among those reporting that the company is considering suspending or cutting production of the 737 max. In response to the story, boeing issued a statement to cnbc saying it would continue to assess production decisions based on the timing and conditions of a return to service for the max. And as we know, guys, faa last week through cold water on that return happening before year end. Right i think that this is something that some people say it is a foregone conclusion. And that the reason why you didnt see this before was that the way that accounting works, something i think a great cfo would understand and they have a great cfo there, that you had to state that things would be fine until theyre not fine you literally just cannot make a conjecture against your own companys views. This say more realistic view i believe that the cash flow will be enough to be able to sustain a dividend cash flow enough to be able to make it so the company has can work through this. But i also believe that the stock has been too high. That sentence just could scare some people. You believe the cash flow will be enough to sustain the dividends. Having that kind of a conversation about the ability to sustain the dividend, thats scary right there, isnt it . I dont think so. I have to be realistic, this is very important. My point is, even having that as a consideration is enough to scare if i take the dividend off the table, if i literally just say dont worry about the dividend and this dividend gets cut, i really think im being irresponsible. Theyre not being irresponsible. Theyre standing by, dont worry about it do you know what the cash flow reductions could be here . Until we do, it is questionable im saying that once they figure it out, i have faith i also have faith that there are people who believe this thing will never come out of it. Thats completely untrue there is just a tremendous 2 billion companies, these guys will get out of it, i just bit way, remember, southwest air made a deal last week that surprised me in terms of how little they were really owed so thats one of the reasons david, i know that may have come across as being lets say harsh. Not reckless, but harsh. What i feel confident about that is that the cash flow is good enough and i think that we all have to think about, well, wait a second, if it is a total shutdown, does this company not have the cash flow to pay for the dividend i think they do. I understand the way you put it and i did not by any means try to ascribe, hey, those of you who are worried, listen, i feel better. I understand that my point is when you get to this, we talked so often about the fact that the stock price is not really this has been the worst year, call it full 12 months almost. And it was horrible. And yet the stock price we pointed out many times was still up. Thats where maybe it was not properly reflecting the risk that seems to be growing. There you go. I think that the stock is wrong, but the cash flow could be in tact and thats why im not saying the stock goes to 250, i think the stock should be down for the year ive got companies that are really doing extraordinarily well, whose stock are not nearly as strong as boeing. As you can see, were hanging on to 147 for the year the other implication for production scheduling is the impact on the 600 or so suppliers and then the hundreds of smaller subcontractors that feed into boeings chain. I have such straight conviction in ge and larry culp. But larry, hes i hate to make this sound hes into boeing for a lot of money. Honeywell less there are companies United Technologies, yes. But if lets say greg hayes was here, i wish he were, hes the great shooting of all ceos, hell say, listen, this will make us have to change our we may have to cut numbers. Or delay numbers take the numbers to the back half meanwhile, United Technologies is merging with raytheon i think thats a great deal. But, yeah, i think those are two companies that, you know, im not talking about spirit you could trans dime those will be heard. But, yeah. I think we have to revisit the earnings per share for United Technologies and for ge and these are companies that have been great suppliers to boeing it is remarkable that were seeing the overall Market Action that were seeing with boeings drag we know what a huge influence it is of the indices because of the price weight a lot of that has to do with the clarity we have gotten over the past week, jim, fed meeting, ecb, brexit, usmca and phase one. People are excited about europe all of a sudden isnt it amazing any sort of certainty, the man who is going to run the uk is not pro europe we get some certainty. People want certainty. I worked all week on this trad agreement, other than a four hour window in the eagles beat the skins. By the way, that was nice thank you. Very nice. Dallas showed up, which bothered me tremendously i know we have ed green going to be on soon hell be highest over the eagle win. But we have to bring him down because next week we play dallas i think you guys are in for it if they keep up the performance they had against the rams thats not what were here to talk about. Its true i dont want to get side tracked at all the deal may be real the deal may be real because of backyard hog production. 60 of the hogs in china are there are chineseowned farms where hogs have not been killed because it is hard to it is airborne virus, asian flu. A group of frozen hogs just in case, you know, frozen pork, just in case it got to that. That frozen pork runs out, boom. There is going to be a lot of demand for pork. Yes do you know if pork right now, our farms, our big hog farms, are National Security protected. You cant go to a hog farm never let you in this is important. We got them, they dont. Theyre coming tothe table, believe me it is all about pork thats for sure when prices over there are doubled in a year, we know why watch out for beef and chicken inflation for 2020 United States. Were going to hear more about what lighthizer said about the deal over the weekend. As jim mentioned, in a moment, a new consumer giant, iff merging with duponts nutrition and biosciences unit futures look pretty good coming off the record close for the s p and the nasdaq still on track for the best annual gain since 2013 iff a very large deal over the weekend for the flavors and Fragrances Company will merge with duponts nutrition and biosciences business dupont at 26. 2 billion, the combined company will have pro forma 2019 revenue of more than 11 billion. 2. 6 billion in ebitda here with us at post nine, iff chairman and ceo Andreas Fibig and duponts executive chairman ed breen thanks to you both thank you for being with us. Youre coppiming right off the Conference Call you just held. Ed, let me start with you. On the call you said iff is the best partner in every respect, you obviously indicated there was a process you evaluated a number of potential outcomes for this business. Why was this the best one for your shareholders . We made the decision based on strategic fit and culture. This creates the Global Leader across all the ingredients spaces, the broadest portfolio by far and well have double the r d of any other company in the industry so strategically we love this, we can really offer our customers full set solutions that nobody else, any competitor, can do the interesting thing was it was a competitive process, there were three people that wanted to merge with the company and all three of the prices were sitting right on top of each other. So thank heavens we didnt have to scratch our head and say, should we take the other one, because the price was better we got the price we wanted, great strategic fit, and then we thought the cultures of the Companies Really gelled well and thats important when youre integrating two Large Companies together thats a lot of what makes it work. All right around the 18 times current ebitda, i guess in times of valuation metrics youre looking at the deal is not that far in the past and it pained shareholders in part because of some things you found there. What confidence can you give them that youre ready to do another large deal and another very large integration what we would say is that first of all we have another 12 to 13 months until we close the deal and the teams are already planning on integration. It is a very robust plan we have our experience and also the m b team is experienced here i think ever will go very, very well over the next 12 months so theyre ready at day one we took our key lessons out of the fruiteron deal what were the key lessons then everything which is cost related was going extremely well were overdelivering on the cost synergies, procurement or footprint or overhead cost we have to watch the one time and the sales that we bring the teams good together and we make sure that were not losing out on this one. It is very clear that most teams for the next 12 months have to perform on their base and their core business and that we made this very clear. I think it is good that the companies the two teams talked already and were very confident that we will get go into next year with a good tailwind. Andreas, good to see you, good to see you both will you need to do an Equity Offering after the deal is done, or will the Free Cash Flow enable iff to reduce the debt . Yeah. You will have to do an equity offer, without a doubt okay thats important because the stock is down 6. I know youve always been quite candid on mad money and said, looks like we might have to and people should be ready thank you. Thats great and now, ed, im trying to look at the rest of the company to me, there is some green chutes i see, were starting to talk about 5g. Thats been very important to the electronics. What is your next move me personally no, the company i know youre personally were both in the in business. Im not talking about your next move, your move here. Im staying at dupont as executive chair and im really excited about it but, you know, look, were actively going to look at the portfolio still and will continue to manage that and it is the best owner mentality for us in the company as we just demonstrated with this great merger today but we look, we have a great portfolio with the three core divisions we have now. We have a lot of secular growth areas, we really love. You mentioned one of them, 5g. Were big at lightweighting cars, big at electrifying cars as they go towards ev. These are big markets for us as we move forward. So we got great growth prospects. I wouldnt doubt we do some tuck in acquisitions along the way. Were going to have a great profile from a cash position and Balance Sheet position so were really going to be in solid shape here moving forward. Ed mentioned r d. We talk about pro teams and flavors all the time where is r d focused now where will it be focussed . What you see is total solutions. We have a nice play around different categories and r d was one of the reasons why we said this deal makes a lot of sense from a Strategic Point of view. We will be leaders in many of these categories, plantbased proteins, flavors. So we will focus our r d to bring these programs basically to fruition and look how we can combine the categories for total solutions. Let me give you an example. If you look at plantbased burger, very popular now, iff is delivering the natural color, the flavors, and now we have to plantbased proteins that texturizes we can provide the total solution and that could go on and on and on we have more examples here thats something which really differentiates us from any other competitor and as ed just said, what we did with this move is not applicable with any competitor with one move they would need more moves to basically rebuild what we have now. I want to follow up on the cost synergies and revenue synergies. Youre talking about 300 million bucks, but revenue synergies, 400 million. Not often we see revenue synergies exceed cost synergies. Can you explain where that is coming from . The beauty of the deal, more the revenue opportunity Going Forward. Theyre complementary, not overlapping the portfolios the plantbased burger, dupont supplies five ingredients in the bun, the cheese, or the burger iff supplies five different ingredients into that product. So the power of a full solution is really powerful, probably for our big customers and our regional local Food Companies which are growing very rapidly they dont have that solution capability so well be able to supply it to them the revenue synergies are really big on this deal but because the products dont overlap as much, you dont equate as much on the cost side, but still 300 is a nice number it get on a business with this type of multiple on it. And, ed, delivering those revenue synergies will be dependent on the Management Team your shareholder base, why is this the right Management Team for dupont shareholders to believe in, as this business changes hands . First of all, the culture is the same, the focus on r d, the customer solution set, thats where we were driving, thats where theyre driving. So i think this culturely fits m b is bringing a solid season Management Team with a lot of depth here and our team along with all of dupont has been through massive integrations the last four years. So we have put a lot into n b and you never watched anything go wrong it was very smooth our team knows how to do it. Well get the best of our playbook, the best of theirs, we have as andreas said, we have 12 to 13 months to plan this and well have it all laid out and documented about how were going to proceed im highly confident and i certainly know we picked the best partner strategically. Andreas, should i feel more confident because i love that deal initially and you know in your 10k from 226. 19, you wrote due to the nature of the transaction and the characteristics of fruit a rum, we were limited and we may subsequently identify additional obligations includes those assumed in the prior acquisitions you feel much more confident in this case. Did you have enough time to do the Due Diligence . Absolutely. What makes a big difference is that we are talking here to u. S. Company, very clear, it is an easiness of doing the deal and we had multiple interaction with the dupont and m b Management Team the culture is so similar that there is a real nice click between the teams and we will start right from day one and onwards. 3. 7 billion coming in cash, tax leakage, right to you. What will happen with it the beauty of this deal, because it is a reverse morris trust, it is tax efficient to our shareholders, which is great. The 7. 3 billion, remember, we have to delever the company because it is less ebitda and well spend about 5 billion doing that well still have over 2 billion of excess cash quick reflections on macro, got done talking about everything that got done last week regarding trade confidence inflicting quickly as a result it feels like it is i wouldnt say we see it in the end market yet i havent seen anything significant change not getting worse. I dont see significant pickup yet. I think with the stimulus that hit and that was happening about a year ago, ten months ago, nine months ago, get the feeling, thats globally, thats going to kick in and help things out here the little bit of the trade tension dying down it just builds ceo confidence to go out and spend on capital. As i talked to so many of the ceos, ive been around so long doing it, they feel a little confidence coming back here and they start spending again. And, ed, finally, the multiple youre getting for this business, people seem happy with at least judging from the analysts and the call and the questions on the call. Leaves a multiple on your existing business fairly low im looking at a fiveyear chart of dupont, from the beginning of the talk of taking it all apart to where we are now, are you still frustrated or are you frustrated with the performance of the stock yeah. Im not. We hit we demerged with dow, we really hit the industrial kind of softness going into last year remember, we took 4 billion out between dow, corteva and dupont. As the revenue starts lifting up again these things are going to print cash theyre in a way better position and pure plays in our industries i feel very good about it. Just to punctuate your point, the multiple right now, im not looking to trade today, the multiple is eight times ebitda our industry and im picking just the average, trades between 12 and 14 times. So there lies a really neat opportunity. Sounds like he may go out and buy that stock also. Gentlemen, thank you appreciate you joining us with the news this morning. Andreas fibig and ed breen as well on todays big deal or yesterdays big deal. When we come back, cramers mad dash, well count down to the opening bell on this monday morning. Dont go anywhere. Futures look good to start the week well get to several sell side calls as well on chip names, pepsi and more the opening bell in five minutes. Is the monolithic view of emerging markets obsolete . At pgim, we see alpha in the trends driving specific sectors of outperformance. Where a rising middle class powers a booming auto industry. A leap into the digital era draws youthful populations to mobile banking and ecommerce. Trade and travel surge between emerging markets. Every day, our 1,100 investment professionals around the world search out opportunities for alpha. Partner with pgim, the Global Investment management businesses of prudential. vo than just the business theryou came for. More whether thats getting a taste of where you are, or bringing some of that flavor back home. Thats room for possibility. Lets get to living lets get to a mad dash before we get you ready for the opening bell two minutes from now. We talked to allergan on friday when i was talking about a potential close as soon as february theyre going to get this divestiture done january features well today. We have dr. Mitchell brynn from allergan who is going to ring the opening bell. Hes a botox person. David, the great thing about the merger with abbvie is abbvie has this gigantic worldwide sales force. A lot of people feel that the allergan that we know did not have the ability to project sales away from the u. S. And that the market is actually far bigger when it comes to look and feel, in other words, not only just for how you look, but all the other different uses of this drug sweaty palms is a big issue there are some womens issues that have not been explored fully that i believe that abbvie will explore so this is the beginning of the new botox, and dont view it as just something to get rid of wrinkles there is much more to it in terms of migraines, another use, remember, allergan brings a cgrp pill, acute pill, so when you have a migraine, you can take it. Injections now once a month. That no, thats not allergan. I know im saying in terms of treating them, a new therapy. Yes as the spokesman for American Migraine foundation there is three companies that have that people dont like to take to give shots of themselves i myself dont like to do it if you do it by me, yeah if you have a doctor do it, im doing it on i feel like it is the end. It is all right. Dont scare people but, yes a pill is always a better thing to take than a shot. So there you go. I can administer better than i can take it. Lets get medical consultant is over, lets get to the open ing bell and the s p 500. At the big board, Pharmaceutical Company allergan, celebrating 30 years of botox at the nasdaq, clifford, the big red dog and scholastic publisher of childrens books and educational media. Well keep our eye on boeing phil lebeau in the 7 00 hour did say he thought a temporary halt to production was more likely than a slowdown. Well, the problem with a temporary halt is that it just seems like the as this thing drags on, boeing continues to want to try to get ahead of it by saying it is temporary halt it is just not up to them. And i think that theyre meeting now, the board i think they have an excellent board, pretty heavyweight, but it is just not in their hands. And there is a presumption all along that this is what boeing decides to do is going to determine this i think as this drags on, we realize that it is not up to boeing and thats whats happening today recognition that it is not boeings fault right it is not boeings fault. When is this plane really going to do we have any idea . No. We dont, right i think it is going to be here is the strange one. It wont be back until people forget that it was a problem but, you know, there are are a lot of people, again, i like to speak, a lot of people feel it is finished. I dont know when we will think about this 737 max but they are here to stay, and they will get through this it is just that the idea of owning your stock, i have been completely mystified i remember when the stock was at 250 and i thought, it might be expensive. I believed in it and the stock is hung up here better than almost any dow stock given how numbers have to complete, completely be cut over and over im waiting for big revisions down sure. And then you might see where this all clears. Every other dow component is positive dow is being led by goldman. And cisco and cat. A lot of calls today, jim, upgrades for micron and Western Digital as they see even though near term pressure on pricing continue to recover in susquehanna is an amazing as is the morgan stanley, they go from 4856 this Company Reports this week, there are until these calls, the perception was the dram prices, very important, have not stabilized but that is still the case it is just that it is very undervalued just in terms of where it has been. I completely agree with the lift in the stock you have to believe 2020 will be better than 2019 i was listening to a lot of the people on squawk this morning. I have a lot of companies that are in the cards to have a much better 2020 than 19. I think this is one of them. Micron will have an amazing opportunity, you heard ed breen talk about 5g. Ed breen, big company, dupont, 5g is going to spur and acceleration and it certainly will for micron too. What is left at dupont, of course, after they do this deal, which is still a year or so away from closing as they made clear. But the multiple on what is left at dupont, he said at eight times ebitda, below certainly what the it is an auto and semi. Those have been bad. Shares are benefiting iff shares are down sharply. Said theyre doing an Equity Offering. Didnt give a lot of detail, just didnt really just said, yes. Well, that yes is not no. I know. It is not maybe yes is yes. Want to make sure you heard that. We did more than just thats why people short it and try to cover on the equity and they need to do that to fund the 7. 3 billion. They sure do, yeah. Dont want to stretch the Balance Sheet anymore. This is very conservative company. Remember jpmorgan downgraded and upgraded it. This is kind of like iff too the movie. Come back to the big deal in a second i wanted to focus on uber, which is having a nice morning on news it is going to be it is looking to divest its uber eats business in india. Pass the sale to a competitor according to dow jones they say there are talks in progress remember the company has said previously that it would only focus on markets where it could be number one or two and certainly we talked a lot about how much it is losing 50 of the losses gained from those markets. I think uber somebody estimated it could be half a billion dollars. I look ive been saying uber is a buy since they said that because the idea of some sort of consolidation in the Delivery Business among grubhub, and among door dash, it is happening. Door dash is becoming so powerful, it is extraordinary. You talk about rationality coming back it is great if uber decided to get out of that, they dont need that, it is not really core in the same way that square, which is i know the stock square didnt need caviar. When i my i want to own square for my travel trust, but we used caviar at both restaurants and it is pretty smooth switch, caviar being square, the consolidation is happening ahead of what everybody thinks, why uber is a buy. It is a buy here. Remember it did go public at 45. Dont really see that again. Yeah. Not even that day. It happened look, i think did anyone read the wework article in the wall street journal they said, you got to stop using marijuana, kind of like out of body article. I recommend it to anyone i think wework may have been the beginning of the end of lets lose a lot of money and get a lot of money for losing a lot of money. We made this point many times, but it is worth repeating, of course, ubers largest singleinvestor is softbank, the vision fund. They dont come off very well at all. They have been a Significant Investor in a number of the competitors to uber whether it is dd, competes with certain markets, the chinese giant, ride sharing and door dash as well. Right in the article, the wework article, masa son is the man who destroyed the concept of value it is so critical of him and there is this last Board Meeting where mark stern, the former goldman guy, says, listen, this all has to end it was too late. There was a lot of scrutiny of softbank these days, in the investment world we hear about it, i discuss it with people all the time, what is going to happen there, whether vision fund too could become something beyond press release. Whether theyre going to be successful and whats going to happen with the first one. 45 billion is the preferred, they have to pay 7 on. Maybe if Global Sentiment continues to warm up, that will be a nice tailwind as we approach 3200 here, ten points away, i see bamle today reiterates their meltup thesis s p 33, 33, by march 3rd, all 3s wow. The meltup. Yes Michael Harten out of b of a. The meltup. Are you revising your bull market playbook . I thought this weekend when i go over the trade deal, it really wasnt an important trade deal it really yes, the tariffs will go up in a couple of months if they dont demonstrate good faith, but there was a belief at the meetings that this was different this time. And that the chinese are going to say, you know what, we know we got to play ball or the tariffs are going to come right back it was a very significant weekend that made me feel that a lot of the stocks that were really going to be hurt, here im talking about the apples, talking about the dollar trees, talking about the hasbros, the mattels, the costcos, got to buy them. Lighthizer was on face the nation over the weekend, no date set for phase two talks yet, but called it an incredible deal take a listen. We have an enforcement mechanism, whether this whole agreement works is going to be determined by who is making the decisions in china not in the United States if the hardliners are making the decisions, were going to get one outcome. If the if the reformers are making the decisions, which is what we hope, then were going to get another outcome this is a the way to think about this deal is this is a first step in trying to integrate two very different systems. Now there is this theory going around that davos, our eunice yoon saying a signing there would timing wise would make some sense. It is possible. Listen, really parse what lighthizer says, which is there is this pla of hardliners of the pla, the pla versus the xi who is not pla and it looks like that maybe the pla kind of said, you know what, well go with you can say the same thing about the administration, couldnt you yes hardliners and those who are not. Hes been one busy man, that lighthizer. Is he ever. Wow. That navarro wing. What about it the wing supposed to cause the recession, very happy. Theyre happy happy. Is ron barea happy with it too . You mean the alter ego of Alexander Hamilton had an alter ego before you did he did . Yes first time anybody has put navarro and hamilton in the same sentence, but tell me. It wasnt an alter ego. Someone he quoted in his own book. His publicist, remember the john berra. We went to the white house Correspondents Dinner and we had a remarkable turnout, the man who wrote hamilton, remarkable expo significance on Alexander Hamilton wrote under a different name and gave that newspaper to president washington and annoyed president washington, but it turned out to be written by hamilton well, ron vera, boy, is this a stretch it is a stretch. Holy cow am i out there. Talking about our boss frying pan power. We did it on friday as well, we first told you steve burk will be stepping down as the ceo of Nbc Universal what we learned is hell be stepping down as the ceo january 1. He will remain or become chairman of Nbc Universal after that but retiring officially after the olympics in august of 2020 there is the man replacing him, jeff shell, incoming is the incoming ceo, going to take that role, january 1 of 2020. So were counting just days from now, really. Mr. Shell will take over, mr. Burke, a very long run at both comcast as the man running Nbc Universal, and presiding over incredible growth during that period of time in its many different businesses and leaving at a crucial time as well, the launch of peacock is not as significant perhaps as the launch of disney plus or even the launch of hbo max for at t, time warner. But it is the significant moment. How about and the integration of sky, which continues at this point as well wow i was shocked about this you were . The suddenness of the yes but then again, i know steve burke from 1998, 99, he was at disney can i just say that i always think of what my father remembers of great philadelphia piece about him, which said in many times he wishes he were really running the Childrens Hospital of philadelphia so he could be doing more what matters. And he i only mention thats metaphor for who he really is. Not your typical cat who runs no, he is not no, he is not. The announcement allows Brian Roberts really to mention the legacy hell leave behind, whether it is invigorating the parks, film franchises, the olympics deal, which will be sort of the signpost on which he goes out. 2032 is what it goes through and, yeah, seems the right moment he did say always been his plan to hand off the baton at the right moment and move on to the next chapter of his life, where he can pursue a different set of interests. People wont speculate hell run another company, no, thats not whats happening here. Ever get the going on to another chapter we all have to think about it sometimes. Do you get the calendar he sends about his family i dont want to get misty about it just remember, my father died, this is a special guy. And hes a special guy. Well said so we are 3190. Dow is up 44 to bob pisani. Happy monday. This is a very powerful advance we have today, very broad, all 11 sectors the s p 500 are up, 5 to 1 advancing to declining stocks thats a powerful rally. This is how you know it is powerful you get industrials moving up, consumer discretionary, along with Consumer Staples and healthcare, all at the same time, cyclicalsed and defensive up at the same time, tech leading the way, that is a powerful rally the big question over the weekend, everybody has been debating, is do we have any more better visibility for 2020 thats what corporations want. And it is debatable, but i think that modest it is a modest plus overall the fed is neutral now the u. S. Economy, well, the chances for recession are pretty darn low right now 2020 at least it the data we have now. Labor defeat over in the brexit deal, that was a positive for stocks lets call it a truce for moment on the trade deal. Global growth, there say little bit of a difficulty issue, better numbers in china over the weekend. But a clear bottom say little elusive. Thats still a little bit of an x factor if you look at the way the markets are voting right now, theyre clearly saying that things are getting a little bit better we have a historic high in the United States, even just oday, europe is sitting at 52 week high, look at the etfs over there. Emerging markets, weak dollar in the last several weeks here, that weaker dollar has been a real help to currencies over there and the economies in some of these emerging markets countries. So you look here, it is hard to argue that the Global Markets are terribly worried overall here, that there is better visibility look at the proxies here, high yield, excellent proxy for u. S. Growth, sitting essentially near 52 week high, this is the largest high yield etf, hyg, this is a play on credit, not a play on Interest Rates there was great concern that corporations were going to have a very ugly 2020 this would not be anywhere near a 52 week high move on and show you other things, metal stocks, copper weak throughout the year, concern over global trade issues, copper prices have been rising recently. This metal to mining has been moving up here, we talked last week about free port mack moran based on the belief that metal prices may be bottoming, who knows if thats happening. The mark set voet is voting for. Semiconductors, no matter what you look at in semiconductors, i like looking at the excess d, if equal weighted, all moving up in the last several months, these are global moves up that we have been seeing on the internet of things and, of course, semiconductors being in automobiles, but also some trade optimism as well finally, just want to note, industrial stocks overall, want to look at a broad group like the s p industrials here, caterpillar near new highs, dover, deeper cyclicals as well, also voting here, sitting near 52week highs. And the final key point here is just Interest Rates slowly moving up a little bit, yield curves steepening as well. Final confirmation here, kbe, bank index, the big banks, essentially, also 52week highs. You put this all together, you can be a little cynical and say, all right, im agnostic about whether the market will move forward. But it is really hard to argue that visibility is worse now than it was a week or two weeks ago. I think the Fair Assessment is visibility is a bit better, even if you can say, okay, we havent resolved the trade issues, maybe theyre just on hiatus, maybe thats the right way to look at it, but visibility say little better than it was a couple of weeks ago. To the bond pits as well, Rick Santelli at the cme group in chicago good morning, rick. Good morning, carl. We garner a lot of information, if you look at one week chart of 2year note yields, were covering the same areas, holding, but the short end is mostly glued with the fed on positive if you go out to the long end, 10year note yields up 4 basis points, double what 2s are were getting a curve steepening as you see it is really is the short end doesnt move much and the curve moves by the long end. Back over 20 on 10s minus 2s, volatility does stand along and todays settlement day for last weeks 3s, 10s and 30, i wouldnt spend a lot of time worrying about it. The fed seems to have dumped a big enough pile of cash to alleviate any concerns for the turn year end. If you look at some of the liquidity operations that were really earmarked just for the turn, some of the multiday, multiweek repo operations, it is in the zip code of half a trillion dollars so the market satisfied many of the spreads we watched on the very short end that give us a glimpse of demand and financing, certainly seems seemed to be taking a relief breath right now. One week of bunds, and a longer term chart of 10s shows 10s stop in the 190s. Bund yields tested minus 22 intraday last week that was the highest close if you recall in november that closed in November Comp to july so we can continue to test resistance with higher yields or less negative yields if you look at europe, cant get the kick to follow through finally, one thing that has been following through, the dollar index, hovering at the lowest levels since july. Were not far, twothirds of a cent away from when we settled at the end of last year. Carl, jim, david, back to you. Good story. Rick, thank you. Still to come, 2016 president ial candidate former hb ceo Carly Fiorina. Boeing at this point, about a 70point drag as we see the dow up 167 were at 3192. Have you ever worked with dr. Francis . Oh yeah, hes ok. Just ok . Guess who just got reinstated well, not officially. Nervous . Yeah. Yeah me too. Dont worry about it, well figure it out. Ill see ya in there just ok is not ok. At t has americas best network, now with our best plans, at our best prices, starting at 35 a line for 4 lines. New from at t. Red on the dow boeing and now mcdonalds. You can see the only ones. St ispmis for december come molyn line dow is up 170. Well get stock trading with jim in a moment. May your holidays glow bright and all your dreams take flight. Lease the c 300 sedan for just 399 a month at the mercedesbenz winter event. Hurry in today. Okay. Tomorrow eli lilly has an incredibly important meeting where theyre going to give you 2020 guidance. I predict that their guidance is going to be wellabove what people are thinking about because the company is so wellrun can you buy it up a dollar you know, i wish they were kind of steeling from the upside. But, you know, this is this is a Great American company. And they will they will surprise you with good things. Yeah. Done well. I saw today golden cross on s p bio tech. I think well, you know what, this is Elizabeth Warren backing away or lower in the polls whatever you think but Elizabeth Warren was the one that kept the she was a pe destroyer and now that she seems to move on to other things, i got to tell you. How about tonight lavongo, which is a Healthcare Company that saves the system money and then an unsung hero, doug peterson, as he goes into the cowboys im sorry. Doug peterson from the s p take a look at that performance. Its been its been unbelievable why . Because doug keeps expanding the number of indices. Personal hero of mine just in terms of how he is very quietly doing everything the only time he ever talks is on my show thats a good place to see it mad money. 6 00 p. M. Tonight. Well see you then, jim. When we come back, the wealth tax and more youll hear what Elizabeth Warren told our john harwood in the meantime, dow is up 159 is the monolithic view of emerging markets obsolete . At pgim, we see alpha in the trends driving specific sectors of outperformance. Where a rising middle class powers a booming auto industry. A leap into the digital era draws youthful populations to mobile banking and ecommerce. Trade and travel surge between emerging markets. Every day, our 1,100 investment professionals around the world search out opportunities for alpha. Partner with pgim, the Global Investment management businesses of prudential. Im Carl Quintanilla markets enjoying a nice monday dow is up 157 and the s p up about 21 points. Close to 3190 despite some drag from boeing. Morning, diana. Good morning, carl. Home Builder Sentiment jumps five points to 76 in december on the National Association of Home Builders index the hmi. That is the highest level in 20 years. And a huge beat. The street was looking for 70. Anything above 50 is considered positive novembers read was also revised one point higher last year, the index only stood at 56. Now, the builders point to the severe housing shortage on the existing home side as well as improving economy for these high numbers r now, of the index three components, current Sales Conditions rose seven points to 84 sales expectations rose one point to 79. Buyer traffic increased four points to 58 now, regionally, sentiment was highest in the west and south. Where builders are most active morgan. Diana thank you road map starts with boeing big Decision Company reportedly considering suspending production of the 737 max as the grounding wears on. Trade optimism boosting stocks as we go into the last two weeks of trading. President ial candidate Elizabeth Warren joining cnbcs latest speak easy series discussing her thoughts on billionaires, antitrusts, and a lot more. Boeing under some pressure as the companys debating on halting production. Hi, carl. We have confirmed the board is considering a Production Cut or halt to put this into some perspective, what the board is looking at right now is more likely to halt production as opposed to slow down production for a variety of factors at the end of the day, it comes down to what is best for the bottom line of the company a shutdown is possible for 45 to 60 days. Though, nobody wants to put a timeline on this because, ultimately, it depends on when the grounding is lifted. Thats what would trigger, lets bring production back up the boeing board is discussing the max production both at a meeting that started yesterday. It also continues today. By the way, production right now, 42 per month. That is the slowest production rate since 2016. That 57 that you see in shade there. That was the expected production for 2019 never got close to that. It was at 52 when they dropped it down to 42 back in april. For the max, which is built out in rentin, washington, about 12,000 employees work at that plant. How many of those workers might be able to be redeployed up to the boeing plant in everett or other boeing facilities, that remains to be seen if there is a production halt altogether slowdown, they would be able to manage that to a certain extent. Although, there may be some lei offs with that as well this is a company that in the last six months has said between charges and expected costs, for the 737 max, it totals more than 8 billion so, guys, the board is meeting today. Im not sure we get announcement today. But we probably will hear about the dividend when this Board Meeting is over. And people will be focused on whether or not that stays where it has been or if its cut given the constricted cash flow at the company with no deliveries happening. Yeah. Phil, we know youll bring us those headlines as we get them throughout the day biggest drag on the dow. Phil lebeau. Joining us now is jeffries air space analyst sheila here at post nine. Welcome. So everything phil just said is that your expectation were going to get some sort of halt or temporary freeze i think well see a halt to production when you think about at 737 max at 42 a month. Of course, you have to pay your supply chain you have longterm agreements. So maybe boeing will save half of that. But if you assume this goes on through q4 and into q1, thats an extra six months. You have a conservative cfo here thatd like to save that cash. We talk about the airlines. But the supply chain, what it means for the Aerospace Sector united technology, ati, cfm which is the ge safron joint venture. What are the ripple effects . Theres 1 Million People employed revenues to the 737 max. Management team has clearly recognized that. And theyve diversified a way with two deals in the last 18 months. One of the things we havent necessarily talked about as much, boeing is still one of the biggest defense contractors on the planet and we can talk about the impact that the grounding the 737 max effect this is a company essentially in crisis right now is having on other potential commercial business whether its the 777 x but what kind of effect is it having on the defense side of the business, too . Because theres continued issues with the tanker. Boeing over the weekend basically bowed out of bidding on the 85 billion ground base strategic deterrent. How much is there any way to quantify how much potential future other business boeing is missing out on right now because its so focused on the max i think its interesting because boeing has its hands full on the defense side with three new programs they won in 2018 and its currently working on executing those. So it has its hands full and isnt focusing on deploying capital deployment to those businesses what i think is interesting, Bigger Picture stepping away, the street or at least weve cut our cash flow estimates. Now, what the concessions have done and what the accounting costs have done have added about 8 billion, as bill said. If we double those to 16 billion, those are Free Cash Flow per share so the street is overestimating, in our view, what the by cutting estimates. So to answer your question in a very longwinded way, we become more negative on defense on the Services Side of the business as the Natural Inclination has been on the other side of the business. What about the dividend, sheila, what is your expectation in terms of the impact to the stock . I have no idea how its viewed amongst the share holder base. Perhaps you can tell me. The dividend is sacred in defense. As weve seen with lockheeds dividend yield i dont think the dividend will be touched with the december meeting today. You dont for now, i dont think so. What would it take . I think its the timeline on the 737 max, which no ones been able to answer and thats where weve seen all the criticism. But i guess would a slowdown or halt, is that intended to protect the dividend other words, without either of those two things, would the dividend be at risk . Yes, i think so i think you have to halt production to keep the dividend. And also, what boeings done is its taken out three revolving credit facilities. Its taken out longterm debt throughout 2019. So its created a stable Balance Sheet position to be able to continue to support that is the thinking that a return to service happens under the max name or should we start to think about how they might market it in ways that are unrelated to how we know it currently i mean, i think you could see a max change but again, its the airline thats the customer and not the individual so very few people often know what theyre flying on the aircraft i dont know if what branding sort of change will be put on it. Were talking about a halt or potential freeze in production for the 737 max right now. But up until this point, i realize theyve tapered it down a little bit in recent months. But boeing has been cranking out these planes theyve basically been getting parked and sitting in places all around the country right now the longer they sit, how much of a risk does it become that those planes become a greater cost when we do see return to service . I think thats why ultimately you will see a halt to production coming out today or tomorrow is because you are stacking up these planes the faa is going to go through as these aircraft return to service and going through ensuring each of these planes are safe to fly. Do we know what the deal was between boeing and southwest at this point or is it still secret . I think its a secret nobody knows but, you know, southwest announced a profitsharing agreement with its Employee Base thats how they work but if you look at the 3. 6 billion in concessions and southwests backlog of about 250 aircraft, you can do the math. Quickly, where do you stand on the stock we think the Free Cash Flow 2022 is going to be more intact. So were positive. Sheila, thanks for joining us at post nine. Meantime, the u. S. And china, as you know by now, reported agreeing to phase one on friday. However, some key points have yet to be finalized. Trade rep lighthizer did explain when the deal would be signed over the weekend take a listen to that. We dont have a date. What we have to do is get this we have to get the the the final translations worked out. The formalities. Were going to sign this agreement. But ill tell you this the second phase two is going to be determined also by how we implement phase one. Phase one is going to be implemented right to the right down to every detail it really is a remarkable agreement. But its not going to solve all the problems zwrojoining us this morning, cleat will yamgs aiams guys, good to see you both again. Cleat, any surprises that we know now that we didnt know when we spoke on, i think, thursday afternoon right well, look, i was very impressed with with what the u. S. Was able to deliver here if you remember back to the Oval Office Meeting in october, it wasnt clear what they were going to get in phase one on forced Technology Transfer and we heard on friday that is a core part of this deal thats a longstanding problem that was the impetus for the whole 301 investigation. On the intellectual property front, the u. S. Has indicated it got a a a great commitment from china on trade secrets. Theyre going to put in place criminal penalties and and modernize that whole regime and then on agriculture, this is a lot more than just agricultural sales youve already seen china implement some stuff on poultry. They lifted a fiveyear ban they had on u. S. Poultry. Ustr on friday was talking about similar structural changes for beef, for pork, and for biotechnology. So i was very impressed. But i want to make one quick, broader point here thats, lets go beyond the substance for a moment and lets realize that we are in a scenario in the nooiz United States and china where nationalism is on the rise where decoupling and even a cold war are legitimate possibilities. And in that scenario, just being able to say yes to each other on something is very, very important. And in addition to delivering this substance, the u. S. And china have shown it is possible for them to work together. And that gives me some encouragement. Yep thats one of the brighter spots about the deal even though plenty of hand wringing still about the details. Macro implications if youre looking for things to inflect higher as a result of what clete just talked about, whats going to come first its clearly not pmis today obviously. But is it cap x . Is it hiring Something Else so the markets have been breaking out from this long Holding Pattern already in early november so the markets have been sniffing out some sort of inflexion point for the global economy, which means, you know, global earnings of course. And and, you know, the pe ratio has sort of front run that as typically happens at inflexion points the pe ratio is up 33 from a year ago while earnings are flat so it is important that that, you know, whether its this deal or the combination of this deal and brexit and usmca, just a just a a a series of betternews events along with the natural progression of the pmi cycle, as you mentioned. Pmi peaked 16 months ago and the math is pretty clear that the longer you are away from that peak, the better your forward returns become and were at the point where the forward returns for the next 12 months for the s p are plus 16 with almost 90 batting average. So the market knows the math the longer you go, the better your chances and when you juxtapose that against very muted sentiment, you know, equity flows into etfs and funds. Only now are turning positive after an entire year of negative flows. Despite the fact that the s ps up 27 so when you get a couple of good news items, even if we have to be skeptical about the longterm, as your other guest mentioned, with potentially a cold war or what have you. You add everything up and it spells sort of a melt up into year end and probably further gains into 2020. Clete, one of the other major trade developments thats happened or i guess i should say progressed over the past week or so that hasnt been getting as much attention is the ongoing deflation of power at the w. T. O. Break that down for us and what, specifically, that shift is going to mean for the negotiation of future trade deals. Right well, look, the wto is the Multilateral Institution that is supposed to govern trade rules trade disputes trade negotiations between us. And that is a system that has not been working as intended in recent years you know, one of the big problems with the wto is it didnt cover any of these the the majority of these things that we were negotiating with china and so the wto needs to adopt new rules to deal with issues like forced Technology Transfer. Now, what has happened in the last week is the u. S. Has also put pressure on the wto to improve its dispute Settlement System and, in particular, the u. S. Has blocked the ability of of the appellate body to continue to function now, i see that, in the shortterm, really not making as big of a difference as most people think members who want to appeal can come up with ad hoc arrangements but what i really hope that it does is it gets people in geneva to change their mindset and to figure out how do we create a system that is fit for its purpose . That deals with these problems with china and that is quick and nimble where if a company has a problem, it goes to the wto and asks it to solve it because it know it can be done in a quick way. And i will say, you know, this administration does like doing things on a bilateral way. But over time, if we are going to be able to hold chinas feet to the fire and make sure that they follow through on all these new commitments, the best way to do that is through a multilateral framework and i hope that once this administration gets china done, gets usmca done, it pivots to the wto because thats the way its going to make all the stuff sustainable over time. That would be an interesting pivot. Finally, year end, mike, i got a question about the dollar. Down i think ten out of the past 12 days. If, in fact, global risk is coming down, is there less of a demand for the dollar . And how good is that for u. S. Corporates in 2020 well, it would be very good i mean, there is a very clear inverse correlation between the level of the dollar and the rate of Revenue Growth for the s p 500. With a lag of about threequarters or so so a weaker dollar is very positive for risk assets in general. Its positive for u. S. Earnings. Its very positive, obviously, for emerging markets and we can already see that the rate of change in forward earnings estimates for e. M. , for the e. M. Index has already improved from a minus 15 rate a month ago to minus 6 . Now, thats still negative but its certainly a lot less negative than it was and a weaker dollar is certainly very much part of that, as well as, like i said earlier, the natural progression of this slowdown that weve had. You know, similar to 2016 and other periods where the where this secular bull market has been put on hold for a year or two. And so a weaker dollar is very much part of the picture and because earnings do need to come through next year because the market has now discounted an earnings improvement with this sharp valuation rally. So now, the onus is on earnings in 2020 to actually come through. Yep well be looking for some revisions on that front as well. Clete, thanks so much. Thank you. Thank you when we come back, right here, were going to hear from president ial candidate Elizabeth Warren she sat down with our own john harwood. Giving her take on billionaires, the business round table, and a lot more we got a big show ahead. Dont go anywhere. Thats part of the problem weve got here is government listens disproportionately to rich guys who dont want to pay taxes. soft music when i see obstacles, i create opportunities. When i see adversity, i find a way. When i hear never, i say now. [announcer] Southern New Hampshire university is education made to fit your goals with over 200 degree programs, flexible class schedules, and some of the lowest online tuition rates in the nation. cheering so when i face barriers, i can break through. [announcer] breakthrough at snhu. Edu. Sitting down for a cnbcs latest speak easy series. Speaking out on capitalism the wealth tax well, theres a whole lot of things to talk to her about. John harwood is down in d. C. And he has some of those highlights for us good morning, john. Morning, david. You know, Elizabeth Warren says she is a capitalist to her bones but shes built her Campaign Around challenging the way American Business runs now i asked her in the interview whether or not she was impressed by the declaration by jamie diamond in the business round table earlier this year that it was no longer going to be exclusively shareholder capitalism that drives corporate decisionmaking. Can we just put that in a little bit of context . I had come out with my accountable capitalism proposal. That said that giant companies, like the kind of company that jamie diamond runs, should have to be chartered at the federal level. And their charter should actually say that they all of these multiple duties. And that employees can elect 40 of the board of directors to make sure. You think you caused them to make that statement . Well, all im saying is, thats what happened first and there was a lot of conversation about it. And then jamie diamond and the heads of some other very large corporations said, we dont need a law. Were just going to make that change voluntarily now, of course, Elizabeth Warren has had highprofile clashes on this network with people like leon cooperman and other major figures on wall street i asked her if she understood why those wall street figures feel that theyve been vilified by her youd have to ask them. But i will say this. A lot of em just dont want to pay the taxes. You know, and and thats part of the problem weve got here. Is government listens disproportionately to rich guys who dont want to pay taxes. Remember, for everybody who says that this this government is caught in gridlock, remember that when the question was cutting taxes for the richest and for the biggest corporations, it took the republicans about five weeks in order to call everybody in and do a trillion and a half dollars in tax breaks. Tax breaks that went mostly to those at the top now, Elizabeth Warrens been riding a roller coaster in this campaign a couple months ago, she looked like she was going to emerge as the democratic frontrunner. She struggled more recently, especially after laying out her program on medicare for all. And 20 trillion of tax increases needed to fund it. But Elizabeth Warren is not backing down from those positions. And, in fact, when i asked her whether she drew any lesson from jerome Jeremy Corbyns loss landslide loss in the recent british election, she said, you know what, i dont know what people think the left is but theres no such thing as a government that helps average people too much. Guys john, you know, it does appear, particularly after she introduced her medicare plan and people started to look at what that really would mean in terms of increased taxes and whether or not it would actually deliver what if said that her numbers started to come down dramatically. Did she discuss that at all with you . Yes and i asked her whether or not that was proving the point that president obama made recently, which was that the country was in a mood for improvement. But not revolution and i noted that she has lost some altitude in the polls and she says, you know what . What i care about the most is being out there fighting for average, working families. You can read that two ways one, saying that its a cause candidacy and shes trying to push those ideas and recognizes that shes struggling at the polls. Or the other is to try to reenergize her campaign with a more fullthroated appeal to the left she, of course, is competing with Bernie Sanders, whos been very stable in the race. And hes been doing well lately. So how that shakes out, that is where the farleft vote goes between Elizabeth Warren and Bernie Sanders is going to determine how much of a fight theres going to be in the end between that segment of the party and the more moderate segment. Led by people like Joe Biden Pete Buttigieg amy klobuchar. And more recently, mike bloomberg. Yeah. Well, john, thank you for that of course,the entire interview valuable on cnbc. Com john harwood as we head to break, lets take a look at the markets hitting fresh record intraday highs, this morning, the dow, s p, and the nasdaq. Were at session highs as well we got more squawk on the street when we return look, a new day has begun it is time now for our etf spotlight. Taking a look at the tech spdr hitting new intraday alltime high currently trading more than 1 right now. Components leading the way Western Digital on pace for fifth straight daily gain. And micron trading at a more than 52week high. Both upgraded by susquehanna to positive from neutral. Its been quite a decade we can say that now with just two weeks left in the year for trading year for the xlk since the beginning of 2010. It has soared more than 290 outperforming the s p 500. Wow. Look at that. Large deal announced yesterday. Involving duponts bio Sciences Nutrition unit it had been thought to be something that would be divested in some way. They finally got to a deal that they liked the market, though, at least for the company that is merging with it, not that happy were talking about a reverse deal in which the unit will be spun by dupont into a new company in which its Share Holders will own 55 merging with iff valuing the bnn business at about 26 billion roughly about 18 times its current ebitda fairly high multiple leaving behind due ponpont but iff Share Holders, well see. 7. 3 billion payment also being made by the company. They did seem to ascent to jim cramers question earlier when we had them on about a potential Equity Offering at some point in the future when the two Companies Get together heres what mr. Brino had to say about the synergies. Because they are citing 400 million in revenue synergies versus only 300 million in cost synergies. Its war of the revenue opportunity Going Forward because theyre complementary, theyre not overlapping portfolios so the plantbased burger example, dupont supplies five ingredients into either the bun, the cheese, or the burger. Iff supplies five different ingredients into that product. So the power of a full solution together, as andrea said, is going to be really powerful for our big customers and our regional local Food Companies, which are growing very rapidly they dont have that solution capability so well be able to supply to em. Plantbased burgers got a lot of dupont and iff in it. All right. Moving on, though. Breen did cite what he believes is essentially a company thats left or will be left once this deal closes in 12 to 13 months, that he thinks is quite cheaplyvalued by the market the multiple remain dupont is eight times ebitda our industry, and im picking just the average trades between 12 and 14 times. We did ask andreas about the deal that deal didnt go very well. It was a large deal for iff and you can see the stock is being sold aggressively this morning. Lot of cross currents in there. Yeah the proteins and flavors. I dont know. Its making me hungry. Ten ingredients from those companies. And we did tell people theres a lot of chemicals in there. Its processed. Lets get over to sue herera. Good morning, sue. Good morning, carl. Good morning, everyone heres whats happening at this hour the House Judiciary Committee releasing a 650page report detailing its rationale for impeaching President Trump accusing him of betraying the nation for his own political gain the house will vote wednesday on the two impeachment articles the u. S. Special representative for north korea, steven biegun, meeting with the south korean president moon in seoul. Later, he called on north korea to return to the negotiation table. Speak directly to our counterparts in north korea. It is time for us to do our jobs lets get this done. We are here and you know how to reach us and a pair of sunglasses that belong to former Beatle John Lennon sold at auction in london for more than 150,000 they were sold as is apparently, one of the ear pieces is loose because a screw is missing and he reportedly left those glasses in the back seat of ringo starrs mercedes in 1968 didnt bother to go get them he said hed just buy another pair you are up to date carl, back to you. Asset diversification, sue. Thats what its all about. Exactly. Thanks, sue see you later. When we return, former hp ceo Carly Fiorina will join us with her thoughts on the president ial race hey, elon. Hey, carl well, there are two prongs to my story. Business and politics. And you can find them both right here it is stainless steel and this is the last factory in america that still makes flat wear stick with me. Ill tell you all about it coming up next whatd we decide on the flyers again . Uh, fifteen minutes could save you 15 or more on car insurance. I think were gonna swap over to over seventyfive years of savings and service. What, were just gonna swap over . Yep. Pump the breaks on this, swap it over to that. Pump the breaks, and, uh, swap over . Thats right. Instead of all this that ive already . Yeah. What are we gonna do with these . Keep it at your desk, and save it for next time. Geico. Over 75 years of savings and service. Wealthy. Senator Elizabeth Warren telling our own john harwood that the government listens too much to, quote, rich guys who dont want to pay taxes latest polls still showing senator warren locked in a tight race with joe biden and Bernie Sanders, how will they shape the economic debate on policy . Joining us now is 2016 president ial candidate, former Hewlett Packard ceo. Carly, nice to see you a number of years ago when a large republican president ial nominating group what advice would you have for current candidates at this point in the race in terms of how they should proceed how they should think of standing out in what is still such a large group of candidates ranging certainly from what some would say the far left to more moderate. Well, hospitallnestly, im ne my advice would be worth much. I think the truth is that trump takes all the oxygen out of the room he did in 2016 and he continues to in 2019. And i think the challenge for the democrats is how much attention to pay to him. And their ability to beat him versus their own message what i would say is this i think the reality is this election is neither going to be won by the base of the Democrat Party or the base of the Republican Party this race is going to be won by people who have toggled in between. Who are uncertain. Call them independents call them persuadable democrats or persuadable republicans and i do think that that group is not going to be persuaded, ultimately, by an Elizabeth Warren or a Bernie Sanders i think they will hue more towards the moderate candidates. Thats just my assessment. But, of course, this is a democratic primary and the base drives the primary. Carly, i wonder if you think i mean, theres been so much talk about capitalism and this idea that it isnt working and that its failing the average american right now it does seem like its something thats going to be on trial with this election again. I wonder how you see that and if you think the american concept of capitalism is evolving or even under threat right now . Well, i do think capitalism is under threat. But i also think that for those of us who understand that free market capitalism has lifted more people out of poverty than any other market system in the world. That we need to be honest about the failings so the we do have incrediblyhigh income inequality thats just a fact there are people who are being left behind. It is also a fact that there are many industries, and many companies, that have taken advantage of consumers whether its the Opioid Crisis whether its the financial crisis whether its people looking at the situation with the boeing 737 max. Whether its peoples concern with facebook and amazon market power. The truth is, we all know, that power concentrated is power abused always and thats true in business just as it is true in government. And so i think, you know, when the business round table takes a step and says, of course, ceos should Pay Attention to things other than shareholders. They need to Pay Attention to their communities and their employees and their customers. Thats sort of obvious but the fact that people felt that statement was important to make says that we have a lot of ground to make up. A lot of trust to rebuild. And i think we dont make up that ground or rebuild that trust unless were honest about the failings of the system which are real. It sounds like a call, carly, for at least on the margin more government activity. More Government Intervention and that comes after a term in which they saying they have been singing the praises of government deregulation. Do you think that changes . Well, actually, i dont think that means more government regulation necessarily or a bigger role for government. I think the reason Elizabeth Warren is starting to fade is because people have figured out her plan is for more government every single time. And government has also failed and theres such obvious examples of it power concentrated is power abused whether that power is concentrated on wall street or whether that power is concentrated in washington, d. C. I think the answer, honestly, is more competition more power restored to the states i do think that you have Technology Companies with way too much power now and so some degree of regulation, accountability, and transparency for a behemoth like facebook or amazon is warranted. But that doesnt mean that you take more things out of the market and place it in the purview of government. It does mean competition works accountability matters and transparency is important. Carly, as you probably are aware, ive been following this desire by xerox to try to buy hp its a battle thats sort of begun and will continue. I know we got to go a ways back but you did, when you were running hp, of course buy the compact business, which is part of at least the business that is currently consisting of some of those of those units. What are your thoughts about whether those two companies would do well together well, i have to say im not all that current and times have changed a lot. But, of course, when i was at hp for six years, we believed that our differentiation was our strength that a systems play was the right play and clearly, hp is beginning to break itself up along Market Segments you look at hp enterprise, theyre still focused on a systems play but in the enterprise space time will tell with the xerox combination. It is, i think, a reflection of the fact that the markets that used to drive the xerox core business and used to drive the hp printing business have changed dramatically through technology and so i think that is going to have to be all about a play all about cost and scale and distribution yeah. The Revenue Growth, of course, as you point out, is really not there. Finally, carly, tell us about unlocking potential. I know its a nonprofit that youre obviously very much involved with. Well, unlocking potential is really focused on the kind of Leadership Development and Team Effectiveness training that i have been doing in the corporate space for many years through Carly Fiorina enterprises. But in locking potential, we are focused on those folks in the social sector, in nonprofits specifically, because theyre dealing with very difficult problems and dont always get the same investment in human capital. We have some great Corporate Partners mass mutual. American express these Corporate Partners help fund us to go into communities, to work with wonderful nonprofit organizations that are doing great work and that dont always get the investment in capacity building. And its also given us an opportunity, in the case of mass mutual, to train up their employees to become coaches to their nonprofit partners in the community. I think its a great example of a corporation really being invested in a community. And also, bringing something valuable, particularly to their millennial employees, who as we all know, i have a lot of millennials who work for me. And millennials very much want something beyond a paycheck. And want to make a difference in a way beyond just being a cog in a corporate wheel. And so we think our Program Provides a lot of benefit to employees, as well well, we appreciate your joining us today, carly. Thank you. Thank you, david. Meantime, the new Defense Department spending bill mandates flat wear for the Arms Services forks, knives, spoons, must be made in the usa. But not a lot of American Companies do that anymore. The politics of flatwear takes us to a small town in the middle of new york state called sheryl. Elon is there and breaks it down hi, elon. Hi, morgan. Well, thats right this is a case study of how business gets done in washington sheryl manufacturing is the last company that makes flatware right here in the usa. And it starts out as one of these blanks and then the machines over here. They stamp it. They buff it and eventually, they turn it into a fork. Now, currently, the Company Makes about 10,000 forks, knives, and spoons, on average, every single day but that numbers about to grow because once the new defense spending bill becomes law, the military will be required to purchase flatware thats made in america. And sheryl is the only company that can do it today, were doing about 6 million in sales we could probably double or triple that with the equipment we have. And probably if we put a second shift on, even more. Now, you might be wondering how did this one company shoe horn its way into a 738 billion piece of federal legislation thats where the politics comes in this region is represented by congressman, a freshman democrat in this very red district. And hes been on the fence on impeachment. So both of those things have made him a very important man in washington and hes the one who fought for the force. I dont care if its good for party. Its good for the American People and thats what i care about so the bottom line here, guys, is that this is the kind of hometown victory that democrats need to show that theyre not just the party of impeachment. Back over to you elon out in the field elon, thats very interesting. A quick programming note as we do go to break do not miss former treasury secretary jack lew on closing bell today discussing the latest on trade, thats coming up at 4 00 p. M. Ertin me dow is up 191. Analysts betting on more highs in 2020. This is forecast too hot too cold ndutust right . Fi o on tradingnation. Cnbc. Com more squawk on the streets coming up. Apps are used everywhere. Except work. Why is that . Is it because people love filling out forms . Maybe they like checking with their supervisor to see how much Vacation Time they have. Or sending corporate their expense reports. Ill let you in on a little secret. They dont. By empowering employees to manage their own tasks, paycom frees you to focus on the business of business. Music welcome back squawk on the street lets send it over to the group in chicago and Rick Santelli with the Santelli Exchange hey, rick. Good morning, thank you, morgan id like to welcome ubs chief economist seth carpenter spent a decade and a half at the fed as well. Seth, trade deal done. That was one of the big quote unquote uncertainties facing the market. Thoughts on the package . Is it too skinny is it too early to tell if it will develop into something good for the u. S. Economy are there any fed implications yeah. I mean, i think clearly good is theres not going to be further escalation in the near term. At least it doesnt seem so right now. I think what remains to be seen is as lighthizer said, the actual agreement is going to get signed only after the the tariffs are going to come down only after the deal is signed and thats probably in january so that means there is a little bit of ways to go still in ironing out some details for anybody who was hoping all the uncertainty would be resolved in one fell swoop, i think that still remains to be seen from the feds perspective, theyve clearly keyed off of what they see as the uncertainty and the risk from trade war getting worse as part of what kept them on hold. So this is probably going to make them just at the margin a little bit more confident about where things are going so well have to see you know, but when we first started embarking on this road almost two years ago, there was thoughts and debates as to whether it would be disinflationry, inflationary it turned out to be mostly disinflationry and it would be hard for me to think if the deal progresses farther from phase one, and ult may mately, phase two, that process will be disinflationry well, i think whats happened for the disinflationary is weve seen this big disruption all at the end of last Industries Hit last year. Manufacturing got hit. There were disruptions as people try to deal with those tariffs. Were seeing the same thing happening now with the tariffs in june of this year. Well probably see further disruptions in retail. Even with phase one, those dont get reduced until sometime probably in february. If we get phase one completed and get phase two and as a result we see more free flow of goods, that can be disinflationary but from a different perspective. It should be good for employment at least in terms of growth terms. The pricing side of things has been pretty, pretty small. The real effect has been on employment and manufacturing. Its going to be employment and retail. Thats where the biggest effect is. Thank you for your thoughts today. Back to you. Thank you. Lets send it over for a look at what is coming up on squawk alley. I dont know whats coming up. Its a big show. A big show coming up. We have a lot more squawk on the street right after this. Just wasting time. Wasted time is wasted opportunity. Exactly. Thats why Td Ameritrade designed a firstofitskind, personalized education center. See, you just oh, this is easy. Yeah, and thats oh, just what i need. Courses on options trading, webcasts, tutorials. Yeah. Their awardwinning content is tailored to fit your investing goals and interests. And it learns with you, so as you become smarter, so do its recommendations. So its like my streaming service. Well exactly. Well except now, youre binge learning. Oh, i like that. Thank you, i just came up with that. Youre funny. Learn fast with the Td Ameritrade education center. Call 8662967451 or visit tdameritrade. Com learn. Get started today, and for a limited time, get up to 800 when you open and fund an account. Thats 8662967451, or tdameritrade. Com learn. Welcome back to squawk on the street. Markets hitting record highs again. The s p kicking the week off on pace for its fourth straight week of gains. Energy and technology as you can see here leaders while the real estate sector the only one in the red so far. Taking a closer look at the technology trade. The index hitting a record high of its own up about 45 . Among the names leading higher, you will find Semi Conductor stocks. Watch that all on the heels of the upgrade. I will send it back downtown to you guys at the new york stock exchange. Thanks very much. We actually have exciting news. Our leslie picker had her baby boy born yesterday december 15, 7 pounds 2 ounces, a big congrats. Operative word being big. Congrats. We are so happy for them both, although were going to miss her. My sources at the hospital tell me both baby and mommy are doing great right now. Thats important. Thats the most important. Shell be back soon, right . It doesnt take that long. It takes a lifetime, but not that long. Congratulations. Markets enjoying a pretty nice day as we get closer and closer to 3,200 on the s p. The trillion dollar question how you play tech in 2020 when squawk alley starts in a minute. As a principal i can tell you this. When one student gets left behind, we all get left behind. This is a problem that affects each and every one of us. Together with ibm, we created a whole new kind of School Called ptech. Within six years, students can graduate with a high school diploma, a college degree, and a pathway to a competitive job. You know whats going up today . My poster. Today, there are more than a hundred thousand ptech students around the world. Its a game changer. Were committed to making college more affordable. , thats why were keeping our tuition the same through the year 2021. [woman] i knew snhu was the place for me when i saw how affordable it was. [narrator] find your degree at snhu. Edu. vo in every trip, theres room for more than just the business you came for. Lets make the most of what weve been given whether thats getting a taste of where you are. Lets get to living. Or bringing some of that flavor back home. Thats room for possibility. Lets get to living good morning. It is 8 00 a. M. In seattle. In 11 00 a. M. On wall street. And squawk alley a live. Good monday morning. Welcome to squawk alley. On a day where we got record highs on the s p, nasdaq and now the dow. We begin this morning with amazon continuing to drive fear amongst its compet