Transcripts For CNBC Squawk Alley 20240713

Immediately. Is that the case can you comment on that . Didnt quite characterize the conversation correctly, but to the larger more important point, we are happy to continue the conversation with the iraq is about what the right structure is weve been there to perform a Training Mission to help the Iraqi Security forces be successful and to continue the campaign against isis. Were going to continue that mission, but as times change and we get to a place where we can deliver what i believe and the president believes is a right structure with fewer resources dedicated to that mission, we will do so we also have today a nato team thats here at the state Department Working to develop a plan which will get burden sharing right in region as well so we can continue the Important Missions to protect and defend and keep the American People safe while reducing our cost, our resources and burden and the risk to our soldiers and sailors in the region. Here today at the podium you said the imminent threat was a threat to u. S. Embassies, didnt know precisely when or where last night the president said a threat to embassies including our Baghdad Embassy here why can you say that and the president said it in toledo, but no one said it to lawmakers in a classified setting we did. The senators we told them about the imminent threat, all of the intelligence we briefed, that youve heard today, i assure you, in an unclassified setting. We provided it in the classified setting as well. You told them embassies were to be targeted that was the imminent threat im not going to talk about the details of what we shared in the classified setting but make no mistake, those members of congress who want to access this same intelligence can see that very same intelligence that will reflect describing what the president said last night as well is that threat gone with soleimani gone threats are never gone. A lot of danger in the world always a lot of danger in the world throughout the region. Nobody believed that a Single Mission in any respect took down the risk of terror, terror from al qaeda, isis, al shabab. No one believes that the president doesnt. Look at the achooemplts in the administration we took away the caliphate in its entirety we took down bin laden we took down al baghdadi, qassem soleimani. This is a list that has reduced the capacity for trifrts around the world to perform the functions that put american men and women and the homeland at r risk were proud of that. One more. Next to you. Right there. Yes. The china trade deal. The cheerchinese side is going here next wednesday to sign that part of the deal but theyre a big importer of iranian oil and minerals and thats a big part of their economy. How do you balance any concerns about the iran issue coming up in the signing of the phase one deal or a negotiation for the phase two deal i had no idea youd ask that question but its a good one to end on we were looking forward to the chinese delegation coming next week phase one is very significant. It includes very significant components of changes to technology issues, intellectual property issues, and 50 billion of purchases for our farmers i would comment i dont agree with your comment that china is a big buyer of oil the china state companies are not buying oil from iran and i would just say we are having conversations with china as well with any other counterparty on sanctions evasions e thank you very much. Thank you, everybody the treasure secretary and the secretary of state sanctions on iran and senior officials in iran. The secretary of state expanded on the intelligence that he says led to the killing of general soleimani saying theres no doubt that iran had full intention of killing u. S. Forces in a missile attack, and echoing the president s comments about the potential cause of that ukrainian jet crash in tehran. Eli, good morning. Good morning, carl. Indeed the administration making clear that they are fulfilling the president s statement that he will impose punishing sanctions on iran and now we got a little more information about what those were. So the administration is solidifying sanctions as part of their maximum Pressure Campaign against the country. Theres ban lot of question about whether sanctions are an end in themselves, the punishment themselves, or whether they should be used as leverage the administration clearly coming down on the idea that sanctions in themselves can be used as a punishment, part of the end game here, and a way to show strength in the face of iran at the same time they try to deescalate the crisis after those missile attacks. Just prior to the briefing, elan, we were talking with mark short, chief of staff to the Vice President , and the treasury secretary sort of echoing, answering questions about next weeks phase one signing it sounds like well get a fact sheet of some kind, just unclear how granular it will be. I think one of the Big Questions around the middle east cob flikt and tensions with iran is this could perhaps metastasize into a broader geopolitical conflict that pits the u. S. Not just against its allies potentially in the middle east but also across the globe so that was an important question about whether these new sanctions could perhaps ensnare some of our european allies as well the treasury secretary saying there that if this sort of specialpurpose vehicle that europeans had set up in order to sidestep iranian sanctions, if that does move forward, those transactions occur, those transactions could be subject to sanctions as well, could trigger the sanctions that the administration has imposed i think there is still a question mark around how this will play out with our allies, but the treasury secretary saying there he had been in close contact not just with the chinese, also with the europeans in order to present the administrations case and hopefully get them on board. Yeah. Elan, thank you for bringing us the headlines there. We want to get to eamon as well. Want to get your sense of what it was like in the room. Certainly, some of the additional color around intelligence on a socalled imminent threat, what that meant in terms of targeting embassies getting a lot of attention reporter thats right. Peter alexander of nbc news was drilling down on this question of what did they brief lawmakers on you saw mike lee, republican senator and others, express disgruntlement about the classified briefing that lawmakers received about the soleimani strike, saying it wasnt enough and they were being instructed by the administration not to raise questions about it the capitol hill lawmakers not entirely happy with that answer, but here secretary pompeo suggesting that the administration did brief the lawmakers on all of the classified information about the potential strike on embassies. So a point of disagreement here between the white house and capitol hill i was also struck, guy, by secretary mnuchins answer to my question to him about the european allies, the secretary suggesting this mechanism thats been set up, which is called insects, which is a mechanism to avoid u. S. Sanctions by allowing european firms to conduct business with the iranians without using the u. S. Dollar, that there havent been any transactions there yet but saying theyve had very direct conversations with european allies continuing to do business with the iranians. Thats another point of tension as the United States tries to continue to manage this and deal with european allies who dont like the idea of cutting iran off because it has at least so far been following along with the terms of the Iranian Nuclear deal so this is an area where the United States has had pretty unfettered power in terms of global sanctions and getting european allies and its allies around the world financially to cooperate with that. Now, though, in this circumstance, allies not as willing to cooperate on sanctions as they have been in other situations in the past because of the trump administrations unilateral action here. So this is going to be difficult for the United States to manage over the next coming months, and well watch of that relationship and see how it unfolds eamon, is there any risk to the administration and the United States ability to continue with that path on sanctions . What recourse do the europeans and others have if they want to push back . Well, thefshy have been tryig by setting up this one facility. The United States has control because of the power of the u. S. Financial system, transactions from all around the world touch the u. S. Financial system in one way or another that gives the United States power unlikely other country in terms of imposing sanctions because most firms in the world want to be able to continue to access the u. S. Financial system if they cant, its very difficult for them to do business on a global b basis that power is the power of the United States has leveraged in diplomacy. Part of the way its leveraged it is by getting allies on board conceptually with what the United States is doing in this case, theyre not entirely on board conceptually, so you have to use that hard power and you dont have the soft power, power of persuasion, you had in previous circumstances. Of course having this discussion as the u. S. And as President Trump have also said that we want greater nato involvement in the region as well, which means more working with, more reliance on those same allies. Reporter right the president was asked about that yesterday and he said he does want the nato allies to have troops on the ground in the region, wants a financial commitment aides say they want nato allies to be sending more equipment to the region all of that is something of an ask from the United States to the europeans. So thats why that relationship is increasingly fraught. Eamon, thanks eamon jabbers outside the white house following the briefing by the secretary of state and treasury despite the geopolitical tensions, hasnt rattled the markets. We got to 29k on the dow bob pisani was there whats led us to this point, bob . Less than two months to get from 28,000 to 29,000 on the back of a powerful Fourth Quarter rally, up about 12 , and now a followthrough into the First Quarter. The complaint is the narrow leadership you get concerns, if you have three stock, what got us to the 1,000 points, apple a third, golden, unitedhealth, twothirds of the gains, three stocks in the dow for that, throw in mcdonalds and visa and a few other ones here, thats another essentially all of the gains, 1,000 points. Seven stocks in the dow, 1,000 points of the game, virtually 100 of the gain the s p 500, up 1. 3 so far this year, and if you look here, heres your big names, five biggest stocks 5 , 3 , more than two, three times the s ps overall gains. What this means is these big names are pushing up the s p 500. You look below that, a lot of other names are flat and not doing much so are we at peak bullishness or not . A lot of people are pointing out we have a fairly narrow number going on thats the question for earnings so, remember, flatish 2019, Fourth Quarter numbers are flat as well. What you cannot have happen is these numbers go flat, First Quarter and Second Quarter they have been coming down, fairly typical, but theyve been coming down fairly quickly you cant have that go flat. You cant have 0 Earnings Growth minimum you need 5 . Bullish analysts are at 10 . You have to be careful watching this prices up, earnings coming down, that means you have a high multiple here. So narrow equity leadership, next full screen, and you have a multiple thats really high, about 18 1 2 times forward earnings, at the high end of where its been the last 20 years. Typical is anywhere from 15, 16, 17, or so. Be care kwhafls going on here the question is what happens next you have the jobs report say its roughly in line given either side of positive, negative, the degree of miss you could have here, january 15th, the trade deal will be signed, then we have the fed meeting on the 29th the made r feds neutral what will spark investor enthusiasm how will that advance the mar t market these are all priced into the market the make or break will be the commentary on earnings they cant go to zero in the First Quarter and Second Quarter or the market will have a problem. Back to you. Going to be a big earnings season bob pisani, thank you. Apple and microsoft a big part of how we got to 29k josh lipton has more from san francisco. Josh what helped get to 29,000 two big tech giants, apple and microsoft. Since the dow first crossed and closed above 28,000 back on november 15th, apple has surged more than 17 . The iphone maker has been on a remarkable run in the past 12 months it has skyrocketed up more than 100 thats as investors are already betting on a 5g iphone coming in september. They think that will supercharge the iphone franchise they like what they see in the faster growing Higher Margin Services segment apple this week telling us that customers dropped a record 1. 42 billion on the app store between Christmas Eve and new years eve. Theyre excited about the wearables business and microsoft has jumped about 9 since the dow first crossed and closed over 28,000 its up 60 in the past 12 months, in part investors becoming increasingly bullish and confident in this company as a true Cloud Computing powerhouse microsoft recently won the big Cloud Computing contract with the pentagon, surprising some who might have thought of amazon as the frontrunner. Apple and microsoft hitting new alltime highs this morning. Investors might be wondering how much room there is to run. 3 upguide for microsoft for apple, its 11 below its current price. Back to you. Yosh e jojosh, thank you. Lets bring in two people from suntrust and loop ventures good morning good morning. When youre looking at your favorite stocks for calendar 20, it looks like fang without the netflix, am zorn first among them why do you still like some of these names that have performed relatively well, although admittedly amazon of those three is about 70 off its 52 week high for a couple reasons. One, we think the value broadly within internet Digital Media is accruing to the larger caps. We saw that last year from growth standpoint. We fithink well see that this year as well amazon, the reason weve identified it as our favorite large cap, but we like google, facebook, or alphabet and facebook as well, is because, one, amazons numbers for 2020 and 2021 i think are relatively misunderstood by the street. Expectations are for a slowdown when we actually think 2020 will show an a e acceleration, mostly driven by oneday Free Shipping which prime launched six or seven months ago the other is from a valuation stand point. Amazon underperformed the group, the overall market in 2019, and if you go back and look at even honestly the last two decades, there hasnt been one single instance when amazon has underperformed the market two consecutive years. So last year underperformed. We think this year its going to outperform, one because of valuation, two, because we think ultimately the numbers are going to come out better than what the street expects gene, i want to go to you with apple this week we got numbers from apple about the App Store Performance just after christmas. Performance was decent, up 16 year over year i think we knew that the Services Business was not linked directly to iphone units or revenue, but it still could be pretty tightly linked to iphone usage. I wonder if you think that this indicates that the Services Business, at least that app store portion, is flatting out no, i think its still going to be kind of that high teens growth weve soon theen that in the paw years. The active base is probably about 1. 5 billion. Last update they gaichz ve us ie summer, 1. 4 billion devices. Something you mentioned, iphone versus the App Store Growth in the last two years, the unit growth, theres about almost a 30 gap between those growth numbers. So theres been a consistent separation between new iphone sales and the app store, and i think that it is consistent with the overall device i do quickly, jon, want to go back to apple in a Bigger Picture and now v how its driven the market, the average target is 11 below the current stock price. I respect the profession greatly of the analysts, but the reason why it jumped out to me, we think about apple moving forward here, southside analysts dont get paid to be ight. They get paid to be relevant they get paid for their insights to the buy side, and i think what we are seeing is some reluctance from the south side really to get this stock right i want to try to quickly define what the right case would be microsoft, google, and facebook traded at 31 to 35 times multiple apple is developing a consistency around their business that is comparable to those. If you president a 31 multiple on apple, thats 465, about 50 upside so i would highlight that even though we dont see those pric targets moving up on apple, there is a bigger trend towards equality in multiples. Yousef, i want your ideas on cloud works, what that landscape has meant between names like amazon, microsoft, google. What do you think that looks like in 2020 what does that look like and how does it affect the stocks you cover . The only name weve covered is amazon dont cover the others if twooi2019 is going to be remembered for anything, it will be remembered as the year when competition within cloud has gotten kind of moved to the next level we know that amazon has a contract we know that amazon from a growth standpoint stepped down from the mid40s into the mid30s. The good news is i think at least with an aws or expectation for amazons Cloud Business has been reset since they reported Third Quarter numbers, which i think is healthy if you look at street expectations for the next couple years, theyre from 25 up to about 35 , which we think is pretty good. But relatively speaking, gcp or the google cloud is growing much faster but off a smaller base. Stepping back and looking at the three players, we think the market is really large to accommodate multiple success stories. But we dont think amazons supremacy is threatened in any way over the short and medium term all right we will leave it there for the week yusuf, gene, thank you. Thanks. When we return, what barry diller said about facebooks political ad stanchion first a reminder, you can always watch us live on the go on the quk le r sawalyeturns in two. Some things are too important to do yourself. Get customized security with 24 7 monitoring from xfinity home. Awarded the best professionally installed system by cnet. Simple. Easy. Awesome. Call, click or visit a store today. Stocks led by tech hit new highs. Names like tesla have doubled in the last three months. The highest value automaker, gm, in u. S. History. Amid the rally, the percentage of listed companies that are in the red like tesla is now close to 40 , highest level in over 20 years, so should investors be worried . Kevin delaney of the New York Times joins us. Lets start with tesla and the mark markets seeming willingness to forgo looking at debt and losses weve talked about this many times. Tesla is a cult stock and theyve sort of checked the boxes to allow investors who enthusiastic about elon musk and the future of tesla to actually continue believing in the story the latest one, a profitable quarter so thats undermined the concern about teslas viability as a business. Theyre also expanding in china, which is an enormous market where gm and other big automakers sell millions of cars a year if you want to believe in tesla, elon musk hasnt done anything too crazy recently and there are signs that its viability as a business is decent alan, are you seeing more cult story where is you are . I think its a cult story i think its interesting, elon musk was going to do a private thing and its over that price now. Its reflective of the fact that public buyer likes companies they know and theyre comfortable with we saw that in the ipo craze of 2019 now theyre looking at the reality of the fact there are losses i think 40 being a percentage of the companies showing losses, a lot of that was biotech companies. And thats the nature of biotech companies. They dont make money far long time they usually get bought out by one of the big drug companies. I personally believe were going into a period this year where people are looking at and saying, you know, when will these losses end, companies have to at the end of the day have some profits kevin, does that mean 42 of the loss making Public Companies are biotechs does that mean that to the downside perhaps techs risk isnt but biotech . Fl theyre proxy for the sort of risk that investors are willing to take. Two important points to make monopoly the first is that these are not companies for most part that are leading the market Advancements Companies leading the market advances overall are the companies that youve been talking about this morning its amazon, its apple, a big one. More than doubled over the last year its microsoft so im not sure how much the story has changed for the Loss Making Companies i think a really important point is that if theres economic shakiness, and this is alans point, too, investors start looking more closely at cash flow of companies. So money losing companies, in whatever sector they are, are actually more vulnerable and prone to a selloff, which is what we saw in 2000, earlier market cycles. Really key point. Weve been talking about it as the dow hit 29k earlier today, youve seen this narrowing of leadership before today i never would have expected to see tesla and gm in the same article but there you have it. Alan, the point that jumps out at me, highest level since the twooin 2000s. Does this feel like 1999 to you or no . Ive looked at this many time, and is this a repeat, deja vu all over again . I honestly dont think so. And i lived through that collapse of 1999 and 2001 and 2002 and it was painful. But a lot of Companies Went public that shouldnt have been public they did it prematurely because of overexcitement about the internet and the stocks were they were built with flimsy foundations and a lot of them went away. Today companies are going public, even the ones losing money, going through two, three, four, five rounds of financing theyre bigger sizes theyre not Startup Companies that said, they havent necessarily proven the economic mod elels work yet so we have to see them go through that period. But i dont see a bubble type of atmosphere another difference from 2000 is the extent to which index funds are actually players in the market and that has only exploded in the last 20 years. One of the questions i would have is whether, you know, if youre fa v in an index, you dont get kicked out of it because you lose money for a quarter or a few quarters. I think thats another reason that the market is more tolerant of lossmaking companies a big factor we probably dont talk about enough. Always in the background, thats for sure. Meanwhile, iac chair barry diller joined us yesterday he sounded off on political advertising and facebooks decision to not remove those ads from its platform. This is what he said if you have basically free speech and you have the ability to advertise something, unless you are so egregiously over the line, you dont have any right to censor political advertising. How are you going to do it what kind of slope are you going to slide down when you say youre going to in a promotional medium what is advertising . Its promotion you tend to xanl rate the negatives or the positives most political advertising is actually negative. So you make these negative arguments about your opponents how are you going to vet those its impossible. Interesting, sort of signing with zuckerberg on this, right yeah. Well, he is signing diller is saying he doesnt support facebooks position, so i dont know how you equate it i personally come down on the side of these political ads that are disor the tif should not be allowed. I think thats a bad concept and i think it hurts political campaigns, political candidates, not any one specifically everybody gets hurt by it. I think its better if you do frankly what twitter has done, and google has been more responsible. The point is you cant edit these things because its a slippery slope thats what facebook said theyre working on their strategy and they said were going to allow mike pcro target and candidates to run falsehoods as part of their ads facebook offered that users could ask to see fewer ads thats buried in settings. Facebook has shown it doesnt have control of advertising on its platform candidates could still actually run messages on facebook even without advertising. When you cut off advertising, which is what twitter said, doesnt mean that youre cutting off the speech of the candidates youre just cutting off the amplification, the turbocharging of the messages, which we know in some cases are deliberately false. We know we have rules on television itself which comes with this disclaimer after every ad of i support this message we dont have that over the web, and i think that i think there needs to be some discipline i think there are a lot of things that are being run that we know are patently wrong, and were all vulnerable to it going into the heaviest part of the campaign especially when you can be targeted that story will get amplified as we get closer to the actual election thanks, guys congratulations again. Thank you good time for a news update sue herera has that. I do indeed, jon. Heres whats happening at this hour iraqs caretaker Prime Minister in a phone call with secretary of state mike pompeo asked the u. S. To start working out a schedule for an american troop withdrawal he told pompeo that recent u. S. Strikes in iraq were an unacceptable breach of iraqi sovereignty. Iran state tv showing the flight data recorder from the passenger plane that killed 176 people iran denies western allegations one of its own missiles downed the jetliner but allowed boeing to take part in the investigation. A lockdown placed on macdill africa afb in tampa has been lifted this after reports of a person armed outside the base. Officials are still searching for the suspect. And thousands of people marched through downtown sydney demanding action on Climate Change and protesting against Prime Minister Scott Morrisons response to the wildfires that have ravaged that country. There is no containment at this point. That is the news update this hour morgan, back to you. Sue herera, thank you. European markets are just closing. Seema mody has the breakdown overseas just take a look at the map behind me. Weve been losing a bit of steam in the last 20 minutes but on average european stocks are higher a lot of movement in the airlines right now stronger bookings were seen in december that bullish forecast helping easyjet and other airlines move higher responding to that ryanair guidance travel on track to be the best performing sector in europe this week a lot of movement in the airlines and europe. Take a look at the auto space as well shares of aston martin, up 12 on the report from the Financial Times that chinas geely is considering making an investment in the automaker as aston has struggled to recover from falling sales the company has struggled ever since its ipo, down 70 since going public in london in late 2018 an investment would add another european automaker to geelys portfolio which already has lotus and volvo. A tiny bit of selling here, dow down 62 points, lost not just 29k but 28of 9 tenyear yield back to 1. 81. S p up by a point. Welcome back to squawk alley. Stocks are mixed after the dow crossed over the 29,000 mark for the First Time Ever earlier. Down about 50 points tech responsible for most gains. Lets bring in washington advisers brian and david at ubs. Kevin, your thoughts on not only the milestone we hit this morning but the fact were taking a breather. Yeah. It tloox way the rally has been sponsored by lower Interest Rates it comes amid a Global Economy thats been very disappointing, below trend, u. S. Growth has been coming has been the best one of the best of the developed markets, but that growth rate is coming down and weve seen some slippage in todays day that private sector payroll, up 1. 5 or so year over e yoor, the weakest of the cycle. In order for this bull case to develop and the market to continue on an upward trajectory, we need to see an improvement in macro conditions heading toward midyear david, what do you think of this market right now . Arguably, valuations are stretched. How important are earnings going to be to continue an upward move i would think a couple points, morgan if valuations are higher than average, but when macro conditions are favorable, Interest Rates are low, inflation is low, unemployment is low, that tends to be an environment where valuations are higher than average. So from that perspective, valuations dont look auto of whack. The other thing i would say is valuation is a poor timing tool. It has almost no correlation with returns over the next one to two years so just looking solely at valuation, i hit the will be a little misleading when were talking about returns over the next 6 and 12 months that being said, we think valuations are relatively fair i think youll see an improvement this Earnings Growth last year earnings in 2019 were flatish. This year as we get a turn in some of the global cyclical areas in the marketplace in terms of earnings, i think youll see earnings strength reemerge were looking for about 6 Earnings Growth this year. Kevin, as much as we talk about how bad ubers performance has been postipo, the stock is up better than 30 since its midnovember lows. Some people might be surprised by that. Also a number of other smaller kind of midcap stocks in tech are doing pretty well. In what a lot of people imagined would be a stock pickers market in 2020. Are those defying that narrative . No. Theyre actually i would im not speaking about uber in particular, but a lot of those companies are really more proxies for sentiment at this point. When you look at where the market has come over the last number of months its been a huge jump. Many managers looking to square up or beat benchmarks need to put on risk. Consequently, those higher beta, smaller cap, more risk on kind of sectors are the places we would expect skroinvestors go t first especially with this improving Global Health narrative were hoping to see takes place the next few years to your other guests point, i dont think were at that point were seeing improvement this growth in earnings, but in order to get there we need to see it pick up in business spending, which hasnt quite materialized yet. Were a little more sanguine about our outlook for return to positive Earnings Growth at this point, were a little bit stretched and it is going to be a little bit of a stock pickers market so long as were kind of stuck well v8levated valuations based on the analysis you laid out for the market more broadly, what sectors and names within it do you think offer the most opportunity right so we think there is some more upside and our price target for unit in 2020 so about midyear is for 3,400 on the s p a little more upside from where we are right now in terms of the sectors that we like most at this point, its really a focus on the u. S. Consumer which we just saw in the jobs report this morning still remains very healthy job growth is slowing down a little bit but still very healthy and wages are growing if you look at the broader picture. Consumer discretionary makes a lot of sense some of the ecommerce giants are a big part of that sector. We think that still is an area that is ripe for good returns. The other area we like is Communication Services thats a sector that has a lot of Internet Companies, media companies. We think Internet Companies in particular look cheap, putting up nice growth rates that sector has the Telecom Company which gives you some down side in case we see volatility Going Forward all right, gentlemen. Thanks for joining us today. Kevin and david. Got some new money patterns emerging across pacific sectors ahead of the election this fall. Robert frank is here to talk about how Corporate America is viewing this race. The big source of Campaign Funds have been small donors but employees have clear favorites an analysis of fec data compiled by open secrets shows President Trump is the favorite among those in the oil and gas industry, pharmaceuticals, Health Care Professionals and the Real Estate Industries lawyers favor joe biden. Elizabeth warren gets the most money from Internet Company employees. And Pete Buttigieg has the lead among big banks. Bernie sanders for education employees, cory booker dominates the investment world and hedge funds. The handdown favorite in entertainment and media was Kamala Harris until she ended her campaign on a company by company basis, Bernie Sanders scores at the top list of corporates including apple, starbucks, gm, amazon Pete Buttigieg leads among facebook employees as well as jpmorgan, b of a and pfizer. Kamala harris led at comcast an disney well get new numbers in february for the Fourth Quarter and see if it changed. Some of this has got to be a bluecollar, whitecollar story. Some people forget most apple employees work in retail so if you look at apple, starbucks, walmart, thats as much perhaps a class thing as test a tech Company Versus Retail Company thats right. Then you look at Something Like bank where is they also have a large i wouldnt say bluecollar but all the retail Bank Employees for those supporting Pete Buttigieg was a little surprising to me given hes sort of seen as an elitist candidate and one not favorable to banks there are some interesting surprises. Which is i it also got my attention that booker would be a favorite with hedge funds. Does he put policies out there that would stoke that . Since his days in newark hes always been raising a lot of money from wall street hes from this area and has had a lot of friends here for a long time the apple retail argument makes sense, but boeing . For sand sners. Exactly and walmart. You think about walmart, a rural population, you think very pro trump. I would have thought trump would have done better among walmart workforce, yet bernie is far and ahead the favorite there trump is in the mix. He does very well as the second or third favorite candidate for a lot of these companies which is why hes not number one but still overall gets a lot for each industry and does well, fundraising overall. The walmart thing to your point, talking about rural america, which we dont think of as socialist country, does well for bernie of course given what bloomberg is spending yes fundraising is more a proxy for interest than dollars. We think about grassroots being so pure. Its just people but what people are interested in within a company, it shows people are maybe thinking about these constituencies like bernie getting so much from teachers if and when they ever get elected, so there are always interests associated with money and politics, even if its, quote, grassroots socialist country is one thing, but Government Spending country, social Program Country . Exactly absolutely. Thats health care. Absolutely absolutely right, jon. This is the first time you deechb this, by the way . Yes and this data is coming from . The ftc and open secrets. It will be interesting to see how it changes and whether we see any money going to bloomberg now that hell be in the mix for the Fourth Quarter interesting prism not just for politics but the cultures of these companies. Think about, you know, apple and tim cook 95 of donations within apple have gone to Democratic Candidates think about houf w hes been abe to balance his Good Relationship with donald trump in a workforce where 95 of donations are going to Bernie Sanders. You noticed were getting breaking news regarding Speaker Pelosi and articles of impeachment. Well go to our reporter she will be transmitting articles of impeachment to the Senate Next Week she did not give a specific day, but she said that next week the house will vote on who the managers will be who will present the case from the house before the senate, and then she will send those articles of impeachment on she said she believed that senator Mitch Mitch Mcconnell will not be holding a fair trial, that he is engaged in tactics of delay and this he has disregarded the American Peoples interest for a fair trial and a dismissal of the facts. But now we finally have some sense of the next steps in this ongoing saga here in washington of when the senate could begin its trial, when pelosi will finally hand the articles over and end that stalemate that has locked washington for the past several weeks, guys. Session lows for dow, nasdaq, and s p, and its jobs friday, which means a special Santelli Exchange is just ahead. Yes, al well have vince reinhart, well discuss everything about the jobs rorept and the feds Balance Sheet, growing, growing, growing after the break. Some things are too important to do yourself. Get customized security with 24 7 monitoring from xfinity home. Awarded the best professionally installed system by cnet. Simple. Easy. Awesome. Call, click or visit a store today. Both the dow and the s p are now in the red, weve got stocks at session lows. Lets get to rick for the s Santelli Exchange. I would like to welcome mellon chief strategist, thank you for joining me todays jobs report was jobs light, lighter on the workweek, lighter on wages wasnt what i would call a spectacular report your thoughts. It was pretty tepid, but from the teds perspective, it fits their narrative perfectly. We have economic momentum in that 145,000 jobs created is more than the run rate that we keep the Unemployment Rate unchanged. We have pressures on resources because of 3 1 2 Unemployment Rate is below the natural rate of unemployment, and we dont have evident cost and price increases picking up, so that means that they can run monitory policy Monetary Policy the way they want to, which is keep the policy rate unchanged all this year. Yesterday, dallas fred president Robert Kaplan talked about a bit of nervousness hes have with fuelling excesses with the growing Balance Sheet. We see that balance and it was approaching 4. 2 trillion and the wall street journal had an article today that over a 12month plus period, 40 of Listing Companies are losing money. They highlighted ge and tesla. Wrap all of that up for me it doesnt sound to ne that that would be the type of foundation to see stocks at this level or remain at this level. Sure. So theres a couple of things going on one is, and i appreciate the shout out to the h 41 which is the Federal Reserve release where you can see it every thursday afternoon, that Monetary Policy shouldnt be measured just by the basis point terms of where the Feds Fund Rate is. You should blolook at the size the Balance Sheet, and the fed has made its Balance Sheet big, its brief experiment in shing g shrinking the Balance Sheet didnt work out how they wanted. The issue is big banks want to sit on reserves and that is probably distorting the front part of the yield curve, ie money markets that when the fed did run off reserves, we had the volatility in september, and they backed off really really fast i think the concern for president kaplan is expressing is whats the plan is it just keep shoveling reserve to keep the market quiet or to implement a new strategy now, when youre talking about valuations, and it really does feel like its a risk on environment when you look at equity values and risk spreads, you want to step back and basically what happened in the last part of last year is the bad things we worried about didnt really materialize. There was phase one of a deal with the u. S. And china, a passage of the u. S. Mca. The impeachment process didnt change anyones mind and so some of the bad risks to the outlook have kind of shurunk in some. Yeah, the world is a risky place, and were going to be talking about the president ial election 24 7 in a couple of months, but right now its a window for risk taking now, you know lets encapsulate this in a very simple form. We have many excesses growing, thats undeniable, whether stocks can stay here amidst that or not almost is a peripheral issue. Weigh that against the solutions versus just patching things over we have an issue its been after the credit crisis, how things like treasuries and munys and various collateral of high quality are treated, how theyre hoarded, reserves of course are paid interest and all of this has clogged up the plumbing. Your final thought. I think what you have done is characterized the Federal Reserve as a serial bubble blower in its effort to keep Macro Economic outcomes on an even keel, it has to create accesses in different markets. Thats the dirty little secret of Monetary Policy they hope they can keep that under control by their supervisory policies but they dont have quite have that right because what they have in fact done is created an elevatored demand for reserves. They can make their Balance Sheet big because theyve made big banks want to hold reserves. Exactly listen, thanks for your thoughts, vincent, always interesting. Happy new year to you. I havent seen you since 2019, and john fort, back to you. Rick santelli, thanks. Meanwhile, near session lows for stocks, lost the 29,000 level on the dow mike santoli back here whats going on . Minor fatigue i dont think it was much of a move to the upside i think one thing to note is all week long, really as we got into this year, there has been this kind of below the surface kind of calling of the market, in other words, a lot of stocks have been pulling back theres been a little bit of profit taking, the very largest stocks, continue to outperform the nasdaq is slightly green right now, have been somewhat ob skr securing that. I think obscuring that. I think the jobs number was expected and perhaps a reminder that whistleblowere in a modes environment. Hard to pin this on one thing. It does raise a question about whether or not phase one signing will be a sell event South China Morning Post with a fascinating piece, why there didnt end up being a trump xi signing, and maybe it reflects how both countries see the deal differently. Right in other words, if it sort of turns south, didnt want to have that to look back upon i thought that we just kind of put the phase one trade deal in the got it column. All it is is it ceases to be a positive catalyst, if not an outright negative one. Its down almost 2 , you had this news from key supplier from them, sbr, that theyre going to do layoffs youre seeing all the other boeing suppliers move pretty dramatically as well whether its tech or triumph, ge, i can go down the listment cant help but think thats adding to some of this red were starting to see. Its just the dow thats exactly the explanation for whats going on with the dow underperforming or at least slightly lower today nasdaq and s p, flattish, taking the rest at the end of a week. I think sentiment and valuation got to a point where that makes sense. Get rest for next week because jp morgan on tuesday, all the banks and of course the china event on wednesday, its going to be crazy as usual lets get to the judge in the half. Carl, thanks, im scott wapner, front and center, managing the momentum with stocks hitting a major milestone today, is your money increasingly at risk the longer the market continues to surge. Its 12 noon, this is the halftime report. The dow hitting 29,000 for the first time, the best ideas for playing this rocket fuelled rally. This stock is up more than 80 in the past year, and it just got a major bye call one of our traders owns it well debate in call of the day and 2020 set to be a record