Boise, potato ships . No, computer chips welcome to squawk alley. I am jon fortt with me at post nine, Morgan Brennan and david faber. Carl quintanilla hat morning off. Another busy morning in washington the house of representatives has another big vote on the trade front, expecting to pass usmca, the replacement for nafta, on the heels of approving two articles of impeachment against President Trump last night Kayla Tausche joins us with more reporter the vote will be a stark contrast to the Party Line Vote on impeachment. On the house floor on capitol hill, two hours of debate is beginning that will tee up a vote that white house officials expect to be a landslide bipartisan vote, thanks largely because of provisions folded in to win over House Democrats by Bob Lighthizer last hour on cnbc, the treasury secretary said it should be seen as a win for the economy, not a win for House Speaker nancy pelosi were going to get in excess of 50 basis points of additional growth in gdp as a result of this agreement people who say this is just nafta 2. 0 just dont understand the technicalities of the agreement. This is a whole new agreement that really brings the trading relationship into the modern era. Reporter among changes that effect business, higher wages for mexican factory workers that democrats and unions say will Keep Companies here from outsourcing more jobs to mexico. The result will be higher tariffs, largely for Auto Companies who are choosing to make more parts overseas and pay the tariffs at the border to come in rather than source parts within the stricter content guidelines under the new deal. The congressional budget office, nonpartisan arbiter an estimator of deals says that roughly 3 billion in new tariff revenue will be the result from the united states, largely because of the dynamic i just described. Senator pat toomey from pennsylvania says thats one of the consequences he doesnt like about the deal, one reason he is not voting for it. Every trade agreement weve done has been designed to expand trade. This one is designed to go in the opposite direction the good news is its impact will be very modest, right . The detrimental ones are in auto the net effect is a little lost growth, marginal mostly im concerned this not be a precedent or template for future trade agreements, then that would be a clear step away from free trade, toward protectionism. Reporter he believes it will cost growth and gdp will expand. Republicans will have their say early next year when the senate takes it up. The house vote today is expected in a few hours we know youll be watching for it, thank you for bringing us the latest. Treasury secretary Steven Mnuchin dismissing the house rebuke, saying impeachment wont hurt trumps economic agenda it has been a terrific end of the year for the president s economic programs. Were looking forward to usmca being passed, china phase one agreement, and approval and passage of the appropriations bill which is very important to our military and has lots of important policy wins for the president. Joining us, chief Investment Officer jim wall, and david will he have cowits we have seen the legislation push coming into the final weeks of the year, despite impeachment now. When you have the House Speaker come out and say she will delay sending impeachment charges to the senate, how much risk does that become to more law making going into 2020 . May be a risk to law making but not yet a risk to the market in fact, the impeachment process so far has been obviously political but not a market event. The market focused squarely on the fed in its corner, good slow growth, not no growth, economic trajectory, health of the u. S. Consumer in terms of being fully employed, reasonably good savings levels, good household debt, enabling them to spend more as the driver of our economy, one key take away investors will be able to take with them into what we expect to be a fairly politically charged 2020. David, when it comes to trade, whether it is usmca moving through congress right now, whether it is this phase one trade deal with china thats in the final text expected to be signed the next couple weeks. Some of the movement in markets, for example, u. S. Stocks measured by the s p era, about 7 since september 30th. Some of that move is reflective of progress on the trade front the other thing happening is theres more confidence the Global Manufacturing soft patch thats been the story all year is looked like it is bottoming, should improve in 2020 a couple things driving the markets the last couple months but i dont think all of the up side is priced in. If we get a final trade agreement signed with china and see recovery in the soft patch i was talking about, yeah, we could see u. S. Markets continue to grind higher, another 5, 6, 7 in the next several months. Jim, looking at what you like in 2020, you say blue chip dividend growers, mid and small cap value. Sounds like youre cautious, given the type of year we had this year. Why the caution . I think it is only prudent to be cautious after not just this years spectacular run in the s p and dow, also the bull run we have been on. That said, we think there are plenty of opportunities globally speaking in small to midcap value range, overseas, established foreign markets, maybe somewhat in emerging markets. We dont want to give up on battleship balance sheet, blue chip dividend growers, any more than we give up on health care in fact, likely to add to that position on politically motivated dip. We expect to see dips material az with regard to Health Care Getting into the Election Year of 2020. David, put the same question to you what do you like now, what would you avoid heading to 2020 . From a sector perspective, two sectors that look appealing to us are Consumer Discretionary and Communication Services so Consumer Discretionary we were mentioning the u. S. Consumer is healthy, we fully agree. That should support that sector, plus a beneficiary of commerce within Communication Services, i think theres opportunity to ride the secular growth in Internet Companies that are trading at fairly low valuations, and some Media Companies pivoting to some of the new higher growth areas. We are underweight at tech and energy, tech for high valuations, energy because we have adequate supplies of energy, especially oil and also point out, emerging markets is an area we upgraded if we see improvement in the Global Economic backdrop, emerging market should be a key beneficiary. David, parse that for us. When a lot of people think tech, theyre probably thinking names that you put in other categories you say youre underweight tech, what does it not include people think of, and what does it include . Sure. It is a good point within tech were not the sectors got reshuffled google, facebook, Internet Companies are in the Communication Services sector. Thats an area we like tech is really the apple and software companies, microsoft being the biggest, and Semiconductor Sector thats where we see pretty high valuations, certainly highest relative to the market in about 11 years that gives us a little caution theres no Earnings Growth in tech this year, despite the fact that that sector is up over 45 . Think valuations are a little elevated all right, gentlemen. Thanks for joining us. Jim and david, as markets move higher, the s p hitting a fresh record inter day high. When we come back, heres the worst of the inventory micron shares are up, after the Company Reported its results were going to speak exclusively with the ceo. Plus, breaking up with barry. Match group splitting from iac squawk alley is back after this [maniacal laughter] gold. Gold right, uh. Thank you, for that, bob. But i think its time we go with gbtc. Its bitcoin exposure through a traditional investment account. Nice rock. Its time to drop gold. Go digital. Go grayscale. And when you open a new brokerage account, your cash is automatically invested at a great rate. Thats why fidelity leads the industry in value while our competition continues to talk. Talk, talk frmts shares of micron are popping, up better than 3 on strong earnings. The chip maker trading at levels not seen since july, 2018. They said they reached a bottom of the period for chips with some concerns ahead. Joining us, sanjay mehrotra. Good morning good morning, jon good to be on your shows. Great to have you back. Theres a lot to look forward to in 2020, and i guess thats part of whats got people excited layout whats going to happen, not just with 5g phones which you argue are going to have more or are going to need more of your chips even at the low end, also with gaming consoles launching at the end of the year that is right jon, 5g phones, even the 300 phones that have been announced have 6 gig bite of content in them, on an average, 5g phones that have been announced in totality have average of, you know, 8 gig bite of ram and 200 gig bites of nan content the features it is offering, faster download speed, vr, ar, ai, fast capability is a driver for content for multiple years to come. Next year we expect 200,000,005g smart phones to be sold worldwide. And they would be driving Significant Growth in content. And new gaming consoles actually are displacing hard disk drives with solid state drives. So our industry that multiple growth drivers, and micron certainly is expanding its Product Portfolio and absolutely driving. Thats what were excited about for 2020. Thats good news. One of the potential head winds is customers in China Building inventory the end of the year. When will investors know how much drag that will be in the first half of 2020 i will tell you some china customers may have built as a result of trade tensions, may be carrying levels of inventory, may have made strategic decision to carry higher levels of inventory perhaps. Of course, we do not have total visibility into their inventory strategy practices what i will tell you is we observe buying patterns of those customers and inventory there would be much less than inventory we had seen in 2018 when across the globe in multiple markets customer had building inventory due to increasing prices. This inventory in china is meaningfully less than we experienced in the past. Another important thing, jon, when you look at the supply simulation happening in the industry, supply growth is slowing down in the industry and last year, 2018, as well as 2019 d lamb supply growth is 20 . In 2020, we talk about supply growth of mid teens. Thats a difference in supply growth, much more meaningful to the supply demand balance than the inventory level thats potentially there in the china markets. Bottom line is as we enter 2020, we have tail winds to industry demand, supply balance lasting throughout calendar 2020 calendar q1. In 2019, demand, supply balance was head wind. This industry, micron with strong execution, is being in a different place in 2020 compared to 2019. Sanjay, the fact that you called a bottom for the Current Quarter part of the reason the stock is up 3 on the heels of the earnings as well in terms of the rate of recovery, what are your expectations we expect that our fiscal q3 will be a gradual recovery we are bringing down inventory faster, competitors may still have some level of inventory as we look at second half of calendar 2020, demand trends are stronger we have seen decent signs of pricing improvement. Fiscal q1, price decline in dlam, compared to prior quarter price decline. In ad the price went up. Overall look at improving fundamentals throughout 2020 once we get pass the seasonal calendar q1 which is baked into q2 guidance. Our Second Quarter ends the end of february. Q3, you see recovery in march. That will be as you go through calendar 2020. Second half of calendar 2020 will be stronger as is typically the case every year versus the first half i was skeptical when you said that last year, given what you were facing, but it did turn out that way lets talk about huawei. Big, important consumer. You had some issues with them beyond your control. You point out specifically on the call that theres going to be some issues with the revenues you get from huawei. You dont expect it to really roll in the first half of the year what potentially happens in the second half then how should investors plan for huawei related revenue the second half and how it might alter the picture for you . As we have shared before that we have been continuing to ship product to huawei that has not been subject to export Administration Regulations and now we are thankful to the u. S. Administration reviewing applications for licenses that we applied and approving them, four shipments to huawei all the applications we applied for have been approved what it means is that for new products that we are designing and new products and new platforms that huawei is designing, now we can begin the qualification activities for new products to be designed into their new platforms. Those typically take a few months over the course of last few months, since huawei was placed on entity listing, we couldnt engage in new product qualification activities with huawei as we qualify new products that will take a couple of quarters, beyond that we would seeing growing opportunity for us to deliver mor product to huawei. It used to be 12 to 13 of business, it is now less than that micron business is globally very well diversified end markets well diversified from smart phones to data centers, all of the trends of 5g and ai and autonomous are driving Global Demand for our business thats our focus diversify the business and Consumer Base and bring more new products, just like we announced several new products, focus on product leadership. It will be interesting to see how much that huawei percentage bounces back great to have you. Thanks for being with us thank you, jon. When we come back, investing responsibly. We speak to the head of goldmans Sustainable Finance group. As we head to a quick break, checking shares of tesla, hitting a fresh alltime high again this morning remohs up over 60 in the last the ntsquawk alley is back afr this woman my reputation was trashed online. I felt completely helpless. My entire career and business were in jeopardy. I called reputation defender. Vo take control of your online reputation. Get your free reputation report card at reputationdefender. Com. Find out your online reputation today and let the experts help you repair it. Woman they were able to restore my good name. Vo visit reputationdefender. Com or call 18778668555. Iac announcing plans to separate dating Service Operator match group. They hold a controlling stake in the parent of that it is expected to be tax free as a spin off they anticipate to separate in 2020 if youre an iac shareholder, you get new shares of match. That company will be paying 3 a share dividend to iac, but perhaps most importantly match will be a fully independent company. One share, one vote as well, which is important from governance perspective, also allow to be included in indexes that will conceivably add buying power, and potentially could be a takeover candidate once it is fully separated. Most eligible bachelor or bachelorette of 2020 perhaps it is not small. It has more than 20 billion market cap but that data and engagement with young users, i dont know where else you find that seventh spinoff for iac, provides them with capital to pursue new opportunities, something to watch there as well. 2. 9 billion in cash proforma. Match will be levered, 4. 2 times, expected in ebitda. Diller who oversees this will own 6 personally of match, but iac will no longer have ownership stake. There he is. Havent interviewed him in a long time. Ask him for matchs hand. Wearing the same tie. It is end of the year last tieme i interviewed him long time ago. Miss you, barry. Uber and lyft are preparing for californias 85 bill that could potentially effect the economy landscape. Deirdre bose has more. Reporter on january 1st, california is the first real case study how to regulate tech. Two new laws address the increasing amount of influence Tech Companies wield over parts of the labor force and our privacy. First, theres Assembly Bill five known as ab 5 requires employers in Industries Like ridesharing and food delivery to reclassify some independent contractors as employees. This could change the Employment Status of more than a million workers here in california right now, less than two weeks from implementation, theres far more confusion than clarity. The law is meant to empower big economy workers, give them protections they havent had access to. At the same time, if it hindered flexibility, there are carve out for lawyers, doctors, engineers, but not so for Truck Drivers and freelance journalists uber, lyft, doordash failing to secure are willing to spend for a ballot initiative. When the bill goes into effect in january, uber and lyft say drivers will remain independent contractors, that could lead to a slew of lawsuits meanwhile, uber and lyft have added the bill as a risk factor in sec filings analysts predict could cost hundreds of millions and the Consumer Privacy act that gives californians data protections, could Cost Companies up to 55 billion in initial compliance costs, according to one report. Guys, as lawmakers figure it all