Transcripts For CNBC Squawk On The Street 20240713

Season jpmorgan crushes estimates, citi and wells are mixed ahead of the open. Plus sustainability is becoming the new standard, blackrock ceo saying the Climate Crisis is about to trigger fundamental reshaping of finance. And the tesla rally rolls on shares now up more than 100 in the past three months alone. Well start with bank earning, jpm, chase, citi, each posting better than expected results. Wells fargo shares moving lower on its miss. New ceo charlie sharp our cost structure is too high and i believe there are many areas where we will be able to increase our rate of growth. Efficiency really the story on wells, jim well, i got to tell you, im a total believer in Charlie Scharf and what he did at visa hes the most technologically inclined ceo in the bank group it has the most opportunity after this washout it is a washout. I dont think charlie will waste any more time. He has to address these things and he will. In the meantime, jamie diamond, what can i say about jpmorgan . Its incredible trading numbers, and citi, overlooked really good number youve got some incredible double digit gains, and credit card so i think were seeing two out of three aint bad no, turn on tangible common equity at citi, youre talking 19 , jim, at jpmorgan. From a story perspective, wells fargo is much more interesting because of mr. Scharf, because of what hes trying to do and undertake there, in terms of creating efficiencies. Just technology alone at wells fargo must be a huge undertaking to integrate the different systems and everything theyve got going on there it seems wells fell behind on the issue. You cant blame them they had serious scrutiny on some important issues involving crossselling which had been their stock in trade under mr. Stump. They had to undo all that and discipline people. At the same time on the fly theyre supposed to be adding the Technology Bank of america is going to add, or citi or jpmorgan has wells is a disappointing situation, cant walk and chew gum at the same time Charlie Scharf is a spheror operator wells may offer opportunity based on scharf. Nobody cuts better than charlie. He seems like a nice guy yes, i know and i know he is privately perhaps. When he says that he wyes, privately he says cost structure is too high he says its earl will toy put time frames around the goals in terms of increasing rate of growth and obviously cutting costs. What do you make of that well, i guess the stock went up with the rest of the group, and weve got an etfization of these stocks that is unwarranted. The no time frame tells me the stock could dip down to 48, 47 about ever it starts going back up again, that number was horrible. I dont know i mean that is an outlier number i have to wonder whether they havent lost share i have to wonder whether they literally are making less money per account than everybody else, when they used to make more. So was the star over, was it inflated i think if you go back and red that 110page report by sherman sterling, which is underlooked, youd see that wells did a lot of things to make the numbers. Now youre seeing without doing a lot of things and the numbers arent any good. As for jpm, its really a fixed story, up 86 year on year, almost 1 billion ahead of the street loans up three pretty interesting quote here out of diamond, guys, Global Growth stabilized, albeit at a lower level and resolution of some trade issues helped support client and market activity towards the end of the year. Its being framed, jim, as the best result annual result for any American Bank in history in a year, where we all know the curve inverted and the fed cut three times. We have tariffs, we thought the interest margin which was so important had to go down it turns out the bank has growth, and whats really interesting, i think david, you can speak to this, clients are doing things again remember when clients were sitting on their hands thats not happening i wonder what the readthrough for Goldman Sachs is going to be it will be interesting to see goldman, such a different story at goldman, though just as an aside here, i always encourage people think being investing in these companies, read the 10k dont just satisfy yourself with the earnings release, because a lot of these companies, and this gets me to goldman, jim, are hard to follow and understand fully. You read the 10k, goldman for example theres some things youre not going to fully understand theyre going to do a better job of making it more transparent, thats going to be the coup he key part of their presentation on the 29th with the big investor day im not sure what the readthroughs are to Goldman Sachs. In certain areas could you say okay, its going to be strong no doubt, but at the same time, youve got that whole shift, change in the institution in terms of at least some of its focus towards the consumer youre right. I think that steve scherr the cfo would be the first to admit goldmans opaque and that has to change by the way, i know that its infancy with apple and credit card, but i think the numbers at jpmorgan and citi speak to big growth in credit cards david, when we get that deal on wednesday, it talks about how the Financial Companies can do more business. What would happen if goldman were able to do credit card in china, with apple . Right now theyre limited to United States. How many people have an apple iphone in china . This could be a huge win for them, and we know by the way, that the banks are in there talking to mnuchin pretty consistently yes another reason to buy there might be a real interest in that carl, i dont know if youve gone on the website, they offer 1. 7 wow how generous out of the good jpmorgan im getting 0. 004. Im not sure goldman say huge story. What we might learn about china commitments, jim, regarding phase one in the coming days some numbers starting to get leaked in terms of the allocation of the 200 billion in u. S. Purchases you mentioned thintech and credit cards visa is buying plaid for 5. 3 billion which helps link Bank Accounts to various mobile apps, not necessarily a Story Limited to the names were covering today. No. Those are much more higher multiple stocks and they get the higher multiple because theyre doing things that are consistent i continue to believe that the most consistent banks higher multiple hence jpmorgan going up citi is still ten times earnings versus the giants of visa and mastercard remember, those are paper to plastic, which continues to be a huge trend in the world than were seeing paypal go up a lot, plastic to digital and thats another trend. These are all unbelievable trends and theyre all playing out to higher priced earnings multiples for this group. Larry fink, high priced multiples is driving on the plant deal, carl, it is interesting, the 5. 3 billion price tag far above the most recent round where they were valuing the company. I do understand there was competition there, you might expect from lets probably guess mastercard, but you ended up with a very big price for what was a unicorn in the payments area and visas first big foray in terms of an acquisition of that type. Nice looking chart there. Well cover the banks all day today, huge story. Meantime the head of the worlds biggest Asset Management firm is sounding the alarm, black rocks larry fink warning the Financial Risks of Climate Change are bigger than any crisis hes experienced in his career on wall street. Hes out with a letter to fellow ceos saying the climate risk is an investment risk listen to what he told our Andrew Ross Sorkin where the fed fits into the picture. We dont have a Federal Reserve to stabilize the world like in the five or six financial crises that occurred during my 40 years in finance. This is bigger, it requires more planning it requires more Public Private connections together to solve these problems, and i do believe many of these problems could be solved but the actions have to begin now. Manages almost 7 trillion and this is a big move forward you could imagine that it would be, carl, that it is weve talked a lot about last year, in some ways, it being a wat watershed year esg rose up in this country. Europes been ahead of us in this as being a significant approach, and this certainly ratifies that. At the same time, i have to tell you, there are some people who were somewhat skeptical that ive talked to in the markets, significant Asset Managers i might add, this morning, jim, who just say this is right now a lot of words, its marketing hype i want to see real action here one could imagine real action is to come when you hear those words from mr. Fink, and blackrock is a seminal player in the markets in so many different ways when they talk about deepening the integration of sustainability across their investment and Risk Management platform by fully or formally integrating it into the risk and quantitative analysis group, you imagine that becomes something that a lot of companies are going to be aware of, and jim, its interesting takeida pharmaceutical company, a big one, its first four or five slides in its presentation were all about its Carbon Footprint there it is. Thats what companies now are focused on and its just interesting that they would do that thats actually the very first part i wanted to show. None of the right ones there but my point is, there it is, esg is important not just for the investors but for the companies to show theyre hitting the right notes. This is huge. Kudos to Andrew Ross Sorkin. A must read. Larry also said this could lead to issues where they will directly challenge management. Does that mean proxy fights on companies that arent doing the job . Yes i mean, listen, there is already, you know, value act took the lead some time ago, jeff, there are some things theyre doing at a number of companies there, but yeah, it could mean that you see now, in the interview with andrew, he said listen, you dont know when were voting against directors or having conversations actually with companies to change their ways and then we vote in favor of their directors you dont see that happening, but it does seem to at least lay the groundwork for them being more active on this. Activist investors have already taken a lead to a certain extent of some companies. The big one, jim, remains when are we going to see a move made on one of the Big Oil Companies . And somebody pushing them conceivably their Shareholder Base continues to contract as a result of the the esg metrics coming to play for so many big Asset Managers look, when oil was at 26 a barrel, these stocks were much higher, substantially higher i think younger managers just avoid this group like the plague i follow and focus on the robin hood people, remember theyve got 900 million, just a budget to be able to grow they have mostly millenials, 10 million accounts guess what millenials care about first . What do they ask about first, esg. So the investors of the future care passionately about this the company i follow rewarding its own managers for doing this is clorox. A lot of the big faang companies are deeply focused but trying to scramble figure out what is the best thing the best thing a lot of them are doing is trying to get the electric grid to be far more on solar and that is working. The electric grid is the problem because so much of it is coal. Theyve got to get out of coal last years second biggest year of getting out of coal i think these companies are forcing the coal industry to really go into oblivion and larry fink has said it were not going to buy coal stocks there arent that many left. But the market value of coal stocks i dont even know it fits into teslas oneday move yesterday probably, jim were not talking about david, you got start somewhere. You got to start somewhere right, but when you get to the big guys and we had this conversation with mike wirth last week from chevron which explains his commitment and almost obsession with the dividend you have to compete with peoples values. Right and a low rate environment, maybe at some point the dividend will elicit a response from investors. Yes i dont know, my chat, i like to criticize managers, its stupid i was stupid, i didnt realize bp would not be attractive with the 6 yield because it is tarnished with picando, ail spoiler of the environment look at the stock and dividend and tell employee it isnt because they are the hated, they tried to do things, they think they did the most to destroy the environment. We dont know where the stock would be without it. Right the unknowable, how much its supporting overall valuation guys, a lot to get to this morning. Well get kramers mad dash and count down to the opening bell you saw the chart at tesla as we get another price target increase today as jeffries goes to a six handle. Well talk about that and more from jim at the Jpmorgan Health conference when squawk on the street comes back make fitness routine with pure protein. High protein. Low sugar. Tastes great high protein. Low sugar. So good high protein. Low sugar. Mmmm, birthday cake pure protein. 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Yeah, they do jim, arent you worried at all about almost doubling of the mulled tipple . He multiple here we sat for years and years talking about how cheap apple was. We cant do that anymore i think thats a great point, david. Theres a term i use you and i often talk about the kiss of death, talking about a supercycle 5g supercycle. Oh, boy remember the supercycle in 2011. Yeah, didnt work out too well have to be careful. Yes at one point, jim, do you tell people its a great run, but the multiple is too high given the expectations this year their earnings are not going up that much yet no. What you have to do is wait. If youre not in the stock, lets wait look, i say own t dont trade it the people who trade it endlessly have hurt people if you dont own it, lets see the number for all we know, an inline number would really take the stock down dramatically. I thinki theyll do better than expected but these analysts are just constantly saying look, i got to raise my price target the stock is going up. I call that circular reasoning its not why i like to buy a stock. I dont like stocks that go up purely because the pricetoearnings multiple goes higher i like to see earnings you have to wait last year at this time the company preannounced a downside. Can we hold off to see whether the earnings justify the move . Yes listen, we all want to make not we all people want to make apal geez, ji analogies to 20 years ago. It is reminiscent with the price targets going up as opposed to anybody saying whoa. Look, you need to have people think this being a consumer stock because its almost getting a Proctor Gamble multiple on 2021 obviously Procter Gamble multiple can go higher if it gets microsoft multiple. Remember microsoft is growing double digits. P g will get aggressive on sustainability all right, a reminder, you can watch us live on the go, on the cnbc app, a lot more squawk on the street straight aadhe we have the opening bell for you. S. All three indices are up three to four days dow and s p have not had backtoback losses since december 9th and 10th. Opening bell in just six minutes. You should be mad your neighbor always wants to hang out. And you should be mad your smart fridge is unnecessarily complicated. Make ice. Making ice. But youre not mad because you have e trade which isnt complicated. Their tools make trading quicker and simpler so you can take on the markets with confidence. Dont get mad get e trade and start Trading Commission free today. S opening bell is brought to you by nuveen, income, alternatives and responsible investing. Youre watching cnbcs squawk on the street, live from the Financial Capital of the world, the opening bell in just over three minutes, obviously an important day for the markets, as earnings season really kicks off weve been through the major banks. Delta is the other big one, rising in the premarket, after reporting a beat on the top of the bottom line, ed bastion talked to phil lebeau. Success in decommoditizing its business and weighed in on boeings new ceosteve calhoun. I have tremendous respect for dave knowness the company well and have an impact i think youll see his name continue to elevate at boeing in terms of making the type of changes that are necessary jim, stocks on pace or looks to open for its best day since april. As the discussion turns to whether or not the airline is benefiting from all of its own efforts and troubles its rivals are getting from the max right once max comes on, there will be a big xalgsity increase. Right now there isnt. This delta number is extraordinary. We remember how much money the airlines used to lose. Their multiples are way too low versus what were seeing from delta. If the max comes on, maybe this is the peak. I dont know the American Consumer is in the travel boom, thats the way i read it, a travel boom those on planes and its always extremely full flight, guess what extremely full because the consumer is flying, the consumer is spending. We see that from jpmorgan and the credit card American Airline has with citi. Im blown away, this is a much better than expected number. Yes, then you got this story in the telegraph out of the uk, jim, that bowing is trying to keep orders going for the max and that theyre offering discounts of 50 plus discounts in the industry, not uncommon, but that is a startling number boeing has other planes it would be a sign of good faith by the chinese to buy some of the other planes i dont know, when is boeing going to get ahead of the news flow we read critical comments about lion air and people from boeing. If i were boeing and calhoun, i would say look, heres everything that anyone has said, and when we called up some sort of what i regard as being a definitive, bring in a lawyer and from some firm that has standing and say heres every document we have that ever mentions the max everything from every employee, because when you see them making fun of lion air, as idiots, it says what the hell i mean, what were they, how bad is it . [ cheers and applause whats that culture saying meanwhile, were going to continue to look for the ancillary effects on employment, aviation will lay off 70 temp workers. Lets get the opening bell here on the s p 500 [ bell ringing ] and the big board Financial Service company equitable. Well talk with the ceo in half an hour. At the nasdaq, a leisure Gaming Technology company so one of the days where we know what well watch at the open and its the banks yes, the banks certainly we talked about, not to mention, though, i got to watch tesla, we talked a lot about ooh, they added a cheer. [ chants of eqh its a ticker cheer talking about tickers you want to cheer, tesla again, up another 3. 5 , this may be a fall through to yesterday, the stock up 30 so far this year. Jim, at what point are the shorts out of this thing, stop covering and did we start to see at least some semblance of a leveling off i dont know. I mean id like to see what the numbers are for the accounts that are short 18 of the flow short. This is a situation, where people are rewriting this thing furiously. Its going to be profitable and because of china, and nvidia and electronic vehicles. I think about what larry fink was saying tesla fits the profile perfectly, doesnt it . It does it comes up of course right at the top of a lot of your screens for esg at least on the sustainable front, given theyre making automobiles that dont have a significant carbon footpri footprint. Im not sure what they do with the batteries and Everything Else on esg we are still degree with a nascent way to measure Real Progress so many Different Things you can look at when it comes to the environment, sustainability, not to mention other areas, its not just about the e its about the governance also. But jim, it does become difficult and until we get that sort of set of standards you can put next to the accounting standards and believe in and compare across industries and within peer groups, i still think it makes it difficult for Investment Managers to make good decisions. Look, its touchyfeely and it cant be touchy feely it has to be rigorous, benchmarked. I think larry fink wants to go that way we want to like Carbon Neutral stocks and love carbon negative stocks footprint we dont know yet. Companies that reward executives like clorox are going to be an interesting way to ben mark. Who is lowering the Carbon Footprint as an executive and does that person get a bigger bonus . That would be an interesting way to measure how much are they rewarding executives who are focused on esg its got to be within the ranks. Right its not just about, carl, the Investor Base wanting this but also the companies in terms of attracting any lmillenials and employees, seem to dare more than perhaps our generation did. Thats what you hear its very mushy they want to work for a company that is not just about getting there, creating a career for themselves and making as much money as possible that is at least what you hear from ceo rz when ths when they t their workforce and it changes the way the leaders of the Company Think about it were looking for metrics to try to measure it and manage it. As for tesla, guys, jefferys goes from 400 to 600 today on the heels of yesterdays move at oppenheimer going to 612, their street high. Shorts, jim, on tesla, now down 2. 8 billion according to s3 . Yes short interests still about 20 and then axios has a great piece if the valuation gets to 100 billion which its not that far away at this point no. The employment agreement with elon musk will give him 1 of shares which is essentially back at the envelope of billiondollar payout if they could get it i remember when he agreed to that because he took very little actual salary. Hes getting really close. Its a dis98 billion market cap for text la. That will result in a nice payday nice payday wow talk about owning the shorts, jim. Well, why not look, youre in an industry where everyone says theres no growth if you keep coming in at 18 million vehicles here, china is declining and this guy is putting up growth numbers. Its a growth stock. Why shouldnt we if they can earn ten bucks next year, why should we pay 24, 25 for it. It is rerated. People understand that they have the cars that people want, who knows whats going to happen with the pickup. They have a lot of deposits. Whats happened is the shorts control the narrative here and now no shorts they want to raise their heads. Its also autonomous. Weve been talking about it for years i feel it is the robotic taxi fleet of the future and perhaps some investors believe will be teslas ability to have significant market share in whatever we know is coming given all the miles their cars have driven. The shorts will tell you theyre not, jim, but they got a lot of mileage thats the key they have a cult following. When you start selling say 250,000 cars in china next year that is not a cult thats powerhouse numbers. I think what happened not just the idea theyll be profitable take it off the table. They can raise 2 billion during the next commercial break the banks involved in doing those kinds of functions did well, jpmorgan shares up over 1 given the outperformance in the quarter. Bank of america yet to report. Its up. Citi had a good quarter. Wells fargo is the feature this morning, carl, down over 4 . Charlie scharf speaking realit to a marketplace who was hoping for better saying were going to get it there but not giving time line on when in terms of efficiencies and return to growth jim are you underwhelmed by loan growth which we knew would be a die nammis comiynamic comi prints credit card is up big i think that you have loan growth with little credit impairment thats positive. The economy is not insanely strong but we have virtually no inflation, and i think that jpmorgan is a great readthrough to the economy, which is look, its growing good. I do feel if youre President Trump, you could say it should grow faster. It is difficult to try to figure out how to make things grow faster how do you get more lending when there isnt enough demand for something that youre borrowing for . And i think thats the problem i dont think its regulation. I just think people have to pay a lot for labor these days theres very little reason to expand, if youre saying expand in retail, youre up against an amazon or walmart, you want to expand in manufacturing, we dont know manufacturing is expensive in the country. The big expansion was coming from boeing. Thats not happening i dont know i think the consumer is so solid, that they dont need loans. The consumer can do it with cash we had big tariffs where is the inflation where is the inflation i just think these are good numbers. Im surprised that citi is not up more. That was a great quarter cpi, of course, in line essentially two, three year on year, headline and core. Well hear from williams and Esther George later as well, well get commentary on the inflation front. George . The banks Earnings Calls, wilfred frost is watching that hey, carl, listening to the jpmorgan call. Three big takeaways from earnings so far. One, december much stronger than expected in fixed income commodities and currencies trading and Debt Capital Markets. Two pressures from lower rates continue to have less impact than feared and three, wells fargo, ouch, again in terms of debt issuance, jpmorgans cfo said clients accelerated their funding to take advantage of attractive pricing conditions to strengthen their Balance Sheets. Here is chairman and ceo jamie dimon. Actually trading eased off a little bit i dont think it will completely go away. You have potential ongoing trade with china and europe and stuff like that. I think because that sentiment got better, trading got better, how long that continues, we dont know net interest margins for all three banks continue to hold up better than feared and loan growth solid, the Interest Income numbers overall did not disappoint the same cannot be said for wells fargo overall. If theres a Silver Lining or perhaps a bronze lining its that the miss on, came on the expense side, not the revenue side Charlie Scharfs first Earnings Call kicks off at 10 00 a. M. Citis Earnings Call kicks off at 11 30, a. M. Guys well talk to you in the fno too distant future jim, we should touch on health care. A ton of news coming out of the conference mckesson is the best s per right now . Lisa gill mentioned, one of jpmorgans health care analysts, saying mckesson could surprise the upside thats what it looks like. Im surprised drug stocks arent moving more. We have a heavy rotation into companies that do, that are going to benefit from the trade deal and the Drug Companies are not that kind of company i do think were hearing tremendous stories of innovation out here, thats not driving anything either. Im not saying these companies arent doing anything important. Im saying theyre doing things important but paling in comparison to the kind of surprises were getting say from the jpmorgan, from citi, which really are amazing, by the way, because it justifies the whole move now im speaking i met with cvs yesterday. Larry merleau selling at nine times earnings there is a compression in the group and i think some of the compression comes from the fact that, well, people are worried about the debate tonight theyre worried about what the democrats are going to say i dont blame them well hear more about single payer again. Sanders is in the lead. At least in the des moines register. The last debate before the caucuses will be one to watch. Jim, the other element here the analysts are trying to keep up netflix reports a week from today. Deutsche takes alphabet 1735, this is happening every day we come in. This is the kind of move i dont like i know i dont want to be going against this but unless you get remarkable earnings the way you get from jpmorgan and citi and those companies are lower multiple, these stocks are going up because theyre going up. I know that sounds ridiculous, but when you come in, and youre a google analyst, alphabet analyst and using a 1300 price target and the stock is at 1437 you run the risk of looking irrelevant what do you do you come in and you say 1500 i think you base that on the fact the stock ran through your price target typically youre supposed to i recommend it at 1700 1400 people are afraid. The analysts are afraid. They say the valuation is difficult here, at 33 times earnings, but my Charitable Trust is alphabet. I think i may take a little off the table because im not seeing a lot of discipline. Where is the discipline . Its something said a lot about the sell sign. Well watch it dow is up 5 points were hanging in at 3281 bob pisani emerging markets, china a little weaker. Semiconductors flattish, industrials a little flat. Banks which have had a tough time so far this year down slightly today emergingmarkets in china had been the leader the last month, theyre down i think were running out of steam. I want to show you china because the trade deal sign something imminent we had good numbers on china december trade data, that helped look at this runup, the most important etm. Mchi is the broadest china etf you could run. Expectations ofthe trade deal signing and hopes for better economic china, thats happening, numbers we got out of china, a nice move there elsewhere in terms of the banks, wilf gave you a run down of whats going on. Morguen is tough because were not moving up at all on treasury yields citigroup say new high of 82 for citi and wells fargo a disappointment the only thing i would add to what wilf said, i tend to look at fees. Fees have been good for a lot of these banks, revenues up 21 fixed income volatile. Net Interest Income, hard to make money on your interest bearing accounts tough to make money on the interestbearing accounts. I want to point out the role of buybacks. Citigroup and jpmorgan a small group of companies that are aggressive in their buybacks. Jpmorgan bought back about 2 , last quarter citigroup 3. 2 . The last five years, citigroup reduced their shares outstanding by 28 , jpmorgan by 16 and they are continuing to do that and did so in the last quarter and continuing to do that. My point is even if you have 15 Earnings Growth in citigroup, 3. 2 of that is due to buybacks youre talking about 20 of an impact because of buybacks. Its significant and people ought to be aware of that since buybacks are a big issue. You talk about larry fink and blackrock talking about esc. They are going to essentially muscle dramatically muscle up the esg assets under management, double their offerings, talking about sustainable flagship index products what does that mean . Theyll have alternative to the s p 500 essentially an esg s p 500 thats out there, going to talk about screening out fossil fuels, have strategies, new strategies focused on Global Energy transition, that means clean energy essentially, push and muscle this forward. Now, you might say how important is esg at this point it wasnt until about a year and a half ago, to be honest with you, esg with a little bit of a joke we have 4 trillion etf business only 15 billion was in etfs. Look only 3 of all of the assets are in esg. 3 you got to be kidding me it was less than 1 a year and a half ago so its growing fast and my estimate, guys, this number 15 billion assets under management in esg will double in the next year. Remember, david, you mentioned this before. The sec has had questions about these esg people they have sent the note out saying we want to know more about whats in these esgs and how you define them because its a little fuzzy to us and indeed theyre right. A new high for blackrock, t. Rowe price their competitor also on the upside. Others with higher fee costs waddell and read have had a tougher time Rick Santelli at the cme in chicago, good morning, rick. Good morning, carl. Im not sure if its a slow fallout from what was a tame cpi, Consumer Price index, that we saw at 8 30 eastern this morning, but look at a one and a half week chart of tens, visiting the low yields as krot curve. Tens are down three basis points if you look at a week and a half of bunds, theyre down one basis point. Basically hovering at the highest yields in close to 7 1 2 months if we look at a chart from midmay, you could see what im talking about with regard to how aggressive, it is getting less and less negative and the difference the spread between u. S. Tens and european tens is approaching 200, havent been at 200 since february of 18, so well call it almost two years theres another market thats starting to go parabolic, that of course is the yuan, the chinese currency against the greenback on this chart that starts in july, we are at five and a half month lows, thats the dollar verse the chinese sur currency it isnt a necessary surprise but leak phase one the better it looks. Carl, david, jim, back to you. Thank you very much, Rick Santelli so some moderate movement in the overall indices today despite sort of the attention thats being paid to the banks on the first day of earnings season, coming off record closes for the s p and the nasdaq, all major indices are up three out of four sessions china exports overnight up what happens if chinas economy ends up rolling over can they adhere to commitments to buy 200 billion worth of u. S. Goods its been pointed out the commitments at least and well see whether they are truly outlined specifically, carl, in terms of the numbers but the commitments that have been discussed are far above what have been the previous highs for chinas purchases. The question is what they will need to do in order to reach the goals and what will happen if they dont some of the breakdown here, manufactured goods 80 billion. Not giving granularity on categories or anything like that we are getting news from the house about the timing sending the articles of impeachment to the Senate Reporter House Democrats are holding their weekly caucus meeting right now and a source tells me that pelosi is suggesting to her members that the house vote tomorrow on that resolution to send the articles of impeachment over to the senate and also named the managers in the house who will make the case for impeachment to the upper chamber. That would end a weeks long stalemate between House Democrats and Senate Republicans over whether this trial should include witnesses. For now, the answer is no, shou include witnesses. For now the answer is no there have been moderate gop senators open to hearing from witnesses later in the process, once the senate does receive those articles from the house. Guys, the expectation is that the trial will begin in earnest after the mlk holiday. Any effort to dismiss outright appears to be essentially dead theatre President Trump has suggested over twitter over the weekend that he might want the senate to dismiss the case entirely but there is not support for that in the Republican Caucus over in the senate heard from one of the members of the republican leadership, top senator, gop senator, who said there just arent the votes to do that. So it looks like there will be a full trial the big question mark is really how long this trial goes and whether some of those moderate senators, like Susan Collins of maine, will call to hear witnesses later on in the process. That could extend this trial for several weeks. I will be watching the romneys, the collinses, for the next several days. A note, be sure to check out our podcast, squawk on the street. Whenever you listen to the podcast, the dow down five points on the first day of earnings season. S p 3282 imagine traveling hasslefree with your golf clubs. Now you can, with shipsticks. Com no more lugging your clubs through the airport or risk having your clubs lost or damaged by the airlines. Sending your own clubs ahead with shipsticks. Com makes it fast easy to get to your golf destination. With just a few clicks or a phone call, well pick up and deliver your clubs ontime, guaranteed, for as low as 39. 99. Shipsticks. Com saves you time and money. Make it simple. Make it ship sticks. Keep youre eye on smile direct up 12 as their liners will be available alt dentist offices and orthodontist offices. One of several names in 2019 had a roughly second half and looking to recover some of that ground in early 2020 beyond me again up well watch that lets get to cramer and stock trading. A lot of people are asking for something, a way to play the signing tomorrow bank of america has Union Pacific as a way to do it. I totally agree. The rails could benefit from these different what were hearing about different buys off 200 billion Union Pacific, play it as it lays thats the one to buy. Yeah. Were going to start to get some information from the transports, jim, which would be nice to have that ratify all the good news weve gotten from other parts of the economy. Wouldnt it be . Look, whatever is fluff will send the market down whatever is hard dollars could drive the market up. We have kind of a sloppy market today. I think people are tired of buying the same old stocks every day or nothing new i do want to be careful. I do want to caution people that its okay to take a breather on fang fang does not need to go up every single day. Jim, whats on mad tonight. More from jpmorgan conference medtronic talking about robotics thats important dexcom trying to deal with a worldwide epidemic, diabetes. All right, jim. Great having you out there all week long. Jim cramer, youll see him on mad money tonight if not before when we come back, well have all of that from jpm Health Care Including meeting with cignas david cordani. A bit of a breather today. Dow is down 12 i can. The two words whispered at the start of every race. Every new job. And attempt to parallel park. electrical current buzzing each new draft of every novel. typing clicks the finishing touch on every masterpiece. newborn cries it is humanitys official twoword war cry. Words that move us all forward. The same two words that Capital Group believes have the power to improve lives. And that, for over 85 years, have inspired us to help people achieve their financial goals. Talk to your advisor or consultant for investment risks and information. Talk to your advisor or consultant but in my mind im still 25. Thats why i take osteo biflex, to keep me moving the way i was made to. It nourishes and strengthens my joints for the long term. Osteo biflex now in triple strength plus magnesium. Good Tuesday Morning welcome back to squawk on the street. Im Carl Quintanilla dow is down 13 points as earning season truly kicks off with the banks and delta. Well get to all of it. Roadmap with Big Bank Earnings all reporting before the bell. Well dig through those numbers for you. A day one from signing the phase one deal between china and United States. Well talk to asian chair steven roach. What black rock said would quote fundamental reshaping of finance. Lets start with the banks. Jpm, citi, wells fargo kicking off earnings seen. Wilfred frost listening to Earnings Calls as we know the commentary is as important as the print. As we mentioned 20 minutes ago, the month of december really contributed to the positive surprise for jpmorgan and citigroup. Here is jpmorgans ceo on the improving macro outlook by the end of the year. Certainly stabilize, broadly speaking stocks getting worse. So we saw sentiment improve a bit, which i think contributed to the overall success of the Fourth Quarter and then certainly there are puts and takes the u. S. Consumer remains in very strong shape both from a credit perspective sentiment spending, obviously labor markets strong the ecb on hold, Capital Spending is still a bit soft. The positive takeaway from this morning that does apply to all banks to come is less pressure from Interest Rates than feared. The theme, though, from the investment banks this morning is that you want exposure to fix income over equity trading and you want exposure to Debt Capital Markets over Equity Capital markets. That may play better for Goldman Sachs than Morgan Stanley in terms of the banks to come we shall see citis earning corps kicked off. The key to watch is return on tangible common equity the year ahead. For 2019, they hit 12. 1 ahead of 12 forecast. That compares to jpmorgans 19 for the full year, 17 for the past quarter thats the main reason, of course, they still have different earnings multiples the wells fargo corps kicks off 11 30 eastern time lots to focus on there but the main thing, the jump in expenses where does that come from and how long will it last . Thats the main reason you see stocks down 2. 8, a little off the lows guys well, citi and jpmorgan in terms of fixed income training, how are those . Always a very tough question to answer. Asked by the likes of jamie dimon and jen. Of course they cant predict it. We did get updates at the start of december at the financial conference and its clear late december saw a big surge largely if you take away a theme because of improving macro sentiment, that led clearly to a pick p in corporate sentiment which hasnt been at play. We know consumer has been strong throughout they arent the people doing fixed income trading we saw a pick up in debt capital, banks taking advantage of the low rates and also pick up in fixed income trade well have to see if that continues. There is something to point to improving trade tensions which could mean that could blossom. Thank you for bringing us the latest and whats been a busy morning for you. Whats going to be a busier week wilfred frost. Well stick with the banks a closer look at the numbers, analyst david long as well as our own mike santoli good morning to you both david, ill start with you that jump in expenses at wrvells fargo that will fred was referencing, what are your thoughts. Weve known expenses would remain high for wells fargo. However, i didnt expect them to this this high regulatory issues on the company, new ceo charlie sharp coming in, hes taking a focus here on improving the relations with regulators. The first step is fixing the foundation of the bank, which is getting the relations with regulators right what weve seen recently is from an i. T. Perspective, there looks like head winds there. So going forward, our concern here is that expenses remain higher for a longer period of time than what some bullish investors were hoping for. Yeah. Hes got quite the to do list in terms of turning things around at wells fargo how quickly does he need to execute . What is wall street . Whats an analyst like yourself give him in terms of a time line here. Sure. Well, hes only been in the seat for three months it takes a lot of time to figure it out its a 2 trillion bank. So a lot to go over. You know, the bank has made some progress they have gone through over the last two years and added 18,000 people in i. T. And compliance. However, during that period of time they have lost people, revenue producers, which hurts the fundamentals of the company. So unfortunately as they are working through these i. T. Issues, its going to still be a while before the fundamentals improve. To put an exact time frame on it is a bit challenging but looking at 2020 and the rest of this year and 2021, i do think that the street expectations need to be reined in from an earnings perspective and to really fix the foundation here. Mike, the dow is hanging onto gains, albeit just slightly right now thanks to jpmorgan at 2 1 2 injury in financials, only sector in the green and s p as well. The numbers we got from jpmorgan and citi, how much can we glean from those for the broader bank sector i think you could say no big negative surprises without a doubt. This is a very steady group. So the steadiness is what really i think you come away with with the exception of wells Fargo Citigroup is interesting because its been more of a capital reallocation, Balance Sheet story, buying back stock at very cheap valuations jpmorgans premium has really grown, an indispensable financial holding. If you look at the way all sectors are trading, the market wants to anoint a group of winners, play tremendous premium for that winner and the rest figure it out on their own i think its good numbers. Obviously the consumer is strong if you can extrapolate what the public corporate debt markets are implying about creditworthiness of Companies Based on debt trades, then these guys have not much to worry about in terms of credit problems for the foreseeable future i dont think it becomes an exciting story but a secure and predictable earnings path. David, we saw that reflected in terms of what he was saying chargeoffs, loan reserves. Back to expenses at wells fargo, Charlie Scharf, who a lot of people have faith in, would not put a specific time line out there either in terms of when they will be able to increase their rate of growth and when they will be able to actually get the cost structure in line whats your thoughts in terms of what investors are willing to accept from him . So its tough to see when, like you said, the time frame will come to fruition here my biggest concern here is on the revenue front, anecdotally ill tell you they are still losing producers, which is going to extend out the time frame until they can become profitable as i said earlier, they fired 18,000 people in i. T. Compliance but their head count has been flat because of the producers they have lost so from a profitability perspective, you need to get that revenue side fixed. Because the brand has been tainted here, its a bit of a challenge for them to approve top talent they continue to, like i said, bleed some of their Revenue Generating bankers. Mike, obviously the big banks excluded here, perhaps but financials overall more broadly. Weve seen a fair amount of deal making, consolidation, even visa playing 6 million last night. What is the expectation around more consolidating in the sector and especially if youre starting to talk about maybe brokerages and banks. The ingredients are there i think the problem is the really big banks cant do anything in terms of horizontal mergers. Its a matter of one big reenl deal, bbt merging with suntrust. It doesnt seem like a tremendous appetite to complicate the picture by going for more of those. But the visa deal points a bigger issue with the industry, which i guess are traditional banks relegated to Financial Services do they have to do something bold and disrupt themselves. The bet on japan mowing, they had the wherewithal to do that. David, i want to get your thought on this, not only consolidation and sector when you have a company like wells fargo and i realize it has a lot to deal with right now but they are also behind the ball on technology, does this make the company go out and see whats possible in the tech space sure. I dont expect wells fargo to make any moves on the acquisition front. They have to figure this out themselves they have added a lot of people both the day to day worker bees, if you will, as well as at the top. Charlie scharf already brought in different business lines and i. T. Thats something they need to get past, charlies first mandate. Thank you for joining us today. Thank you. It has been a remarkable morning for shares of beyond meat, was briefly halted due to volatility, has resumed trading. As you recall, this stock was up 27 last week alone. Just managed to reclaim 100 the other day. This morning gets to 135 and change intraday before settling back a bit now, 127. Still 11 gain jim was just saying a few moments ago how people are buying shares on literally no news there may have been incremental news about test kitchens or shake shack getting into similar spaces. Yesterday we had news presumably the market had time to price in whatever that was, if it was material or not. Theres a lot of house money flying around these high velocity stocks right now. I dont think you can overthink it necessarily, and say it really is all that people have a lot of winnings. This stock had a mini mania last year its not as if its new to this kind of action where theres not a lot happening. Yet, you know, were going to latch on for the ride. It is an esg play youve got larry feink saying things about changing approach the Worlds Largest money manager active and passive they do hit the top of the list when it comes to that given its a replacement. Without a doubt if the future is replacement wholesale, maybe they will have a road its the same kind of reality thats an mating tesla again, you see basically these vertical moves in smaller momentum. Smile direct, a 31 gain for how many sessions into the year, nine Something Like that. Obviously also become this selffulfilling to kind of target heavily shorted stocks that have high data and all the rest of it i dont know if theres a lot more happening in that right now . Yeah. We could make the argument, too, smile direct not beyond meat but smile direct could fall into this category of some of the most up loved stocks last year perhaps being areas where people, investors are seeing potential value. A flop right out of the gate. Of course they did some deal thats going to be more of a retail play. Well see. Much more to it than that. Okay. When we come back right here, is sustainability becoming a new standard for finance black rock ceo sounding the alarm. Were going to get a read from another one of the companys larger Financial Services company, ceo of equitable. They rang todays opening bell hell join us next a reminder, watch us live on the go use the cnbc app if you dont have it, downadlo is today squawk on the street will be right back upbeat music [narrator] at Southern New Hampshire university were committed to making college more accessible by making it more affordable. Thats why were keeping our tuition the same for all online and campus programs through the year 2021. [woman] i knew snhu was the place for me when i saw how affordable it was. I ran to my husband with my computer and i said, look we can do this [narrator] take advantage of some of the lowest online tuition rates in the nation. Find your degree at snhu. Edu. Beyond the routine checkups. Beyond the notsoroutine cases. Comcast business is helping doctors provide care in whole new ways. All working with a new generation of technologies powered by our gigspeed network. Because beyond technology. There is human ingenuity. Every day, comcast business is helping businesses go beyond the expected. To do the extraordinary. Take your business beyond. Paragraph its no longer app equitable the company that went by that name, its rebranded calling itself now equitable first cnbc interview mark pearson. Mark, nice to have you, surrounded by all your employee employees, who have suddenly gotten very quiet. What should investors know about axe no longer being a part of it. For the first time we are a Public Company and independent that means we get to build the house we want to live in whats changed is the strategy, the Investment Decisions and the culture is really set by us here in new york. Its a very, very exciting time. Im curious when it comes to culture, weve been talking a lot about sustainability, which i want to talk to you about. What would be the difference of culture versus axe equitable. It would look at the business through multinational, 150 Country Organization were here to provide financial we wi wellbeing for americans were an american listed on the new york stock exchange. It really means much more focus for us and getting much closer to our clients very exciting for us. Also manage as much as 700 billion in assets. This morning we got potentially Important News from blackrock. Ceo larry fink in his letters to ceo focus in a way we havent seen from that firm with 7 trillion in assets id love to you take a listen and sort of give me your sense as to how you approach this and how important it is. Lets listen to mr. Fink. We dont have a loud enough conversation, and we are not focusing on this redistribution of capital i believe were going to see more and more investors looking for advice where should they invest their money . Okay. Wasnt particularly forthcoming there in terms of what we were talking about. But how do you view esg right now in terms of that 700 billion . I think its a fundamental trend that were going to be seeing over the next few years and decades. For a company like equitable where we invest for the longterm. We provide the time and provision for people that may last 40, 50, 60 years. Obviously Something Like responsible investing and sustainability is critical for us its something we intend to be part of the conversation going forward, and its really important for all investors, but particularly for retirement and Insurance Companies. In terms of that longterm investing time line, given the fact its just low Interest Rates and has been for years now, how much has that been a drag in terms of the investment portfolio and how much have you been able to offset that with things like equities look, weve been around 160 years. Weve seen a lot of ups and downs, Interest Rates to 16 and now below 2 so we do invest for the longterm. We do look to match our assets and our liabilities going forward. We have seen Something Like 85 of our products sold today dont have an Interest Rate guarantee element to them, much more than equity component with perhaps some Downside Protection so consumers are looking for some upside but wants protection the products we put in the marketplace are meeting that need today. I wonder what you make of a big generation of young people graduating into money, proprietary . They are going to need it to be managed. Their memories are short, because they are young they have never known high cost of capital they remember the recession. How is that affecting their attitude toward equities at least. We are encouraging people to look at their whole lifestyle and the whole age of when they invest and look to the longer term and not panic too much on some of the shortterm gyrations. Its very important to give advice that is appropriate for the individual rather than have one size fits all. You know, we do our clients are both baby boomers but we also are very proud to serve about a million teachers the average age there would be 45, 46, younger. Again, we would be encouraging them to look towards their retirement years, some years out and invest it. Number two, i believe in variable annuities quite a few Analysts Bullish on the stock right now. In large part theres a sense you could use some sort of Risk Transfer is that in the future especially with these new variable annuity framework thats taking effect. About 60 of our earnings come from individual retirement business that business has had a boost recently with a secure act one of the few bipartisan projects in washington has had a very big boost so i myself think well see much more variable annuities come into play in 401 k s and other retirement products helping people secure income in their retirement were bullish on variable annuity. We think its a good source of growth over years to come. To carls point, a low rate environment, youre not in the fixed Annuity Business nonetheless, youve got to get a generation accustomed to that returns will not be what they once were, particularly if youre weighted towards fixed income. Thats right. I think my training, i came from japan before coming here, so we were used to 0 there for a little while yes, absolutely, it has to be a mix of the assets have to reflect the environment were in and the length of the duration of the liabilities and the promises were making. Weve got cpi today its very difficult to get the economy to run hot enough to where inflation is a story again. Do you worry about the japanification of the u. S. As some like to call it no, i dont think so. If my memory is right, i think the nikkei is still 38 off its alltime high. I dont see that in the u. S. The economy is still extremely strong the markets are still very, very buoyant. So no, i wouldnt see that. What about demographics when you think about japan, you think about the fact they have a rapidly aging population and not nearly replacing were kind of getting close to that in the u. S. Is that a longterm concern . Its something we look at with our history and looking for the longterm, we look at all of the macroeconomics the thing driving our business is 10,000 americans a day are turning 65 and the retirement gap is so large in the u. S. We have a business where we can help people and do well as a business as we go along. Thats the main whats the retirement gap what does that actually mean if you look at acli, association of life insurers, look at the website, the average american lives 23 years after retirement on the date of retirement has Something Like 19 months of income saved thats the gap in human terms. We exist to help americans secure their Financial Wellbeing so they can live long and fulfilling lives i think another thing that happens, peoples aspirations in retirement so much greater than when my grandfather retired. People are setting up businesses, going back to school, teaching, traveling. So really our purpose as equitable is really to help people fulfill the lives they want to live thats the real main demographic we look at. Seeing so much capital in fintech, deal making and acquisitions as well its not just we talk about some of the other Financial Services companies and banks but were seeing it in in sure tech. Now that youre forging head on this new strategy, does it include in sure tech we use technology to disrupt ourselves, if you like we put technology in the business ranging right from our subsidiary on how we analyze results all the way through to the tools we give our advisers one of the things on this facetoface advice, we see americans today when they are looking to protect their families or plan for their retirement, they still want facetoface device. The Technology Behind the adviser is where were investing and we see quite a lot of disruption to the internal model. Its interesting you say that there has been such a focus on how even if its facetoface advice, how you match up with people looking for certain products or services especially in an industry thats getting busier and getting more crowded. I think thats right. I dont think people just go to one source for information anymore, even if it is facetoface, they are doing a lot of Research Behind the scenes looking at our website, looking at reviews, looking at references i dont think anybody just goes to one source anymore, whether its direct or through intermediate area. Finally you saw 65 of alliance bernstein, active active management. Is that an overall threat to the business or are they managing. They are performing well, seven quarters in a row net funds flow going into alternates. Alliance bernstein has an asian thats doing well. As i say, seven quarters in a row they have been net positive fund flows, which i dont think many peers can say. We got data about survival rates of various cancers its amazing whats happening to survivors. Its no longer a death sentence by any means in this country would the increase of average Life Expectancy have a meaningful impact on the business longterm i think were seeing, sharing earlier, 1859, establish Life Expectancy was around 50 years now a child born in 1957 has a chance to live to 107. This is a blessing but it does require people to plan their finances perhaps more than they used to do. It also begs the question, will there always be a place for Something Like term Life Insurance or is it going away . No, i think term life meets a particular need at certain times in peoples lives, additional protection and cover lets say its a young family has got a morgue and young kids, they will need protection during that time in case something happens to the breadwinner i think its here to stay. What was that retirement gap, 19 months versus 23 years . Did i hear that appropriately . Yes, on ample. Mr. Pearson, thank you. Thanks a lot. Appreciate it, mark pearson, ceo of equitable holdings. Thank you. Coming up after the break, shares of delta flying high on earnings bead. Exclusive from ceo on the past quarter when squawk on the streetcos ck meba. Welcome back to squawk on the street. It is time for spotlight ishares transportation etf ticker iyt, up more than 2 since the beginning of 2020. Currently trading up. 7 right now outperforming the Broader Market this is shares of delta rise on better than expected quarterly results. Thats helping gift lit to other Airlines Stocks as well. One of the top performers in the s p 500. Phil lebeau in atlanta we go to home. Much better than expected numbers for delta in the quarter beating the streets, 1. 70 a share, 30 better than expectations revenue 34 billion well above analyst estimates. They also beat the street when it comes to revenue for available seat mile as well as profit margin. All around, almost any metric you look at, the Fourth Quarter was a solid one for delta. Premium revenue, things like revenue they received through their agreement with chase, the credit card, they did very well there. It also helped that there was Strong Demand for the holidays the demand was really healthy. It was a strong holiday period as a result of that, we were able to take revenue grow revenues, grow our capacity particularly domestically and delivered Great Results which we see going into 2020 as well. One other reason why shares of delta up more than 4 today, its guidance for q1 they dont give earnings by on other metrics. Extrapolate those out and a number of analysts saying, look, this is better than we expected. Thats why shares of delta up close to an alltime high just under 63 a share. Guys, back to you. On pace for the best day since april. Settling back a touch now, phil. Great stuff as usual fill lebeau in atlanta sue herera hi, sue. Good morning. Here is whats happening mgm reports selling mandalay and mgm grand in las vegas to a joint venture which includes black stone. The total price tag is 4. 6 billion. Irans president says the crash of a ukrainian passenger plane, which killed 176 people, was a, quote, unforgivable mistake by irans military. Speaking today, Hassan Rouhani promised all of those responsible will be punished the countrys judiciary says some arrests have already been made. South koreas president moon jaein said he could push for exemptions of u. N. Sanctions placed on north korea. This could be a way to achieve an expansion of interkorean ties he also suggests this might help restart Nuclear Negotiations between pyongyang and washington and there are some bleary eyed fans this morning, at least in my house, as lsu tigers are celebrating this morning they beat clemson last night in College Footballs National Championship final score 4225. A celebration parade is expected to take place in baton rouge on saturday you are up to date thats the news update this hour morgan, ill send it back downtown to you. I bet thats going to be a sight to see, sue. Sue herera still to come, were just one day away from the signing of u. S. China phase one deal. Well check in with foer armsian chair steven roach when squawk on the street returns before we talk about taxsaudreys expecting. New . Twins wed be closer to the twins. Change in plans. At fidelity, a change in plans is always part of the plan. High protein low sugar tastes great high protein low sugar so good high protein low sugar mmmm, birthday cake and try pure protein delicious protein shakes 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. U. S. And chinese delegates expected to sign phase one of that trade deal tomorrow kayla in d. C. With more on what we might expect. Hi, kaley. Hi carl, hours leading up to the deal signing tomorrow, the chinese delegation arrived yesterday and will hold a working lunch today alongside u. S. Negotiators as part of those talks, u. S. Says china is not a currency manipulator. In a report expected in october but released yesterday, china has committed to refrain from competitive devaluation and will publish Exchange Rate information that had previously been opaque and allow yuan to strengthen in october and fall all justify removing that tag. The yuan in response to that reversal soaring this morning. The dollar falling as that olive branch was extended ahead of the signing. Tomorrow im told there will be roughly 200 attendees, standing room only in the east room of the white house at an event two senior Officials Say will be the grandest yet recognizing magnitude of the issue this is tackling youll see some familiar ceos in the audience including blackstones steve schwarzman, something of an emissary between the two countrys governments as these talks have gone on for more than two years. Also joining for the occasion farmers and republican lawmakers with impeachment proceedings on capitol hill im told no democrats were invited. Carl. The collision of the politics in the midst of this trade agreement. Kayla, thank you very much for that joining us to talk more about this phase one signing stephen roach, senior fellow yale university, former Morgan Stanley asian claire good morning. Good morning, carl. Page one, talk about china hes negotiators who in the journals words recognized an opportunity here the agreement would not force them to make Economic Policy changes that washington had long insisted on. You essentially see this as a truce . I do, carl. I think that that point is really critical. When the u. S. Trade rep lighthizer realized his section 301 allegations in march 2018, the goal was to get china to change its basic system of subs diesing enterprises, innovation, force technology transfer. The deal will be signed tomorrow well really not touch any of those issues its political theater as kayla just described very actively a couple hundred people in the room ex tolling the greatest deal in the history of deals will it really accomplish what the president and Robert Lighthizer set out to do in march of 2018 . I dont think it will do that. If youre waiting for phase two, youll be waiting for a long, long time. I think well be disappointed on that regarded as well. You make it sound like the u. S. Has gotten bought here for 200 billion how confident are you they can actually buy that much. Not too confident i think its going to be very difficult for china to buy 100 billion a year for the next two years. There will be a lot of creative accounting to make it seem like thats the case. You know, the good news is weve stopped the dangerous expiration of tariffs the bad news is tariffs still remain even with this phase one accord at about 19 on all chinese imports coming into the u. S. That compares with a pretrade war tariff rate of about 3 so theres certainly a high level of tariffs remaining you know, i said, this is political theater. This is not meaningful structural breakthrough on issues that we supposedly held near and dear to our heart in confronting china. But stephen, if it is political theater, isnt that why you want to see tariffs remain in place, that way theres still some sort of leverage, something for these countries to come to the table and negotiate around china would like to roll back tariff rates, morgan, to the levels that prevailed before this conflict began. And the u. S. Is insisting that china change its decision to get that concession and china is not going to do it. Before you finish that thought, we are getting some boeing numbers orders and deliveries really quick. Lets get to phil lebeau on that. Carl, weve got a number here thats going to be stunning to some people. Full year earnings and deliveries out from boeing airbus released last week for all of 2019 boeing had a negative number when it comes to commercial airplane orders that is to say there were more cancellations than orders for commercial airplanes that is the first time in decades that boeing has had a negative number. It was negative 87 by comparison airbus last year racked up orders for 768 when it comes to deliveries, no 737 max for the last nine months of the year. As a result boeing delivered just 380 commercial airplanes. Thats fewer than half of what airbus delivered for the year when airbus set a record of 786. Again, for the first time in decades, boeings commercial Airplane Division posted negative orders for a full year. Guys, back to you. Phil, thats stunning in a way. But at the same time i wonder was the Shareholder Base ready for that number . What were the expectations given boeing shares really not doing much here in terms of falling certainly. David, they were ready for it this has been coming for several months once you get into august and september and it was pretty clear that the max would not be coming back, that meant there would not be more orders as a result everybody knew this was likely going to be negative for the year for boeing when it came to commercial airplane orders. Phil, the fact that the net total is negative 87 but the 737 max its negative 182, what were the other planes that were getting bought to offset well, you still have 787 dreamliner their production up to 14 a month. That is still doing well youve got a few other wide bodies they are selling. They even had a couple of 737 ngs essentially fazed out that line but essentially a few orders out there its not like boeing has no business there, theres some remember, the max is bread and butter, what moves the needle for boeing since the max was grounded since march, there were no orders or virtually no orders. Going positive helping the dow hang onto a 65 point game now even though s p is red thank you. Apologize for the interruption but sort of is answer lat ancilla ancillary. Im curious dropping trade manipulators after four or five months we talk about additional tariffs if they dont follow through are we going to maim them a manipulator again if theys mi misbehave . Are we going to go back and forth and back and forth this is an unfortunate politicization of what had been a meaningful effort over a long period of time to hold countries accountable based honorary tough analytical criteria, like their current account surplus, in chinas case has vanished. Clear indications of intervention and currency markets which china has actually been doing to boost its currency rather than push its currency lower. China had not hit those criteria imf said the same thing when it renews currency manipulation, where it started from years and years ago. So the classification of china as a manipulator was groundless and meaningless. Now to remove that, i think even makes the whole exercise far more political of any substance. Stephen, i wonder what you think, there are reports Financial Services could benefit from this phase one deal tomorrow obviously we dont have details yet. What could that mean in terms of banks and other financial entities able to operate more broadly in china well, this is something my former industry has been pushing for for a long time. More with ownership caps than operating as joint ventures. This will certainly be viewed as as very positive sign by Financial Services and has been long telegraphed were moving in that direction but lets just go back to the basics what is this deal supposed to really accomplish . Supposed to provide relief for American Manufacturing companies, American Workers that have lost their economic livelihood because of a large imbalance with china and will phase one be an important step on the road to providing that type of relief. Im pretty skeptical of that but others will argue to the contrary. One last point, stephen, the hawks, they are not done they are not done fighting for that rick scott was on our air and said hes all for trade. How can you trade with someone who lies, cheats, and steals what is the hawks next move on china . The hawks next move is to say were going to keep the pressure on china and were going to go after phase two, which is going to get china to fundamentally change its behavior in the way that senator scott and others were demanding good luck with that. Its not going to happen election year. I think weve got to take a long and hard look about the role that we play in the United States in fostering economic imbalances that leave us with trade deficits not just with china but with over 100 other countries. Why do we have that condition. It continues to put pressure on our families and our workers and our manufacturing companies. Those are tough issues for us to address as well. Well talk about this obviously tomorrow when we get that signing well see how much information we get as a result stephen, good to talk to you see you soon. Good to talk to you, carl. As we head to break, a look at the markets the dow up 66 points, higher by jpmorgan, post earnings, actually boeing which moves up despite negative aircraft order we just got. Tethwkn e re stet afr is break ing] you still have service . Call the Insurance Company its them, calling us. Its going to be a week before they can get through on these roads shhh, sorry, i didnt catch that. I said ask how soon they can be here right now . Whats now . He says theyre surveying our property now theyre probably at the wrong house i dont see any hovering his name is hovering . Look up . By automating claims with Machine Learning and analytics, cognizant is helping Insurance Companies advance how they serve even hard to reach customers. Cool stocks havent been this expensive in two years some traders dont see reason to worry yet. Find out why on trading nation cnbc. Com more squawk on the street coming up. Welcome back to squawk on the street. Rick santelli here my guess . , guest is from Kissinger Associates new york yankees f thanks for joining me. Foreign policy, especially xhoo china, your thoughts on the phase one deal cut through the politics we live in a world where everything is politically charged. Your thoughts . It was a practical deal it reduces trade deficit with china. But setting out for a big deal was never really going to happen the chinese are not going to change their fundamental system, which is a stateled system. Their goal is become the preeminent power in advanced 21st century tech dmonologietecs theyll continue in that direction. This is about the best they were going to get its a modest deal but an improvement and particularly because it reduces the escalation of tariffs and now perhaps moving toward some kind of deescalation and theyve set up a procedure for greater consultation over the next several years to try to deal with other issues but dont expect quick progress or miracles. Theyre not going to happen. You know, bob, youre a bit guilty here as well. We dont know all the specifics of phase one, so neither of us can say with any high degree of certainty exactly how much is contained or missing, and with respect to details, being in a place where everybody likes to trade and whisper, i would think putting out specifics of the deal would probably be a very bad idea leading to market manipulation i think the specifics would clear up the uncertainties that are current. Youre right, we dont know the specifics but we know one thing and that is the chinese have said repeatedly that chinese are not going to change the fundamentals of their system all the people in hong kong might have a completely different thought process on exactly how stringent or steadfast the chinese will be in the future predicated on the past sometimes things change. Isnt it possible china wants to be a better player thinking that all the growing may be in their best interests yes, and there are a lot of chinese who support reforms. I think you will see youre right, we dont know the details, but there are a lot of chinese who want greater production of intellectual property they want to get foreign Financial Firms in there i got you there are positive things that could occur, but false statement changes in their system, xi jinping has made clear, we can have a framework with working with them but the constraints of the way they want to run their economy and the way we want to run ours bob, were out of time. We have to leave it there. Anybody who loves our country, five years ago would say change can happen quickly while you least expect it. Lets hope there will be. David faber, back to you. Thank you, rick lets send it over to jon fortt to get a look at whats cominging coming up on squawk alley. Our look into healtcah re, the ceo of cigna joins us coming up on squawk alley. Because Health Insurance doesnt always pay it all. Aflac after surgery we had extra bills followed up visits, deductibles. We thought Health Insurance had us covered up for everything, but it didnt. Aflac gives you money directly to help you with those things. I want to thank my wife, my mom, the duck. Get help with expenses Health Insurance doesnt cover. Get to know us at aflac. Com im dominic chu. Stocks losing a little bit of steam. Jpmorgan, citi group and First Republic bank moving higher today. On the other side of things we have welles fargo missing estimates and one of the worst performers in the s p 500 today. Charlie sharp takes the reins on his first call as ceo. Back downtown to you guys at the new york stock exchange. Coming up on squawk alley, kathy wood joins us at post 9. Stock has doubled. What does she think . soft music when i see obstacles, i create opportunities. When i see adversity, i find a way. When i hear never, i say now. 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