And lets get a check on the markets. Stocks are higher hitting record highs again today and get this, the dow on track for its best week in nearly five months there you see the industrials basically flat never the less higher. Welcome, morgan. How are you . It is great to be with you this friday afternoon. Record breaking rally has been led by the biggest names google join iing microsoft in te trillion dollar club for more on that impact from those megacap stocks and what theyre having on the market, were going to go to seema hey, morgan, the reason we care about these milestones is because alphabet and microsoft and apple collectively make up about 13 of the s p 500 and all three are sitting on gains for the year really setting the bar high for earnings this season. Now evaluation metrics for these three Tech Companies shows that alphabet is the only one trading at a discount to its five year average of 34 times earnings microsoft apple are both trading above their historic pes with apple in the 15 to 16 range typically. Now the average price target for alphabet continues to rise at , 1,516 a share and ubs and evercore raising their target on the stock this week citing strength in its Cloud Business some are sitting on the rally after hunl huge surge for Semiconductor Stocks morgan, back to you. Thank you as race to records rate is op, two big wibillionaire investors, david teper says he quote loves riding a horse thats running. Stanley staying in the race, sayinging that i am still riding the horse. Still bullish. Immediate term not certainly their first rodeo. So definitely pay close toengs to should you keep buying stocks at record highs lets bring in michael k chief investment strategist and ron insana, Senior Adviser and cnbc Senior Analyst welcome to you both. Thank you stocks. Valuations right now sure about that are they expensive to you or valuations stretched . Theyre expensive but i think expensive in overvalued can be different. Doesnt mean that theyre overvalued necessarily theyre expensive because of i think three reasons. Interest rates are low credit spreads are tight and the composition of the s p today is very skewed towards technology, growth and other defensive segments of the market unlike say 2007 where itsly cyclicals, which tens to give a cheaper mark ron, you agree . I do. I would say were technically overbought t vix is below 12. Weve seen meaningful corrections. One type to have concentration, five stocks accounting for the 5 of the market cap then the vicks coming down so yeah, i think were probably stretched i dont think its the end, but a pullback is always possible. You say were getting close to a pullback, but not a bear market what tells you were get iting close and what would trigger it. There could be some of the same volatility strategies that were quoing on in 2017 where you were long the s p and short the vix. That keeps it as low as its been just the other day that this is the sixth longest stretch since october weve not seen a 1 move in the market either way we could suggest were in blow off top in technical terms that could have a pullback down the road, but i think largely technical. Economic numbers have been as you said earlier, just fine. So michael, where do you see the greatest opportunities right now . What names specifically . Weve been recommending Higher Quality value which lends itself to a more cyclical tilt while the markets up a lot and prk es have led the way in 2019, we think earnings are about to pick up and earnings expectations which had been coming down the last couple of years as manufacturing had been weak we think thats beginning to turn around. We like financials, industrials. Thats what i was going to ask you. Where do you find Higher Quality value . Any names in those categories . Yes so we, im a strategist. We also do Quantitative Research the characterics you want to own in a backdrop where manufacturing pmis and Economic Data is beginning to improve industrials, but with a domestic tilt we think the u. S. Economy is going to be driving this expansion in 2020 and into 2021. So transportation stocks machinery stocks i know a bunch of, theres certainly a lot of names that would fit the Higher Quality value universe certainly dont want to nail it down to one or two names its not what i do, but i think stocks that are relatively less expensive than their peers that have profitable Business Models today are good buying options. Ron, you say a pullback is possible how big of a pullback might be reasonable to expect 10 to 20 well, we can so far, if the fed is not only quite easy, but is actively endpanlged in providing liquidity to the marketpla marketplace. You dont usually see large scale corrections. They cut 55 times last year around the world Global Markets are all up. And are the most vulnerable those trillion dollar valuation stocks that have run so much for a correction, yeah. Weve not seen this really this type of concentration since 1999 but the characteristics of the market are somewhat different. The fed was tightening into that bubble cycle and that type of thing. The one thing i would be careful of is the high yield levered lone market. For high investors who hd incom should go through and see what kind of ill liquidity resides. If theres a pullback, that might be more magnified in junk debt if your fund is hoeded up on those, take a second look. Thanks for joining us today thank you and a news alert on boeing. Reports of another, yes, another Software Problem with that plagued 737 max. Boeing stock falling on the news and dragging down the dow. Cnbc. Com reporter Leslie Joseph joins us now we are finding out that boeing has put in this piece of software, its actually a software monitor so when you start up a plane, boeing put this in to make sure all the systems on the plane, flight control, et cetera, are working correctly and in tests in recent week, were finding one of those monitors didnt work it wasnt able to perform that the software to monitor the software exactly and boeing wants put as many fail safe mores from place and theyre scrambling to get these planes back into service so they need these thins to work. Its something we dont know at this point, but they need everything to go well. Any sort of hiccup in the process, thats why we have the stock move that you just saw when you have this conversation about boeing and software in general, it seems like its built by United Technologies b i believe when you talk about the software and malfunctioning, is it boeing writing the software that connects into that component or is it the other way around theyre putting in software, theyre putting in a program so that it can monitor and make sure that all of the other programs, they have very complex soft wark to make sure all of those functions that a pilot sees and is using are working correctly. They dont want the plane firing upstarting up and then have those systems not work so they put this additional step in there, which the f ark a. Has boeing commented on these latest reports they said theyre working with the faa on it as theyve said before and reiterated they want to get these planes back into service and working closely with the regulator to do so there is their statement on the max updates. Thank you so much for being with us appreciate it. For the latest on boeing, you can find her work on cnbc. Com new reports today saying the Trump Administration wants to make changes to the foreign prep practices act. Larry kudlowwas asked about it aeamon. The new book is by with two Washington Post reporters. Its called a very stable genius its about President Trump and his time in office and one of the anecdotes in the book relays an incident in which the president asked then secretary of state Rex Tillerson to get rid of the foreign corrupt practices act. The law that prevents American Companies from paying bribes overseas to foreign officials. The president has been critical of that law in the past publicly and in the book, it quotes the president as saying its just so unfair that American Companies arent allowed to pay bribes to get business oversea es. We are going to change that. Well larry kudlow was in the White House PressBriefing Room today. He was asked about that and what the administrations view is on the act. Heres what he said. We are aware of it and we are looking at it and weve heard complaints from some companies so i dont want to say anything definitive policiwise k but we are looking at it. So saying he doesnt want to say anything definitive policiwise and the administrations stance, but we are looking at it. That is we are looking a the foreign corrupt practices act with with a view to changing it in some way that would make it better for companies or easier for American Companies, which are caught up in bribery vegas situations overseas. Ive asked aides to expand on kudlows comments and explain what the administration plans to do cant get rid of the law as the president of the United States you have to get congress to do that, but the department of justice enforces this and presumably the department of justice under President Trump if it wanted to, could take steps to change the way that law is enforced no indication thats happening its a sensational headline, right . The idea of getting rid of this or at least changing this act, but i wonder, especially given the fact the administration has such a focus on this idea of a level or leveling the Playing Field when it comes to things like being able to export and manufacture goods. Are there certain things the u. S. Is not allowed to do or negotiate that other countries are . Sure. Other countries are allowed. Other companies do play bribes and get away from it and there is some market share loss for other companies. You hear hear american businesses talk about how their competitors can do this and they cant. In a way, you can say it squares with the overall Trump Administration deregulatory agenda sort of taking some of the shackles off of american businesses so they can be more profitable, but this one is interesting because thing act is to totemic of americas position in the world as a force for law and order and anticorruption and has been used by the United States as sort of soft power around the world to lower corruption and particularly, for an administration that had said its efforts in the ukraine, which have led to the president s impeachment, were about cracking du ining down on corruption this is a tricky piece of messaging right now, so well see if the administration puts meat on these bones and specifies what they want to do here thank you very much coming up, usually the cold weather months like december with quieter for Home Construction, but this december was red hot. 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A big jump in Housing Starts that translating to the stock market the Home Construction etf hitting a more than 18year high the building stocks rise iing ts week as are the companies that the stuff that goes into the home mohawk industries, up 10 this week can strengthen, can strength in housing translate to the broader economy . Steve liesman is joining us now with a rapid update. Thank you two of the major forces affecting the u. S. Economy have played into todays data the slowdown in manufacturing apart from the trade war but the surge in housing linked to the decline in interest rates, both sides, affected by the weather q4 tracking 1. 4 and thats unchange bable to explain, but q1, the weakness is still in the forecast at one point economists said they raised their forecast because of the blowout housing number up 17 helped by low rates and warm warmer weather in december but lowered them because of the weak Industrial Production report showing some strains in manufacturing, but also lowered utility due to warm er weather up 2. 4 . Thats their Fourth Quarter estimate oxford and b of a at 2 and bringing up the year 1. 8 we started the quarter with rapid update at 1. 5. So its trendinging the right way, but the one sixth for this quarter, that could be more solid. The halting of production of the 737 max as you know is going to shave maybe as much as half a point off of gdp and is going to be tough to get that back even from stronger housing. Is there a way to factor that in as we go into 2020 . Its going to take about a half a point off but it should come back as they bring the 737 max production back online. When that will be, i guess take the month that boeing says and add six months because theyve been off thats a joke. How much larry kudlow said the trade deal will add at least a percentage point to gdp. You buy that i have not seen any mats or heard them from the Administration Nobody in the private sector say ing theres a percentage point what the best ive heard pretty sure thats what he said i would not disagree, but what ive seen is that estimated the trade war will take away. 2 this year and they have sorry, 2020. Theyve had that so maybe a. 1. The trouble for the economists is they start from the standpoint of the tariffsbeing in place you only got rid of onehalf of one round of the tariffs that you put in place so a lot of that negativity that comes from that and the disruption supply chains, they also do not forsee a big rebound in confidence thats going to be a big reb boubd in cap ex. If theyre going to be long, thats where theyre going to be long i want to bring in joe. Why dont we just bring him in welcome. He may have a better estimate you got your wallet on the table here its an old, its a big wa wallet no money in it money in my pocket anyhow, i think that a what kudlow was driving at was the volume of puchls that are implid or cot fi codified in this trade agreement and its several hundred billion dollars and if the United States can generate that kind of supply, maybe it would add the gdp. Sentiment aspect that steve alluded to, larry is well aware of, is very important. Animal spirits are key seems a couple of things have happened number one, the equity market, some of the growth of your sectors like financials, industrials, have done extraordinarily well that is very good for corporate sentiment. That will help lift cap ex and manufacturing to me is close to a bottom ive been saying it the last month or so. That will give us growth and if sentiment improves, growth could be three i know that sounds aggressive. I think the street is way too pessimistic on the 2020 outlook. Im curious though why you think man faufacturing is hittia bottom we hit a number of earnings. Csx. Expediters international the freight and the rail data speaking of a economy in recession. It is so bad that freight and rail data. Terrible the ism says the sector retracts ill give you two reasons why i think it is recovering less obvious is the following. If you look within the internals of the ism, when production runs belovercut that speaks to the natural recuperative power that spread which i alluded to is negative has happened four other times in the last 40 years and two were doing the last recession. So im going to pick a bottom and say were recovering thats one answer. The other is if you look at the different Philadelphia Fed surveys, which steve is very familiar with, all the six months forward activity components have bottomed and turned up. So to me when the Manufacturing Sector recovers in 2020, cap exgoes with it we dont disagree much. I think its a matter of timing and degree i think what we have is oan a initial wave of weakness because i think theres still bad stuff to work through the economy. They only took effect in september on a big and important chunk of them and theyre still out there on some 360 billion worth of chinese imports thats one the second i think we get some recovery i think its a back half story you may do 32 you raised very good point. To me, the tariffs, because theyre not all on final goods and services, they need to be measured from relation to total size of the economy. Which isnt 22 trillion. Its 40 trillion so 600 billionish on 40 trillion is just peanuts. It just doesnt matter which is why ive argued in the past, the fed responded, they corrected their mistake, and viola, the outlook is better. Ill close with two quick questions. Is is now a good time to buy stocks youre asking a fixed income guy. No recession, so yes lets turn to the article in the wall street journal yesterday where the thesis was the Federal Reserve and other Central Banks have lost their power to influence economies i believe thats the head of the era of fed power is over prepare for a more perilous road ahead. He made various arguments within it do you agree look at the feds balance sheet. No, i dont agree. Because theyre able to add to that. Even if they have limited able thety to lower rates further the two most powerful things that have happened