to head the defendant treasury. it's tuesday, november 15th, 2016. "squawk box" begins right now. a. >> announcer: live from new york where business never sleeps this is "squawk box". good morning welcome to "squawk box" right here on cnbc this morning. i'm sore with joe kernen and melissa lee. take a look at u.s. equity futures this morning. keeps going up, up, up. dow looks like it will open up 22 points higher. nasdaq up seven points and s&p 500 look to open up four points higher. overnight in asia, a bit of a mixed picture. hang seng did go hire. nikkei down. finally let's take a quick look at european equities. you're looking again, all sort of marginal mixed picture and then finally wti crude at this

very hour is sitting at 44.48. >> big move. >> big move. snap back. >> a lot of reversals. >> we've been snapping. >> a lot of things are reversed. except equities. look strong the. look me dow component, home depot. consensus above estimates. also beat expectations. company's top store sales rose 5.5%. wild dig through those numbers with an analyst in a couple of minutes. we had the guy on and 23 billion in a quarter. you can start a company in your lifetime that sells $23 billion worth of stuff in a quarter. what a country. >> are you saying that is the

next chapter for joe kernen? >> no i'm already late. here are the big corporate stories. reynolds american looking for a higher price from british american tobacco. reynolds rejected a $47 billion take over saying the price was too low. british american owns 47% of reynolds. reynolds trading higher by 2.5%. grocery shopping center regency centers is buying be equity one for $4.6 billion. it will add areas of los angeles and new york to its portfolio. aig agreed to sell its japan's life insurance business. terms were not disclosed. airline stocks on the move. warren buffett berkshire hathaway venturing back into that industry in a surprising reversal. sec filings showing that berkshire has taken stakes in american airlines, united

continental holding, delta airlines and in an exclusive to our becky quick buffett revealed a fourth stake in southwest airlines. it's a surprising move for buffett because he soured on that industry nearly 30 years ago. he thought it was too turbulent for him. when he a long running discussion. there were 20 years where they made no money. now i've argued they finally deserved to make a little bit of money and the barriers to entry are finally a little bit higher as they've always been high. maybe you do have some favorable -- we decided it was routes. >> routes. >> might have some favorable one. maybe only two carriers where you are able to charge more. >> they will become like the railroads. >> now i decided if buffett isn't it you're right there

isn't a lot of competition and is a little bit rigged. he likes to do things not rigged. >> there's an advantage. >> there's an advantage. >> bill miller will be with us had made the argument the airlines are like the railroads in that you just can't build more track. there's only going to be a couple of them and that's it. interesting he bought all of them. as opposed -- and by the way clearly i haven't talked to becky about it in whatever conversation he had with her he clearly understood he was buying southwest as well so it didn't look like he was leaving them out of it. >> almost like a macro call in the economy as opposed to a specific i like american, i like united airlines,er likes the fundamentals of the airline industry. >> we've talked, take a 14 hour trip with your kids and you'll buy the airlines. you just will. kids are, don't really one any

more what a long drive is like. oh, yeah i would like to go on a long drive. an hour later -- we have "13 hours" to go. they don't realize. a plane ride of three hours seems long. but as we get more leisure time and more spendable income airlines -- i've always thought demographically it's a great thing. you can drive across at this point -- taking off self-driving car can't go across. can it? you have to fly. you have to fly to far away places, right? >> planes are more self-driving than cars. >> yeah. that's true. >> she just learned so much. can take this back to people that run your shop and say wow i learned a lot on box. joining us now with more for the sector is savi syth airline

analyst at raymond james. we probably didn't hit it exactly right. what is attractive in this day and age to warren buffett and this industry, in your view? >> i would agree that the barriers to entry have risen, but i wouldn't quite equate the airlines to rail because you can't pick up a railroad and move it anywhere, where aircraft you can move wherever you want. the industry is still competitive. given the consolidation and actors are behaving better. that's what changed in this industry. and the valuations are still very attractive compared to other industrial companies. so i think that's probably what is attractive to berkshire hathaway here. hard to say if it's energy or economy play. . fundamentals have improved in this industry. >> i think gordon bethune that

everyone knows he says you're only as good as your dumb jet competitor. someone would come around and uncut. they got some discipline having planes fuel and not worry about market share and becoming more profitable. are they unfairly profitable. their margins don't seem that different. >> absolutely. if you look at some industrial companies and the margins are more reasonable still, now they are benefiting from low fuel and we expect some of that margin to be erased as fuel recovery but i think they have a healthy margin levels for industrial companies and the trinz profitability is shocking to see how badly profitability or lack of was in 10, 20 years. >> you don't have to buy everything at the absolute bottom but company have had an

absolute home run a couple of years ago. is there plenty left for him? >> i think so. and i think -- if you look at the valuation standpoint it hasn't been that attractive for some time. there was a lot of fear that when fuel came down and airlines started adding a lot of capacity, if you look at compared to gdp, 2014 they only added one time gdp and more recently been adding -- this year they added over three times of gdp levels from a capacity standpoint. that's reacting to lower fuels. that caused a lot of fear for investors. from a valuation standpoint they never looked more attractive. >> is there one airline in this group that's a winner and one airline in this group that's a dog. are you surprised he bought all of them? >> i do think there are ones that we prefer near term and there are different themes you plain and delta is still quite

attractive and our top pick. spirit, which people were worried about the -- >> that's not on his list. >> and then on, but also united is having an investor day today and a lot of potential to be unlocked there. but at the end of the day i think the favorable outlook is good for the sector in general. >> he bought sometime in the third quarter he could have had a previous run. the sector was flat. what's the turning point and is that turning point sustainable going into the fourth quarter in 2017? >> for investors i think it's you've had unit revenue declining for the last couple of years and again fuel has declined much faster. but there was a fear that unit revenues would continue to decline.

you're starting to see signs of one that capacity growth starting to moderate and those unit revenues starting to moderate as well. there's increased optimism that some of those earnings will be retain. i think that's what really helped the group. i would be remiss not to point this is still a sicyclical sect. the direction of the u.s. economy and global economy will be important for these shares. >> all right, savi, thank you for your time this morning. we'll have much more. >> pretty savvy. >> more on buffett's bet if you're an analyst. at the top of the hour we'll talk to investor bill miller. son will be they're. he told us back in february that he's bullish on airlines. i don't like calling like the worst company or stock a dog. i don't get that. why a dog? why not a cat. dogs are better than cats.

you like dogs? who doesn't love dogs. why would a stock be called a dog. >> what would you call it then >> a fish. who loves a stupid fish. >> there's people who love fish. >> or a hamster. >> how about a skunk. nobody likes a skunk. >> cute little animals. >> skunks of the dow. >> terrible when they get run over. >> permeates. we should talk markets. >> yes. >> what's your skunk of the day? >> don't do dogs. i love dogs. i don't like that. >> let's introduce these guys. good to see you both. you know what's interesting this market we've had a number of sharp reactions to the election whether it be the swing higher in financials or swing lower in technology. what's telling us the truth about the markets? which move?

>> you know, look, i don't know if we're getting the full truth. what is happening is investors were first and foremost caught offguard. then this change of perception where we went from concerns about the individual president to a realization of what the policies would be. and now there's kind of a reaction to what the policies will be which seem to be somewhat stimulative for growth and higher rates, driving up rates for multiple different reasons. so authors coming through and playing out. the reality, we keep stepping back and kind of asking this question if we really do still have gridlock in congress and the president has limited powers only -- can there be a delivery on the hopes that the market is the acting on today. marginally can be right. can the markets get this and interpreting this right in terms

of magnitude. >> assuming everything trump said on the campaign trail will come true 100% we've seen that reflect in the technology trade. tech is down four straight session. in theory, stimulative policies for overall economic growth would being a great for technology. a lower corporate tax rate is good for technology. repatriation taxes from abroad is great for technology too. what's going on? >> it's good for technology, it's probably better for other areas. so you're seeing rotation. there probably is a good opportunity in technology for sure. and to jason's point we don't know what happens next. but this is what we think we can say with some confidence. when you look at surges in bond yields and you look at surges in stock prices that happen at the same time, generally that's a good sign for forward returns. so when we look at the potential

stimulus, and we ask ourselves what's going to be the effects of lower taxes and less regulation, and the potential fiscal package, you have to recognize, i think, that you're accelerating a trend and that's a bottoming of inflation expectations an an earnings recovery that's under way. we've come a long way in a short period of time and very long on enthusiasm and maybe short on specifics. but, you know, ultimately there are probably some areas that do quite well under the new regime and still under valued relative -- >> there's a lot of messages out there they watched their stocks happily move so much higher in the past -- >> amazingly. so quickly. >> they say do i want to take some off the table. take some profits. wait. nobody knows if they are about to miss the next leg or if this is over shot and going to come back. that's sort of the vexing

question. >> we stated before the elections occurred people should fade whatever move there was following the election and now that opportunity is kind of -- >> who did you think would win? >> it didn't matter who won. the reality is markets tend to take whatever it sees on a naerm basis of a presidential election, extrapolate what they think will be the effect over a prolonged period of time and then realize one month, two months later doesn't turn out quite as single direction. >> still more room to run. that's the question. your going miss the next elect or should you fade it? you said fade. >> fade some of it. maybe it's more sectors in industrials. maybe the run in strilgs has been a little too much. maybe the drop in technology has been a little bit too much given the likelihood. you have to go through the items of saying what does fortunate have power to do fairly unilaterally and what does the

president end up having to fight with congress particularly the senate to get done. >> it's a week since the election. he hasn't gotten inaugurated. look what happened. it's unbelievable. barack obama still going around as our president on foreign visits. it's not donald trump. but yet the market has already got 30% or 40% of the movement it will get from these policies. >> you can put in place a framework. two paths you can see what the president can do. once in office the president has pretty much unilateral control in trade agreements and on the other side reconciliation process in the senate is possible to get some things done. everything else requires agreement between parties. you can do a lot of executive orders. you can start picking through that. >> assume you just get corporate

tax policy and income that unto itself -- the question is where do you give that in the market? just give that? >> you give that something. >> what's that worth. >> worth ten bucks worth of earnings on the s&p. >> have you been watching amazon. not happy with besos. >> wasn't happy with besos before. >> what would happen if it was taxed like a normal company, amazon. he says it doesn't matter because it's a web service. >> lost $35 billion in sensitre. when donald trump is mad at someone and i'm not saying he'll exact revenge but is amazon -- there's an argument that other retailers are at a disadvantage.

jeff besos said he wanted to sends him up in a rocket ship up to space and never come back. >> then he congratulated him. >> everybody stepping into line. >> exactly. you got to fall into line. >> where were you yesterday? i was bothered you. >> what do you mean? >> i thought you were one of those protesters. >> i took the day off -- >> no. you were throwing stuff. >> we have lots of little things going on in the sorkin family. i was not able to make it. as i've said i have more than an open mind. i'm hopeful and i want great things to happen. >> you're not a man you got little hands. they are doing all this -- >> with him picking on you, you can tell kernen was in the basket. definitely in the basket. >> nobody voted. >> thank you. >> thank you. some other headlines. nasdaq has named adenna friedman

as their new ceo. she will join on set at 7:30 a.m. >> adena was tweeting yesterday. she was excited we're hanging out. we called them our landlord on "fast money". >> i don't know if you heard the news. >> hey. >> she said no. "fast money" -- now they seem excited. >> we'll see our new land lords and friends in the 7:00 hour. when we return we'll talk home depot just out with quartererly results. stock moving up 2%. we'll dig through that report with an analyst in just a moment when we return. what powers the digital world. communication.

that's why a cutting edge university counts on centurylink to keep their global campus connected. and why a pro football team chose us to deliver fiber-enabled broadband to more than 65,000 fans. and why a leading car brand counts on us to keep

their dealer network streamlined and nimble. businesses count on communication, and communication counts on centurylink.

home depot rocking it one more time. just out with third quarter results posting earnings of

$1.60 per share. beat expectations. brian nagel is dr. investor at 0 p -- oppenheimer. >> very solid report from home deboth. what's interesting a few weeks ago there were weaker supply reports which caused the market to worry that is home depot cracking. is the home improvement market cracking. with these results the answer is no. >> i ask you every quarter how much of this is a function of home depot meaning the operations of home depot. we should take this away as a macro story. how much of this is a macro story that we'll see show up in the results of companies like lowe's. >> probably half and half. if you break it down, home depot did a 5.9% comp in the u.s.. half the market half them. we'll see what lowe's reports

tomorrow. what happens happened in the past when you have these choppy engineer sales environment lowe's doesn't perform as well. we'll see. usually lowe's is one or two percentage points below home depot. >> how do you play this stock? >> very flew paid. if tax rays go lower that's a positive. >> mortgage rates at 4%. highest since january. very swift rise in mortgage rates and home equity loans, those rates are going higher as well. i'm wondering in terms of financing project, home improvement projects does that offset in this moment now any down the line tax cuts for the individual? >> well the way i think about that mortgage rates yes have jumped up in the last week but still very, very low. and i think what trumps that now is better jobs growth.

if the homeowner can feel i have a job, i feel more confident in my job that's more important than the modest uptick in mortgage rates. mortgage rates are a significant head wind to home improvement activity. >> in terms of mapping out what this company is worth, what it was worth two weeks ago and what it's worth today is it any different. you're a fundamentalist you would say no. maybe not. >> the easy answer is no. it's a 20 multiple type stock. that hasn't changed much in the last couple of weeks. >> when you think about lowe's what do you think? >> something slightly, not quite as good. if home depot did 5.9% comp, lowe's comp, domestic comp, lowe's is probably fourish. >> great to see you. >> thank you. coming up investor wilbur ross is rumored to be on president-elect donald trump's

short list to run treasury. we'll be right back.

♪ ♪ every minute ♪ every hour ♪ i'll miss you ♪ i'll miss you more ♪ every summer sme emer ♪

welcome back to "squawk box". dow jones will open up 20 points higher. s&p 500 up about two points. here's what's is going on our agenda. 8:30 eastern retail sales, import prices and empire state manufacturing survey. at 10:00 business vince, fed speak to watch today at 8:00 eastern this morning, boston fed president eric rosengren then at 1:30 we'll hear from stanley fischer and figure out how they are reacting to the election. >> as the trump cabinet begins to take shape bring in wilbur ross chairman and chief strategy officer for wl ross and company served as a senior policy adviser to the trump campaign. he co-authored trump's contract with the american voter widely believed tube blueprint for trump's first 100 days in office. wilbur, thanks for being with us. good to see you. >> thank you. good to be on.

>> quite a sea change in tone maybe not with everyone but people like paul ryan and other republicans. there's nothing like winning to get people to suddenly say wow what a great candidate you were. remember the downstream worries. >> right. remember they used to say appearance becomes reality. now reality is becoming appearance. >> remember the down ballot worries. instead of being a head wind it was trump coattails. >> remember the sweep was not just the presidency or the house or senate but governorships and state legislatures. this was an enormous tsunami that came through. >> port morten will be written, andrew, over a matter of months. did you watch the president? he was quite interesting. he was almost saying hillary didn't go enough places. we needed to be every where.

we needed to appeal to the disenfranchised people more. wasn't like a lot wow my policies are being rejected en masse. more hillary wasn't a great candidate. >> there's a lot of soul searching within the democratic party. >> the president didn't seem like any of it was on him. he thought hillary should have been more places. >> the question about this whole election for the democratic party is what lessons are ultimately going to be taken away. will they say -- there's repudiation of obama he's failed as a president given half the country clearly -- >> these are what the dnc are thinking. i listened very clearly. >> hillary was such a flawed candidate that had nothing to do with the policies unto itself but it was one individual. >> what the dnc is thinking. it was down. because i know you know. >> and there's the question. what is it? as a result what do you do about it for next time.

>> has everything to do with the policy. really do. >> so do i. >> i don't think that hillary clinton ran a bad campaign. i think she ran a brilliant campaign to tell you the truth. i think, though, the reality is donald trump recognized that there is a lot of trouble out there. there's a whole huge segment of the population that has not been well treated. sick and tired of it and that's what changed i think the election. >> are you intimately involved with the transition -- >> i don't want to talk about things like that. i'm here as a civilian commentator. >> they are running things by you. do you have opinions on who should be in certain post? >> i think donald trump is going to make the decisions. he's got very good transition team that's been working ever since the convention. people forget the transition ideas didn't start tuesday morning. they started on wednesday morning. they started way back at the

convention. >> every paper has america's mayor as the world's diplomat as possibly secretary of state. last i heard, the left was calling him like a raving lunatic from his speech at the convention. was that your take on that? >> that's totally unhinged that was my take. that was the take of the democratic party. not my take. >> you already said. so do you want an unhinged raving lunatic conducting all of our foreign policy. >> he's not unhinged. >> i know. >> he's not unhinged. >> that wasn't me. >> he was not unhinged when he was mayor and he's not unhinged now. it's easy e ji ty to caricature. >> it is. like people who got other

appointments like bannon. he was ceo of the campaign. there was a little bit of push back on that but i guess once you become paid by the taxpayer that's when people think they need to start -- >> i have two questions for wilbur. one is a question we ask the market guys in the last half hour which is people seen the market run in a remarkable way on the expectations of all these things that donald trump will be able to do and the market is pricing virtually all of them in at one shot. maybe, maybe not. maybe they are not pricing. maybe more to go. if you were as a market player as a citizen -- >> i am a citizen. >> forgetting about your role with the campaign, how do you look at the market because there are a lot of people wake up, i should take something off the table this, has run for a while. or there's other people who say if i get out now maybe i'm about to miss -- train will really leave the station. >> a couple of weeks before the election i had a little debate on unnamed tv station with mark

cuban and he was saying he was putting on a big short in case donald trump got elected. >> he was right about so many things. >> he was wearing a very bizarre shirt. so i told him, i think you will lose your shirt if you put on a short as a result of trump getting in. he did lose his shirt. >> he's so out there about the whole thing and then -- we invited him on the show the next day but got a very curt no thank you. >> in terms of where we are in the market now. >> it's correct for the market to be aggressive right now. and the reason is several things. trump's policies as you can see from everything he said and from the little 100 day thing that we wrote, is expansive. its fiscal policy being put to work. one of the missing ingredients in the last several years has been fiscal policy. there's a real limit to what monetary policy can do on its

own. can't pausch string. >> wilbur, the reason we're locked in this box of monetary policy is because of not going. why not bring the money back. bring the money back. lower corporate taxes. get rid of regulation. that's when when rattner whoever says we're going down a thousand points connect those points. it's temperment. they were translating what they perceived to be trump's temperment to a market selloff instead of the policies he was espousing. why would that not be more bullish than hillary's policies. >> it is. >> it is. >> corporate tax rate down from 35 to 15, that means you have 30% more of pre-tax earnings come through to post-tax. how many companies ever have a 30% increase in a year. darn few. second the idea of writing off capital investment immediately is huge. the thing that's been lagging

the most in our economy has been capital investment. and this plus bringing money back from overseas, plus the lower tax rate on ongoing earnings of return that's powerful medicine for thing that's the weakest. >> on note of capital investment i want to talk about some industries you're familiar with. if you look at u.s. steel. 21 closed out on election day. now $28 stock. in the course of days. that's a quarter of its gains. >> right. >> is that a correct reaction? is it that good that much better for steel companies, for raw material companies out there? >> i think it's partly the trump program and it's also partly china is changing. i was over there a few weeks ago just for two weeks doing some business because i do have a day job after all. and i became convinced for the

first time they really are going to deal with the overcapacity issue. in steel they have a billion tons of capacity. they need roughly 700 million for domestic consumption. they have been putting overseas mostly dumping 100 million tons. they still have 200 million unused tons. that's 10% of the world's capacity unused sitting there. mostly inefficient, very pollutive. that's going gone. cement, same thing. they produce more cement from 2012 to 2015 than the u.s. did in the whole 20th century. >> think of what kind of week it was for the people, the apocalypse, the ones forecasting apocalypse. it wasn't just that it didn't go down 10%, it actually -- all time new highs. best week in five years. do they ever say -- you know what they say? it's coming.

like brexit. it's coming. it's coming. i don't feel embarrassed. >> we got to go. one last question because it's a question that comes up in the newspaper articles recently. mainstream media, we're part of the mainstream media. >> speak for yourself. >> how do you think about some of the conflicts that president macon front and the last big article this morning that walked through possibility that if you were a lobbyist in america today you were going to go and buy out all ofmar-i-lago. do you think there's a concern? >> first of all i think people now making the new haleycy nation. the old hallucination he'll never win. the new hallucination he'll win but won't work right for this

reason or that reason. they are all hallucinations. mar-i-lago is the least of his fortune. >> you understand the argument that's being made. >> i hear the argument. i don't understand it because there's no substance to it. >> so that's going to be your call for the hug the dafr after the election. i mean people down at the "times" wrote something about the mea culpa. >> that wasn't a mea culpa. >> will i get flig you in writing? the hug is all i'm getting. >> how about on the air? >> no,. >> why not? >> we've done that before. i don't want a hug. i want something written. >> how about a fist pump. >> exploding one. >> i know. >> wilbur thank you. >> it was get go to complicated. >> i look in my mail box every day for a letter and it's not

there. >> he did a lot of graffiti which i think we get. >> coming up, whale watching. and don't miss two big exclusive interviews, president of goldman sachs and former house speaker john boehner in his first interview since the election. as we head to break take a quick check on what's happening in the markets. dax is slightly lower today.

time now for the executive edge and we'll start off with chael watching. yesterday was the deadline for money managers to reveal their holdings. soros move was made hide of the presidential election.

john paulson held its stake in the spider trust. paulson has been long known as a gold bull. by the end of third quarter the value of the firm's position fell by $4 million. david einhorn green light capital cut its positions in its biggest holdings. this included apple and general motors. apple is still green light's biggest position. coming up president-elect trump has promised to take a tough line on china. we'll talk about that changing position with stephen orlins. here's a look at yesterday's s&p 500 winners and losers.

mary buys a little lamb. one of millions of orders on this company's servers. accessible by thousands of suppliers and employees globally. but with cyber threats on the rise, mary's data could be under attack. with the help of at&t, and security that senses and mitigates cyber threats, their critical data is safer than ever. giving them the agility to be open & secure. because no one knows & like at&t.

what's going on here? i'm val, the orange money retirement squirrel from voya. we're putting away acorns. you know, to show the importance of saving for the future. so you're sort of like a spokes person? more of a spokes metaphor. get organized at voya.com. welcome back to "squawk box." during his campaign for president, donald trump said the

u.s. was suffering economically at the hands of china. said he would label china a currency manipulator. joining us now is the president of the national committee on u.s./china relations. good morning. >> morning. >> so what do you think is going to happen here? >> well, what's going to happen, i think, what we're talking about -- what the national committee is talking about today is actually investment much more than trade. that we've just come out with a report that talks about how government numbers both chinese and american government numbers have far understated the amount of u.s. investment in china and chinese investment in the united states. and we will say that u.s. investment in china is $230 billion versus the $75 billion that the government has talked about. and chinese investment in the united states is $64 billion going to around $100 billion by year end. >> okay. so donald trump is going to read this report and change his mind about what? >> i think he's -- you know, he's a business guy. he understands what investment

means. he's a builder. what i think he's going to do is he might reach for some low hanging fruit which is the obama administration went about 80%, 90% of the way down a bilateral investment treaty with china. he may sit there and decide let's go all the way. because it creates jobs, chinese investment creates jobs in the united states. and it opens the chinese market to market. so your washers want this. it's going to open financial services -- >> aren't the jobs numbers in your report though? it shows that the jobs created in china by u.s. firms is actually much, much greater than the jobs created here in the united states by chinese officials. >> that's right. and that's because we've been doing it for basically 35 years and the chinese have been doing it for really about six or seven. >> so more and more are -- >> on an annual basis chinese investment exceeds in the united states, exceeds investment in china. so that's a big change. and i think what this tells the

government is these two economies are really inextricably intertwined. and we need to think about how we can use this trend of chinese capital flowing into the united states to create more american jobs. i was in dayton -- you guys didn't cover it, but i was in dayton, ohio. some people refer to as the flyover place. i watched johnson controls, general motors close their facilities. a month ago i stood in dayton and watched the closed gm facility reopen with 2500 american employees because of a chinese investor. the largest automotive glass company in the world happens to be chinese and it's creating american jobs. when you focus on that and when president-elect trump focuses on that, he is going to look for ways to have the chinese help the u.s. economy. >> you don't think it's going to make it easier. >> he's a business guy.

he'll make it easier. on trade, it's another story. in investment, it's a win/win as long as you're not in national security. >> what do the chinese leaders think of donald trump? we've had a mixed picture. tlrl early polls that suggest the chinese love donald trump. they think of him as a deal maker and they like leaders that appear strong. then there was other polls and other guests that we've had on that say they look at this and have severe misgivings about -- >> i think it is a mixed picture. depends on who you talk to. i've had some who said this is a business guy. he's going to be practical. he's going to want to find ways to build this constructive relationship. they said my gosh, this is going to crash the u.s. economy. it's then going to crash the u.s. economy. >> what's the leadership of china you think to the degree you know? >> i think they have a mixed view. i think the jury is out. they just don't know. i think, you know, sunday night

president xi and president-elect trump had their first telephone coal. i think it was a productive one. we're already beginning to see the beginnings is going to be a practical president. he's going to look at it the way he's looked at his businesses over these 35 years. >> can you confidently say he's going to be good for investment but jury is out on trade. if there's a trade war, couldn't the chinese government make it much more difficult for u.s. companies. >> of course. >> and extend the capital flowing out. >> yes. that is a risk that the trade war becomes so severe it affects the capital flows. not only affect the capital flows, it would affect companies like boeing who would be the first target of the chinese -- >> we tried that before. who did that with steel? tires or something? >> president obama did it with tires and the result was chicken and -- they restricted exports. we have a lot of agricultural

exports to china. one expects if the trade war starts, it will lead to tit for tat. that the chinese will -- you know -- >> apple, andrew. >> apple certainly would be an obvious target as a boeing. boeing's largest market, it's going to be when you look at that what it's going to be buying. domestic traffic continues to flow rapidly. >> there's no stopping that. more leisure time. you're going to fly. right? >> of course. absolutely right. but the risk is that, you know, boeing has a competitor in airbus. coming up, bill miller and son will join us in a guest host double play. we'll ask them about warren buffett's bet on airlines. stay tuned. what i love most

about tempur-pedic mattresses... is that they contour to your body. it keeps us comfortable and asleep at night. shop our biggest event of the year, including all tempur-pedic mattresses. save up to $600, now thru november 29th. get your tempur-pedic. the most highly recommended bed in america. prge! a manufacturer. well that's why i dug this out for you. it's your grandpappy's hammer and he would have wanted you to have it. it meant a lot to him... yes, ge makes powerful machines. but i'll be writing the code that will allow those machines to share information with each other. i'll be changing the way the world works. (interrupting) you can't pick it up, can you? go ahead. he can't lift the hammer. it's okay though! you're going to change the world.

the dynamic duo of investing. bill miller and his son bill miller iv. how they're positioning their funds for a trump administration. that interview with the millers is straight ahead. plus the nasdaq names a new ceo. the electronic marketplace will ring in the new year with adina freeman at the helm. both will join us in a first on cnbc preview. and warren buffett takes to the sky. why he's putting money to work in the airline sector and cutting his stake in walmart. that story and more of this morning's business headlines are straight ahead as the second hour of "squawk box" begins right now. live from new york where business never sleeps, this is

"squawk box." >> welcome back to "squawk box" here on cnbc. i'm andrew ross sorkin and joe kernen and melissa lee with us. joe said the most magnificent thing. we'll tell you about it one of these days. we won't tell it on the air. dow jones looks it's going to open up about 19 points. what a run it's been on. nasdaq looking to open five points higher. s&p 500 three points higher. home depot posted better than expected earnings and revenues. benefitting from higher traffic and more spending at its stores. shares higher than about a percent. we're also watching airline stocks this morning after warren buffett's stakes in the sector. a new regulatory filing into american airlines, united continental holdings and delta air lines. buffett revealed a fourth stake in southwest airlines. the move is surprising for buffett given he soured on the

industry nearly 30 years ago after an investment in u.s. airways proved too turbulent for him. carney this morning among the headlines suggesting october inflation data is with the weaker passing through to consumer prices. guest host this morning legendary investment bill miller and his son bill miller iv. how do i division between you two? do we call you bill iv? >> that's what we can do. >> "seinfeld" was onto something naming a kid seven. bill and bill, thanks for joining us. trump's election win, we got to go with your dad.

you're working on one. >> right. >> has he breathed all the knowledge and wisdom of 30, 40 years into you? do you feel -- you understand how he invests? >> i actually taught him everything. >> but only 10% of what you know. >> exactly. >> what bt it? what we know, it's been seven days since we all voted. >> it was a surprise to me that trump got elected. but the market's reaction wasn't a surprise. the end of partisan gridlock. trump is into deals and not details. so he's going to want quick wins. i think since he's not into details you're going to get a paul ryan/mitch mcconnell economic program. corporate level may be more important like every other developed country. that would be great. it would stop the problem about

repatriation. deregulation or i'd say unwinding some bad regulations and bad legislation like dodd/frank. and we're going to get a big infrastructure program. the irony of this whole thing is that the republicans are going to get control and we're going to go into a massive keynesian deficit. >> would be nice to get out of the fed trap. if this is the way we do it. i'm ready. that's why we've been stuck. we've been stuck in that because we haven't achieve d anything above stall. >> in terms of stimulus programs. >> how do you math it out though in terms of where the market has gone the past couple of days and where it will go? it's pricing in a lot already. >> it's pricing in the beginnings of what's going to happen already. we've had a big position in banks. they've gone vertical. a lot of things have had big moves. i've been short treasuries and

it's worked out. 220 to 225 is probably a stallout for awhile. >> in terms we've been talking about all morning, do you say to yourself that we're over -- or where are we in this process or multiple legs to go and you should be really long this market? ultimately going to depend on policy. the market is going to go higher. 2% the all-time highs. when did we hit a first all-time high? and are we 2% above that? and we spent two years consolidating. market can move -- you see what can happen. you go from 700 to 3,000. markets can move. right? >> policy is okay. the fact in my opinion the 35-year bond bull market is over. people are going to start losing money in bonds. going to switch somewhere and a

large part will go to equities. >> sometimes assets are correlated and stocks don't do as well as bonds go down. >> depends on valuation. but as in 2013, what we have right now is that stocks are already discounting probably 3% to 4% tenure. and it depends on the growth rate. >> stocks are discounting 3% to 4%? >> yes. >> on the 10-year. >> simplified greenspan model was the yield should be the same for fair value. right? but bonds are trading at 50 times earnings and stocks are trading at 18.5 times. >> i understand that. but in terms of just the massive rise in yields in such a short amount of time along with the rise in the dollar, i mean, nearer term, at what point does that become a concern for multi-nationals? i'll go to bill iv as you've been respectfully waiting. >> has your dad done okay so far? >> agree with everything he said. >> saw you nodding.

>> how often do you disagree? >> we disagree on airlines. that's one of the things we disagree on. >> i got vote of my camp yesterday. he's feeling a little less confident. >> it was 1% of the portfolio. let's not whip ourselves into a frenzy here. >> so you're on the other side -- >> he's been right since the beginning. he invested in airlines in 2011. >> and encouraged warren to do so at the time. >> at the berkshire meeting. >> doubled since then? >> five times. >> would have been nice to get in when you got in. >> i want to hear the family squabble here. >> you are such a kerfuffle. >> i'm stirring the drink. >> right. is that? >> stirring -- i know what you're thinking of. we'll get there. but make your argument.

>> he's made a lot of money, right? i think he takes a victory lap and moves on to other things. if you look at the history of airlines, i don't think the basic industry structure for airlines have changed all that much. also if you think they can return on capital indefinitely, i think the regulators are going to eventually not allow that to happen. >> if you had your way and you could convince your father to liquidate some position airlines and put it somewhere else, where would that place be? >> well, so -- >> probably in his fund. >> that would work. no, personally he and i really like -- one of the things we really agree on is alternative asset managers. those things look incredibly cheap to us. that's space we really like. if you just look at the yield that are kicking off. they're kicking off dividend yields alone. these things tend to make money

in a few ways. so they sell their portfolio positions into the market and they get a portion of that gain. that's not even being disappointed into the future in terms of how many they're going to make. we think they could have easily double digit dividends being kicked off over the next couple years. >> so in this regime, things got a lot better for this particular group? >> well, i mine, certainly there's a carried interest tax reform probably coming. it will be taxed as income. we think that's more than priced in already. just the general economic environment. the growth tilt. these things should continue to make money as their businesses continue to grow and do better. >> the -- back to the airlines. what is the most positive thing right now? because we love talking about airlines and whether they're -- whether it's a totally free market. whether the gains are making in terms of margins and

profitability. whether that's justified or whether it's somehow a function of sort of the government screwing up the root system and who gets them. i mean, is it truly an oligopoly? is it not fair what's happening? >> it's consolidated now to where the top three airlines, each have 25% of the market. you add southwest, you're at probably 85% of the market. it's a commodity business, but the incentive structure -- bill mentioned for new entrance and things like that. but the internal is now based on return on capital. the economy doesn't have to get any better. they don't have to do anything different. delta has a 15% free cash field. returning 75% of free cash flow to holders. is really good because they've done poorly up until now. and kwhast interesting is that things that drive airline stock

prices in the term which delta thinks will turn positive. and then gdp growth which has a high correlation with it. gdp growth is going to accelerate. you've got cheap stocks with catalysts in place. >> i won't call him a dog. we said in the 6:00 hour who are the winners and the dogs. is there a skunk in there? >> no. i mean, something like hawaiian is expensive compared to the other ones. alaska is a high quality name that's more expensive than the other ones. >> because there's a takeover premium? >> well, with alaska it's just because they've run the business so well for so long. been able to learn above the cost of capital. >> so i would -- i've always argued that a vibrant airline industry is good for everyone. obviously it's good for shareholders and things like that. is it good for the consumer that they're able to be so profitable. >> i think fares are down in the last 12 months. >> but not as much as they would

be in a purely competitive environment where people would be undercutting if everyone could compete on the same roots they'd be cheaper. when they didn't make money for 20 years. that's not good either. >> for a hundred years. yeah. >> so it's positive for society or should consumers -- >> it's an extremely competitive industry and they compete on individual roots, compete internationally. i don't think you're looking at an industry where they can raise price consistently over time. >> i'm trying to get the discussion going here. so are you converted yet? >> that it's a completely competitive market? >> he said it's sort of competitive and consumers are benefitting. it's like a win/win for everyone right now. >> one of the -- we were at anthony's conference and gave the short case on the airlines. one of the things he said was it's much more competitive than the people who are bullish

realize. he showed a structure l.a. to somewhere like houston and how they cut the price down and then not only did others drop the price. >> new york, l.a., l.a. houston there are many that are competitive. >> seattle is hard. omaha for those of you to see warren buffett. if you want a direct flight. if you're willing to go through chicago or whatever, then it's very competitive. this becomes the issue. so we'll see. we'll see. clearly, by the way, and we'll talk more. mr. iv over here thinks there could be a rel togulatory issue? >> not under president trump i don't think. >> call us in four to eight years, right? when we return, arkansas governor mr. hutchinson is going to join us. his name has been thrown around for a possible place in -- >> not by you.

asa. >> he's our guest after the break. later, nasdaq naming a new chief adena friedman will be replacing robert greifeld. they'll join us in a bit. e? a basketball costs $14. what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley

welcome back to "squawk box." president-elect trump in the process of putting his cabinet together.

one name thrown around for attorney general joining us this morning from orlando ahead of the republican governor's conference is arkansas governor asa hutchinson. good morning to you. >> good morning. great to be with you. >> shall we ask, do you want the job? >> well, the answer is no. i'm have been happy as governor of arkansas. incredible things are happening in the state. it is good to be down here with 31 other republican governors talking about what's ahead with the donald trump presidency and it's great to see vice president-elect mike pence who is a colleague of ours who we know is going to have a great relationship with the governors and talking about with them. i'm happy as governor of arkansas. >> we have this expectation that because the white house, the senate, and the how's are all going to be controlled by the republican party that we're going to be able to do

remarkable things. that effectively, we're going to see all sorts of new policies. is there any divide or distinction, you think, that's going to take place within the party itself over some of these issues trump has raised? >> i think there will be. there'll be a very robust debate particularly in the area of trade. because donald trump has made it clear that he wants to have a tougher negotiating posture with some of our trading partners. i think trade will be a hot topic of discussion in some disagreement. while we agree with tough policy, trade is very important for states in terms of agriculture, manufacturing, retail. and so we want to make sure that the flow of commerce continues and it will under a trump presidency. there's really broad unity about

the affordable care act and that needs to be undone. so we'll see exactly the steps and the transition. >> what about immigration? >> well, yes, that's another area of debate. clearly we support a very secure border. an immigration policy that makes sense. i think you'll see some of the executive orders that president obama had in place be undone. that way you'll have a debate about immigration within the united states congress where it should be. and there's going to be -- it's going to be a tough item. but you first start with securing the border which we're in full agreement on. and once that's done, president-elect trump indicates then we'll decide where to go from there. >> but you've talked about the wall a frightening to you. do you think a wall is really going to come? >> well, you've got to listen to the words of president-elect trump. he talked about you might see

fences in some places. you're going have some practical realities. i've spent a lot of time along the border. you've got some very sensitive areas there. you've got areas that a physical wall might not make sense. so he's going to hopefully try to make sense out of a more secure border. that's what the american people expect. much of it will be a wall, but there will be other aspects of it. >> he wanted a prosecutor to look at hillary clinton. you've heard lots of people at the rallies talk about that. yet on "60 minutes" this week he walked that back at least to a degree saying he didn't want to hurt the clintons. what do you think is really going to happen here and what should he do? >> well, first of all, you're going to have a new attorney general that's appointed that can actually meet with the fbi and review where that matter is.

of course the fbi indicated they're not proceeding forward at this time. but there could be other aspects of the matter that has to be looked into. but you have to have seasoned investigators and prosecutors that are career outside of the arena of politics that make decisions. that should be under the leadership of the next attorney general. that's not something that you can say in a campaign. you can state your opinion. but whatever your president or attorney general, then you look at facts, you look at evidence, you look at what's the right thing to do in the context of all the cases and the law. >> governor, what do you think of the choice of steve bannon to be the president's senior counselor? i'm looking at a head line here. a hard right adviser. bannan accused of a racist viewpoint. >> first of all, i don't know

steve bannon. but i do know reince priebus. and i was delighted that president-elect trump selected him as chief of staff. so each decision that i see donald trump make, i've agreed with it. i think that was a very good choice. this is the person that will be a member of the president's cabinet, his closest adviser. that's what the concentration should be on. i'm sure that mr. bannan brings something to the table and donald trump has some confidence in him as a senior adviser. let's see where that goes. that decision is good. >> get right back up on that horse. right? >> there are worthy questions to be asked and i'll ask another in that same vain about the trump empire may ultimately present to the presidency. what kind of disclosure do you think should be required to the american public about the trump businesses as they go forward? there have been questions about whether you're a lobbyist,

you're going to stay at all foreign hotels. you're going to throw more parties at mar-a-lago. in terms of flowing into that family and business while he's in the white house. >> that's why we have a tradition and many instances of presidents putting assets in blind trusts. that way you have some separation and you don't have a specific knowledge with the trust. it's a little more difficult with the trump empire. because you've got signs everywhere. you sort of know what's happening. so i think this really needs to be thought through on how to assure the american public there's going to be a separation between the business of the white house and the business operated by the family. so he's got to think that through, give confidence in it. there should be a clear line of separation. >> a lot of times you'll say somebody's going to play devil's

advocate here. but not normally -- just in certain cases and not -- that's not devil's advocate that time. other times you're asking the same legitimate questions, you might use the devil's advocate. if it's, like, someone -- >> yes. >> i'm going to break. still to come -- >> governor, thank you. hope to see you soon. >> adena friedman taking over for bob greifeld beginning of the year. "squawk box" will be right back. sometimes when brushing my gums bleed.

no big deal. but my hygienist said, it is a big deal. go pro with crest pro health gum protection. it helps prevent gum bleeding by targeting harmful bacteria on your gums. left untreated, these symptoms could lead to more serious problems including tooth loss. gum crisis averted.

welcome back to "squawk box." take a look at u.s. equity futures at this hour. they're pointed to the green at e the moment. when we come back -- there you go. dow looks it would open 21 points higher. nasdaq will kick off 2017 with a new chief. bob greifeld stepping aside for adena friedman. both joining us after the break. they're also going to get a new show at their location. "squawk box" returns in a just a moment.

welcome back to "squawk box." among the stories front and center at this hour, home depot posting better than expected earnings and revenues. benefitting from higher spending and traffic at their stores.

shares up about 2% at the moment. chinese e-commerce giant reporting better than expected forecast. 38% increase in quarterly revenue. also offering an upbeat outlook. the associated press is reporting that former new york mayor rudy giuliani has emerged as the favorite to serve as secretary of state. a source says the job is giuliani's if he wants it. and politico says they've gone to steve mnuchin. and guest this morning on our program wilbur ross. he joined us in the last hour and had this to say about the transition. >> donald trump is going to make the decisions. he's got very good transition team that's been working ever since the convention. >> that's what i would say. we will have more on the trump transition in just a bit. and senator john burress is going to be with us at the 8:00 a.m. hour. changing of the guard at the

nasdaq. adena friedman will become the chief executive officer on january 1st, 2017. current ceo bob greifeld will become the chairman of the board. they both join us now for a first on cnbc interview. obviously this is not really a surprise. this was a languaong planned transition. you're handing over the reins at an interesting time for the financial industry in particular, bob. how do you assess the nasdaq you are handing over to adena compared to the nasdaq of a week ago? how have things changed? >> i think for the positive. we don't look at the short-term week. it's really the fact that nasdaq today is perfectly positioned really across a wide range of businesses. in addition, led by adena, the team is strong. i feel confident this team will lead the nasdaq to greater heights. >> give us your opinion on what

a trump presidency will do for the markets in general. >> if we look at the markets since the election, they're focusing on the fact a republican administration is likely to be relatively pro-business. and that obviously will be good for the markets. i think that in general we'll find that investors will continue to react well. if so long as the pro-business tone continues. >> have you been surprised by the reaction, though, to some of the tech companies? the apples of the world, the amazons of the world. >> right. so i think the issue at hand of course is trade. and i think that we're going to have to see how that plays out over the next hundred days as they put together their plan in terms of making sure that the trade situation remains positive for the technology company. >> you think that's overhanging more so? i think the benefit would be been the repatriated cash that could come back. >> there's a huge benefit for that. may taking a more of a wait and see to that. a benefit to a lot of large

technology companies as well as other companies listed on nasdaq could benefit from that. >> have we seen a pickup in trading volumes? is there more certainty now so people are more engaged in the markets especially with all votes rising except for by cap ex-stocks. >> we've seen a pickup in volatility particularly in the fixed income world. yes, it's been a good week for those of us in that. >> powerful rally in financials. i know that stock prices are things for ceos and future ceos to comment on. if you look at other publicly traded exchanges. they've seen a rise in stock price. 5%. 9%. the nasdaq is flat on the week since the election. i'm curious what your take is on that. what are investors missing, if they're missing something? >> well, they're always missing something because a stock can always go higher. but certainly we've had a great

run. we're up dramatically. we're dramatically out performing. we look at the year to date performance. we continue to execute. under adena's leadership i think we'll do that incredibly well. >> what's your outlook for ipos? >> obviously this year has been a slower year, but nasdaq in terms of our relative position has had a really strong year. we've had about a 74% win rate this year. as we look, we see a lot of companies wanting to go public. i think the earlier volatility in the year held people back. and of course the election also holds people back from entering the markets. so we see the potential for a busy end of the year. and then going into q1 of next year, there's a very healthy pipeline of companies ready to go public. >> the question i was going to ask is, donald trump will get into office towards the end of january. in terms of the timing for some of these ipos, is there a watch and wait kind of thing it's not going to be a first go. >> generally the attitude is

it's all a matter of the market environment around them. i can't predict what the world is going to look like exactly in january. but generally speaking, they do try to go out on the road as early as the second week of january and start that process. and i think that they're just going to be looking at it and saying do they know as much as they need to know about having a new administration work. if they do, then they can go out and investors will be receptive. >> the big fight for ipo in 2017 is going to be uber. is that right? >> we have no comment on that. that's for uber to say. you're telling us something we don't know. >> they're going to go public in 2017. i imagine if you're in the exchange business, this is the one to try to grab, right? >> i would say we look at every company that wants to go public and we're really excited to work with them. >> how early does the stage begin? sometimes we find out from the

filing. >> that's why we started nasdaq private market. just because you stay private, you still need to have liquidity. that also allows us to have a relationship with these companies years before thinking of going public. >> bob, what's your role in all this going to be going forward? >> well, first we're focused on the transition. been working on it for a long time now. we want to make sure we perfect it at the end. that i'll assume the role of chairman, but adena is the ceo as of january the 1st. and as i said, the team is in place. i feel very good about the future. >> would you ever find a way into the trump administration? >> i'm focused on this transition and making sure this goes well. and we've had a very active job here at nasdaq. looking forward to doing a multitude of other things. >> fair enough. >> looking out, adena in terms of nasdaq's future, are you prime to meet more acquisitions in the first half of 2016, are

there more to come? >> we have done i think a great job of balancing out acquisitions and organic growth over many years that we worked together. i expect we will continue to do that. i think we have an amazing offering that we can offer out to our clients today. an incredible suite of things we do for them. and how to deepen relationships with the clients, ak we skigs will be part of what we look at. but also growth opportunities. >> we heard yesterday you're going to get a new tenant in the nasdaq. we want to know what bump that's going to a have on your stock. >> i think it's going to have a bump on your ratings. >> wow. >> might bring the vaels value down though. >> we should share this with the audience for those who don't know which is we are going to be spending our mornings at nasdaq. >> what's that big thing in the front? >> we call that the tower. will be up on the tower every time you walk in. >> from 6:00 to 9:00, will you

have -- >> images of joe kernen. >> images of joe nonstop. >> the ticker goes around here. so you're willing to allow us to -- >> we just want to have your photo on the tower all the time. >> it's going to say "squawk box"? >> it will say that. >> it will. very exciting for you all. we have your logo. we'll work on that. >> what kind of landlords are they? >> benevolent landlords. they've been amazing. >> thank you. appreciate it. >> thank you. >> congratulations to you. >> thank you. coming up, the profit's marcus lemonis travels to cuba and profiles a new breed of business owners. a preview of cnbc's newest documentary is after the break. and later, what the millers think of tech and particular amazon. they've held that stock for nearly 20 years. the holiday season fast approaching, is this a buying

opportunity? we'll find out in just a bit. "squawk box" will be right back. this car is traveling over 200 miles per hour. to win, every millisecond matters. both on the track and thousands of miles away. with the help of at&t, red bull racing can share critical information about every inch of the car from virtually anywhere. brakes are getting warm. confirmed, daniel you need to cool your brakes. understood, brake bias back 2 clicks. giving them the agility to have speed & precision. because no one knows & like at&t.

welcome back to "squawk box"

this morning. it is one of the last remaining holdouts of communism. cuba where the government there has expanded the rights of citizens to operate private businesses. some entrepreneurs have improved their lives dramatically but still uncomfortable when talking about money. marcus lemonis found that out when he spoke to a farmer outside of havana. part of a new documentary premiering tonight on cnbc. >> fernando is socialist to the core. so i wondered how he got his new house. beautiful. it's very smart how you built it so the breezes can cross. what did it cost to build this house? >> but you are asking me difficult things for -- i cannot tell you how it cost. >> okay. 5,000? >> maybe more. >> 10,000? >> less. >> okay. and where do you get the money to do that? do you borrow it from the government? families send it to you from america? >> i don't like the kind of

let's say -- i don't like -- >> you can tell me, it's okay. >> i don't like the kind of -- >> questions. >> questions you're asking. >> is it making you uncomfortable? >> maybe. >> okay. he told me the money came from lecturing overseas. not something most cubans get a chance to do. >> tune in tonight at 10:00 p.m. eastern and pacific for "the profit in cuba." when we return, more from bill miller with buying opportunities in the sector. and next hour, john barrasso will be here to talk president-elect trump and the issues facing america. "squawk box" will be right back. l with patient-centric, digital innovations; from self-monitoring devices that can interpret personal data and enable targeted care, to cloud platforms that invite providers to collaborate with the patients they serve. that's why over 90%

of the top 25 global pharmaceutical companies are turning to cognizant. our domain experts, technologists, digital and data specialists, clinicians and scientists are transforming the way clinical research sites collaborate with pharmaceutical companies, and enhancing patient engagement with innovative platforms and solutions. our population's growing healthcare needs present growing opportunities for our clients: to advance the future of medicine with digital, and improve the quality of lives. ♪

♪ oh, yes. it's that time of year. let's get back now to our guest hosts. and we can talk how to play the tech sector following the election. bill miller and bill miller iv of lmn investments. we talked a bit about tech. we will in a second. first i want to ask have you sold anything, bill? taken profits on anything? gotten out of anything based on being less positive about either sectors or individual names recently? >> no. >> haven't done anything in how long? >> well, i mean, we run 20% to 30%. you're talking three to five year holdings. we had a big position in nxp

which is being bougt out. that's going to be migrating out of the portfolio. unless something finds better values, we're going to be holder. >> when was the last time you added to something? have you done that recently? >> tech? >> anywhere. >> yeah, yeah. we've bought a lot of stuff that's dropped in the past month. names that i've mentioned on this show and at delivering alpha. >> like? name a few. >> valeant, endo pharmaceutical -- >> averaging down on valeant now? >> yes. lowest average cost wins. >> what's going to be the catalyst out of valeant here? >> we're actually meeting with them after this show. >> what are you suggesting to them. >> what i'm going to suggest to them is they focus on something pharmaceutical companies don't focus on in their discussions and earnings releases which is free cash flow. so the free cash flow, they're running close to $2 billion. and that coupled with asset

sales will enable them quickly over the next few years. we expect something in the order of $5 billion to $10 billion disposals in the next years. >> and then it turns into what? bausch & lomb? >> i think bill ackman made a comment about renaming the company. so i think it's going to be a slow growth specialty pharmaceutical company that for the next few years will be doing disposals. but they'll be putting money in r&d. products will get approved. it's going to be a completely different business model from what it had before. >> how do you feel about that? i mean, i would imagine that you entered into this position when valeant was closer to valeant opposed to a company that's closer to sell a lot of pieces off until it becomes possibly a bausch and lomb. >> i think it was probably in the high 30s.

and then the vast majority of the position has been taking much lower prices. by the time the stock had collapsed to that level, the business model didn't work anymore. it was a question of how to create value for shareholders. >> do you think bill ackman can ever make his money back? >> i don't know what his average cost is, so it's hard to say. >> over a hundred dollars a share. >> it's going to take awhile. we think valeant is worth easily double the current price. and if things break right over the next few years, it could be triple. that gets you into the mid to high 50s. not a hundred. >> what is tech now? is tech social media? is it semiconductors? is it telecom? what is it? >> it's a big tent. >> what's attractive, what's not attractive? >> what's interesting is what's happened since trump got elected. i think people have maybe misinterpreted that to being

something that silicon valley not being a supporter of peter thiel and president-elect trump has had harsh words about jeff bezos and amazon in particular. i think the selloff is due much more to the fact that growth is expected to be faster under trump. and therefore the scarcity of growth will be less. and so the biggest growth companies out there like amazon, facebook, google, there's more competition for those dollars. money is flowing out of that. i think the selloff in all three of those names is creating a good buying opportunity here. >> aside from rotation, though, is there a concern that amazon in particular might have a target on its back given the comments that mr. trump has made on the campaign trail essentially saying there are going to be huge antitrust concerns given there could be trade wars and amazon has a third of its physical footprint outside the united states not that much in retail sales overseas? all these things add up to be possible concerns about amazon

on top of that rotation that you're talking about. >> yeah. i think that certainly part of why amazon corrected 20% or more and the others have corrected less. >> that is the question in terms of the way you think donald trump is going to approach some of these big companies he's made comments about. interestingly, you would have thought that the at&t transaction with time warner would be in jeopardy. people at at&t think that they have a better shot of getting it through perhaps than even necessarily if hillary clinton had won. >> you know, i mean, if you take -- let's go back. you talked about antitrust. there's no issue with antitrust for amazon at all. but they've had that issue with respect to electronic books. and amazon controlling 85% of that market, the issue isn't part of the market control. it's what the consumer gets out of it. amazon is almost always the low price. the size has nothing to do with that. >> you're not worried about the

target because he can't really go after amazon? >> well, he can use a lot of rhetoric on amazon, i think. but it creates headline risks so people don't like headline risks. >> we're back to the candidate versus president. the theme of all companies if they get too big, it's bad. but if you actually look at the at&t/time warner in terms of vertical integration and everything else and if he talks to the regulators deciding on the deal and they say in the end it's going to be better for consumers, advance the technology. i guarantee you a republican is going to be more likely to let it go than hillary. that's why it makes sense. >> the distinction being he came out publicly and said this was terrible. we have to break up -- >> but that's the populous rhetoric about big companies. i've always thought that this would -- i've never believed that that would be something he would buy. i always thought at&t/time warner would work. >> you didn't think he was telling the truth when he said that. >> no.

>> back to the -- >> i don't know what you're supposed to make of it. >> well, the hundred other things where you said you just look at it and say my god. and mortified. so just throw that in with everything else. the wall and muslim. >> can i ask about the rotation more? >> could i stop you? >> i don't know. you keep talking. back to rotation. you make a good talk in terms of everybody was going to technology for growth because that was seen as the place to go for growth. at this point will those managers come back? is this a rotation that's a sort of change in the market at this place? in your view? or does it come back? >> well, it's going to depend on the individual company fundamentals at the end of the day. i think that the greater rotation is out of utilities, bond proxies. i think that's where the greater danger is. alphabet is 18 times next year's earnings. this is sort of demanding in this kind of an environment.

and facebook despite the slowdown in facebook, you're still coming to the low 20s multiple. so the consumer staple has been carrying those multiples and they grow 3% to 5%. >> so what are your thoughts on the rotation and whether the money goes back? >> i don't have a strong view on that. i think there's still some interesting names in technology. we still like twitter a lot. it's a dominant franchise. if you just look at its valuation relative to its users. facebook has 35 times -- facebook is roughly 35 times the value, six times the users as twitter. so there's a lot of space for twitter to make money on users. that's what they said on the last call. they're going to focus on profitability and run it like a business. hopefully doing ate way with incentive option plans that have been destructive for shareholders value. but we're optimistic on twitter. >> and jana partners is a new shareholder there. they're an activist so that will

help. >> when you talk tech, it's all this social media stuff. do you buy cisco now? is that tech? >> yeah. >> it is? but we don't talk about it anymore. we talk about this twitter which i have right here and -- but social media that's tech. >> yeah. i -- >> what about people that make the connecters and all the stuff that goes into the phones and all that stuff? any of that? you still own that stuff or no? that's going to build out the infrastructure of this great future? internet of things, all these things that are happening? >> quite a nice run. >> qualcomm. it's tech that's not social. >> he likes to buy things that will double. >> he was in nxpa. >> now you can get out of that. >> qualcomm. >> all right. then you've got to be really smart to figure out the next wave after social media or what part of social media is the next wave. i guess do the young people understand this better? maybe iv understands snapchat.

snapchat. right. because it disappears. i worry about my kids. thanks bill iii and bill iv. more from you in a bit. coming up, senator john barrasso on president-elect trump, the economy, jobs, and more. and then quicken loans ceo bill emerson will join us. the company's been fighting to have the doj's lawsuit moved out of washington to the company's hometown of detroit. we will get an update and talk housing as well. you work at ge? yeah, i do. you guys are working on some pretty big stuff over there, right? like a new language for crazy-big, world-changing machines. well, not me specifically. i work on the industrial side. so i build the world-changing machines. i get it. you can't talk

because it's super high-level. no, i actually do build the machines. blink if what you're doing involves encrypted data transfer. wait, what? wowwww... wow? what wow? there is no wow. or keeping a hotel's guests cuttinconnected.i to 35,000 fans... businesses count on communication, and communication counts on centurylink.

trumpinomics 101. making decisions who's going or in his administration. we're going to break it down. breaking economic news. plus it's the biggest week of the year for sales in the art world. we'll talk about what donald trump's victory might mean for picasso and monette as the final hour of "squawk box" begins right now. live from the most powerful city in the world, new york, this is "squawk box." >> welcome back to "squawk box"

here on cnbc. i'm joe kernen along with andrew ross sorkin and melissa lee. the futures this morning have been from up 10 to 10 20 on the dow. the nasdaq is now positive. diverged a bit in the week from the other averages we talked quite a bit about. and the treasure yields have moderated a bit today. there's the 10-year. we're now starting to watch the 30-year again. had a big move above 3%. the 10-year is at 2.21%. we have a lot going on for us. i hope it never ends. three, four, five fed guys every day talking about whether they go up a quarter point. all the nuances of whether they have a raise. i can't get enough of it. can you? look at all these people today. >> i will tell everybody about all the people out in force. then we can tell them to stop. here's what's going on today. boston fed president eric rosengren in maine giving remarks to the portland chamber

of commerce. steve leisman joins us with the headlines. mr. leisman. >> thanks for that great intro, guys. eric rosengren saying the december hike seems plausible. he said the november statement represents a high likelihood of the december hike. that's why he didn't dissent. he had enough in the statement there to not dissent. he prefers gradual hike opposed to faster tightening. he expects to reach full employment next year which he estimated to be 4.7% in 2017 around the corner. but he is skeptical on the continued gains in the labor force. we have a lot of people coming into the labor force. he doesn't think that continues which means he's looking for that to continue. and he says it's already evidence that wage pressures are beginning to show up. you were talking about 9:00 fed

governor dan turullo then fishds and and kaplan later on today. >> thank you. among today's corporate news, home depot reporting better than expected revenues and same store sales. look at shares. they happen higher by 1.25% in the premarket trade. and we are watching airline stocks this morning after berkshire hathaway discussed new stakes in the sector. a regulatory filing showing buying into united continental and american airlines. and a fourth stake in southwest airlines. this is a surprising move for buffett because he had soured on the industry nearly 30 years ago after u.s. airways proved turbulent for him. and united is holding an investor day today. announcing new economy fares, passengers with these tickets will be assigned seats on the day of the departure. and only one carry on item that must fit under the seat.

>> we are going to speak to senator barrasso. we're going to talking about obamacare. have you tried to figure out winners and losers in health care in potentially what the new administration does and whether you should sell something and buy other things, bill? >> the health care sector prior to the election was the worst sector in the market this year. and it's now had a nice rebound and probably a lot more to go in that space in my opinion. because you've largely eliminated the issue of price controls. but i think also the legal overhang that would generally be in that industry is probably going to be less, the regulatory situation is likely to get better. so i think overall the health care sector looks pretty good. >> something about the individual manager companies did really well under obamacare. the medicaid ones. >> the hospitals did well, too, because of the insurance. >> they had their day in the sun? >> well, the -- we made 50 times

our money from 1999 to 2000. >> not bragging, just a fact. >> just a fact. >> you're smiling though. you're looking at me and andrew like we didn't make 50 times our money. which we did not. >> we did not. >> but those companies are all good companies. i think they're solid. they're not terribly expensive. the manage care companies. there may be opportunities in those. >> and you never sold. you were there for all 50 times on an investment. >> we were. >> i never had anything go up 50 times. you just can't as a stock. something doubles, you sell it. because you're -- but it's somewhere else. that's unbelievable. 50 times rev. o you see that because he's backed off the complete repeal of obamacare? >> the stocks sold off dramatically because the issue of obamacare and insurance.

the hospitals have to cover the costs whether they like it or not. i'm guessing that's going to be not so much repealed as amended. that's probably an opportunity there. >> actually, that's exactly what we're going to talk about with senator barrasso. he says he hopes president-elect trump will focus on appointing a top priority. and then you could get started on day one amending the health care law immediately. after inauguration. joining us now senator and doctor john ba ros sew. if you had an hhs secretary ready to go on that day, what could he do. >> thanks for having me, joe. obamacare is over. and on day one there are some things you can do with the pen a enthen phone. then you have to bring in the

sledge hammer to completely repeal obamacare. thing you could do with the health and human service secretary is provide relief for those suffering under the mandates and the businesses that are holding back hiring because of the mandate. so you can do things immediately. you would stop the illegal payments that are going out from the government. with the lawsuit that the house has brought against the obama administration. president trump can stop that lawsuit from being defended. so you can do things in terms of making sure that no new people sign on. the administration right now is desperately trying to get more people to sign up for a program that is costly, complicated, and collapsing. and president trump can stop that effort as well. plus you just give a lot more authority back to the states. >> that's what you're saying. what would you -- you make a big point about something that you would reverse for what states have to do right now. could you explain that and how would it work? >> you want to give states freedom and flexibility and

choice. you want to get this away from being a government-centered health care program to a appreciate-centered health care approach to actually lower the cost of care. but you could do it with medicaid, giving states more authority there. letting states decide what kind of insurance has been sold in their state so people can decide what they want to buy. something that they think is right for them and their family opposed to something president obama says they have to have. that alone will provide more competition and will lower the cost. there are lots of things that can be done in a positive way. president-elect trump talked about 26-year-olds staying on their family's plan. andrew wrote about it this morning in "the new york times" in his article "a new game." and president-elect trump tells the truth about it. he says it's a good idea, but there's a cost to doing it. what president obama and the democrats used to say is -- and it's free. well, it's not free. there's a cost to these things even if they're a good idea.

>> they were both republican ideas before obamacare. and it probably could have been done if rom had stayed. it's not a surprise that trump could keep those. who has president-elect trump's ear right now? do you have it? does ben carson have it? do you both talk about it? when you say sledge hammer, the left is seeking 21 million people thrown out on the street that doesn't have insurance. that's what they think. and a kinder gentler donald trump that we've seen, he's going to be susceptible i think to that argument. or could be. i don't know. i don't know how he will be, but do you know? >> we're working with a new administration. we had a meeting actually the day that the exchanges opened november 1st. donald trump and mike pence were both in valley forge. the senate doctor as well as house doctors, the congressional group was there with him. ben carson was there all talking

about health care and ways we can do this in a way to help lower the cost of care, to help take care of patients so the president obama talks about coverage. we're actually talking about health care. so we're working together to do this. i expect the democrats to do the kind of scare tactics that they're used to doing. i think we can do a much better job in terms of focusing on the cost of care which is what this was all about in the beginning. as you just said, six years ago, things weren't perfect for patients or the providers of health care. they had to do a lot of work. we want a smooth transition, and mike pence has talked about that. a smooth transition for people right now who are under obamacare. their lives have been disrupted enough by this administration. we need to make sure there's a smooth transition. >> i think people just including me are just unclear about whether the aca, the affordable care act whether some remnant of it will still be on the books as

existing law or with modifications or whether that will be gone completely and the remnants will then be brought back with new legislation in a completely different set. will it be defunct, the aca, or not? >> obamacare is over. i think "the wall street journal" editorial this morning put it well. don't get fixated on some of the phraseology. obamacare is over. we promise to repeal and replace it. that's what we're going to do. >> okay, senator. thank you. seems much clearer. what was that -- what is your piece? what paper? "new york times"? >> right here. entire special section. >> let me look. >> called that happened now what. it goes through all the issues. >> i don't get "the new york times" anymore. i asked them to -- >> have you seen "new york times" stock since the election? >> yeah, rough. >> up. up in a big way. sharply up. >> wow. >> proudly so. >> close to a billion dollar market cap? >> over a billion dollar market cap. coming up, a new chapter

with quicken loans. ceo bill emerson will be here. stay tuned. you're watching "squawk box" right here on cnbc. [burke] at farmers, we've seen almost everything, so we know how to cover almost anything. even a rodent ride-along. [dad] alright, buddy, don't forget anything!

[kid] i won't, dad... [captain rod] happy tuesday morning! captain rod here. it's pretty hairy out on the interstate.traffic is literally crawling, but there is some movement on the eastside overpass. getting word of another collision. [burke] it happened. december 14th, 2015. and we covered it. talk to farmers. we know a thing or two because we've seen a thing or two. ♪ we are farmers. bum-pa-dum, bum-bum-bum-bum ♪

welcome back to "squawk box."

take a quick look at oil prices which have been firm all morning long. now 3%. been weird. i wondered about that with what happened there, too, because in a cyclical recovery, thought oil should be going up. unless we're just going to open up all the hydrocarbon restrictions that we've had for the past eight years. i was thinking this was a supply thing the past week as oil has come down. if you look at the demand side, if the economy ramps up, oil should have gone up. why'd it come down? >> there's a gross over-supply globally and you've got -- yeah. and you're not going to have any cooperation to cut production. >> going to play out good. except for people that are in that business, i guess. >> meantime, we are going to switch gears. talk about mortgages this morning. quicken loans reaching a new

chapter with the department of justice. a federal judge now agreeing to a venue change from detroit to washington. this is a big win for the company. bill emerson joins us from detroit. good morning to you. >> good morning. >> i described it as a big win. you've described this, i think, as a little bit of a witch hunt. i describe it as a witch hunt myself. tell us the state of play of where the suit stands now. >> sure. it's -- we think it's a win for sure. obviously having a venue change to the eastern district of michigan is the right place for this to be. the judge saw through the baseless claim of the department of justice that because fha exists in washington and we happen to sponsor a golf tournament that honors military servicemen and women in d.c. that that's where the venue should be. when reality, the facts, the underwrites, all of the things the doj is claiming have happened right here in michigan. and this is the right venue for it. just an opportunity for us to continue to show that this is a

ridiculous suit. the claims they're coming up with have no merit whatsoever. and we're going to continue knocking those baseless claims down one at a time. >> we're going to talk about the mortgage market in a second. but i'm curious to the extent you think that this lawsuit -- has anything changed with donald trump with this suit itself? >> we'll look at what happens with the attorney general and these cases in general. i think there's -- you know, there's hope and optimist a new attorney general, a new department of justice takes a difference stance on these particular cases and actually focuses on things and catching and doing things with bad actors versus the money grab the doj has been doing for the past eight years. so i think there's hope and optimism there. >> what do you think happens under a president trump? >> it's interesting. when you watch the market. right? i mean, trump's not even

president yet and there's already the irrationality of what could be and enthusiasm of what could be. the housing market right now is on fairly stable ground. we still have challenges with inventory. so i think it's going to be up to a trump administration and who they put into the housing sector to be thoughtful about what's going to happen with housing reform and how that impacts the broader market. because housing is what? 18% to 20% of the gross domestic product and it's a time we have the conversation about housing. >> immediately, though, bill, you said interest rates moved a little bit. they moved a whole lot in mortgage rates at 4% yesterday in terms of the rush to lock in loans, to lock in rates. how have you been able to deal with that? i understand there has been a rush of people trying to lock in a lower rates a this point. >> right. clearly there's been a result from the interest rate environment. we're handling it no problem. but it is a good point that if you're a consumer out there and you're thinking about doing

something especially from refinancing, it's time to lock in that interest rate. no two ways about it. i have yet to see a home buyer make a decision because of where interest rates are. but if you're in the market to buy a home, getting engaged now makes sense. >> what do you think is going to happen to -- put the mortgage piece out of it. what do you think is going to happen to real estate as a function of all of this? >> it depends on the policy. right? there's enthusiasm. there's enthusiasm about the release or the pullback of regulation. does that mean for the building community? but the reality is right now building homes is difficult. building them at the lower price point is difficult. but i do believe if there's optimism around the economy and we see things moving in the right direction, that would bode well for house prices. >> okay. we're going to leave the conversation there. we appreciate your time this morning. >> thachks a lot, guys. appreciate it. and we do want to take a quick check on the so-called fang stocks in today's session. we showed you premarket indication for the nasdaq. higher there. but it is worth if they open at

these levels, this could break the losing streak they've seen since the election. these stocks have been down every day since donald trump was elected. each of these stocks down more than 2.4% just in yesterday's session. so we could finally be looking at a positive day for this group of stocks. coming up, can you smell what the rock is cooking up? here's a hint. it's very sexy. details right after the break. the greatest population shift in human history is happening before our eyes. sixty to seventy million people are moving to cities every year. at pgim we help investors see the implications of long term megatrends like the prime time of urban expansion, pinpointing opportunities to capture alpha in real estate, infrastructure and emerging markets. partner with pgim the global investment management businesses of prudential.

welcome back to "squawk box" this morning. take a look at futures. we're looking in the green again. dow would open 21 points higher. and the s&p 500 looking to open four points higher. dwayne the rock johnson has a new title under his belt. he's been named as this year's sexiest man alive by "people" magazine. he follows in the footsteps of chris hemsworth. other actors that won the title include brad pitt, george clooney, and johnny depp. what was that reaction? >> is it "people"? >> yeah. >> oh, wow. >> you're runner up, joe. >> carl was in there. >> how'd they get that picture of you? >> carl was in there. quintanilla. he was in the top 50 i think. >> that's pretty good. >> or the top hundred.

>> out of all the men alive to be in the top 50. that's not bad. >> i did the math. it was like one out of 400 million or something. >> amazing. >> pretty unbelievable. yeah. all right. you know, you like to talk about that, i like to talk about taco bell. >> i don't choose to do the rock reader about the sexiest man alive. >> i don't know. i don't know how it happened. i just know you were reading. yum brands is opening a new line in vegas and alcohol is on the menu. you can get a decent margarita. the menu of the upscale taco bell cantina, going to be open 24 hours, has a deejay and a vip lounge. wow. this has got to come back to the east coast. also a freeze wall with slushies on tap that could be customized with a shot or two of liquor. this is the fourth upscale cantina location. the others are in chicago, san francisco, austin, texas, and i

which the nasdaq. >> there is one inside the lobby of the nasdaq. you have to make -- >> is it open in the morning? >> they will open it up for you. they brought that location in just for you and did a combo taco bell starbucks just for joe. it's next to the golf simulator and the chef that makes the omelets to order. >> i wish this were all true. i really do. and the other stuff i don't even need. just the taco bell with the -- >> sadly, it's not true. we're just pulling your leg. >> with the shots. our guest hosts this morning bill miller and his son bill miller iv of lmn investments. you mentioned your second biggest position. and it's about to embark on an actually field test in florida. what's the next catalyst here for this stock? >> a little bit like the wild ride at disney world. because it's a portfolio of options. it has -- nothing is really

commercialization yet. arctic apple will hit the market probably next year. the market will hit next year. the friendly mosquito, to control that. apart from florida, there's going to be significant release of those in brazil and central america. >> so a basket of promises. >> lots of stuff happening there. on the earnings call, r.j. kirk who is the ceo and founder of it. but he was very optimistic about stuff happening in the relatively near term which i think is why the stocks had a bounce here in the last few days. >> what does that mean? relatively near term? >> he talked about being a fourth quarter quarterback to win games. so fourth quarter is what we're in right now. they're presenting i think today or tomorrow at one of the health care conferences. and there's also some very scientific conferences that one of their affiliates is presenting out. >> yeah.

>> okay. it's a very busy day for economic data. among today's key reports, retail sales and import and export prices. you don't want to miss it. stay tuned. you're watching "squawk box" here on cnbc. this just in. 50 million customers' data was not compromised this morning in a security breach that didn't happen. wall street, not rattled... at all! no. sir, sir. what went right? everything. we have a brief statement on this non-breach. we're happy to report there's nothing to report. my dad's company wasn't hacked today. cool.

my dad's company wasn't hacked today. will your business be ready when growth presents itself? american express open cards can help you take on a new job, or fill a big order or expand your office and take on whatever comes next. find out how american express cards and services can help prepare you for growth at open.com.

♪ retail sales and import prices crossing the tape. rick santelli standing by at the cme in chicago. rick, you got about a second to relax before you give it to us. >> here we go, joe. october import prices up 0.5%. 0.1% hotter than we were expecting. we gained 0.1% on our last look. that's month over month. let's go year over year. looking for a number down 0.3%. also a tenth better. down 0.2%. do empire manufacturing is a positive number. we were looking for negative 2% to negative 3%. we ended up with up 1.5%. it's not stellar, but certainly better expectations.

which was down 6.8%. okay. for the big data. october retail sales up 0.8%. a little better than the 0.5% we were looking for. and also a gain in revision, a healthy gain from 0.6% to 1.0% for september. strip out autos, still up 0.8%. the control group up 0.8% which double the expectation of up 0.4%. that's the number that's inputted in other data points. if we look at that number, the control room had a big revision from september up 0.1% to up 0.3%. if we look at the high water mark for that control number this year, we're still a bit aways from it. non-rounded that april number came in on the raw data up 1.057%. so indeed this is a pretty

decent number. that would make it the second highest number of the year. and of course another high number for the year are equities, the value of the dollar index, and of course the yield certainly not the price of treasuries. yesterday cease settlement was one basis point away from what many technicians including myself have been looking at for quite a while. unchanged on the year at 2.27%. it could close unchanged on the year. we will continue to monitor. there's a lot to digest post-election. probably digesting the low hanging fruit and perception of that. there's other things to price as well. but all in due time. joe and the gang, back to you. >> thank you, rick. we're going to keep digesting. steve leisman is at the breaking news desk with reaction of his own to the data. >> thanks. you know, one way to get a sense of the data is to look down the

column at the negative and positive signs. there are like 20 categories and only three that are negative. furniture and home is negative, department stores negative, and food and drink stores are negative. but all the rest and healthy positives in there, motor vehicles up 1.1%. food and bench up 0.9%. gasoline station sales flattering the number with the rising gasoline station sales. but the idea is we put together two back-to-back decent months here. 1% in september. 0.8% in october. you recall there was this august concern about a downturn in consumer spending. it came in at a big goose egg. this gets us off to a great quarter when it comes to consumer spending. the expectations were pretty limited looking for a 2.4% on consumer spending. we might get an upgrade to the fourth quarter expectation here on the first month. so it's a good start here and

we'll have to see how this plays but just remember that the gasoline station number is going to be part of why this is better than expected. melissa? >> all right, steve. thanks so much. u.s. major averages up 1.3% over the last week. with a look at what's going on and what's working is sara mallek. great to have you with us. >> thank you. >> we just got retail sales. consumers a little stronger than expected. we've also seen in the days after the election is real strain in the retail sector. the department store, traditional retailers out there. on this notion that a tax cut is going to lift all boats. do you see the consumers as much stronger under trump administration? >> i do see consumer strength under the trump administration. we are looking at names that have been beaten down recently. the great high quality name is alphabet. that stock has been trading down recently. but online media is still a big

use for consumers. we think that that's taking market share 80%, 90% of millennials are getting their information online still. so we think alphabet can continue to do well. they can continue to earn $50 a share. >> what's your take on what we've seen in technology? these stocks including alphabet down every day since the election until perhaps today. we're seeing a trade higher in the premarket. >> i think investors are starting to see they're looking cheap and alphabet companies continue to grow. so they're starting to look at those. >> why alphabet which didn't have as high of a p.e. as a facebook or netflix or amazon amongst that group? a company that is primarily domestically oriented when it comes to its revenue. why was that taken to the wood shed in the days a the election? >> mostly it's a source of funds. investors are looking more towards cyclicals as we see more

infrastructure spending and higher spending. people are usings alphabet. another high quality company in the industrial space. they have pricing power, great original equipment business. really seeking products. and that kind of company should out-perform in this. people are starting as the dust settles to look back at the great high quality companies like alphabet. >> how is it of repatriating cash from overseas going to be in all this? >> we think it is going to be important and a benefit to a lot of these technology companies. >> but in terms of -- do you think it's in the next year, two years out, how much do you think it's brought back? how do you map it out? >> we see that as a relatively short-term. >> not a big one for you. >> we do see it coming and coming in the near term. we think it will be fairly high priority. should be the highest priorities. >> you mentioned parker hahnafin. what do you make of the rise

we've seen in parker hannifin in the past week? it's been stunning. >> we see a lot of this as catch-up. we had a multi-year period where momentum and growth stocks were working well. and cyclical stocks were out of favor. we see this continuing as some of this continues in 2016. >> what's on your radar on things to buy? that may be harder with the market close to record highs. >> well, there's other areas we're looking at. even consumer staples which are out of favor right now, we think the food industry is going through a consolidation. look interesting there. high quality company, organic growth that's greater than the sector. they're introducing heinz yellow mustard which will be popular due to the brand name. they're less promotional. >> so consumer staples are bidding up so much because of their dividends that you think they've been beaten down enough. >> we think they should keep

balanced portfolios. not all about cyclicals. it's good to keep a strong balanced portfolio in other areas which are now getting beaten down. what you saw when cyclicals weren't doing better. it's also an eye on those stocks. >> all right. sara, thank you. coming up when we return, we're going to talk art. more than $500 million of art hitting the auction block this week. we're going to break down how the trump rally could impact those sales. and tomorrow on "squawk box," a special guest sam zell. never one to hold back his views on the world. he's going to join us at 7:00 eastern time.

hey, jesse. who are you? i'm vern, the orange money retirement rabbit from voya. orange money represents the money you put away for retirement. over time, your money could multiply. hello, all of you. get organized at voya.com.

welcome back to "squawk box." take a look at the futures right now. we are looking at an extension of the trump rally. in particular, take a look at that picture of the nasdaq. in terms of what the futures are noting. it is worth noting that the fang stocks, they're all higher by more than 1% in the premarket trade. take a look at the picture and the oil markets as well. wti higher by about 3%. ditto for brent and take a look at the dollar index as well. here we go. it is barely higher. it is 100.3 on the index. eric rosengren is answering

questions in maine right now. >> interesting comments from the boston fed president saying if there's more fiscal policy, much more fiscal policy, it could mean faster rate hikes. in the feds would need to do. what the u.s. fiscal policy would be. it matters how it's financed. but one of the things he's saying was something we talked about last week. if there's a change on the fiscal side, it means possibly a change on the monetary side. and it may be when you look at the 2-year, when you look at the 10-year that the bond market has figured this out already. in terms of you know what with a trump presidency, the outlook for monetary policy is going to be different from what they thought on that tuesday. joe? >> thank you. it's been the biggest -- it's usually the biggest sales week of the year in the art world. this week? >> this week. started last night. and, you know, the art market is a really important bellwether for the high end economy. sotheby's and christies expected

to auction off $500 million worth of art this week in the biggest sales week of the career. but that total is about half of last year's. and the big question is whether donald trump's election will revive sales or add a little more uncertainty. now, last night sotheby's got off to a pretty strong start with its sale totaling $158 million. that was about half last year. but big sellers. the big seller last night was this edvar monk piece. it went for $54.5 million. that same painting sold for $38 million in 2008. tonight christies going to auction after this dekooning. they also have one of monette's iconic hay stack painting. >> that's a steal. >> exactly. eric clapton is going to sell off one of his gerhard richter

paintings. in 2002 he bought three of them for $3.4 million. he's already sold two of them for $55 million. this third one hit this auction block with an estimate of $25 million. so his $3 million investment in 2002 would turn into $75 million 14 years later. >> he went for the best of what he could afford at that time. and he pushed it to the highest number. i think that's very important. but again, buying for love. that's something which is a romantic idea. at the end of the day, it actually turns into the same thing that we see here, this richter painting. >> you buy for love, you make money in the process. so bill can tell us, but i worked out that's a compound annual growth rate of about 24% for a painting that he also got to enjoy for over a decade. >> in amazon 2002, he could have done better. could have bought those paintings back. >> all right. >> which ones you bidding on? >> nothing. but the problem in the market now is not the buyers.

there are a lot of buyers that want great stuff. the problem is no one wants to sell. and if you are selling this week, you decided to sell this week about six months ago. no one wanted to put up one of their paintings right after the election because it was so uncertain. so this week will tell us a little bit but not a lot there's not a lot of great stuff coming up for auction. >> might not be a pipeline. >> exactly. >> robert frank. when we return, we'll spend time with our friend jim cramer. he'll join us from the new york stock exchange. we'll get his take on the markets. and then later today on "the half-time report" gary cohn and john boehner in his first interview since the election. that's all today starting at noon. back in a moment.

♪ okay, so you launched your bank's app. now what? how will you keep up with the new demands of today's digital economy? the fact is: some believe they won't need a traditional bank down the road, so at cognizant, we're helping banking and financial services companies think digital, be untraditional, and reimagine what the bank of the future can be. our clients can now leverage customer intelligence to predict their financial needs and provide more contextualized products and services. we're creating new platforms across channels so customers can effortlessly invest, borrow, lend, transact-wherever-whenever they choose. and we're digitizing the way banks run, driving efficiencies and delivering new value

for their customers in return. digital works for banking and financial services. lets talk about how digital works for your business. ♪

welcome back to "squawk box." check out dick's sporting goods. topping expectations. but the current guidance below forecasts. we're seeing the stock decline by about 5% in the premarket trade. let's get down to the new york stock exchange and jim cramer joins us now. we've got the millers here. did you see that movie "we're the miller"? >> yes. >> we have different millers.

we have bill iii and bill iv here. talk about airlines, jim. that was crazy. it's amazing that buffett after what he's said in the past about airlines. but it's a different animal now. >> i've been with bill. bill knows the last time i saw him on air and when i saw him at delivering alpha, i thought the airlines were cheap. now they're eight times earnings. the fact is what buffett hated about them was they were losing money and deregulated they couldn't handle. they got reregulated by a lot of emergenciers. i think the comparisons are going to be easier. i have loved united airlines ever since coming in of september of 2015. i never lost face in kelly at southwest air. i think this group was right and it's right for the move. move has been rather dramatic in the last couple weeks. and might be coming in a little bit late here, but you know what? this group is not the same it was. and it's been marking time. and bill, you know the truth which is these companies are now huge earners with huge capital being returned to shareholders. >> absolutely.

delta even with the move today still down for the year. >> right. down 6%. absolutely. and there's no reason to think that that can't have -- that's a great company. a lot of people don't recognize these companies are now run almost every -- actually, no. every single one of the ceos in this group are that also is different from what warren buffett felt back in 1989 when he felt there wasn't the leadership. he lost track of who was running them. i would trust any one of those people with any company in america and think they would do a good job. >> talked a lot about tech and amazon and fang. is pullback over? >> i think they were trading with bonds. if interest rates decide to cool off, i think the money comes back. amazon is the one i would like to be in. as bill knows, this is the one with the $4 trillion total adjustable market. they're spending more because every time they spent more, they made more money the next year.

so i think amazon is the first to come back. alphabet was a very inexpensive stock and they have no china. the idea that china will retaliate against them, wrong company. >> what have you got coming up, jim? >> we're just looking at these retail earnings. is home depot not a great company or what? >> i said that. a guy like -- langone is a young man. your company makes $23 billion a company and you're just watching it. it's up believable. >> i remember saying i thought frank blake was great. he said you ain't seen nothing yet. this has historically traded off the conference call, not off the release. we've got to hear what they say. but my point is, wow, they deliver some unbelievable numbers. people throwing it away now, please, listen to the conference call before you make your move. thank you, guys. >> we're only ten minutes -- nine minutes. we'll see you at the top of the

hour. coming up on "squawk alley" a cnbc exclusive interview with ge ceo jeff immelt. stay tuned, "squawk box" will be right back. ♪ for decades, investors have used a 60/40 stock and bond model, with little in alternatives. yet alternatives can tap opportunities

that traditional assets can't. and even though they're called alternatives, they're actually designed to help meet very traditional goals. that's why invesco believes people should look past conventional models and make alternatives a core part of their portfolios. translation? goodbye 60/40, hello 50/30/20. the markets change... at t. rowe price... our disciplined approach remains.

global markets may be uncertain... but you can feel confident in our investment experience around the world. call us or your advisor... t. rowe price. invest with confidence.

take a check on the yield of the two-year note, 1.025% and touching ten-month highs this morning. >> our guest host this morning, bill miller iii and bill miller iv of lmn investments. was the first bill miller, was the second one a junior? >> it was. >> and the next one is not the second, the next one is the third. >> the next one would be me. then there's him and he's got a fifth. >> what about bill miller ii? >> you do junior. you might put them together and confuse people. >> what if they named their child bill miller also? >> i wanted to name his younger brother bill v but my wife didn't like that. >> george foreman did that. that's a great idea. i would do that. all right. we're talking about one of the greatest investors of all time. >> you started it. >> i had to intro him and it is

confusing. are you a millenial, bill? are you a generation -- >> i don't know. i'm 35. >> i think you're just at the cutoff, at the outer edge. >> so there is a skill to being one because i do think it's a -- i mean i watch the way the experience shal side of things so you should let him do all the up and coming stuff. >> i let him fix my phone and stuff like that when i don't know what to do. it works. >> exactly. so you would never try and do anything bottoms up or top down? do you have any idea how long this bull market lasts that's already, you know, getting long in the tooth? do you think it -- >> yeah, i do actually. >> you do? >> yeah. i think it's a secular bull market that began in march of '09. it will last until it becomes too expensive relative to the alternatives. so 1999, you know, 1968 in small cap stocks, 1929.

so i think you're looking at -- if rates move up, as i would expect over the next couple of years to call it 3% to 4% on the ten-year assuming good economic growth. if the stock market moves up from 18 to 22, 23 times, then it will be pretty much over. >> bill iv, you may have a different time horizon than bill iii too. you can go 30 years. or you might too. >> yeah, i can. >> why would you say something like that? >> because he's 35. he could live to 105. >> my partner died at 92 in 2010. came to work the day before he died. >> okay. you're not going to make 60 years. he might make 60 years. with some of the singularity, maybe we'll all make another 60 years, which would be good. you didn't give me an actual -- if they don't die of old age then. >> they die of excesses. >> they die when things happen so there's no reason to think they're closing in on some time

of terminus. >> no. the money has to go somewhere if it moves out of bond. >> but you said relative to other things. relative to other things, it's getting less attractive. >> the faster it moves up, yes. >> what's going to be the -- what's the cycle in yields? what will the high be this time around, do you think? >> three to four probably. >> so lower lows and lower highs. i guess if you look historically, what's the average 30 years, like 2% if you go back 100 years? that was an aberration in the '70s and '80s. >> yeah, that was an aberration, but the rates for last summer hit the lowest in 5,000 years globally, so -- >> right. >> i mean one thing the market hasn't figured out yet in the trump stuff is that housing stocks will be a huge beneficiary of the change in corporate tax rates because they're purely domestic and pay a 35% to 38% tax rate. if you cut that down to 25%, they're already trading way

below the market. i think that's part of why they're starting to outperform after being snoozers. >> specifically the home builders as opposed to some of the suppliers in the chain. >> i don't know what home depot's tax ralt is but it's a mostly domestic company. any company that's purely domestic will be a big beneficiary of this. >> not just the housing market, there's so many companies that are strictly domestic companies. >> yeah. >> do you buy, for instance, i don't want to use buy like you're investing, but do you embrace the notion that boat-up department stores get a boost because the consumer has more money in their pocket even though we have so long said they have been dliepieclining in a a secular change because of the way people are buying and travel. >> if i contrast those with home builders so a stock like macy's and nordstrom, these retailers are under huge secular pressure from things like amazon and overstorage stuff. can they get a bounce? yes. home builders, there's no secular pressure there.

that's a case where you've got everything behind you and they get a big boost from the taxes as well and more money to spend. >> we need to thank the third and the fourth, the millers. no real family squabble this morning but we appreciate it. we've got to go. join us tomorrow. "squawk on the street" begins right now. good morning and welcome to "squawk on the street." we're live from the new york stock exchange. carl, well, he is live at general electric's annual mines and machines event in san francisco. carl is going to have an exclusive interview with ge's chairman and ceo, jeff immelt, a bit later this morning. let's give you a look at futures this morning as well. as you can see we're looking for a slightly higher open at least on the s&p, and the dow which did end very, very slightly in