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 positive territory yesterday.

as for european markets, you ask, let's take a look at how we fared on the big three or are faring. all up with the ftse in the uk the biggest gainer so far. the ten-year note yield, certainly a focus since the election. wow, still can't quite get over it. 2.228. where were we before the election, 1.7? >> i checked in for refinancing and it's already changed dramatically. you had to make your move. they adjusted that one so fast your head will spin. >> oil up this morning, which is a bit of a change and brent crude at the bottom there. our road map starts with another record close for the dow. that's six straight days of gains, but the s&p and nasdaq were down. plus a beat in a race for home depot as retail earnings kick into high gear. and the white house transition continues. mary jo whiteout at the s.e.c. as the trump administration

begins to take shape. the dow aiming for a seventh straight day of gains after hitting a record high yesterday. warren buffett's berkshire hathway buying airline shares and home depot posting better than expected third quarter results. let's just start there, jim. you just mentioned mortgage rates, housing, home depot, and yet there's another part of the story that says, well, taxes may come down, infrastructure spending, and it was a good quarter for them. >> well, we have to listen to the conference call because those guys have always given you guidance much better. their actual lease, i fault them rarely, but their actual release tells you less than some other company. unless you hear what they say and the stock jumps on just the numbers, you won't know. bill miller was saying earlier, maybe they have a high tax rate. when i look at home depot and i think this was part of a trade that went on right before the

election, that spend has stopped on your home. you know, retail sales numbers were really pretty good, and i didn't get spend stop on your home from anything other than whirlpool. we had whirlpool and we had masco and sherwin-williams. that's the paint aisle, the appliance aisle and the cabinet aisle. i've got to hear from home depot pause those companies aren't doing how home depot did. no more than how foot locker did if nike and adidas are in a price war. they have been very, very constructive. their fantastic cfo has urged people to stop looking at the quarter to quarter and look at the longer term, the big demographic shift in the country, people moving out of their house. household birth rate. and it really just comes down to her saying there's a lot of money still pent up to spend on homes so i like her long-term

forecast. she's been more accurate than anybody else, any economist i follow. >> all right, but your point being a good one which is let's wait and listen because as you say they don't provide that much in terms of granularity. >> the stock up today is advanced auto parts. if you read the release it's downbeat but the analysts are saying, hey, this is the beginning of the term. i don't want to caution people too much to not react but this is a quarter if you react off the headlines, you have been so wrong that it just doesn't pay to be able to say, you know what, darn the conference calls, full speed ahead. it's been the opposite. conference calls are everything. >> as you pointed out, we're going to get more retail earnings. overall environment right now, we're almost a week removed from the election, the unexpected market moves, certainly the unexpected result and then the market moving in a direction that people did not expect. and the biggest part of the story i think has been rates. i think bill miller earlier on "squawk box" saying the long

bull market in bonds is over. >> right. i can get that. remember, if the government is going to start spending again and you have the united view the government is going to spend again and taxes are going to go down, we know that is bears for bonds because you have to borrow. i've been saying if mr. trump wanted to drill home the infrastructure, time to do a $500 billion bond because -- to make america great again because that's what you need. i urged this to tim geithner and he said, no, you've got to borrow short. i said no, if you lock in long, even though it cost more money in the shortened, what a great opportunity. but a restaurant chain, zoe's, they were trying to say why business is going to be better. kevin miles, who's a terrific ceo, said one good thing is we have the election behind us. i continue to think that's what terry was saying with macy's, mr. ellison when he was talking about j.c. penney which missed

the quarter badly and the stock is up dramatically. let's not lose sight of the fact when you listen to these ceos in retail, they think it's a sea change. they actually think the election is a sea change and they definitely think now that it's behind us, people are going out again. popeye's, expect people to come back. >> there's a look at jcp. i did reference those words from bill miller but let's take a listen to his thoughts about that 35-year bull run in bonds. >> in my opinion the 35-year bond bull market is over and so people are going to start losing money in bonds. the overinvestment in bonds is going to switch somewhere and i think a large part will go to equities like it did in 2013. >> wishful thinking, jim? >> it's funny. it comes on the same day warren buffett loads up on airlines. that's been bill miller's segment. we have a lot of rep taj about different fund managers and their filings come out. i was going over where warren buffett may have been buying the

airlines. he was buying them at six times earnings. united airlines, these are well off their highs. 73 for the high in 2014. american was at 56, delta 42, southwest at 49 last year. look at, guys, you're buying them back where they were. you're not buying them where they were july 7th or june 30th. >> plus we don't really know. i guess it does bear mentioning, he's not making all the investment decisions at berkshire. >> no. >> he's got other people doing that and i think he's been empowering them more to do so. i know he spoke to becky. becky row lelayed to us southwe airlines also a name. by the way, he was burned way back by u.s. air. >> investors have poured their money in airlines with terrible results. it's been a death trap for investors. in '96 he said u.s. airlines revenues would increasingly feel the effect of an unregulated and

fierce competitive market. my favorite one is he said that there's little competitive advantage ever since the days of the wright prorbrothers. if a far-cited capitalist was present at kitty hawk, he would have been shooting them down. >> he has not been particularly positive. it's been a long time since he owned an airline. he did end up making money on u.s. air. >> most people don't remember that. i like ever since oscar came into united airlines. he came in in september of 2015. the stock is not back. you can still make a case for that one. but it's now selling at eight times earnings. jet fuel is a big variable. there's new engines coming out. but when you take a look at where these stocks have traveled, david, just this quarter, i think that people who

get excited, they must realize that you're talking about stocks that have had remarkable runs. american has traveled from 25 to 43, it's now up 5%. during the period when buffett was buying. how about this one. united continental is up 9% for the year, it was 39 on july 6th. it's going to open around 64. so people who think they're getting the buffett bargain, no, that's when buffett was getting the bargain. >> and it always bears worth repeating 13 fs are dated and we also tend to make a lot of some of these hedge fund managers, those that have not had particularly strong track records, though i would not take away from their smarts, but it's interesting how we can celebrate some of their stock picks when they have not been able to perform at all or deliver any alpha. >> maybe it really did peak when we started paying attention to these filings. >> yes. >> the filings, when i was a hedge fund manager we had to make the filings. there was 50% of my fund that i never traded. those are the cape cod bank and

trust names. 50% of them are like are you kidding me? i can't believe that i filed that i owned x. i'm short x. but people just presume that i loved x. and x, by the way, was not -- >> no, not letter x, i understand. i remember, i used to talk to you back in those days. you owned something and -- >> let's get more from carl at ge's mines and machines event in san francisco. carl. >> good morning, david. yeah, fascinating your discussion about aviation, certainly that's going to be part of the discussion here. this is the minds and machines conference, 2600 vendors and partners of ge. it's been going on for about five years where they talk about digital and innovation. of course a big part of ge's strategy going forward. we talked to immelt a couple of weeks ago about that baker hughes partnership but have not spoken to him yet about the election. if you believe the election was a rebuke of globalization and free trade, you do have to ask what is ge's playbook.

it was designed almost entirely in the '70s and '80s to compete dploebl globally, to take on the japanese and the germans. they compete in every country in the world. twice as many workers abroad as there are in the u.s. so we'll talk about the results of the election, what it means for production, manufacturing production in this country along with an update on bhi and alstem and the q-4 guide and media. there aren't a lot of large cap ceos who dealt directly with trump in his private life. immelt did some of that when ge owned nbc and nbc ran "the apprentice." so that's coming up in the 11:00 a.m. hour east coast time. we can't wait. >> we are looking forward to it also, carl, thank you. >> the stock looks like it's breaking out. >> ge. >> yeah. >> it would be curious to hear his thoughts. it's funny, in the few conversations i've been able to have with chief executives, embracing, as you might expect,

tax reform, infrastructure spending. very concerned about immigration and believe that if in fact the trump administration follows through on the promises made during the campaign that will be a negative for the economy and for business overall. >> obviously in that newspaper, chinese communist party, they talked about we could switch from boeing to airbus. ge is agnostic and can have their emergenci engines everywh. you notice that their bids in tech are furiously again because interest rates -- it turned out they were so tied in with interest rates. you'll sell the banks with rates coming down. even down a little bit, and you'll buy the financials. one i want you to keep track of. >> please tell me. >> is the features that twitter added last night. control features expanding the mute feature, giving the ability to mute words and phrases. hateful conduct option with reporting flow, i like. improve the ability to process

these reports. a lot of this -- enforcement overall in training our support teams, all of the things are something so that salesforce backed away even as mark benioff reiterated they may have elected the president. i just point that out because a lot of our viewers focus on tweeting and some of us got so turned off because our wives look at it or our kids and say, geez, that's a horrible thing. >> it can be very deflating if people are attacking you. even if it's 1 out of 50. >> mine is closer to 25 out of 60. >> obviously you know the company well. is this an important seminal moment for them or just another -- oh, carl has stepped away. you know what, let's take a break and talk a bit more about twitter when we come back on "squawk on the street." also be focusing on the markets for you as well.

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mary jo white will step down as the s.e.c. chairman in january after more than three years on the job. this comes as donald trump prepares to assume the presidency. white's departure paves the way

for trump who has vowed to dismantle dodd-frank to pick a new chair and potentially reshape the s.e.c. you've had some issues with mary jo white. >> no, i had issues with elizabeth warren attacking mary jo white. i think she's a dedicated public servant. she recruited me coming out of harvard law school. so all i can say is she directly tried to interpret as an agency, tried to interpret the law. and i think that people like mary jo white, who are -- they come from a background of enforcement but also private practice recognize you can't free lance. you can't just say i'm not going to enforce that law. but i think that the phase of that, if you don't believe in the law and you think the law is going to change would put her in a very untenable position. she would not be serving really the overall ethos. >> do you have any expectations in terms of what an s.e.c. will look like under a trump administration? >> i think that the s.e.c. has

tried to be enforced with both spirit and letter. maybe it will be more letter and less spirit. i didn't think, by the way, that mary jo white was a particularly heavy hand. i also think that the u.s. attorneys have been very straightforward in prosecuting insider trading. i don't know. i totally understand that she did some very good things about money funds. her hands were tied. i mean obviously like a lot of other people in government, they were split in the s.e.c. but i wish her well. she didn't need to take this job. she's had a very, very successful career doing a lot of things and i thought she did her best in an acrimonious environment. >> and tasked in part to modernize the s.e.c. >> yes, without a lot of money. it's not like in britain where they're the highest paid -- the head of their s.e.c. is one of the highest paid people in government and they have a lot of latitude. but, look, in the end, david, the s.e.c. is not going to be able to say here's what insider trading is. that's up to congress. >> yeah. and that actually could even end

up being up to the supreme court. >> yes. so i just -- i feel like that she was under attack from both sides. i thought elizabeth warren did a a -- i wish i could call her and say, listen, i just want to apologize on behalf of people, that was wrong. on the other side it looks like that she is being whipsawed by the prospect of lays a fair. >> the s.e.c. tends to be reactive rather than proactive. and to your point, the real veterans tend to move on to be heads of compliance where they're paid multiples of what they were earning in the s.e.c. >> she's had a chance to be in private practice and done quite well. look, i'm really out here saying this is who you want in government, public servants who have worked on both sides, understand prosecution. she did a great job and i salute her and i hope that she goes on to a less acrimonious world

because that would be deserving. i think she did her best and she did a darn good job in a world where things change rapidly. >> are you thinking about your mad dash? i hope so. >> sure. >> because we've got it coming up. we didn't get to that many stocks in the open there. >> that will change. >> we'll also give you a look at futures so you can see where we stand on the markets. perhaps a bit of a higher open, especially for the nasdaq. tech has been beaten up pretty badly. >> yeah, maybe it's done for the day. >> and that seems like it may have run its course, at least for today. a lot more "squawk on the street" right after this. alpha seems more elusive today. is it because so many go after it the same way? chasing after short term returns. instead if getting caught up with the crowd, the investment managers at pgim take a long term view, teaming specialized active investing with risk-management rigor, to seek out global opportunities. we manage over a trillion dollars this way, attracting many of the world's leading investors. partner with pgim.

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message in a bottle. >> yes. >> you've got a mad dash. where do you want to go? >> yesterday i had a cyber call which is they do e-mail security and we know there's also e-mail security. most of cyber security has come down. this morning morgan stan be upgrades fort net. why is this important? because they announced bad numbers. they actually had a shortfall. people are circling back to these stocks, i think they're circling back because i think in some ways people feel like the trump administration will take cyber security far more seriously. i think that you have to because of e-mails, the e-mails. >> i would like to think that the previous administration, the outgoing administration was taking it pretty seriously too. >> i think everyone takes it seriously, but you're beginning to get agencies, like there's a

new york state regulator who says, listen, you guys have got to do this. so what the ceo said last night was very interesting. he said, you know what, a lot of people did lip service bent. now it's going to have to be you are at fault if you don't spend a lot of money. no one wants to spend a lot of money because it's very expensive. >> and it's ongoing. it's not as if you can stop. >> no, it's state sponsored. >> it's like taking lipitor, you've got to take it the rest of your life. >> it's maintenance. a chronic illness. and that's one of the things that was episodic and now it's chronic. and one of the things that cyber arc says is you presume they're in. that's a big change. he used to say you've got to keep them out. now you have to presume they're in and we have to find them. >> right. >> they're amazing. the election was really in many ways about an e-mail server. >> it did end up being.

and not to mention of course all the hacking that was already taking place to the clinton group. >> when you get behind the one that preannounced bad numbers, that says the group is back. >> we'll talk defense stocks too because they have had quite a run when we watched some of them open this morning. it looked like tech is going to get a bid for the first time in a while. we'll keep an eye on the rest of the markets, not to mention that bond market, when we come back with the opening bell after this. as a supervisor at pg&e, it's my job to protect public safety, keeping the power lines clear, while also protecting the environment. the natural world is a beautiful thing, the work that we do helps us protect it. public education is definitely a big part of our job, to teach our customers about the best type of trees to plant around the power lines. we want to keep the power on for our customers. we want to keep our community safe. this is our community, this is where we live.

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you're watching cnbc "squawk on the street." we're live from the financial capital of the world. the opening bell will ring a little less than two minutes from now, jim. when carl is -- well, he's here, but not physically here. he's in san francisco. he'll have an interview with jeff immelt a little later in the program. >> which will be great. >> i turn to you and ask what is the key to this market. what is so many but what is front and center for you? >> i am going to say one that i think has had a remarkable run and it's bank of america. bank of america, we have a lot of fed speak. bank of america is the number

one company that is levered to higher rates. and it's had a remarkable move. it's now well above book value. that is your stock to follow. i thought brian moynihan and company had an excellent quarter. it wasn't going to get its due unless there was a fed rate hike. now the chances are built in much, much higher. this is the stock that people are keying on. it had its move after a long, long time. it had its move over where it was. you know, this was the last to move. i want you to follow this stock because if bank of america keeps rolling, then you really are going to have a rate hike that's good. >> i think it's four trading days over which the etf that tracks the banking sector is up 14%. >> yeah, it was a remarkable move. >> wells fargo, as we were talking yesterday -- >> they did one of the best. >> well above -- back to where it was. >> but that's what you want to watch because that's like a proxy but it's also for all the

fed speak and in fact, david, moynihan has done a good job in the last year and no one gave him any credit. now they're giving him credit. >> now they're giving him credit? it has nothing to do with him. it has to do with less regulation and higher rates. >> he has a great mobile app. >> nothing has changed. >> listen, he's done a good -- he's cut back costs. he's ready. and if he decide to move -- well, if they dismantle dodd-frank, wow. by the way, this is a fabulous thing for conagra. >> they are celebrating that spin off from coning aremaragrc. five 9 is a provider of cloud software. you can see the realtime exchange. >> doesn't that -- >> it does look like we'll have a bit more green on that board. >> does that sound like

salesforce.com? it's up a buck and a half and only 95,000 shares. they do report 11.17 which has come up rapidly. i want to just go back to twitter for a second. i know that i want to give this its due. they're not done trying to clean it up. when mark benioff looked at this company, i think they were very concerned -- there were two things they wanted. they wanted the data but also didn't want to upset their large shareholders. i think a group of large shareholders really and truly were fed up with the anger and don't feel that it's fitting with a lot of the people who like to advertise. so if they can cloean this up ad block certain things in people and not have a decline in the number of monthly average users and make it a little more easy to onboard, i think twitter will become a target again. >> you do? >> or they can get it up themselves. this thing has become -- i don't know if you saw the article that said now we're done with the election, we're done with twitter. i think mark benioff thinks

different. what was the route trump took? it didn't rely on the media. it was intervention directly to the person and that's what a lot of these companies are talking about, direct to consumer in the software. by the way, home depot, home depot has credited salesforce with doing remarkable work in terms of knowing what the consumer wants. why is the stock down? a lot of people were saying there was a one-off gain from the hurricane, the storm. but you know what, i think you've got to think a little longer term. i don't think home depot is anything other than a fabulous long-term story. not unlike disney, which we never talked about, another one that was long term. >> we can talk disney in a minute but let's turn our attention to technology for a second. shares of apple, for example, have gotten beaten up. they're up today for the first time i've seen for a while and i don't track these things quite as closely as some of our colleagues. but facebook is up, google is up, or i should say alphabet. amazon is up. some names up for the first time in a while that since the election have been down while

the broader market of course has been very strong and the banks, our conversation a moment ago, were very strong. drug stocks, pharmaceutical companies very strong. technology, though, has really been getting hammered. >> there's not been new money coming to the market for a long time so you have to sell something for something. people want companies that have super great growth. what's super great growth? perhaps united technology, companies that you didn't think could move. david, i've got to tell you, i don't know if the bounce can last because people still need more money. what you really need to see is a resurgence in equities as an asset class. a lot of people feel as interest rates go higher, bonds will become even more attractive. i disagree. i think that equities can become more attractive but just not the same equities. >> well, how much further can rates really go and is justified? we're looking at what everybody believes will be -- with a stronger dollar, december raise.

but what are we talking? 2.50? we're not going to get to 3. >> what happens if the president-elect does say we have to do a trillion dollar bond offering in order to make the airports great. do an eisenhower situation. eisenhower was so afraid of a recession in the mid-'50s, he said we've got to build an interstate highway system. would that be so crazy? i don't know. my take is that you have some supply coming obviously, if we're going to cut taxes, david, you've got to pay for it. we've had this huge run on the infrastructure. martin marietta has had a 50-point run in five days. but you've got to issue debt right now or within six months in order to be able to justify all of this building that's supposed to come. >> the prospect for lower taxes coupled with what is supposed to be large infrastructure spending is certainly going to mean potential inflation. but haven't we already -- i mean have we discounted that to a certain extent over the last

four days in the bond market. >> your 30-year fixed you can get at 3.78 if you have good credit. i think it's perfectly realistic to think that could go to 4.5, 5, if we really start seeing demand for money and you start getting a lot of extra cash because your taxes go low. because then i think the fico scores will be a little bit more -- banks have great loans. i don't want people to call their bank -- i happen to have good credit, okay? i'm just fortunate enough. i remember getting my sixth credit card when i got out of school. but i do think that it's been very hard to get that rate. maybe they make it easier, but the rate will go higher if you make it easier. >> the rate will go higher, right, right, but open up to more people. >> i'm frantically trying to get

some things fixed that i have had floating because i am concerned that the ten-year doesn't stop. but at least if it would go up more gradually. the velocity of the move, david, caused all these banks to move at a pace that was absurd. >> and the banks today are all down a little over 1%. morgan stanley closer to a 2% decline. bank of america, which you mentioned, down almost 2% this morning. >> did you see goldman where you had a combination of so many things. the volatility is great for gold p ma, the m & m is great for goldman. the volume is never big because these are etf buyers. you're so right to bring up etf. i did some shopping this weekend, david. i went to west elm. >> west elm. >> a brand new williams sonoma. my wife wanted to take a chair home, see if it worked for our dining room table. they wouldn't let us borrow it and return it.

they should be a little bit more -- that's not right. they get downgraded not pauf that but i'm doing some shopping and the stores were packed this weekend. even west elm which i felt was not that great to my wife frankly. she didn't look like someone who would steal a chair. >> i don't see her running down the street with a chair. >> what is that? >> lower 50s. i was way out of line with that. >> but she doesn't watch so we don't have to worry. >> bug and everest watch more than she does, our two rescue dogs. let's talk briefly about pharma. the last few days have not -- everything is down in that area. >> look at this. home depot, can we really just -- i said you had to wait for the conference call. i didn't mean that you had to sell when you listen to the conference call. but i do think there was an excitement. like maybe the fda would start approving a lot of things. the repatriation meant there was

going to be a lot of bids in the group. but they have to follow up with bids. you can't say there's a lot of bids and come in and the bid be for a shopping center, equity one. that's not the one people are looking for. >> i think it's fair to say we are going to see more m & a. in fact it was a fairly robust pipeline prior to the election. >> yes. >> one would expect given a less stringent antitrust department under a trump administration -- >> that would be the thinking. >> because that has been the key thing as we've discussed so many times. if you are thinking about a fair low large deal that involves any horizontal integration as opposed to just vertical, you've got to think long and hard about it given the landscape this year of failed deals that were challenged. that changes your thinking, i think, under a trump administration. >> yes. >> unless you're time warner and at&t, which most likely i don't believe -- who knows. who knows if he'll really follow thank you and have his justice

department say no to that deal. >> you have to believe that a lot of people feel that he will not put on antibusiness people and the combinations tend to be pro business. david, just getting a little more color of home depot, obviously that's coloring a lot of things. the implied number after i back out that $100 million is more of a 3% rather than 4% consensus so people are freaking out. i urge people not to buy on that headline. that's just not a headline -- oh, whatever. i come out here and say stuff. i believe in myself. >> yeah, you do your work, i know you do. people can do their own. >> apple, can we talk apple for a second. >> i wanted to talk apple earlier but you moved right past me. >> i got sidetracked by french fries. boy the way, i had them last week and they're quite good. apple is between a rock and a hard place. the chinese government saying we can throw the ball to other companies. and last night i had harmon on and obviously harmon was bought

by samsung. hard wmon is the brains of a ca. they have been critical of car saying it's basically just an app. so you've got samsung coming into the next great mobility market. at the same time, we know that trump wants apple to build more things here where it's more expensive, but at the same time if they cut the taxes, it's the single biggest beneficiary. so apple -- >> apple is in the crosshairs of a lot of different things, both positive and negative. >> it reminds me of the william tell orchestra. >> you raised china/u.s. relations. we're talking about the benefits certainly that market participate see butt uncertainty that will arise on trade will not be insignificant and in particular china/u.s. which is an important relationship and how that's approached by maybe a rudy giuliani which could be

secretary of state. i think it's very much unclear at this point how we go with the chinese. that is going to be vital, vital. >> i think the wrap, if you want to wrap things up with trump from when i spoke to him and dan demico, they take our jobs, they send their products cheaper than we can make them because they subsidize and they export their pollution. so that's kind of like an unholy trinity. >> and a lot of their stuff ends up in our land fills. if you buy it at walmart and then you throw it away in a couple of years. >> now, the biggest threat to china, mexico. because mexico can produce things for half the price of china. >> but mexico is also number one on the list in terms of trump trade negotiations. >> i was telling a big trump supporter, i now feel like i have to watch twitter more than ever. why? what happens if he tweets, you know, china is really unfair and you're buying apple?

look, it's not like he's -- that could happen. >> that could absolutely happen. >> it could shift the world. >> my guess would be that will happen at some point, don't you think? >> so i have to follow twitter all that like i used to follow the tape? what's twitter saying here about china, david? but you're getting that reversion. by the way, the home depot moon is going to cause more money in the fang. hey, you got a little ahead of yourself. i like home depot, i'm not backing away from it. you got a little ahead of yourself, maybe things we have to go through this gulf before the economy gets better so buy facebook, amazon, netflix, alphabet. i wish they had never changed the name because that means now it's fa and i had to get rid of the n. maybe inflation is not that bad. >> let's get to bob pisani for a little more of what's moving the broader markets this morning. ba

bob. >> we've got a mixed market. the rally is running out of steam. let's take a look at the sectors. remember what was happening on the trump rally essentially here. so financials, industrials, transports, health care all did well. that's now stopping. this is the latest problem, banks. big leadership group down 1.8% today. look at the kbe, the bank etf up almost 15% since the trump election happened, the election of donald trump. there you see the move up. now it's down a little bit here today. what's been rallying the banks, we know regulatory reform, corporate income tax reform, that's all been rallying things. the important thing is right now none of that is imminent other than the move up in the yields that we've been seeing. so we're starting to see analysts make some comments. last night we believe valuations are now discounting stronger growth, higher rates, steeper curve and a less challenging

regulatory environment and causing the stocks to approach the top end of our fair value range. if you look at banks today, they did downgrade bank of america. this is guggenheim. went from $16 to $20 on the election. there you go at 19. wells fargo also downgraded on valuation issues. bb & t and sun trust were downgraded yesterday. we still don't have a lot of clarity on things. also if you look at some other things that are moving, we've seen infrastructure stocks. we talked about this yesterday like mastec and aecom and quanta services. we don't have any real indication of what's going on. aecom just came out with their earnings at that. they were shy of consensus. aecom was. the guidance for 2017 was a wit short overall. so i guess my point here and you see aecom down a little bit after the huge move up, there may be infrastructure projects but it's going to take a long

time to get clarity on that and this may be a 2018 event. aecom did not even mention the elections in their earnings report or give commentary on the implications of what might be going on for them. so just be careful about all these huge moves up in the infrastructure stocks. home depot's earnings were just terrific. comps were just excellent, up 5.5%. u.s. comps up 5.9%, much better than expected overall. why is it down? well, the guidance was it seems like a slight raise for the full year, but just a penny or so. i think that might have been a little disappointing overall. look at tjx. they meet and their ceo came out and said our comp store sales is primarily driven by customer traffic. and you don't usually get exclamation points, but there you go, across all of our divisions. they insist they're getting market share.

right now the dow down 51 points. david, back to you. >> thank you, bob. now to a man who knows his way around a few exclamation points himself, rick santelli at the cme in chicago. rick. >> i lot of exclamation points if you're a market enthusiast. some of these markets are truly breath taking in a number of areas. if we look at year to date at tens, yes, we traded up yesterday, every price important, but the close is key and we are now hovering right under unchanged on the year. of course yesterday's close a few basis points away from that 227. if we look at year to date of bunds. what a completely different version. we were almost one to one after the big drop in rates in january brought us down on what was kee deemed the relative value trade. on the way up, things aren't behaving the same. look at the spread, that's a 20-year chart.

find me a spread lower than the one we're at. this is significant. and we look at e.r. issues like the yield curve. let's look at 10s minus 2s. the fact of this big reversal and major steepening fed funds, obviously selling off raising percentages, we could quibble about what the pencrcentages me, but the closer we get to the december meeting, the more sizeable the message of the fed fund futures will be to many traders. it's already baked in the cake. the stage coach is pulling the fed here in my opinion. if we look at gilts. they have gotten back to their prebrexit levels, but like the bunds they aren't participating to the extent of the leading sovereign and that is the u.s. rate. but without a doubt the chart you need to really study, the dollar index, you look at the chart from early 20 fit15, you those tops there, we're pushing

through, lcalmost breaking through. how important is that? we could be looking at a new high close to the dollar index going all the way back to the spring of 2003. david, back to you. >> thank you, mr. santelli. you know, he raises a good point, jim. that dollar, i can remember having a lot of conversations about it previously when it's been moving up to new highs or recent highs. >> the ones that it has hit very badly are the consumer products companies that have big translations overseas. but i think people are very confused. if those consumer products have big overseas, they can repatriate so you kind of feel like maybe what they lose in the dollar they may be making in repatriation. the companies that i think that have worked under the more poorly under the dollar if you speak to terry lundgren, macy's, tiffany has done poorly, the airlines, travel, but people are completely ignoring that. we'll be through a period where we ignore things in a couple of

days, i think. >> you just mentioned the airlines. we'll have the former continental ceo gordon bethune with his take on the airline industry. this as warren buffett's berkshire makes a bet on the sector. not that big a bet in terms of dollars. carl has that exclusive with ge chairman and ceo jeffrey immelt on everything from the trump presidency to the global trade picture. you're going to want to hear it. we're back after this. ♪ mapping the oceans. where we explore. protecting biodiversity. everywhere we work. defeating malaria. improving energy efficiency. developing more clean burning natural gas. my job? my job at exxonmobil? turning algae into biofuels. reducing energy poverty in the developing world. making cars go further with less. fueling the global economy.

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and start gathering the information you need to help you keep rolling with confidence. go long™. ♪ take a look there, delta airlines having turned lower. this after we got the news yesterday, as jim pointed out, dated news, but berkshire hathaway an owner of these airlines which it wasn't previously. up next we'll get stop trading with jim.

there it is, time for stop trading with jim. >> i tell people you've got to wait. dick's sporting goods gave you a very negative read on the future. it made me feel like the reason dick's had done so well is sports authority not doing -- closing its doors. this is an investment year for

dick's. i think people ought to give them a break, this guidance is not nearly as negative. same-store sales were good. but today is the day we throw away the retail we bid up off the trump rally. >> why? >> because these companies themselves are saying, listen, don't get too excited. they're lowering their outlook so they can underpromise. they can still overdeliver but they're conscious of the fact their stocks have taken off and they're not in a situation where they want to make expectations so high. will dick's be a buy? maybe soon. >> what's on "mad" tonight? >> i have been -- you know i am very much interested in machine learning and i'm very much interested in artificial intelligence. >> as you should be, as am i. it's fascinating and will change our world. >> harmon yesterday, a lot of what he was doing they figure out how you drive and then calculate how quickly you'll get somewhere. i mean that's machine learning. that's what it is. >> everybody needs data, as much

as you can get your hands on. >> i've been tweeting that, you don't understand the radical changes that twitter is making. now if they can clean it up, this company will be a lot more valuable to people. >> well, twitter is actually up. it was down earlier. technology has a real bit to it this morning. the overall market, though, up a bit. >> you know, i think it's time for consolidation. you shouldn't have a straight-up market. i don't want to throw away home depot. those throwing away home depot, you're throwing away a great american retailer. coming up, we're going to talk with former continental airlines ceo gordon bethune. mil. 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.

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and the fortune 500, and, can deliver insight person to person, on what matters to you. morgan stanley. ♪ good morning and welcome back to "squawk on the street." we're live from the new york stock exchange. carl is in san francisco. he is at general electric's annual minds and machines event and he'll be joining us shortly. later carl will sit down for an exclusive interview with the chairman and ceo of general electric, of course, jeffrey

immelt. let's give you a quick check of the markets. we are up on all the -- excuse me, we're do you on the dow, up on the nasdaq for the first time in a bit. financials down, though. the s&p 500 is still stronger on the day. we also have data crossing the tape right now. let's get over to rick santelli who can fill us in on those numbers. rick. >> yeah, it's a bit old. this is the end of the third quarter numbers. it's the september business inventories up 110. really no great shakes. we were looking for 210s higher. just for some quick context. we start out with two negatives min minus 0.1. we like inventory staying on the positive side. build the widgets and those boom and bust in inventories may be coming to an end. that could be good for gdp. seema, back to you. >> thank you so much. the global bond selloff a bit of a pause here.

what does it mean for markets and are investors questioning trump's pro-business agenda? let's bring in our market panel, david lebovits, erin gibbs, also joining us around the table is mike santolli. david, what do you make of today's market reaction. the dow is down 44 points, but outperformance and the nasdaq with that rebound in tech. >> things have moved very far very fast. financials have led the charge. industrials and materials have led the charge. i think what you're seeing is a little retrenchment where everybody starts to take stock of what we do and don't know about what president-elect trump is going to bring to the table. he's proposed a plan, we don't really have a scoring on the plan. we don't really know what any fiscal package will look like so you're just seeing investors say, hey, let's settle down for a minute and figure out what the facts are before we make any more investment decisions. >> erin, earnings models don't easily account for political under certainty. how are you pricing in trump's

agenda and the lack of detail that we have right now? >> so one of the things we're looking at is just overall gdp growth. we're still very focused on interest rates versus trying to guess about the trump agenda, because obviously this can change from day to day and we're really looking at a long-term picture. it does take a while for any policies to be implemented so we're still looking at where we expect earnings forecast for at least the next two quarters before we could really see impacted changes. and for the end of the year, we're looking at like a nice finish towards the end of the year, particularly with these nice retail sales. >> mike, industrials still in the driver's seat. >> they are. and to david's point, i think in the short term we basically got stretched on a bunch of different measures. if you look at some of the round numbers, we had a new record on the dow. russell 2000 hit 1300 to a new record. you had the dollar index hit 100, also kind of a new 52-week

high. you know, so basically all these relationships seem to have exhausted themselves. ten-year treasury yield also clicked to a new year-to-date high. maybe this isn't any magic in this relationship, but the ten-year treasury went above the yield in the s&p 500 for the first time. the russell 2000 is up 8% in the week. the emerging markets index is down 7%. >> you're a global strategist. we just talked globally there thanks to mike, not to mention bonds, which really has been the biggest move of all. what do i do? >> not to deflect, but i think you have to wait and see what these trade policies actually look like once president trump is in office. the biggest -- >> we're not talking about weeks, we're talking about many months. >> exactly. so the question is do we get a sense that things are going in a more protectionist fashion or is this infrastructure spending, is this fiscal stimulus going to stimulate demand in the u.s. economy enough that it actually helps lift some of these more

manufacturing emerging markets out of their current dole drums. i tend to be in the latter camp. i think this could be good for the global economy. the u.s. could definitely lead the charge here in 2017, but there is a risk, as there is in any unknown, that trade gets in the way. >> what about rates to michael's point, up so dramatically in such a short amount of time. is the bond done? >> we've spent eight years trying to figure out how to stimulate inflation expectations and special rates and the presidential election did it over the course of a few sessions. i think the ten-year has moved a little too far too fast. i wouldn't be surprised to see some retrenchment but the key variable here is inflation. as long as inflation expectations are rising, it's our view that interest rates will keep moving higher. we haven't really seen the growth outlook change that much. if real yield starts to move higher, that's optimistic for risk assets. >> perhaps highlighting just how the presidential election is impacting global assets.

>> i think what's maybe more interesting and maybe erin can speak to what the trends look like here, the areas outside of the core infrastructure plays, outside of financials, we had a better than expected retail sales number today. the retail stocks have gone perking up as well. maybe because of the consumer is in decent shape, we have some inflation. what do the trends look like there, erin? >> again, we're seeing a positive expectation of inflation. investors are feeling better about the markets and we're also just seeing better sales come in. i think going into the end of the year, our typical santa claus rally, this is where we could really get some decent movement, particularly on some of the consumer discretionary stocks. we've seen them starting to be more the leaders along with the financials in the past couple of weeks. moving away from all those dividend plays. and i think this could be one of the plays for the end of the year. >> the intersection of politics, central bank policy and stocks. erin, thank you for joining us. david, a pleasure having you on. >> thanks for having me.

>> mike, thank you. well, the shaping of the trump administration certainly under way. our john harwood joins us now with more on that developing story and developing every moment, john. >> it's developing rapidly, david. first of all, let's just talk about a couple of the big jobs. treasury secretary, we don't know whether a decision has been made, but a former goldman sachs exec executive, head of fund-raising for the campaign just arrived at trump tower and sounded very much like a treasury secretary in waiting, even though he said he wasn't going to comment. he said he was working with the transition team on getting the biggest tax cut since ronald reagan. didn't rule himself in or out, but there's a lot of speculation that that is in process. in terms of the secretary of state job, a lot of talk about rudy giuliani. this is someone who does not have diplomatic experience. of course he has law enforcement experience and he was the mayor of new york city. he was u.s. attorney and worked in the justice department during

the reagan administration. but that is one that would be someone new to the realm of diplomacy. now, there's also a tremendous amount of turmoil within the trump transition team, especially on national security, which is very concerning to republican veterans of national security policy. mike rogers, who formerly chaired the house intelligence committee, abruptly resigned from the transition team this morning, saying that he was turning over that process to mike pence and the trump family and others. this is believed privately by those close to the transition to be a reflection of a what is described as a purge of those people close to chris christie who formerly headed the transition, but was demoted in favor of mike pence, who is now leading it over the weekend. now, in addition to that, you had elliott cohen of johns hopkins who was a

neoconservative, national security advisor to the bush administration and a prominent republican voice, conservative voice in national security, putting out a tweet this morning saying that my previous advice is reversed. he said he had told people to cooperate with the trump transition. now he says stay away, they're angry, they're screaming you lost, we won. and the suggestion overall of this turmoil is there's a very small group of people who are very close to donald trump, both in terms of surrogates like christie, giuliani and others, not a big policy breadth to his advisers and it is looking like it's a difficult process of staffing up the government, guys. >> yeah, john, interesting. you may not get a lot of those typical people who would join a republican administration on foreign affairs. some, i think, are saying if you're asked, it's your patriotic duty, but it does appear given that tweet we just saw that others are going to have a very different view of it, aren't they? >> exactly right.

and when i talk to people both in the outgoing obama administration, people who used to be in the bush administration, people are looking for some measure of continuity in foreign policy and national security. you know, you're looking for people who have experience and are familiar with these issues and the players involved. the number of people close to donald trump who fit that category is not large. he needs to expand it. we don't know how that process is going to proceed from here. we certainly know there's a lot of turbulence at the moment. >> yeah. all right, john, i know you'll be watching it closely. john harwood from washington. as we mentioned earlier, carl is at general electric's annual minds and machines event in san francisco and he joins us now with a look at what is coming up. carl. >> hey, david, yeah. just listening to john's report, it strikes me that the election was a week ago and in that time we've worked hard to gather the thoughts of ceos and business leaders about all the

uncertainties that john was just talking about. ge is certainly smack in the middle of a national debate about manufacturing production and free trade. they are highly leveraged to any changes in the dollar and inflation expectations and tax policy and m & a policy, so we do look forward to talking to jeff immelt in the next hour here on cnbc about the responses to the election, preferences for cabinet choices, predictions about just what kind of policy changes are likely, would be effective, all of that coming up in the next hour. very excited about that. the other half of this conference, david, is about ge's digital efforts. they call it outcome as a service, trying to help someone with a very expensive tool, like a jet engine, get another percentage point of efficiency by leveraging things like augmented reality and the amazon echo. this is where they show all of that off. it's been a big part of their marketing campaign. you've probably seen their

commercials over the past couple of years. but this is the fifth year they have held this conference. a lot of vendors and partners, 2600 of them. this is how they're starting to explain to people how changes in the internet are going to change the industrial economy. we look forward to talking with jeff about a.i., for instance. how in the world does that change the life span of an engine on a 757. so a lot to get to with jeff immelt. we'll talk about media and an update on al stem and ge, baker hughes, all of that coming up soon. >> carl, of course we want to hear his thoughts about a trump presidency. i'm interested in so many of the different issues. but you bring up an interest of mine, which is certainly the growth in artificial intelligence. people may wonder, how does a jet engine figure into that. but as i'm sure as you know and will tell us more, the chips that are implanted in these jet engines that are sending off data constantly, this is the internet of things, isn't it, that we talk so often about?

>> i'm just looking at two deals they did today, terms were not disclosed. but one is a data intelligence company. the other is a leading machine learning and intelligence systems company. i mean this is no longer pie in the sky. i remember when we would talk about it with jim and it sort of felt like it was, but no longer. we're seeing real concrete applications in the enterprise, things we talk about on "squawk alley" a lot on a consumer basis more often, but this is turning into an enterprise story and where ge will help walk us through some of that. >> yes, the melding of minds and machines says it all. carl, looking forward to the interview. we'll see you a little bit later in the show. thank you. when we return, a departure shaking up the future of banking regulation. and buffett's big bet on airlines. why he thinks now is the time to be bullish. we'll speak to the former ceo of continental airlines. stay with us. ous moment?

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senator elizabeth warren bringing minutes ago at the wall street journal ceo council. >> there's an old joke here in washington that if you don't know what to write on any given day, always use the headline democrats in disarray because it's almost always true and that was never more true than this week as democrats try to figure out where they're going in a

post-obama democratic party. elizabeth warren signaling where she would like to go in a post-obama air ar for democrats on capitol hill. she also took aim on steve bannon, the guy coming in as senior strategist for the trump presidency in the white house, a very controversial figure of the here's what elizabeth warren had to say about him. >> this is a man who says by his very presence that this is a white house that will embrace bigotry. here i am with the business leaders of america, and i just want to underline something that every one of you know. bigotry is bad for business. >> now, democrats will have an opportunity to vote on their leadership on the house side on thursday. we're starting to hear some of the first rumblings that nancy pelosi might be facing some sort of challenge. not clear yet whether that will materialize or not, but clearly democrats are shell-shocked by the scale of their defeat, trying to figure out where they

go from here and trying to figure out if the leaders that have been in place are the right leaders for the future, david. >> eamon, thank you. mary jo white announced she will be stepping down in january. this as donald trump prepares to assume the presidency. bank stocks of course have been rallying in recent sessions, until this morning, on the assumption that his administration will pursue policies of deregulation, certainly involving dodd-frank. for more let's bring in camden fine, the ceo of independent community bankers of america. cam, trump going to be good for your industry? >> i think so. i think particularly for main street community banks and regional banks, his administration is signaling that they will be very good for our industry. >> why? >> because he has in his public statements and some of his surrogates have talked about rolling back dodd-frank, which i think was some overreach there. there's been a plethora of other

regulations enacted over the last six years that are just crushing smaller community banks and regional banks, and that needs to be rolled back. and he has signalled that he's going to roll them back. >> right. what would be -- give me some examples of what your expectations would be then in terms of what might be rolled back and how it will benefit your bankers. >> i think some of the small lending and mortgage regulations need to be pared back for community banks and regional banks. i believe there will be some serious modifications at the consumer financial protection bureau, some of which are badly needed. i think that the banking agencies will receive new banking agency heads, and i think they'll be more receptive to taking a slower pace on just the sheer amount of regulations that they issue and overload these smaller banks with. >> camden, some people say that tearing up dodd-frank will help the larger banks, the larger

financial institutions like jpmorgan more so then the regional smaller banks. what are your thoughts on that? >> no, i don't think so. i don't see a tearing up of dodd-frank. i see maybe more like a repeal and replace of dodd-frank or large portions of it. chairman hinterling has introduced the financial choice act, which is his replacement for dodd-frank, and it's anything but easy on the wall street banks. it doubles the penalties for wrongdoing, it requires higher capital accounts, leverage capital accounts, so i wouldn't say that the choice act goes easy on wall street. >> you've said in the past, cam, that trying to imagine what a trump administration would do depends on the people he surrounds himself with. we don't fully know that. in fact we really don't know that to a large extent yet. what are you watching for to sort of try and divine where things are going to go? >> well, he has not assembled

his economic or financial team yet, so i think everybody needs to take a breath and wait for those individuals to be put in place. but certainly, for example, in the s.e.c., paul atkins might be a candidate. he's heavily involved in the trump transition. he could be a possibility. we're looking for people at the federal reserve, people at the occ, at the fdic, that actually have banking experience, regulators that have proven that they have common sense when it comes to enacting regulations. those are the kind of signals we'll be looking for as he names his financial team. >> camden, i just want to point our viewers' attention to the move that we're seeing in banks. jpmorgan, morgan stanley among others posting losses, this after financials have been one of the best performing sectors since the election on this bet of deregulation.

but how long does deregulation -- will it take, the actual process, the timetable? >> oh, i think if the trump administration hits the ground running in january, and i know that the house and senate will hit the ground running because they have already introduced many of the bills that they would like the president to sign, i think by this time next year we could have substantial regulatory relief, particularly on main street and at the regional banks. >> cam, appreciate your insight. >> sure. >> of course we'll catch up with you as this process moves along. thank you. >> thank you so much. >> you're very welcome. camden fine from the independent community bankers of america. when we return, warren buffett's big bet. why he's changing his tune on airline stocks. we'll speak with the former ceo of continental airlines, gordon bethune, up next.

welcome back. warren buffett disclosing new investments in american airlines, delta and continental. joining us is gordon bethune, a

cnbc contributor. a pleasure to have you on the show. what are your thoughts on this new investment from warren buffett? it certainly comes as a surprise, given that warren in the past has openly criticized the airlines industry. >> well, i think it's a sign of confidence the airline industry isn't what he invested in in 1989. it's certainly transformed itself. i think it kind of endorses the four top management teams on this 80% of the marketplace. and i think the oil getting stabilized and maybe some new growth opportunities in america says it might be a smart play. i would never bet against warren, that's for sure. >> gordon, the plunge in fuel prices, yes, helped the airline industry last year. i think it was record profitability for the airlines in 2015, but now this speculation that opec will cut back on production later this month at the opec summit. that could result in oil prices rising and, therefore, fuel

charges also rising. is this investment too late, i guess? >> i don't think so, seema. one of the things opec pulled back the last time they tried it because they don't have the heft they had. there's a lot of alternative sources out in the world today that weren't available 20 years ago, so you may be correct and they may be able to enforce a higher price, but i'm not sure they will be. >> what other ways can airlines improve pricing power, though, if fuel charges do rise? >> well, you price about 90 days out. you rarely sell tickets more than 90 days out, so you have the chance to recover a growing oil price by starting raising prices on tigckets. that's been the conventional wisdom to protect yourself. so the hedges aren't a really good way to protect yourself. it's that everybody needs to raise prices when oil goes up. >> gordon, i mean it's been an interesting year for the airlines. of course after last year.

do you -- when you look at the group from your perspective think that it's worth buying? >> well, i've never seen it this good, david. i mean this is as good a management teams that are out there. they have got really stable fleets. the economy is doing well. they have learned or are learning, as you can see with the initiative united took this morning, to compete with the allegiants and spirits of the world. so i wouldn't underestimate these guys. >> you know, we've had this conversation so many times but it always seems something comes along to bite them in the posterior. what would it be, if there's anything coming along in that front? and it's been a while, i should point out. >> i think, you know, national or international unrest is always the big killer, the world trade center, big problems in the middle east. those tend to dampen markets and dampen travel and dampen enthusiasm for investment. so they're subject to the same thing the rest of the economy.

if the economy goes into a slump, the airlines are definitely going with them. >> gordon, we have seen more than one terror-related event or act this year. there's also this concern that with donald trump in the white house, we'll see elevated geopolitical tensions. how does this all sum up, i guess, for the passenger and flights going forward for the airline industry? >> i'm not sure, seema, i would agree that trump offers any more exposure to terror-related incidents on airplanes. the world has come a long, long way since 9/11 in implementing security. we know it's not perfect, we can see that, but there's -- in our country, the best, most secure transportation system in the world. so i don't see that as being a detriment to airline stock price and airline growth. i just don't. >> in terms of flight activity, what are you expecting this holiday season? >> well, you know, obviously that's great -- wish it was

christmas every day, the airlines love it. but at the same time they know that january is coming and that dropoff will slump. they priced that and they'll be there and get their share of the revenue. i'm positive. >> even though united says they may restrict carry-ons. women can bring on a purse, men can bring on a briefcase, but no carry-on, gordon. >> one of the things it's rubber meets the road at the gate. the guy who doesn't check his bag and he gets there and has to check it but he knows that he's escaped the charge because he got beyond security. my idea would be if you're going to sell a ticket that won't allow a carry-on, put that on the boarding pass and the tsa won't let them through the tsa with it. so you can prevent those kinds of things. some people don't want to carry a bag and they shouldn't have to pay for the baggage costs. >> we'll leave the conversation there. gordon, a pleasure to have you on the show. appreciate it. >> thanks, seema. a quick programming note, the united airlines ceo oscar

munoz will join "closing bell" today at 4:30 p.m. eastern time. you don't want to miss it. coming up right here, the trump transition. we'll discuss how the president-elect is shaping his administration. plus tackling hate speech. how one tech company is updating its platform. i'll let you guess which one we're talking about. that's next. 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. ♪

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good morning, everybody. welcome back to "squawk on the street." i'm sue herera with your cnbc news update this hour. president obama arriving in greece where he was welcomed by the greek president. it is mr. obama's final foreign trip as president and he will also meet with the greek prime minister later in the day and hold a joint news conference. hundreds of german police officers searching more than 200 offices, mosques and apartments of members and supporters of the islamic group, the true

religion. germany's intelligence service has warned that the organization glorifies jihad and allegedly helps recruit people for isis. back here at home, aaa projecting nearly 49 million americans will journey 50 miles or more from home this thanksgiving. that's a 2% increase over last year, and it would be the most thanksgiving travelers since 2007. aaa credits an improving economy and lower gas prices for the increase. and a california ceo has been put on leave after comments he made about assassinating donald trump. matt hair began of cyber security startup packet sled posted on social media that he planned to kill trump. he said it contacted the secret service. i'll send it back downtown to you guys. david, back to you. >> thank you very much, sue. president-elect donald trump and vice president-elect mike pence meeting at trump tower this morning. the transition team nearing its

picks for major cabinet level posts such as secretary of state and treasury along with attorney general. senator elizabeth warren sounding off on the trump transition moments ago. take a listen. >> it doesn't start by hiring a bunch of lobbyists to run the transition. it doesn't start by floating names of people who have run giant hedge funds to be able or been part of that to be able to run the treasury or people who come from industry to be able to run the regulatory agencies. you know, the american people understand about the revolving door, and i think they're really sick of it. >> joining us now, veteran strategist, christey setser who serves add senior advisor to the al gore and howard dean presidential campaigns and harold hogley from the defeat crooked hillary pac. harold, i'll start with you. your own sense in terms of how the transition is going. >> well, it's no surprise that

someone like elizabeth warren would be upset. however, she didn't have a problem when she backed hillary clinton who was probably the largest backed candidate in history from wall street who used wall street hedge fund managers to write the regulatory reform so that was just ridiculous on its face. look, i think donald trump is trying to do what so many politicians have failed to do over the course of my lifetime which is bring in outsiders to try and help shake up washington. the hiring of steve bannon, someone like that who for a long time has had his finger on the pulse of the common american man who has been left behind, and woman, who have seen their jobs shipped overseas, someone like reince priebus, the chairman of the rnc, who is an establishment person, to bring in warring factions within his own party is pretty gutsy and it shows that donald trump is every bit of the manager we thought he would be by bringing in folks of differing opinions and views to try to get this country on the right track again. >> christey, i would assume you take issue with that?

>> i take issue with very much of that, yes. first, i think it's awfully rich to say that donald trump is bringing in outsiders. he seems to know about six people, including his own family and the several people who are in the public eye who supported his campaign. so yes, rudy giuliani for secretary of state? hardly an outsider. names like jeff sessions, john bolton, these are names that have been floating out there for republicans since, what, the '80s i guess? the thing that is most concerning i think to the majority of the country who did not vote for trump and the millions of us who were frankly terrified of what a trump presidency could bring is that he hasn't given us a lot of -- the southern poverty law center says there has been 300 hate crimes committed in the last week. trump had to be proactively asked about that, if he had anything to say to people who are committing hate crimes in his name.

finally he just said stop it. look, the whole thing is, is quite disconcerting for many millions of people right now. >> hogan, this morning we get word that mike rogers is no longer part of the transition. national security certainly an important component of the trump administration given their ambitio ambitions. any concern on your part in terms of how that transition is going, particularly when it deals on the national security front? >> not really. i mean, look, national security is one of the top four issues for republicans. it's one of the top 14 issues for democrats. it's something that donald trump ran his campaign on about securing the borders and also defeating isis instead of this slow roll that's been going on under the obama administration, calling them the jv team, completely ignoring them, pulling out of the region, creating the vacuum that allows isis to tloif ahrive and surviv. i think donald trump will pick someone who is strong, who knows the region. quite frankly he's going to listen to his generals, the ones

that will tell him exactly what he needs to do over there to defeat this threat that not only has thrived over in the middle east but is now starting to thrive in this country, coming in through the porous borders around mexico. we've seen more terrorist attacks on our home soil than ever in history before and one of the biggest issues people voted on other than the economy was security. i heard more moms and dads say security was the biggest issue for them. and donald trump was the only one speaking to that. whereas hillary clinton clamored for open borders and a 550% increase in syrian refugees that she said would be unvetted. >> hogan, i hear you prosecuting the campaign as opposed to dealing with the reality. trump won. really, more terrorist attacks on u.s. soil now than ever before? coming across the mexican border? these sound like the campaign points. but we're talking now about the national security team and what that's actually going to do to make sure that, i guess, isis doesn't actually continue to have any gains. >> you can't fix the problems unless you diagnose them first.

donald trump was the only one diagnosing the real problems and not sticking his head in the sand like the other side. those are the points from the campaign because those are the points that got him elected to this office and quite frankly if he reneges and backs off on those particular promises, he's going to have a serious problem. >> christey, last word to you. >> if change to donald trump means appointing a bunch of 70-year-old white guys to positions that they have no background or qualifications to hold, if that's the change his supporters voted for, i guess that's what we're seeing right now. to the security issue, again, i believe that many millions of americans right now actually feel significantly less secure given the policies that he's espoused throughout his campaign. whether that means you're a black man and terrified of the stop and frisk policies, whether you're a latino man that believes you're going to be more open to hate crimes because

trump has called latinos rapists and murderers. whether you're a woman that believes that the serial sexual assaulter that is our president-elect won't take women very seriously when they report crimes like this. there's a lot of reasons to think that you should be scared and he's not doing a lot to change that. >> listen, we thank you both for sharing your thoughts at this point and we'll be watching that transition very closely. we're getting a ton of fed speak today. steve leishman is joining us with that. >> two fed officials are watching closely for what fiscal policy comes from the new trump administration and that it could affect monetary policy. >> if we end up with a much more acalm dafb fiscal policy, if that were to occur then we shouldn't have as much accommodation in monetary policy. so an implication would be that we'd be tightening more quickly

if we have a stimulative fiscal policy. >> he added monetary policy has been carrying too much of the load to stimulate the economy. he's a voter this year on the fed. he also supported a december rate spike. fed governor dan tarulo speaking earlier this morning generally agreed the time is right for a rate hike. he's the leading fed bank reg later. he was asked about the chance that dodd-frank under the new administration could be weakened or scrapped, including what's happening in congress. he urged the audience to remember why the new rules were passed in the first place. >> it was because of a financial crisis which followed an extended period of buildup of unsustainable lending and other business practices and which elicited a widespread, bipartisan call to do something. >> he added a cornerstone of dodd-frank is bipartisan agreement that taxpayers should

not bail out the banks ever again. he did support easing regulations on smaller banks. seema, the chance of a fed rate in december now topping 80%. >> we'll see what happens. steve, thank you so much. let's talk more about markets. art cashman is joining us on the panel. there seems to be a little reluctance with the dow down about 40 points as to what a trump presidency will really mean for markets and the economy. is this just a brief pause or is this skepticism out there? >> well, i think this is a good week for consolidation. we had a very big run last week and i think you want to maybe put things in order. the other thing that's happened is oil, which had a nice spike overnight, is backing off its highs and that always gives the market some second thoughts. i think that's where we are now. you've got the s&p is up, but the dow is backing off. home depot and goldman sachs probably pulling it down a little bit. >> if you missed out on the 5% rally that we saw in the dow

last week, is this the time to jump in and to be a part of that trump rally? >> well, i think you probably want to wait until a little bit later in the week. we'd like to see some of these cabinet appointments solidified, find out really who's going to be there. i think rudy giuliani at secretary of state was a bit of a surprise to everybody. you know, they saw him perhaps as attorney general or a different role. so we'll have to have these things begin to solidify. so i think this will be kind of a range bound week and you can probably wait until later in the week to make a move. >> the nasdaq now up 1% as tech rebounds. art, thank you for your perspective. internet giants making changes. julia boorstin joins us with more. >> twitter, google and facebook all announcing changes. twitter tackling cyberbullying on its platform, upgrading its

mute feature to unable yorsz to mute words, phrases and notifications they don't want to see. twitter is upgrading tools to allow users to directly report conduct that violates its policies. this as twitter looks to improve its experience to grow its relative low stagnant user base. in the wake of growing concern about how the spread of fake news influenced the election, google and facebook are also making moves, cracking down on which sites and apps yoz their ad-selling software. google issuing a statement saying we will restrict ad serving on pages that misrepresent, misstate or conceal information about the publisher, the publisher's content, or the primary purpose of the web property. now, facebook quickly followed suit, clarifying its policy about its audience network, which puts ads on third-party apps and sites, saying we do not integrate or display ads in apps or sites containing content that is illegal, misloading or deceptive, which includes fake news. while implied, we have updated the policy to explicitly clarify

that this applies to fake news. now this follows a buzzfeed report saying that renegade facebook employees formed a task force questioning the role facebook played in promoting fake news during the election campaign cycle. guys, back over to you. >> julia, thank you. coming up at 11:00 a.m. eastern time, carl will sit down for an exclusive interview with ge's ceo, jeff immelt. a lot more ahead. stay with us. 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

since the election, no sector has been hotter than the financials and the banks. but is the bank run already done? find out at tradingnation.cnbc.com. whether it's connecting one of the world's most innovative campuses.

or bringing wifi to 65,000 fans. businesses count on communication, and communication counts on centurylink. 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 on the street." stocks here mostly higher but energy leading all s&p 500 sector. this as west texas crude surges to $45 a barrel on hopes for a

possible production cut from opec. energy leaders today include chesapeake energy, murphy oil, apache and marathon all up 49%, guys. back over to you. >> i want to direct our viewers attention to paul ryan who has just taken the podium at to jus podium. let's listen n. >> the president will be judged on the results of this administration. that's why we're very eager to get up and running to help him with his transition, to get up and running and to make progress on the mandate that has been given to us by the american people. we're confident about moving forward. we're confident about the transition and we're very, very excited about getting to work for the american people. [ inaudible question ] >> those are decisions that are being made with the transition team. none of those decisions have been made yet. we're sitting down with the trump administration and waiting along with our colleagues to come up with our plan for lame

duck and also for 2017. it's very exciting. we're having constant conversations and haven't made any of those specific decisions yet. >> mr. speaker, the president-elect has signaled that he will use his adult children as his advisers in his administration. do you have any concerns about them potentially getting security clearance, number one? two, should trump take any steps to ensure conflict of interests between running his business -- >> i'll let the transition team comment about those things. we're focused on our job in congress. donald trump is a multi-billionaire, successful businessman who has been so successful because he has surrounded himself with good people. he is a man who has made great successes, created tens of thousands of jobs because he gets good advice from good people around him in his life. what's wrong with that? that's a good thing. we'll focus on doing our job in congress. is he going to focus on populating his administration. we will help him be as successful as he is going to be

i think he will be a very successful president. we have an exciting agenda, transition team we're working with and excited about getting to work for the american people. >> has steve banon personally come after you, your primary, written about your children, or his publication has written about your children, questioned your school decisions. he has mocked your catholicism. do you think, at any point -- >> i'm not worried about -- i'm not looking backwards. i'm looking forward. i'm looking forward to the future, how we make this work for the american people, how we help president-elect trump be our most successful president in our lifetime. you've heard me say this so many times. 70% of the people in this thags think america is going down a wrong path. they just said get on a better way. get on a better path. that's our job.

look forward, make president-elect trump to help the american people fix this country's major problems. >> you built your career on forming entitlements, lot of conservative ideas. donald trump just won on a platform that, in many ways, is not terribly conservative. are you prepared to lead a charge -- >> we're on the same page with our president-elect. i speak to donald trump nearly every day, i spoke to mike pence this morning. we're going to make sure it's a successful administration. more importantly, the voices we heard from this election from the american people are acted upon, that we actually fix this country's problems. to get to your specific point if you take a look at what obamacare did to our entitlement programs, it made them worse. we're going to fix that. we're going to help fix these problems plaguing this country whether it's sky rocketing health care costs, lack of jobs, regulatory red tape that's strangling jobs and businesses, fixing our national security,

securing our border. these are all things we're excited about, rolling up our sleeves and getting to work with our incoming president to make good on his promises. [ inaudible question ] >> roads, bridges, structure, are house republicans ready to support -- >> we're going to work on all these things in the transition. budget reconciliation and processes. these are things we're working on with the transition. it's going to take time to figure out exactly what bill comes where, how it all adds up. that's what the congressional process is all about. the point is, donald trump wants job. i talked to donald so many time this is week. let's make sure we get people back to work, let's make sure we get this economy growing, take all this uncertainty out of the economy that's plaguing it and get people back to work. this is something we share. we're excited about working on this with donald trump. that's why i am very confident that we are going to have a unified government that working hand in glove with this administration to make good on the commitments and to get people back to work and fix this

country's problems. thank you very much. appreciate it. >> there you heard house speaker paul ryan, of course, talking about the plans for his congress. one that he will be leading in the house of representatives as he works with the trump administration as it puts its transition in place -- its team in place, i should say, during the transition that we have, seema, talking about many of the issues that trump raised. foremost, of course, putting people back to work. >> strike a positive but strong tone, prioritizing health care perhaps here. the question there, full repeal of obamacare or a vision? we'll have to see. >> going to be interviewing the ceo of ge shortly. many of those same issues will be front and center in your conversation, carl. >> you got that right, david. we'll talk to jeff emmelt about the election, this ongoing national and global debate about globalization, taxes and trade

and perhaps m & a, the way digital is changing the industri industrial. google banning fake news sites from their ad software and facebook remains under pressure as well. we'll talk about all of that when "squawk alley" continues at the top of the hour. >> carl, we will be, of course, watching very closely. shares of ge, by the way, are actually down a bit this morning, seema, about 75 cents. but it is believed to be potential beneficiary of the trump administration. >> speaking of the market as well, a bit of a sell-off there. let's get to rick santelli with the call. hey, rick. >> thank you very much. i would like to welcome peter bookfar. peter, ever since we double bottomed in july, many bond afficianados have been bearish. not keeping up with the bredth

of this move. your thought on those relationships? >> the bond has doubled. germany and japan are doing qe, and throughout europe. the trajectory is all still the same, a rise in interest rates, rise in the cost of capital. it's also happening throughout asia as well. >> now do you think the fact that we've added about 25 bases points to that spread, now in the 190s versus hanging out in the 160s or 70s, does that have implications and tell us that investors that want to go into europe might be disappointed by the returns? could you take it that far? >> yes, possibly. but i think the initial knee jerk is the inflationary implications that we're going to experience in the u.s., particularly in the wage front. so, we want to have stimulus.

we want to liberate the economy, both from taxes. where are those jobs going to come from? we'll put somebody on to build a bridge. if we take them from a construction job building a home we're not necessarily better off in an economic standpoint. you need higher wages to encourage people to come off the couch. maybe that's why that spread has widened. >> very interesting. dollar index. peter, where the traders are, they can't print enough charts. we're not that far away on a closing basis for jumping the levels we haven't seen since '03. there's no way the fed will normalize and not add to this dynamic. your thoughts on what it means both from an average american standpoint in the country and multinationalist trade outside the country. >> one thing trump wants to do is bring jobs back home. stronger dollar is naturally going to help that. inflation direction will be key to the dollar over the next year. if inflation starts to rear up more than people think, that's actually going to be dollar

negative. a lot of pushes and pulls with the dollar. and i think that we have to be careful what we wish for if the dollar strengthens much further from here. >> real quickly, in 20 seconds, are the emerging markets going to feel more over this dynamic that seems unstoppable in some ways? >> i get the strong bear, but emerging markets have been through their five-year bear market and that bear market has ended, coincident with the end of the bear market in commodities. >> peter, as a technician, do you think we'll get a pause here or do you think this dollar index will keep going like a hot knife through butter? >> i expect a big pause here. this is major, major resistance. >> all right. i tell you, peter, we don't agree on everything. we agree on most. i'm going with the hot butter analogy. thanks for being my guest. carl quintanilla, back to you. >> rick, thank you very much. good morning. it is 8:00 am at ge's conference

here in san francisco. 11:00 am on wall street and "squawk alley" is live. ♪ good morning. welcome to "squawk alley." i'm carl quintanilla, coming to you live from ge's mind and machines conference in san francisco. john fort, kayla tausche and nick milken joins us. we're a few minutes away from our interview with ceo jeff