live from new york where business never sleeps, this is "squawk box." good morning. welcome to "squawk box" on cnbc, i'm andrew ross sorkin along with joe kernen and michelle caruso-cabrera. dow looks down, the same thing with the s&p 500 and the nasdaq. look at asia overnight. a bit of a mixed picture. the nikkei up in sort of a big way. up a little over 1%. nothing to sneeze at. european equities now, we'll show you what's going on there. a bit of red there. except in italy and spain. >> here are the big stories we're watching. let's start with oil. the international energy agency out with a new report. it expects global oil consumption to peak no sooner than 2040. some minister also meet in doha on friday to build consensus for

a cut. last night an api report showing u.s. crude oil stocks surged by 3.6 million barrels in the last week, that was more than expected. that could be why crude is down. this morning official data from the u.s. energy department. st. louis fed president jim bullard is in london today speaking at a ubs conference. he suggests that one interest rate increase, possibly next month, may be enough to bring u.s. rates to a neutral setting. snapchat confidentially filing for an ipo. the messaging app is expect god public as soon as march. the company could be valued between 20 billion and 25 billion making it the largest u.s. tech ipo since facebook's 2012 debut. couple stocks to watch, agilent posting better than expected earnings in revenue. the lab equipmentmaker is citing post equipment uncertainty.

and eu antitrust regulators are expected to give clearance to abbott lab's $25 billion bid for st. jude medical. this coming according to reuters. the european commission is due to make a decision by next wednesday. wall disney upgraded to buy from hold. the price target is $112. the share sitting at about $99. square saying that jack dorsey who is on the board of disney, entered into a stock trading plan to sell shares of the company over the next 12 months. the plan was finalized in august. total shares available for sale are capped at about 7% of hits holdings. square says proceeds are for dorsey's financial and tax planning purposes. >> you know how risk factors have, you know, first three pages, everybody has them. i put election uncertainty in

there. >> add it there. >> with the weather. >> with the weather. >> midterms are coming up, aren't they? >> right. >> you guys are already working on four years from now. full force on making this a one -- whofrnlgt are you talking about? >> just a lot of never-trumpers. >> a lot of people out there. >> a lot of people out there and in here. you are never out from election uncertainty. >> always in election uncertainty. >> even when the person wins, you never know what they'll do. >> that's true, too. >> i heard that if you look at the chicago cleveland series, if you add up the total number of runs, they both got 27. so there really was no winner. i know you had all the individual games, but it's not really -- so there is a little movements to go back and say this election -- >> talking about the electoral -- >> why do we have that?

you know what's great, gloria -- i get her mixed up with barbara boxer. she wants to get rid of the electoral college. do you know what it would take to do that? two-thirds of the senate. >> you have to change the constitution. >> but she's introducing a bill to do this. but then they'd have to -- if it goes the other way, they would have to turn it back the other way. >> what do you think trump would ultimately think of that? first he said it was a disaster. >> in 2012. >> now it's a great thing. inch have alwa i have always thought you cannot have new york, l.a., chicago and san francisco elect a president. you can't. you can't do it that way. >> one. two. think logistically. then you would have recounts all over the country because every single vote in every single little town matters. you would never get it done. >> it's a great talking point and allows for whining and

nashing of teeth and sour grapes. >> on all sides. >> it's only one side now. the s&p is getting close to an all-time high. >> dow is already there. >> yeah. for the fifth straight day. >> nasdaq bouncing back. earnings alert. earnings -- maybe -- let's start that again. earnings alert! lowe's missing on the top -- missing on the top and bottom lines. >> who always does terrifically and who invariably -- >> home depot. >> earlier i was thinking -- >> a pattern? >> more than that. >> knowing what the sort of view of lowe's or just the impression that lowe's is versus home depot, lowe's appeals to me a bit more.

i'm totally -- i wish i were handy. i wish i looked good in a tool belt. i'm totally intimidated in home depot. supposedly lowe's, you can go in. >> it's softer. >> yeah. that appeals to me. >> it's more womanly i've been told. >> whatever. >> the sorkin family goes to lowe's, the saturday morning of every -- the first week of every month. they do a woodworking class for children. >> really? >> across the country. >> they sell a lot of stuff. you do the free woodworking class and you buy stuff. >> woodworking class for children. is this what you go to or do you take your -- >> my children go. >> do you all go? >> we all go. no, it's a whole family thing. in fact, they're doing frames next month that you can hang on a christmas tree. my boys are already excited about it. >> that's nice. >> you see what i'm saying? lowe's appeals to me. i've been in home depot.

i walk in i'm overwhelmed. all i'm getting are light bulbs. but different types of light bulbs. >> so many kinds of light bulbs. >> i try. i do. i go. i'm going to do this myself. but i can't. they're very friendly. >> are you going for old school filament style light bulbs or the new l.e.d. types? >> no, the little things where there are like 12 of them in a -- >> chandelier? >> sort of. called other things, too. if they're attached to this thing, they're called something else by designers. you know, sometimes i'm getting 30 of them, individually putting them in. >> the recessed lighting? >> those, too. those are difficult, too. those are hard to get out. >> yes. >> that's the extent of my -- >> back to the markets. >> that's the extent of my handiness. i wish i were handy. some people find that attractive, those tool guys that come on.

>> right. >> you're not handy, are you? >> i have a butler who's a really handy guy. that's a joke. joke people. joke. >> now back -- >> some day. >> the markets on a seven-day winning streak. yesterday tech jumped in on the rally. the nasdaq outperforming the other averages rising 1.1% in one day. f.a.n.g. stocks led the way. it's a rebound. financials have been the biggest winner since the election. the spdr s&p etf surging more than 15% since last tuesday. joining us is michael tyler from eastern bank wealth management and mark luschini fr. maybe the end of this very rough period for savers. it might be good for banks, no, michael? >> i think it is good for banks.

it does seem the policies mr. trump wants to enact are healthy for banks. they will be stimulative to the economy as well. there are a lot of people saying it's too far too fast already. i can tell you from experience when people are surprised by something, and as it moves in anticipation, they say wow, i missed t i can d tshged it, i c typically is is goes much further than anyone thought. is it going to be where this immediately pulls back? >> i have sympathy for that view. we have come a long way fast. namely healthcare and the financials, but i think the prevailing sentiment is not so

euphoric or bullish, even though the market is pulling forward with optimism in terms of policy initiatives and pro growth intii initiatives that could be good, still it's a set up that bodes well for equity prices. not that it will be a linear progression upward here without interruption. at the same time i think that clearly the underpinnings for economic activity suggests that we're going to see better conditions for share prices to advance. i think we'll take out new highs. the old highs that were established back in august probably before the end of the yea year. >> we the investment community have been looking for a turnaround in earnings for quite some time. the general expectation is that 2017 would show better conditions.

certainly out prices have stabilized. the set up for corporate earnings have been better for the coming year. egs pe expectations about the fed have been reasonable. the immediate optimism following the election, there's still two months before the inauguration. a lot can happen. we'll see what the first 100 days are like. overall conditions setting in place for a better macro view to compliment what is already shaping up as a gernings year next year. >> right. it's not just that maybe people view these trump -- the pillers of the trump presidency as pro growth but he has both houses of congress. he has the senate and the house. something might actually be written and signed into law. it's been so long since that's happened. maybe the market is not wrong.

growth, cyclicals -- i don't know if we're taking into account all those factors, trump and a united government. >> i was going to say, it would be an environment inviting for active managers. they've been stalled by the low growth highly uniform, high correlation environment which has been very difficult for active managers to separate themselves from passive investments. this could be ripe for an active management environment. that is a good setup. you're right. the fact we do have a single partiment y system, we have tha but at the same time that could be good for what gets done. while the market hates the uncertainty of not knowing what might get done in a single party system, at the same time it could be beneficial for economic activity. maybe that could be priced into the market.

>> divided development, i think the market sees that divided p government, under a democratic president is good, but -- divided government, you like that. >> depends. depends. the only thing i'm concerned about, at this point you're betting on what the administration and washington is going to be able to do the thing i can't figure out is how do you price that knowing that there will be a day, by the way, we'll wake up and there will be some headlines that suggest for some reason there's a fight in the house or senate. >> no doubt. >> something is not going to get done the way we think. the question is is there going to be a snap back and pull back in the market? everything has been pulled for w ward. the question is has everything been pulled forward? how much? >> how much? >> that's the question.

>> these are the early stages. >> we're not in january. >> when reagan came in we went from 800 to 3,000. that's going from 18,000 to 60,000. we're not there yet. >> a remarkable thing. >> to underline the original point, the worst moments for the stock market in the last month or so is when things looked so bad for donald trump. they were talking about the democratic sweep, all three arms of government going to the democrats. that's when the market fell the most. >> that was a great call. ian bremer, once again out in front of all this right on. >> about a sweep for the democrats? >> no just obama -- or clinton is a shoe-in. this and that. i would worry about all of his calls. andrew, thank you guys, mike and mark. >> thank you. >> what does warren buffett say? he always says praise by name,

criticize by category. >> yeah. no. >> no? >> him? >> the midterm was supposed to -- >> i'm just suggesting it as a model. >> he told me both midterms the democrat s would pick up seats. >> warren buffett? >> okay. we'll come back with more this morning. a snapshot of the american consumerme men consumer. lowe's rolling out quarterly results. first a look back at this day in history. we'll also talk about snapchat.

welcome back to "squawk box." a new report predicts airfare also fall next year. the american express report on the travel industry cites overcapacity and stiff conditions. >> you just told me it was a monopoly yesterday. >> before you get too excited, extra fees -- >> bingo. >> will likely offset lower fares as airlines look to new revenue sources. >> did you guys talk about this yesterday? >> yeah. didn't even bring a bag on the

plane. if you buy the cheapest fare class. >> what if you're a female with a handbag or purse? >> it has to fit underneath the seat. >> that's a bag. you can't put one overhead. >> don't be gender -- >> i know you have a man bag. >> a murse. >> why would you do that in 2016? >> stop. >> why would you micro aggressive me? >> this is supposed to be a safe space. >> supposed to be. >> it hasn't been. >> i shouldn't -- >> supposed to be. >> i shouldn't wear my man bag? >> the fannie pack, yes. man bag, no. >> let's talk walgreens. walgreens says theranos allegedly voided 11% of all blood tests they provide to the drugstore's customers as part of a year-long partnership. the "wall street journal" reporting theranos told

walgreens in june that it voided 31,000 tests it conducted at its main lab. that facility failed an inspection by u.s. regulators earlier this year. legal papers filed by walgreens yesterday so hes that theranos also voided results from another 1,000 tests done at its second lab. >> wow. >> man. >> what is happening to that. >> was that her or a different blond woman? >> i don't think that was her. >> that whole thing. >> has the book been written yet? >> that's your next book. >> no. no. john kerrio is writing a movie being produced on it. >> already? >> there's a documentary being made. >> wow. >> this failure is big business already. >> i just -- we don't know the end yet. i want to know how everything went down. >> i don't know what happens to her. >> was there intent? >> oh, that's a different -- >> whether she knew or not?

>> yeah. >> i'm not saying there was, but madoff, terrible guy. if you're doing that, giving people false positives and negatives that you know are not true and they're making decisions about having a tumor removed -- >> that's worse. >> there's a pyramid-like scheme in all of this. she might have known and thought i'll fix it. we'll get it like that. >> he probably started like that, too. >> just one trade away from getting back to even. lowe's just out with third quarter results missing street estimates. brian neagle is with us senior analyst with open him a n hienp. >> you look at this lows lowe's announce the, they missed on the top loin and bottom line.

there was a lot of charges in the quarter a line in the press release talking about some shift in the investment strategy. we'll have to see what they say on the conference call. >> i saw on the press release they said for some reason the first few months of the quarter were weak and everything was okay in october. there's more there than that? >> what's interesting about that, we were talking about this yesterday with home depot. home depot was the shocker yesterday in that regard. a number of home improvement suppliers have come out, appliance companies, talking about that. home depot blew right through it. the comment they made were sales were slumping in august and september, but improved in fact for lowe's. >> i understand lowe's weaker in the pre-market, makes since when you miss. i don't understand home depot yesterday. home depot beats on the top line, beats on the bottom line,

raises guidance, and shares fell off. any good exmra that for that? >> we were all scratching our head yesterday watching this. it's interesting that -- my screen was red yesterday. ri dick's sportsiing goods yesterd had good results. home depot traded down, others did as well. it was almost like a rotation going on. >> that's interesting. >> divorcing from the fundamental trends. >> my initial thought was higher interest rates, home sales will change, that feeds to your perception of home depot, how it will do sh, not so expensive, sr high yielder. >> i don't know why that would have been new news yesterday. that's been the case for the last few days. the narrative for the last few days. >> matters how you manage these

places. you can have great management execute better in terms of inventory and a point of sale, and customer experience. these two could diverse easily and have most of the same stuff for sale in the stores. >> absolutely. >> you can run something better than competitors. >> home depot is the better run company. >> it is. >> we've seen this time and again. especially in quarters where there's potential sales volatility me volatility. >> as we said, it's an intimidating plates, even for someone who considers himself very manly. to go into ceilings -- i need like equipment to get stuff off the shelves.

you need like a forklift. that's intimidatintimidating. bed bath & beyond, i can find a duvet, right there. feel it, touch it. >> have the great brita displays, stand next to the vaporizers. >> you can get grill equipment. you can get stuff. >> service. you walk into a home depot -- >> joe, in a fannie pack at bed bath & beyond, that's a vision. >> you're a good sport, brian. >> with the perrier. >> nice. >> coming up, david wessel will join it's, we'll talk about the growth, fed and politics. stay tuned, you're watching "squawk box." guest host sam zell takes over at 7:00 a.m., he's never shy about speaking his mind. >> i think the american people are really pissed off. >> here's what he told us about

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>> welcome back to "squawk box" on cnbc. approaching 6:30 a.m. u.s. equity futures showing a slight decline at this hour. oil prices are also lower at this hour in the wake of inventory data.

wti lower by 60 cents. a decline of more than 1%. among the top corporate stories, snapchat confidentially filing for an ipo. the messaging app is expected to go public as soon as march. reports say the company could be valued between 20 billion and 25 billion, making it the largest u.s. tech ipo since facebook's 2012 debut. we have some national news. operations at the oklahoma city airport have resumed. the airport was shut down yesterday after a southwest airline employee was shot while walking between a terminal and employee parking area. 5 2-year-old michael winchester was taken to a local hospital where he died from his injuries. police say the suspect was later found deceased from a self inflicted gunshot wound in a pickup truck that was in a park garage near the scene. back to businesses, target just reported moments ago.

adjusted earnings per share of 1 1.04, which compares to an estimate of 83 cents. that sounds too good to be true initially, but we'll drill down into the numbers more to make sure that is an apples to apples comparison. the comp store sales for the quarter down 0.2%. and sales $16.44 billion, above expectations. so, you know what? -- now it -- now it was just up three. let me see what real trade is. can't tell. the big spread. it looks like it will trade higher today, but that would be -- 1.04 much better than what wall street was looking for. haven't thought about the turnaround here recently. they've been succeeding? >> yeah. >> 71, 72 not a bad price. >> steadily on their way back.

>> maybe this is -- >> gain market share in key signature categories, unexpectedly strong sales in back to school and back to college season. >> gross margins 30.2%. i was going to look at the commentary to see if they're bragging on this. >> kind of like macy's, they say they're pleased with the inventory position. suggests they don't have much stuff on the shelves. >> i can't imagine trying to run one of these. picking stuff, getting rid of stuff not selling. that's why -- >> knowing in advance what people want to buy. >> millennials, not at target specifically -- >> what do you do after cargo pants, i don't know. >> can never have enough cargo pants. >> cargo shorts. >> nothing looks better on a middle aged man. >> they're outlawed in my house. >> i know, but if you would take a stand, your whole life could change if you did it on this issue. put your foot down on this

issue. >> one issue voter. >> not just one issue, but other things. it might -- >> yeah. >> maybe -- i find it better to just -- >> play along? >> yes. >> happy life, happy wife. >> now to politics. in one week since donald trump was elected, there's been talk about whether he softened his stance on issues like obamacare and the proposed southern border wall. let's talk about the fed, the economy and markets, joining us is david west from the hitchens center, senior fellow in economic studies at the brookings institute, and a long-time veteran of the "wall street journal." >> and not wearing cargo shorts. >> what do you make of the election? >>i think people who try to predict what's going on in washington usually have a caveat i'm not sure but, behind the scenes they are sure, but this is different. i think the market is way

overconfident that it knows the shape trump and what he will do. i don't think trump knows what he will do. i think a lot of this policy will be written by the republican congress. there's a lot of things i don't think trump has strong feelings about. that's why people are optimistic about the tax cut. they can see what things are likely to come out of the house. >> so we will see the tax cut but also an infrastructure spending plan. >> you could see some of larry somers programs adopted by trump. >> did you see this column written where somers is now against it? >> he said two things. one which i agree with and one which i find amusing. the peter navarro and wilbur ross plan, you can only do infrastructure if it has tolls

and fees. that's not the one he has in mind. and the other is where larry says i can borrow too much money. he has evidence, that's what peter navarro does, but we don't know that. >> who do you have in mind to be the chair of the fed? >> are you interested? >> i'm not interested. but you could be. >> no i'm not interested either. i think it's going to be a big shake up at the fed. janet yellen's term as chairman and stan fisher's term address vice chairman with up. >> do you think they go early as the way mary jo white went early? >> no, i feel they feel strongly about the eniindependents of th bank, they will feel it is their duty to stay there. i think maybe kevin walsh may come back. john taylor, the stanford

economis economist. >> sheila bear? >> i don't think so. >> what happens in the meantime? how do you think janet yellen thinks about interest rates in an environment, which you think is uncertain -- but the markets don't think it's that uncertain. >> the markets don't like uncertainty, he we get donald trump -- >> you knew under hillary clinton that you were probably never going to get tax reform. >> certainty. >> now you think you'll get tax reform. >> uncertainty. >> certainty but bad certainty? >> i know you're at brookings now, you were at the wa"wall street journal" for a while, did you ever talk to those -- >> you turned your back to them. >> i ran the other way. i have them framed in my office. >> i think, andrew, i think

that -- >> talk to him. >> it's an easy call. >> that's what i would do. >> safer. >> someone more sympathetic. >> you could be more entertaining. >> maybe the market has gotten ahead of himself. but you had the choice between someone who wanted more regulation, more of the same, divided congress, right? had elizabeth warren behind her. and bernie sanders -- not supporting her, but standing there in the wings. now those people have been marginalized and you will get some kind of tax reform. >> it's high risk. >> you have a guy who says he doesn't like regulation. it's opposed. >> but it's high risk. >> you don't get -- >> to go to your question, andrew, before we were so plightly interrupted -- >> you brought up that the market hates -- >> no, i said there's more

uncertainty about what donald trump will do. >> to the extent you believe there's uncertainty, my question is is the uncertainty about what he will do or is the uncertainty about how a republican congress or senate will react to whatever is proposed? everybody has a view that what is proposed gets sailed right through. >> that's not true. i think a lot of the legislation will be written in congress and sailed through a white house. on a few things he has strong feelings. he has strong feelings about trade. i think he has much stronger feelings about trade than taxes. he will probably accept whatever tax bill comes out of congress. he'll have two, three things he wants to be in it, he wants to raise the tax on carried interest. it's on the -- the trade thing is interesting, the president has a lot of power. there he could upset this apple cart by starting some bad reaction. getting back to your original

question, it's a much easier call now for the fed to raise rates. it's clear, as michelle said we will have more expansionary fiscal policy than under hillary clinton, we seem to be close to full employment. they were on the edge to raise rates any way. i think the fed futures say 95% chance in december. >> if the markets collapsed, she would have to worry about a tightening. where they go from here is harder to say. they have to see how much of this fiscal policy that trump and the congress do take effect right away. if they were shovel ready projects, obama already did them. >> there was that one that he did. >> david, come on back when we find out what the fed will do or not. >> voters looked at the status quo and a continuation -- it was uncertain, but they know what they've had. they said we don't want what we've had.

we would rather take a chance on something else. >> 100% agree with you. we agree on something. >> they don't agree on brookings -- >> when did i say -- >> still to come. that 1.5%, if i know it's coming -- higher taxes. >> andrew is not a spokesman for the "new york times" and i'm not a spokesman for brookings. >> you gochthere you go. >> all you had to do is look at the policies of the two sides to figure out which one would be better for the economy. just the status quo? the status quo was always better even if we never get out of the muck? >> call us in five, ten years. that's the question. i think you will get a better economy for the next couple years. >> that makes me feel a lot better. it does. still to come, larry summer also join us in studio. we'll talk politics with him, and at the top of the hour, sam zell will join us as guest host. you're watching "squawk box" on

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time for the executive edge with a touch of politics today. carl icahn confirming that the president-elect is looking at wall street veteran stephen

mnuchin as treasury secretary and wilbur ross as commerce secretary. icahn tweeting both are good friends of mine and more importantly two of the smartest people i know. trump's name is expected to be removed from an apartment complex on the upper east side due to complains from tan innocents. trump was reportedly involved in developing the complex known as trump place in the 1990s. the buildings were bought in 2005 and kept the trump place name. sam zell is the owner of those buildings, he'll be our guest toast today starting at 7:00 a.m. eastern time. coming up next, a special guest joins us in studio. former treasury secretary larry summers will talk politics, infrastructure and the economy. mary buys a little lamb.

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trump was elected with a buying boost from working class americans, but our next guest questions whether trump's economic program will help those voters. larry summers latest column is entitled a badly designed u.s. stimulus will only hurt the working class. let's welcome larry summers, former u.s. treasury secretary.

i think the one thing that we all would like to talk about. in the packs, infrastructure and low interest rates are a combination you thought could work well for the u.s. he interest ra interest rates have gone up a little, but could you find a way for president-elect trump to do this or do you think it could come off wrong if it's not handled in the right way by his people. >> the laws of economics are the same no matter who is president. infrastructure can still help the economy and stimulate the economy, but his infrastructure lan lo looks not to be the right one. it rules out fixing the potholes, repairing the schools, because the only infrastructure

investments it can fund that are the ones that are commercial and yield revenues. the tax credit it works seem ill-designed because it doesn't go the trump program. huge, permanent tax cuts that are very, very poorly targeted. m some of which like the state tax repeal will actually encourage saving and discourage spending. operate in the wrong direction. and the protectionism has already done a ton of damage to u.s. industry because of the effect on exchange rates which has functioned as a huge subsidy to all that export to us and a huge penalty on all our exporters. so if you add it all up, it doesn't seem like a favorable equation except for a limited number of companies that are going to benefit from the

deregulatory measures. it's the same rules. so infrastructure investment properly entered into, yes, i believe that can help to stimulate the economy. >> i mean, everyone -- some to praise the president-elects and some to criticize him saying he doesn't know what he wants to do in terms of liberal democrats versus republican. who has his ear on this? >> i don't know. i don't know who -- >> do you rule out he's not going to do some of the things you're talking about. they say he used to be a democrat. maybe he's ready to take a more -- >> i don't think you can rule anything out. there's obviously uncertainty about what he thinks. but, joe, it's -- there's no uncertainty about what he's given license to. there's no -- i want to say this because it's important to me. there's no uncertainty about that to which he has given license. there has been a huge increase in hate crime in the week since this election. and there are people all across

america who are scared. and they're not -- they don't feel that their fears are irrational. that doesn't make them better contributors to their schools. that doesn't make them better contributors to the economy. very much the opposite. and i don't have anything to say about his personal attitudes. but seems to me that it is incumbent on him as a leader to make clear in a way that goes way beyond looking at the cabinet for 60 minutes that he has no desire, no intention, or takes no satisfaction from licensing the ku klux klan and others who are celebrating and terrifying large numbers of americans following his election. i think that's an issue morally above all. i also think that over time it's going to be an issue with important economic consequences. we've seen what's happened to

states who've embraced the confederate flag or states that embraced homophobic legislation to their economies. and with some of the support he is receiving and some of what he is encouraging with, he is flitting with that. >> can you give us examples of increase in hate crimes or have you seen data? >> yes, the southern poverty law center has estimated an increase of several fold since his election. ask anyone who runs a college about the number of calls. to bring it home to me and what made me go to look at the data, in three separate schools and colleges to which my children are involved -- three separate instances have been swastikas or e-mails of lynch mobs.

so i think the data is pretty clear. again, i'm not making a personal judgment about him. i am making a judgment about what i believe a leader has responsibility for which is that which is licensed in his name. >> larry, do you level the same criticism at people that are, you know, doing violence against trump supporters and protesters that turned violent, riots that have happened since then? >> i levy the same kind of criticism at -- i levy -- >> did he inspire the stuff against him? >> no. i levy the same kind of criticism about anyone who goes violent about anything. but the kids who are -- the kids who aren't going to school because they're afraid their families will be deported while they're there, there's no analog to that on the other side.

look, joe -- >> i wonder if -- >> i'm the guy who's been very much of the view on college campuses -- you and i have talked about this for years. when people start talking about microaggressions or some such, that is not where the priority ought to be. but the other side of it is that we do need to recognize that something very important is happening and that it is terrifying and, you know, i see it. being on a college campus, large numbers of people. and i think it is incumbent on the president-elect to condemn alt-right support. and incumbent on leaders in other institutions to resist that. >> i'm reading a story here about an fbi report that says anti-muslim hate crimes in the

u.s. did rise 67% from 2014 to 2015. so that was under president obama. perhaps there is a rise in hate crimes happening in the united states that needs to be addressed in general. >> of course there is. of course there is. and of course it's a serious problem. i don't think, michelle, that you want to seriously deny that the changes from what was taking place on monday, november 7th, to what was taking place between november 9th -- >> i apologize. to me that's false. >> that's absurdity. that's just a complete absurdity as a suggestion. yes, there have been increases. and by the way, some of those increases were fueled by the kind of rhetoric that we saw in the last campaign. >> we have a hard break. thank you. we appreciate it.

>> we have a lot more to do. sam zell is going to be our guest host in a little bit. thank you, larry.

riding the trump rally. stocks closing higher. the dow notching a seven-day winning streak. real estate titan and private equity sam zell joins us to talk trumponomics and the state of the economy. the newly appointed head of the republican governors association joins us to talk about his new role. and donald trump's election win. and mcrib fever is spreading across the country. mcdonald's limited time iconic

sandwich is back and this time they're making it easier to find. we've got details straight ahead as the second hour of "squawk box" begins right now. live from the beating heart of business, new york city, this is "squawk box." >> welcome back to "squawk box" this morning right here on cnbc. i'm andrew ross sorkin along with joe kernen and michelle cnbc. look at the futures at this hour. we're in the red. nasdaq looking to open off about 13 points. here's what's making headlines at this hour. opposite fortunes for two big name retailers this morning. home improvement retailer lowe's missing on the top and bottom line while target did the opposite. lowe's comp sales rose while target's were lower but by less than the street had been forecasting. target also raising the full

year forecast. target higher by more than 6% while lowe's lower by more than 5%. james bullard says an economic surprise would have to occur for the fed not to raise interest rates next month. bullard made his remarks at a london banking conference. he is a voting member of the fomc this year. snapchat filing for an ipo. the messaging app is expected to go public as soon as march. reports say the company could be valued between $20 billion and $25 billion which would make it the largest ipo since alibaba went public in 2014. snapchat expected to be the largest tech ipo since facebook's 20122 debut. earlier this year right here on "squawk box," real estate titan sam zell said not to underestimate now-president-elect trump. he joins us now as chairman of equity group investments. sam, good to see you. remember you also acknowledged you hadn't done any business in the past with trump, but i didn't hear any overt opposition

to him or endorsement of hillary clinton either at that point. do you care to tell us how you finally weighed in on the election or not really? >> well, i don't know that my vote is relevant. but -- >> in illinois, it probably wasn't. >> for sure not in illinois. but i think that my comments a year ago were that i thought that donald trump is a very significant force. i thought that people spent too much time focusing on some things he said as opposed to the thing he's done. and i think that the stock market is telling you that the country is enthusiastic about the option that he has to make a real difference. >> just in terms of animal spirits, a lot of people are talking about and unleashing capitalistic feelings and less government, less regulation, lower taxes, that that can --

because nothing's been done yet and the market's been moving. but that can engender and that's what the fed tried to do in its own sort of clumsy way to instill some animal spirits to get economic activity percolating. maybe actual -- the anticipation of actual legislation might be more long lasting. >> well, i think the last eight years, there's been a focus on redistribution. and a non-focus on growth. and by definition, if you have redistribution as your focus, growth is the victim. and i think what we see is a basic change in orientation. and i think that that in itself is a positive thing. growth is not going to come from what the fed does or what anybody else does. growth is going to come from a change in orientation. and a change in appetite. and to the extent, the people who are making the, quote,

unquote, risk decisions on a daily basis need to be encouraged. and i think that's what we're going to see. >> sam, let me ask you. when you were here back in 2015, you said i doubt trump has the temperament and personality to be the president of the united states. you went on to say you can't be president of the united states and throw out all the rules because everybody else has an interest. how does that square with whatever feeling you have today? >> well, number one, i think the donald trump of today is significantly more disciplined than the donald trump of a year and a half ago whenever that was last april. number two, you know, somebody i don't remember which president said this but, you know, once the reality takes place that you are going to be the president of the united states, the world is dramatically different. and i think it has a impact on how any one of us would respond.

i think that mr. trump is very smart. i think he has a unique opportunity to really change things and lead this country. and i think this country desperately is looking for somebody to give us leadership. >> why are you taking the names off the buildings? >> that's a very simple answer. first of all, we've been in the process of dealing with this for over a year. our goal was we have no interest in having any political position on anything. once mr. trump made the decision that he was going to enter the political scene, we looked at it and said, you know, we don't -- we just want to be neutral. we don't want to have an opinion. and this was part of an agreement we had with him. the agreement is expired. and we're basically renaming the

buildings according to the street. >> so the news stories are that it was a result of complaints from tenants. that is not true? >> had nothing to do with tenants. if you check -- you know, whether this comes out or not, this began with a conversation that i had with mr. trump i think 14 months ago. i don't remember. but long time before the recent "new york times" article on the tenants. >> there was a suggestion about security and potential protests in front of buildings or related to buildings that have the trump name on them. >> that was not a consideration. we just felt that, one, we've been on the building for 11 years. the market had changed. we felt that this was an appropriate evolution. it had nothing to do with politics, nothing to do with my view of mr. trump. >> what do you think of the brand that is now donald trump

or trump broadly. >> well, i mean, he's the president. he's going to be the president of the united states. that's a pretty damn good brand. so i would suggest -- >> but access hollywood. come on, man. really? no, we just had an msnbc segment, that's what i felt like that's what i was subjected to there. not that there's something wrong with msnbc. we've heard the president called the divider in chief about how we're at everybody's throats at this point. we just had the point made that a lot of the aggression and a lot of the fear and the crime that's occurring is actually now at donald trump's doorstep. and i just wonder -- i mean, the notion that it didn't predate this and that, you know, anti-muslim or islamaphobia comes from donald trump.

that was a surreal segment. >> i disagree on that. i do. >> what happened in chicago over the past couple of years, sam? what are murders this year? what happens to cops? what happened to the way that most people view the police force at this point? >> i think those are issues that have nothing to do with donald trump. >> that's what i mean. it's just unbelievable we just -- you present -- you said that while he was here. i understand how you feel about it. but i'm just -- you know -- >> look. i think there's a distinction, though, between what's happened over the past several years in places like chicago and elsewhere and the way -- the number of people, the magnitude and number of people who in the past week for better or worse feel scared, are not going to school, to work, to whatever. that's a -- i don't understand how that's not a real thing. >> i think you've been reading your own stories. i think that's hardly true. >> you think that's hardly true? >> yes. hardly true. >> so when you hear ceos -- >> we had 5,000 people in the streets in chicago for donald

trump or against donald trump and we had 5 million people in the city in favor of the cubs. i think that ought to answer your question. you know, it's no different than all this press coverage that is creating images that fulfill the press' prejudice, not reality. >> look, i'm a white man in america, so i can't -- i have no standing on this, but i feel like the conversations that i have had with african-americans, with other minority groups, with lbgt groups all of whom have suggested -- >> you've had conversations with all those groups? >> that they feel in the past week -- i've had kmpgss with people that are part of those communities, absolutely. >> really? >> and the feeling is not a good one. >> all right. >> i think it's hard to suggest otherwise. i would also suggest -- look. i was going to tell you i read some of the steve bannon stuff on buzzfeed last night. some was fascinating and in a

different place than i think much of the public believes. >> it was his or it was breitbart's? >> his personal views. it was an interview with steve bannon. >> from years ago. >> from years ago, but that i thought was smart and intelligent. having said that, stuff on breitbart and elsewhere, i mean, around white supremacy and other things is terrible. and i think it's impossible to sit here and say that that's okay. and president-elect donald trump has not come out and truly condemned it and says he feels terrible that there are people that don't feel safe. he's not been a -- >> you know the groups that are supporting who might be the new dnc chair, congressman ellison, farrakhan groups, terrorists. same kind of thing. that doesn't mean he is reciprocating and supporting them. >> why is it necessary for everybody to pass judgment before the guy has even taken office?

i don't understand that. >> because they lost the election. so this is going to be this way for awhile. >> well, he won the election. and the guy who is are doing most of the talking are people who supported somebody who lost the election. >> and the amount of violence paid for by the dnc and the clinton campaign, half of that was operatives of the other side at all the trump rallies. paying 69-year-old women to -- >> i'm not sure at all that was true. >> i was around vietnam in the late '60s. then we had violence. we haven't had any violence. we haven't had anything even close to the kinds of things that existed prior to the '68 convention. i literally was in chicago for the '68 convention and i saw these kids running down the street and attacking the sheriff. i visually saw it happen. very different than what's going on today. >> okay. >> very different.

>> have -- what are you doing? are you looking up some statistics for hate crimes? >> no. i see donald trump is making a statement somewhere and we figured out it's a twitter post that he says i'm not trying to get top level security clearance for my children. this was a typically false news story. he said in a twitter post. something crossing the wires. i thought maybe he was giving an interview somewhere. we could figure out what he's saying. more later with sam zell. you're here for awhile. great to have you. hopefully we'll talk about real estate. all right. scott walker joins us. we're going to talk about his new role as leader of the republican association and about the presidency. but up next, donald trump highlighting the need for infrastructure improvements. one to benefit is the rails. morgan brennan is live at one of the businessest rails in the country. "squawk box" will be right back.

welcome back to "squawk box." the futures right now are suggesting slightly negative open last we looked. and the dow would open lower by 36 points. the s&p lower by 5 and nasdaq by 14. major infrastructure spending giving the sector a major boost. morgan brennan joins us from one of the busiest rail yards in the country with that story. >> reporter: hey, good morning. that's right. so we're at csx's bedford park

facility where trucks loaded with the equivalent of 26 miles of track. this is a big facility. it is privately funded by csx and highlights the fact that the freight railroads already maintain their own infrastructure on track to collectively spend $26 billion this year. that said, if president-elect trump does actually come through on his plans, his proposal to drum up a trillion dollars in infrastructure spending, this could still benefit. take this area. this is the chicago area. it is the rail capital of the country. in general you've got all the major freight railroads that connect here. this area has been a big point in terms of congestion in recent years as you have trains sitting at intersections for hours. if you see more throughout this region, that could mean smoother transitions thus boosting operating efficiency. but the biggest boom for the freight right side could be moving the building materials

themselves. everything from steel to lumber to steel to sand, et cetera. that could do so at a time when they had a weak freight environment. the domestic carrier could be the biggest benefactors in terms of that scenario. now, factor in a possible lower corporate tax code. and possible energy deregulation and this is the reason why you're seeing those three stocks and the broader transportation average in general trading at fresh 52-week-plus highs over the past week. but all that being said, this is still speculative. we're still in very early stages. and of course there's also the looming potential risk of changes to trade if the new mfgs does come in and does take a more productionist stance. that could have ripple effects. >> thank you, morgan. she's in illinois.

>> yeah. >> did you hear me talk about you earlier with itel. >> no. >> i didn't want to admit how long i've been following your career. it makes me old. when was itel? was that '84? >> i took over the company '85. >> that's a railroad. >> no. it's a rail car company. >> the largest rail car leasing company in the united states. >> i sold to my clients and they made a lot of money. is that 32 years? >> something like that. it's a long time ago. >> that's horrible. >> i didn't have any hair then either. >> but you didn't have hair but you had a billion dollars even then i think. >> something like that. >> i didn't. and don't. >> neither do i. >> he's not happy. >> you think the rally in the rail stocks makes sense? >> i think the rally in basic businesses makes sense. i don't know enough about the

specifics of the rail business to make a distinction whether, you know, i mean, when i read that -- just watched that union pacific article. 52-week high in union pacific may sound terrific. i wonder what it was two years ago or three years ago. and, you know, we had a real bit of stocks. and i think what we're having here more than anything else is a correction that reflects an orientation toward rebuilding america. and that's what we need. we're going to take a quick break. we want to talk more to you about things including where the markets are. in the meantime, it is no shave november. you've been following that for some time. but lyft is saying good-bye to its hot pink mustache. the new look is coming up after the break. we should do the no shave thing

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welcome back to "squawk box." ride hailing service lyft is ditching the pink mustache in favor of a new psychedelic dash display. it's a bluetooth enabled l.e.d. light-up beacon which lyft calls an amp. it will be on the dash board of cars to help riders and drivers find each other more easily. it'll display a specific color

to help riders get in the right car. riders can also tap a button to display the same color on their smartphone and hold it up making it yaerss for their driver to find them as well. they will start rolling out the amp to drivers in new york, las vegas, los angeles, and san francisco in time for new year's eve when you want lots of bright colors. and check this out. the mcrib has made its seasonal return at participating mcdonald's restaurants. this year it's even easier to find one with your smartphone because there's an app for that. mcdonald's has launched a new imessage app called the mcdonald's mcrib finder. it's free and it uses the smartphone's gps to find the nearest selling restaurant. allows franchisees to decide whether they want to offer the mcrib. not all of them do. hence the need for the app. >> i love mcdonald's -- >> i do too. >> but i draw the line at the mcrib. >> why? they're delicious.

>> you ever read how they're made? >> who needs to know? >> you ever eat a hot dog? >> yes. and i still do. but i make it a hebrew national. i even eat the filet-o-fish. i'm a little bit worried about that after reading. but these things, they have molds. they pour this stuff in -- i don't know where they get it from the pig. i think they grind up a bunch of stuff and pour it into a mold and it hardens like a jell-o mold and they turn it upside down and it comes out. i don't know. i don't think i'd eat that. can you? >> it tastes terrific. >> all right. >> questions no one was asking. coming up, athena health ceo -- i'm sorry, mcdonald's. they got mad at me once about ronald mcdonald.

i love mcdonald's. athena health ceo jonathan bush talks health care under president trump. he will join us after the break. as we head to break, take a look at u.s. equity futures. all this arguing, the markets now down. delusions of grandeur. that's why they're down because of us discussing.

welcome back to "squawk box" this morning. among the stories front and center at this hour, tumbled 9.2% last week. both new purchase applications and refinancings fell. that's an average 30-year mortgage rate jumped 18 basis points to 3.95%. the highest since january. that may explain a bit of this or a lot of it. donald trump says he is not trying to get top level security clearance for his children. that statement in a tweet this morning in which president-elect called it a, quote, typically

false news story. he also blasted media reports that his transition process is not going smoothly and took a shot at "the new york times." global oil consumption won't peak until the year 2040. that's according to the report of the energy alg agency. pointing to the difficulty of finding alternatives to crude for road aviation and chemicals. okay. iphone glitch in china apparently. in tech news, reports of an iphone glitch are being investigated in china. consumer protection group there says it's received complaints that some phones are spontaneously shutting off even when half their battery life remains. the group says it has approached apple about the issue. no comment from the company at this point. and will donald trump scrap obamacare completely or keep maybe some of the popular provisions? what will the health care system look like under a trump presidency? and what are companies like

athena health expecting? we are thrilled to have you here. what's going to happen? >> he's been very predictable and reliable up until now. so obviously you clearly just trace the lines and you're all set. >> we've been talking about uncertainty all morning. >> haven't you though? the man is funny because he's been the greatest thing for ratings since i don't know what. you know, sliced bread. was that big? i don't know. so there's three things that were going to happen. one thing is going to decline, another thing is going to expand, and the other i have no idea which way it's going to go. the thing that's going to decline is the huge provider sector in the last seven years has been developing the idea to report for different quality programs that the federal government has designed. it was just a giant surge of ph.d.s in harvard into washington during the obama years to try to engineer a better equality system and get everybody to practice according to big studies. >> and that requires reporting. >> lots

so $40 billion was available in play for providers and doctors and hospitals to report if that's going to go that way. >> i'm suggesting what you're saying is that did not work. >> i don't think it worked. some people thought it worked. that's another show. we could have that show. the obama-post-game show. there are certainly some things that were marvelous about things about the obama administration and their efforts in health care. the thing that's going to explode is consumer marketing. so there is quietly lumping along that's been covered up by the last seven years a lap of excess capacity in the health care system. 38% of hospital beds go unused every night. if you look inside, there's a research institute we have called athena insight and we predict the flu and other thungs but also look inside the doctor's calendars. you see the stuff doctors do that only a doctor can do is a small percentage of what they're doing. the rest they're filling in to keep busy to break even.

so marketing is going to be on a big explosion over the next four to eight years. >> to the extent donald trump wants to replace obamacare but wants to keep or at least suggest in that "60 minutes" piece he wants to keep the pre-existing condition piece of it, keep it for those up to 26 living with parents. how do you make that work? >> you rein back what the definition of coverage is. >> reduce the number of mandates. >> right now the only thing that counts legally as health insurance is all you can eat buffet. you know, everything that somebody would have on park avenue is now the legal minimum for what health care is. all you would do to make it cheaper is say those things are allowed but they're not legally mandated. we won't fine you when you get it. there were people when obamacare rolled out on lesser insurance products that said it doesn't count, you have to get more. the way you make it cheaper is

simply roll back the minimum definition. >> what the insurance industry has always said, you would never mandate that every auto dealer in the country would only sell cadillacs. but you have mandated that health insurance companies are selling only products -- >> that's right. that's right. just call it catastrophic. people -- >> doesn't it turn into this whole death panels conversation then in a weird way? >> oh, yes, it does. i can't wait to watch. >> isn't that -- >> it's the right thing -- i hate to say anything nice about the donald, honestly, but it is the right thing to do. we should have never mandated all you can eat buffet and we saw what happened to prices. unfortunately for hillary was, you know, 23% price increase on the average american because there was no -- the way -- you guys study it all the time. the way you do real estate. you build a product that's attractive enough that draws people into market. right? that's the way you rise. you either come in the low end

with something super cheap, find a way to do it. you draw people in. or you come in at the high end and figure out a way to make it cheaper over time. these basic mandates don't exist in health care. but if you roll back the minimum required coverage, then that becomes possible. >> why does that lead to death panels? my idea of the concept of death panels is when government is in charge of deciding what dollars are spent, we're going to pay for this but not for that. >> now cross subsidized into all you can eat buffet. they're saying great we're going to cross subsidize you into the bread plate. you'll say wait you're going to rein me back to the bread plate, no thank you. they're going to be mad. whoever is being cross subsid e subsidized into the full coverage those people are going to lose that. >> what happens to interstate competition? it's one of those things that donald trump has talked about and you have talked about -- >> yeah. it's absurd there's no

interstate comp stigs. >> you think that will change after this? >> it's these easiest. >> jonathan, do we try to lessen the dependence on medicaid? that's not an effective way of doing its. >> medicaid program has been quite a success. medicaid advantage. >> medicare advantage has been a huge advantage. >> we're talking about medicaid. >> medicare advantage is -- >> out of the 21 million, how many were migrated to medicaid, basically? the newly covered 21 million we always hear about, many were replacement from stuff they had before. many of them were -- >> cross subsidized. >> many were on medicaid. >> then you roll out medicaid -- >> they'll stay on medicaid? are they there for good? >> will the expansion states keep expanded? i don't know. i assume so. i don't imagine those states -- >> that's not the best way to deliver health care. that's not the best answer for health care problems is expanding medicaid, is it? >> i certainly don't think so.

>> that's what we've done so far. >> this is the conundrum. this is a republican trifecta. everything about it i adore. the problem is in this country our head of state and our head of government -- you know, in other countries you could have some schmuck that beats people um then you have a nice queen that represents you in the world. we merged the roles and i'm going saying i love it, i hate it. the good news is i should plug our clients won't be affected. because athena net is a cloud based application. whatever the rules are, we're going to cover them either way. >> so something that was going to go away. reliance on data. then you said there was going to be increase -- >> marketing and consumer packages. >> and something you had no idea. >> risk. so medicare advantage makes its progress on the cost of medicare by putting somebody at risk. you -- here's your budget, spend it any way you want. it's an all you can eat buffet but ends at $1,000 per senior per month.

figure it out. that program generates 35% ebida for the people who play it well. and higher scores for the medicare people on it. they're happier because they're being followed and worried about. the guy in charge of that budget doesn't want that person to hit the hospital so they send nurses and people from keeping that person to trip into e the expensive stuff. that concept is the fundamental missing link in most of health care. if contracts, expansion of medicare advantage, medicaid, you could have medicaid. there are several states in the country where medicaid is paid that way. here's the money, god speed, keep them out of the hospital. that idea is a big opportunity. and we think our clients are going to play it whether the government names it or not. we're going to get a lot of profit out of it in a world where we barely could squeak by. >> for the average person who's listening, it sounds like hsas a

lot of people have. >> imagine hsa with a personal adviser. you know? the merrill lynch accounts where they used to sell stocks one at a time. i guess i like that stock, but you didn't really know. then they say let me handle -- i'll give you stocks and bonds and give me a small trickle of fees and i'll cover it. that's what we need doctors to be. to be that personal clinical adviser. i think it's going to happen. they will seize the silence from washington to build out products like that and it could be a big, big one for them. >> and a bank one debit card. why do you know so much about the rap account at merrill? >> it's my job. >> were you a broker for awhile? the rollout was in 1983. >> like the trump empire, i was the scion of jeb and company. my dad started as a gum shoe broker and then built a small investment management firm. >> and you know what bank we

used. >> what bank? >> columbus based bank one that became jamie dimon and everything else. but that was the debit card used on the accounts. >> same thing should happen in this next sector. there's nothing that's going to stop it from washington. and hopefully they won't try to help it either. just sit there and argue. >> your dad was a stockbroker? >> he had his own business. he did investment management. but away from the broker and toward the wealth management concept. yeah. >> jonathan bush, everybody. >> thank you, guys. thanks for having me. coming up, governor scott walker newly appointed chair of the republican governors association is going to join us to discuss the change in power in washington and how he's going to be working to keep the republican in power in the states. also check out the futures at this hour. we're a little bit in the red. it's actually gotten a little bit worse. dow looking to open off 57 points. nasdaq off about 19 points. and the s&p 500 off about eight points. "squawk" returns in a moment.

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welcome -- i feel great. i feel really great this morning. i got so much sleep. welcome back to "squawk box." the futures at this hour are suggesting a negative open. dow lower by 48 points. s&p lower by six. nasdaq lower by 15. no big explanations as to why bb but can't go up every day and we've had a big run. particularly for the dow but the s&p also getting to fresh all-time high. wti lower by 58 cents. $45.23 per barrel. brent $46.46. all right. steve leisman joins us. >> not your book, but the problem of too big to fail. neil kashkari on the plan to massively increase requirements on banks. you've got to see these numbers. in his program he would raise

large banks equity capital to 23.5% from the current level which many think is too high, 13%. that's only step one. if still seen as risky bb he would raise it all the way up to 38%. step three, but a shadow bank tax of 1.2% to 2.2%. step four is cut regulations on community banks more than $10 billion of capital. kashka are rks i said, quote, the biggest banks are still too big to fail and continue to pose a significant risk to our economy. he says his plans would reduce the chance of a bailout down to under 9% once his most stringent requirements are in place. he acknowledges his plan will have a high cost, a huge cost. in fact, he says it will cost 41% of gdp. is but says it is still less

costly than what another banking crisis would cost. to get plans to break up and become smaller. of course the plan comes out at a time banks have rallied and lower capital requirements on banks. we'll have a chance to ask him about this when he joins us tomorrow morning live on "squawk box." so, guys, this is what he -- go ahead. >> i've got a question. >> i'm speechless but go ahead. >> let's underline this. those are huge numbernumbers. >> huge numbers. go ahead. >> tax on shadow banks. right now there are banks out there -- there are companies that do bank-like activities that are not necessarily banks so much. that's what he's talking about? the tax on them? >> if you raise the capital so much on the banks, they'll move to a shadow banking so he wants to equalize the cost.

>> that doesn't mean gdp is 41% lower than what it would have been. it's the cost -- i don't understand that metric. >> i'm still trying to understand that metric, if you really want to know. it says 41% of gdp. >> back to the bailout and they say we spent "x" amount of bailing out the banks. >> plus the economy cost. let me defend the plan in two ways. it's actually the same way. at least he is putting the spotlight on the key issue which is a cost to benefit analysis of banking regulation. okay? and we don't think about this. there is a cost to banking regulation and there is a benefit. we can run the economy a little riskier which i think is what we're gearing up to do. i think we're gearing up to roll back some of dodd frank. if you allow the banks to take more risk. and that means the risk of a bailout or failure will go up, but we think maybe we're going

to get more out of that. if you increase regulations on the banking sector, you're going to push into the -- >> we've seen it already. >> so i think those two ideas, but the levels -- i think it's a nonstarter. >> a lot less lending. right? >> you have banks right now who are saying we have idle capital, capital that could be being used to spur investment and economic growth, and because of banking regulations it's on the sideline. >> i call it dodd/frank leisman typically when i refer to it. >> which part of it? the part i like or the part i said should be changed? >> just in general. >> i have a hundred questions for sam. i wasn't even here when that was passed. do you want to go back and blame everything on me? mccarthy too? sam, what is it like right now? i know you are a aaa whatever the next step above aaa is

borrower. but is capital constrained in this economy by bank regulations? would we get a boost from reducing or loosening up dodd/frank and is that an acceptable risk in your opinion? >> i think that we would get a very significant boost from softening up dodd/frank. but i think the boost would not come from additional capital available. it would come from a reduction in the cost of regulation. you know, in my case, our business our cost of compliance have probably gone up five times in the last eight years. that's nonproductive costs. mortgages are much more difficult to get today. simply because there's so many provisions that everybody is afraid of tripping over. we've in effect converted an

open economy into a highly overregulated economy. and that's why we have no growth. you can't overregulate and expect growth to continue. >> i need to defend myself, sam, from the peanut gallery over here on my right. which is that i have supported higher capital standards and higher regulation on the bank but i believe dodd/frank went too far and for many years i've clamored for them to go back and redo significant parts of it. but i say that and joe doesn't hear it for whatever reason. michelle? >> i was just going to say is there a tradeoff here? much higher capital but less regulation? >> you would reduce all the regulation. that's another thing about dodd/frank. by the way, you don't shed a tear for the compliance officers that's going to lose their jobs? >> i think one of the -- >> unemployment is going to go up. >> that was a joke. >> i think one reason employment

has gone up is we've had so many additional -- >> there's an argument for that. my friend wants to go. >> this is huge stuff. >> we'll have neel on tomorrow. we'll ask him. >> steve's leaving but sam is staying. and at the top of the hour, the chair of the senate foreign relations committee bob corker, his name has been thrown into the ring of secretary of state when trump takes office. programming note neel kashkari will join us tomorrow in the 6:00 a.m. hour of "squawk box." we'll be right back. ♪ it's been over 100 years since the first stock index was created, as a benchmark for average. ♪ yet a lot of people still build portfolios with strategies that just track the benchmarks. ♪ but investing isn't about achieving average.

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welcome back to "squawk box." microsoft is offering concessions to eu antitrust regulators over its $26 billion bid for linkedin. the european competition enforcer expressed concerns about a deal last week. the eu commission will rule on the tieup by december 6th. stocks to watch today, gap naming a new cfo. terry listal will take the job in february. she's a veteran of dick's sporting goods and kraft foods. and coming up, senator bob corker is going to talk about the trump transition and the possibility of him being picked as secretary of state.

in the meantime, check out futures at this hour. we are in the red. dow looks like it will open off 40 points, nasdaq down 14, s&p off 5 points. we return with a big hour in just a moment.

"squawk box" heads to washington. republican senator bob corker join us to talk about the trump transition and the future of their parties. sam zell sounds off. >> i think the stock market is telling you the economy is enthusiastic. >> here to talk the trump economy. plus a key read on inflation 30 minutes away as the second 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 michelle

caruso-cabrera. the futures have worsened as the morning has gone along. but we did have a streak going of higher closes in the dow. but we're indicated down 38 points -- 37 points at this moment. just under five on the s&p and down 13 or so on the nasdaq. the treasury yield curve, just under three on the 30-year. 2.27% now on the 10-year. and rates have obviously been moving up recently. but maybe it's for good reasons. >> i wonder if the market is going for this reason. the dollar, look at it. the dollar index is rising to a 13-year high at this point. we've seen interest rates not rising today, but they have been rising in the wake of the election. and the dollar's gone along with it with these expectations for growth. and at some point if you're multi-national, that begins to hurt. so we'll see. but the dollar index at a 13-year high. oil prices also in focus. crude pulling back this morning following a huge rally

yesterday. $45.39 per barrel. among the reasons, weekly u.s. crude stocks rose more than expected. the energy department will release its latest figures later on this morning. in corporate news, snapchat confidentially filing for an ipo. official term with the s.e.c. the messaging app is expected to go public as soon as march. it could be valued up to $25 billion which would make it the largest u.s. ipo since facebook's 2012 debut. lowe's earnings revenue and same store sales falling short of estimates. the home improvement chain also warning it may not meet prior sales guidance. coming in quite light given how successful home depot was just yesterday. separately, target beating the street on the top and bottom lines. retailer also raising current quarter guidance for comparable sales and giving an outlook above estimates. president-elect trump is now trying to fill his cabinet.

and our next guest could be in the running for secretary of state. senator bob corker served as national security adviser to the trump campaign. senator, good to see you this morning. >> good to be with you. whenever i see "squawk box" on my schedule, i get -- i have an up day. thank you. >> i'm sure you do. and we all do. senator, don't expect much of an answer from you, but what do you know about your chances for any position in the cabinet? whether secretary of state or something else? >> you know, they've just been there a week. i'm sure, you know, think about seven days ago they hadn't even begun to give their speeches about the election. so they're getting things together. am i in the mix for the job? yes. do i realize there are other people who are very central to the campaign that are also interested? we'll see. look, i'm in a good position right now chairing the senate

foreign relations committee to affect things i care about. we'll just see what happens. we got some headlines today. i wonder if you know anything about what's happening with the transition team. the journal's take is that churn has reshaped the trump's -- reshapes trump's team. and they talk about pence now in charge. i think this was called august. the august "new york times" said firings and discord puts trump transition team in a state of total disarray. so, you know, which is which? is it -- how bad is it? >> look, if you can imagine trying to form a government having been a business person coming from the outside and you think about the way he raced, he did it almost by himself. he didn't have a lot of people involved. the campaign was very small. i think it's to be expected there would be some turmoil. i do think that pence is a great person to lead this effort.

i know there are other people closely involved. his family, he relies upon them greatly. i really don't have tremendous insights into it other than what i'm reading and seeing from others. sure, we've had some conversations with them. but, you know, i think i'd chill for awhile and let them get their legs and my guess is they'll be rolling out some folks that i hope are going to help us move our nation ahead. it's an exciting time for us, i think. >> market watch said that the market rally is going to be disrupted by problems with the transition. i mean, is this just normal growing pains? or are they just -- is it disarray? do you know? >> i really don't know. i truly do not know. so i'm looking to you and others to inform me as to what's happening. >> it looks like there's some payback to anybody associated with christie is what it looks like. >> look -- >> jared kushner's father and chris christie was prosecutor.

there's a lot that goes on there. what do you know about mike rogers? i saw trey gowdy said some horrific things. i don't know whether it had anything to do with that. but that was a departure too. because he was a christie confidant too. >> i'm a policy business guy. >> you can't have the job if you don't know anything, corker. >> i think sam zell probably knows a lot more about this than i do right now. >> senator, two things for you this morning. one is a report that president-elect donald trump trying to get security clearance -- this is from andrea mitchell for -- for jared kushner who he could sit in on briefings. appropriate or not appropriate? >> i think he relies heavily on jared. and i think the appropriateness will be, you know, what will jared's role be on the outside after. but look, jared is somebody who

commandeered this campaign. i traveled with them for a day and could see the incredible relationship. believe me, coming to washington -- coming to washington -- let me just say this -- >> he should either be part of the administration or shouldn't be. but that you can't be both. >> well, i think they'll figure out an appropriate way to deal with that relationship. but i will say that coming to washington, having close confidants like their relationship is -- i mean, it's very close. and something i think that's important to his success. hopefully they'll figure out a very appropriate way to deal with it. >> in the same vain of the inside and outside white house article in "the wall street journal" this morning, we talked about this over the past couple days, trump assets could raise conflicts. holdings in domestic and overseas businesses. we talked to sam zell about this earlier. lobbyists may decide they're all going to take up residence in the trump hotel right near the white house. start holding events at

mar-a-lago. what kind of disclosures and transparency do you want to see from the trump empire given iz his role as the president of the united states? >> it's unprecedented to have someone who has such far flung operations around the world being elected president, you know, on this day and time. this is all new territory. i think obviously they're going to care deeply about -- >> what do you think the right answer is? >> you know -- >> do you feel the american public deserves to know all of the money going in and out of those businesses? >> well, i think it depends on what his relationship is to those businesses is. so if he's going to be involved, then certainly. if -- but if -- >> -- is a beneficiary of all of it. >> i guess there are ways -- again, this will be one of the most complex ever, but there are ways of setting up a blind trust to deal with these issues. you've got to make sure that it's a solid blind trust in doing so. >> is it possible to create a

blind trust in the context of assets that aren't moving. they're not equities. it's not the manager knows you can sell this or that. >> it makes it a little more difficult, but what it can do is keep you from dealing with people who may wish to be acquiring or people that may wish to be leasing or whatever. i think it can, in fact, set up an appropriate value between the two. it's going to have to obviously. he is president. he does own these assets. look. i have to believe they're going to go through this in a very meticulous way. and deal with something that is very complex. and my guess is they're going to do their best to be -- again, i'm not sitting there with them at the table figuring how they're going to do this. but in order to have a presidency for four years where people are not constantly picking at you, they're going to have to address this on the front end in a very good way. my sense is they will do that. >> senator, steve leisman was on

earlier. broke a story about neel kashkari, the minneapolis fed president. you were involved in the discussions about what to do in the wake of the financial crisis. so the proposal is to raise bank capital requirements from 13% to 23.5% and in some cases 38%. that's kashkari's idea of how to solve too big to fail with the offset being reduction in regulation. we presume. is that a snowball's chance in hell do you think of ever happening? >> well, it'd be a pretty low return on equity certainly for those in the institutions. i've heard zero discussion about that kind of thing. neel is a friend of mine and i'm glad he's in a position of public service. i know since he's been there, there have been a couple of proposals that have come out that have been somewhat shocking. i mean, just because of who he is and what his background was. but i do think that we're going to be in a new regulatory period. there's no question that finally addressing some of the excesses

of dodd/frank will be done and will pass and will become law as it relates to dealing with the issue that just came out again. i'm standing here in front of a camera, i haven't seen or talked to neel about his proposal. but one of the things that has been discussed is you can do away with a lot of the uber-regulation if in fact c capital standards were at a point -- again, up here on capitol hill, i've heard zero discussion about that this morning. >> dodd/frank, total repeal or just -- >> it will not be totally repealed. look, in any piece of legislation this large and complicated, there are some aspects of it that are beneficial. but i do think you're going to see movements, the banking system in our country is certainly way overregulated. and you're going to begin -- you'll see people beginning at that level and building up and

you'll see legislation, i strongly believe, pass doing away with the excesses i think in the first six months we're here. >> senator, i want to ask you about fannie and freddie. i spent time with bill ackman last week. one of his great hopes along with others on wall street of course is that somehow fannie and freddie get resolved and to their favor. what do you think is going to happen? >> mike crapo is coming in on the senate side and i know he wishes to deal with this. i know hens hensarling does on the other side. talked with him on the ideas he has. i think you're going see that being the second priority here nap is first dealing with the dodd/frank excesses. secondly dealing with fannie and freddie. and look, from my standpoint, we have to do away with the model of public sector losses and private gains.

i think to have two that are guaranteed by the federal government and yet we have stockholder ownership. i will say i don't agree with everything that bill ackman has talked about. i do think that he understands that. and i think maybe there's a way to get to a place that is not the system that we have today. i mean, it is -- the model that we have had is totally, utterly ridiculous. i mean, it is ridiculous. to have fannie and freddie with a half percent capital and $5 trillion in assets combined is a ridiculous model. we'll see where that goes. again, i'm hopeful that that will be dealt with. i will say fannie and freddie is the most complicated issue i've dealt with since i've been in the senate. far more complicated than alleviating the excess of dodd/frank. and it's going to take some gray

matter to get it in the right place. >> okay, senator. >> thank you. >> thank you. >> good to be with you guys. >> good to be with you. >> let's give the trump effort another week or so. i think things are going to settle down. >> no. no. no. >> i think there'll be no more stories coming out of there. >> no, no, no. get ready for four years of this. get ready. >> have a good day. >> and it's dodd/frank/leisman, i believe. isn't it? the actual bill itself. >> he has been a big fan, i know. all right, guys. thank y'all so much. >> great to see you, senator. we'll start calling him secretary of state right now. coming up, much more from our other statesman sam zell on the markets and economy. then in the next half hour, we're going to head back to washington, democratic senator mark warner will join us at 8:40 eastern time. stay tuned. you're watching "squawk box" right here on cnbc. we're seeinw technologies

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welcome back to "squawk box." we chat a lot during the breaks here. bill gross is out with a post-election outlook this morning. among the headlines, he says

there is no new trump bull market. gross says the didn't vote for either establishment candidate and he believes trump will be damaging for jobless and low wage americans. if you'd like to hear more, bill gross will join "power lunch" this afternoon. we want to get back to our guest host this morning, sam zell. good morning. i want to talk about a couple of other things we haven't figured out yet which is sort of a market question. which is the market's been on this amazing tear. how do you as an investor actually measure -- because all thus far is sort of a bet on what the administration or washington ultimately can do. how do you actually measure it? >> well, first of all, let me comment that i think this activity in the stock market over the last week is about the fact that there has been a shift from extreme pessimism to

possible optimism. that really is a huge psychological difference. the fact that the biggest movers in the last week have been industrials, mundane companies. companies that have been the victim of high-tech orientation at the same time the fangs have all gone down. because they're not going to get the same degree of attention that they've gotten so far. i think that's all a very positive thing. i think this country needs optimism. i think this country needs someone like trump to encourage us and lead us in an optimistic fashion. and that's what's been a great deal of what's been missing over the last eight years. >> what do you think is realistic growth rate in this country?

>> well, for "x" number of years, this country grew at over 3%. i don't think there's any reason why this country can't go back to growth rate of 3%. you can't do that if you're under the tyranny of the upa. if you're under the tyranny of the nlrb. if you're in effect running a redistributive economy, you're not going to get that growth rate. and we haven't in spades. but it's time for us to go back -- excuse the expression -- to what made america great. we are a great country, an compensati exceptional country because we've had an optimistic viewpoint. we've had a can-do philosophy. and we've had people moving in tandem opposed to picking reasons to be unhappy.

>> and one of the worries dare i say is that people think that ultimately these policies could be great for growth, could be great for the stock market, but may not ultimately help some of the people that donald trump has talked to most in terms of wage growth. >> i hate to sound like a trickle down economics person, but the reality is that if we create a positive environment where corporate america has spent the money it has and builds forward everybody will benefit. >> would you rather clumsily divide up 1.75% growth in some kind of government more fair way and hundred smartest people decide how to redistribute it? or would you rather have 3% to

work with? >> let me ask you a different question. would you rather spend all your time on facebook posting pictures or having a real job? you know, that's really been what's going on. facebook et cetera, their stocks have been rockets and corporate america stocks have been weak. i think that's a misallocation of resources and a misallocation of emphasis. and i think that what this election is all about is a shift back to the basics of what made this country work. and what made it function. and what made it different from the rest of the world. >> it's staggering. i don't think a lot of people get it though. i saw the president talking about well i think most people would say i've done a pretty good job. he has no idea what overtook the voters in this country or the attitude or the -- in fact, he's

saying hillary didn't visit enough parts of the country, she didn't appeal to the right places. there's seven stages aren't there? what's stage one? denial. >> joe, in the last week we have been entertained with articles delineating how much the democratic party has lost in terms of governorships, state legislatures, representatives in congress, et cetera, et cetera. isn't that a measure of success? except up until last week i couldn't find those numbers. now they're everywhere. slowly and done obtrusively, the country has rejected wealth

redistribution. it has rejected a non-existent foreign policy. it's rejected regulation to the point of strangulation. that's what we have seen happen. >> one of the questions -- we were talking about this yesterday. the lesson the democratic party may or may not take away from this. how much will the democratic party look at this and say there's something about the policies themselves or are they going to say given the popular vote and everything else that maybe hillary clinton was just such a terrible, horrific, flawed candidate that they can stick with what they're doing but try to get a better messenger? you think it's deeper? >> my memory says that bill clinton didn't even get close to a popular vote when he was elected the first time. and yet he was one of the most successful and one of the most loved presidents we ever had.

>> you mean a majority. he won the popular vote, but he didn't win the majority. 44%. >> well, he got 40-some-odd percent of the vote. who campaigned in california? nobody. who campaigned in illinois? nobody. >> right. >> who campaigned in new york? nobody. so how can you use the popular vote as a measure of anything? >> sour grapes are going to do that. that's all you've got. >> yeah. well, you know, we've got to get over that. >> trying. >> but maybe in the next segment i'll answer your question. >> okay. good tease. zblmpb coming up, breaking economic news.

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welcome back to "squawk box." breaking news, we're going to get our october read for ppi. we're looking for a number up 0.3%. that's not the number we received. we received a goose egg. unchanged. wow. seems a little bit odd, doesn't it? when you strip out the all-important food and energy, instead of giving up 0.2%, we're down 0.2%. if you look at the month over month trade, expected up 0.2%. it's down 0.1%. year over year final demand. last time 0.7%. far cry from 1.2%. and finally year over year

ex-food and energy, we're expecting 1.6 when's. on the last metric which many of us seem to focus. it was up 1.3% that year over year. the low point of the year was july at 0.7%. so this kind of continues the spread we've had. i'm not sure this isn't the fed's preferred measure and most people don't find that these measurements actually meet their lives, but it's hard to craft exact data. we do see what seems to be a streak breaking situation with regard to the lineup post election of equities and of course way before the election results were out, the rise in interest rate or the big bottom we experienced in july. we'll pay most attention to that. >> hey, rick -- >> coming up at 9:15.

yes, go. >> what's going on with yields? are we seeing them rise or falling? this is weaker than expected data and therefore yields should fall, right? do we see that? >> we're at 2.27%. we're at 2.97% unchanged on the long end. down a basis points on two. you know, michelle, i do agree that there was a time where the corner stone of the fixed income sovereign market was about pricing and inflation. obviously it calibrated with growth. i do think that we're just getting back to a more normalized level market driven. it's going to pay attention all these fundamentals, of course. but there are other issues on this current that we're on. and i think that investors will be best to pay attention to that. we could overshoot. that would be my opinion based solely on data. but keep in mind we've had the -- pushing on the scale for

so long i think we're going to see a little bit more upside to rates. only contemporary data pairings. >> thank you, rick. steve leisman, your analysis on this data. i'm right on this, right? weaker than expected with all these numbers. >> look, here's new dynamic that's out there. inflation is in play as an interesting indicator. we've had this rise in yields. we're trying to figure out, higher growth rates, higher underlying groit rate or more inflation or perhaps more supply of bonds. because of potential deficit spending? i came in this morning -- sometimes they like to give joe a break from me and so when we can pass on an economic number, we can do that. ppi is a number we've passed on in the past. i came in because it looks like it's on the mind of the market. expectations have been going up. they're off of the lows. but here we have a miss to the downside when it came to inflation. maybe it's just a pause until you have it here, by the way, this was a goose egg even with a

9.7% increase in gasoline prices. what you have is passenger car prices going down. this is a potentially -- if this remains, a good number for profit margins. ppi measures the cost to producers. cpi, what they get on the back end. so we're going -- go ahead. >> we don't think it affects the fed in december when the betting is 91%. >> i don't think it affects the fed in december because they're doing this despite the inflation numbers that are out there. right around where they want to be in the 1.7%. and i think the brighter minds at the fed understand that you cannot take a large aircraft carrier that is the u.s. economy and land it on a dime at 2%. 1.7%, cut your losses, call victory, go in. but what we're looking at here is a huge string of negatives especially the services number down 0.4%. the trade number, ppi down 0.3%. all of these are numbers that most economists expected to be

on the upside. we'll be looking for that and then we'll look for cpi. i believe that's tomorrow. real quick i want to show you that we've been -- yesterday too ticks up from the better retail number. running 2.4% with a range of 3.3%. who's the 3.3%? that's the atlanta fed. then the magical number is 2%. there's where everybody is on their fourth quarter tracking numbers. early days yet, lots of data yet to come. if you add up all the quarters for all year, it averages to 1.92%. >> is the aircraft carrier flying and it's trying to land on a dime? >> joe, there's a moment when words come out of your mouth when you realize you messed up. i mixed metaphors but it was an unstoppable thing. >> but is the aircraft carrier flying or floating? >> well, it's new technology i

believe will be developed by the new administration. yeah. >> the aircraft landing on the aircraft carrier on a dime. >> it's the driverless aircraft carrier. it's all on autopilot. thanks for bailing me out, sam. >> i listen to you. >> i appreciate that. it was a bad choice of words. how would you do it? stop it on a dime? >> no. you're talking about something landing on -- >> how would you -- help me out. >> now back to politics and the trump transition. joining us now holman jenkins, "wall street journal" editorial board members and editorial writer. he pens the twice weekly business world column for the journal and here's the headline of the most recent one. "green elites, trumped. the planet will benefit if the climate movement is purged of its rottenness." music to joe's ears. glad to have you here. what do you mean? >> the greens, the

environmentalists, they rode the party into the ground. i wonder how long they're going to be in the saddle in the democratic party now as the party -- >> holman, the waters are going to rise. >> well, the waters have been rising forever. yeah. we've been coming out of an ice age for a long time and the waters have been rising. we rely on computerized models to worry about co2. we don't see it much in the data yet. we see temperatures go up for decades, go down for decades. meanwhile, the co2 level continues to rise from a very small level to a very small level. and we don't really have the observational data yet to tell us we have a problem. >> if we do have it, we get rid of it pretty quickly. i'll tell you that much. if we have data not showing a rise, previous data getting rejiggered. satellite data showing no warming is used. they use 2,000 thermometers on, like -- you know -- >> they go back and rejigger the

data finding the growth and warmth during the last 18 years during which 31% of the co2 released from mankind has hit the atmosphere with no apparent affect on temperature. >> i'm not a climate expert so i'm not going to make a comment except do you disbelieve all the climate scientists that talk about this? >> i don't know what people mean when they ask me that. i look at the climate change reporters and they're clear where we're relying on models that are imperfect, contradictory, and not supported by observations yet in a way that confirms validity. the science isn't bad. things people say about the science is ridiculous. >> for example, bringing coal back in a meaningful way. >> how will that happen? natural gas is killing coal. >> so you think that's off the table? >> yeah. i mean, coal will be free to compete on its own terms without the obama administration leaning all over it. that's not going to help. gas is cheaper, it's more flexible, and it has much lower

co2 which makes people enjoy burning gas. >> and aren't we seeing significant increase in the use of coal in europe and significant increase in china? >> and coal's not good for anybody because of sulfur and particulates. but that's the problem. the green lobby will show horrific black smoke and call it co2 and they don't care that that's conflating because it's part of the -- i guess it's part of the cause, part of the almost with religious zeal. isn't it? >> there is a religious zeal on that. how could it not be? we're saving the planet. the ugly underseam of this is the fact that it supports all of the business interests that cannot survive without subsidies. wind, solar, tesla. >> if the globe's not warming, there's no reason to have climate scientists as well. that's where funding comes as well. >> isn't there stuff out there that is part of reducing global

warming that is good for the economy and good for business? i know you want to cut off extremes and i support that idea. but the idea of, for example, higher fuel efficiency standards on the part of automobiles. not releasing particulates into the air. these are good things. >> right to clean water because half the world doesn't have clean water. >> i agree with that. >> what about clean air? but they put so much on co2 that they've ruined -- >> i'm asking holman is there a middle ground here we can come back to where we do things that are good for the environment, good for -- >> absolutely. >> -- and good for the economy. >> doing things for the reason of co2 is going to be hard to show cost benefit because there's no benefit, it's only cost. everybody values cleaner air. lower particulates means less lung disease and all that. a car today running down the highway pollutes less than a car running 15 years ago. >> but those are government standards. >> you're trying to turn this into -- >> wouldn't we have gotten there

irregardless? people want cleaner air. >> this is elon musk last year. he said if i cared about subsidies, i would have entered the oil and gas industry. which is to say the imf contends that their $5.3 trillion, rather. >> but let me tell you what that is. that is a subsidy at the expense of the oil industry who have to subsidize consumers for giving away to indonesia for 10 cents a gallon. that's what he's talking about. it's ridiculous subsidy but nothing he's talking about. anyway, coming up, democratic -- thanks holman -- democratic senator mark warner. taking on the future of his party after republicans won control of both the white house and congress. stay tuned. "squawk box" will be right back. (gasp) shark diving! xerox personalized employee portals help companies make benefits simple and accessible... from anywhere.

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welcome back to "squawk box." congressional democrats going back to the drawing board to put the party back together following donald trump's victory. joining us now is virginia senator mark warner prp good morning to you. help us understand this. we asked the question of a number of guests today and throughout the past week since donald trump won the presidency.

but now given where we have the white house, the senate, and the house all together on the republican side, do you look at what's happened in the past call it week or maybe the past several years even as an indictment of the policies of the democratic party, is that the lesson here? or do you look at hillary clinton and say she was just a terribly flawed candidate? how do you measure all of this? >> well, first i'd say that what happened last week in trump's election was a rejection of not only the democrats but establishment republicans. it was a rejection candidly of most of the media since virtually every paper endorsed clinton. it was candidly a rejection of big business. not a single fortune 500 ceo endorsed trump. so yes the democrats got to do a better job. we can't just be a party of metropolitan areas and of the east coast and west coast. this has been something i've been preaching since i became governor of virginia. we've got to bring jobs back to

communities that have been hurt by technology and globalization. but i think the bigger question that all of us have got to re-examine is how do we make this economic system work for enough folks? i think -- again, i spent longer in business than in politics. but the business cycle we see today which is all about quarter to quarter profits that's not about long-term investment, the business community we see today that has 95% of corporate profits spent on share buyback and dividends rather than reinvesting in businesses. the fact that the workforce has changed. nobody works -- my dad worked for the same company for 45 years. nobody works for the same company for 45 years. now a third of our workforce is in some form of part-time or contingent work. they got no social insurance at all. how do we put together a portable benefit system. i think it's the system change and i think that's where the democrats got ahead and the republicans as well. >> one of the things that in this election clearly, the focus on growth and focus on jobs won

out over the idea of more regulation and more redistribution in this instance. so the question for the next cycle when it comes to how the democrats think about this is does it -- from a policy perspective, do you believe the party's going to go more to the left or do you think it's actually going to go more to the center of possibly more to the right? >> i believe we've got to align the incentives to make it work for a broader group of people. i believe strongly in growth, strongly in innovation. but i also think we've got to look at some of the fundamentals. the social contract that was put together in the 1930s and 1940s which was based on the assumption you've got to work at the same firm for 20 years. that's gone. we've got to re-examine that. how do we get businesses to invest and not so much manage quart tore quarter. i think we can leave that. i think that's where democrats ought to head. >> sam zell is here. he's got a question for you. >> my question is having listened to what you just said,

senator, how did you vote for dodd/frank? how did you vote for obamacare? both of those are job killers and contrary to the growth that you're talking about. >> sam, let me try to answer your question. first of all, as somebody again who spent a career in finance and started -- was cofounder of nextell, i believe strongly the the free enterprise system. there was a lot of bad stuff going on in the financial system leading up to 2008. you needed to put some guardrails in place. now, was obamacare perfect? by no means. but we added 22 million people that got health care coverage and candidly you've seen donald trump now saying he wants to keep the prohibition on pre-existing conditions, keep people on policies until 26. he says none of those -- let me answer the question, sam. none of those people are going to lose their insurance in transition. i want to hold him to his word. but i also think what we've heard and what i think the challenge of the president-elect

is going to be is he promises this massive tax cut and he's not told us how he's going to pay for it. we've got $19 trillion in debt. what i'm hoping is that particularly my friends in the freedom caucus on the house side are going to be as tough on debt and deficit as they were with obama because if we do a short-term sugar high with a tax cut that's unpaid for and massive new spending, when interest rates go up, you know as well as i do, sam, we can't meet the debt service that we've already run up. >> sir, great to have you on. we appreciate it. thank you. >> thank you. >> sam had something -- >> i was just going to ask him the difference between guardrails and walls. >> is he still there? >> the great thing is that -- >> building them? that was a joke. >> we're going to put up some guardrails and i think what they've done is put up giant walls. >> but the -- we talked all this short-termism and you heard it there. that's because we're at zero interest rates. the fed had to be where it was because growth was so slow

because of the same things that you were talking about. that's why growth -- all right. we've got to go. >> it's no confidence. >> coming up, jim cramer's going to join us from the new york stock exchange. we'll get his take on the day's top stories. stay tuned. you're watching "squawk box" on cnbc.

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let's get down to the new york stock exchange. jim cramer joins us now. target is doing something right, jim. it looks like it's up $4 or $5. >> gross margin is real good. there's a turn in a lot of different businesses. online business is growing faster than people thought. i got to hand it to them a very strong quarter. brian cornell has done a lot of things particularly in apparel getting it right. the numbers are for real. and i think that what you're going to try to figure out and i'm trying to figure out is how much of it is from walmart, dollar stores, how much is retake? this was a good quarter. and i felt from cvs, which is in there, that it would not be a good quarter. this is a nice surprise. a lot of people shorted after the cvs call. >> jim, you going to eat a mcrib? i don't like those. >> i don't know. i got to tell you i love listening to sam zell. every single night, sam, people are saying the same thing. and these are democrats saying

it to me. they're saying it feels better going out more. and these are ceos. sam, i got to tell you i didn't sense it could happen, but it's what i'm hearing. >> it's true. it's changed the overall attitude. and the election of donald trump hard as it is to believe is created optimism. we've had eight years of no optimism. that's critical. >> i'm getting it from people. you know, sam, look, you're -- i've seen much more life than i have, but i'm hearing from people exactly, i'm hearing optimism. and i'll take it. i'll take optimism. >> right. >> the pessimism's got to go away. >> okay, jim. we'll see you in a few minutes. >> thank you. >> and then later today, oh, boy, trying them all out today, don't miss bill gross, janus portfolio manager will join us at 1:00 eastern. what'd he say everyone would be worse off?

>> he doesn't believe there was a trump rally. >> he's a capitalistic socialist or i don't remember. i can't remember. anyway. ♪ ♪ ♪

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our guest host this morning sam zell, chairman of equity group investments.

commercial real estate, sam, is expensive, is it not? >> i think so. yeah. >> and will the economic growth that you see that could happen if, you know, things go right, will that offset the rise in rates and allow it to stay overvalued? or is there a day of reckoning? >> i think interest rates are a very important part of the incentives that make our economy work. i think the slowdown that we've had over the last eight years is very much a function of the fact that there's no urgency. there's no cost of carrying cash. i think when that cost returns that leads to different kinds of activity. and a much more positive -- >> might not be bad for real estate then. >> no. not over any longer period of time. might create some short-term dislocations as people get

financing at 3 that now comes up for refi at 5. >> you've also been worried about the false underpinnings of the stock market based on cheap money from the fed too. >> yes. >> i guess if those underpinnings became more soundly based on economic activity, you might change your view on the stock market too. >> well, i mean, there's been a lot of discussion in the last week about draining the swamp. i think part of the swamp is on the new york stock exchange where effectively a very low interest rate environment has created unrealistic expectations of valuations. >> can we catch up with valuations if economic activity ramps up? >> i think so. >> so we could. there may not be a day of reckoning then? >> well, i didn't say we won't have a day of reckoning. >> but. >> i think that normalization of interest rates will go a long way toward bringing reality back to everybody's decisions. >> i like what you said about facebook. i mean, ife don't make anything advertised, then what

are you going -- if everything's just advertising, how do you run an economy on advertisement? >> how do you explain the lowest productivity we've had in 25 years? seems to me that an awful lot of people spending an awful lot of time on social media ain't contributing to productivity in our country. >> sam zell, always great to see you. michelle, thank you. >> thank you. >> i'm going on vacation, everybody. >> you are? you are? that's like a vacation for me. >> be sure to join us tomorrow. "squawk on the street" begins right now. ♪ good wednesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. a week ago today we were talking election results and since then dow's up seven straight although futures settling back a bit. s&p remains half a percent