neel kashkari rolling out a blueprint to end too big to fail, he joins us on the "squak" set. it's thursday, november 17, 2016, "squawk box" starts right now. ♪ live from new york where business never sleeps, this is "squawk box." good morning. welcome to "squawk box" on cnbc. i'm michelle caruso-cabrera along with joe kernen. becky and andrew are off today. let's give you a first look at u.s. equity futures. this suggests the dow would open higher by 15 points. the s&p by a little more than one and the nasdaq a little more than seven. overnight in asia, mixed markets there. the nikkei flat. hang seng lower, flat when you look at percentage terms. >> you know what would be

flatter? if it was zero. >> ditto for almost all of europe. hardly anything there. crude oil at this hour is stronger by 37 cents, 45.93. that may be because the dollar has taken a breather after its rampant run. it was one market that just kept going and going. today a bit of taking the edge off. >> carl icahn warns that the strong rally in stocks since donald trump's election might be overdone. even more overdone than the overdone market that he's been warning us about for the last six months, maybe the year before that. i've known him 20 years, he's been warning me for 20 years about the market. speaking at a conference yesterday, icahn says investors can expect trump to help fix washington and improve the state

of the economy. icahn has been a strong trump supporter. he said he bet about a billion dollars on u.s. equities after leaving trump's victory party early last wednesday morning. that's interesting. before the election -- how many times have we had this as a headline? i stand over there at the top of every show. in the last year i have said carl icahn is warning about the stock market at least -- >> it's always something dire. >> overvalued. it doesn't -- and i certainly have some sympathy for that viewpoint given that a lot of it has been orchestrated with the animal spirits of easy money and the fed. maybe we eventually -- this woman is pulling up her shirt out there. this is bizarre. go away. my god. look at this. >> wow. don't take a shot of that. don't take a shot of that. >> we didn't need to see that. >> she had a bra on. >> she did. >> a black one. >> it was black. >> i saw it and lacy. >> you have to ask yourself --

>> good morning. thank you for that. >> don't you try anything like that, allison. alison is coming on in a second. >> i won't either. >> don't you either. >> you have to wonder about the run in the stock market. it's been tremendous since -- >> you're changing the subject. >> yes, i am. >> and so, yes, you can be very excited about potential changes. he doesn't take over until january 20th. how much more can you get until you know really what he wants to do with dodd-frank. stop being distracted -- >> i think they're going to a protest. i do. that was the whole -- we'll see. >> the trump building is that way. >> going to get a starbucks. okay. yeah. all right. we'll see with -- with carl. i don't know if i can continue. the fed out in force this week speaking late yesterday. have you turned your frown into a smile yet, alisonalison? about the election? you okay now? >> have you read the notes?

she's nervous. >> we'll interview her in a few minutes. >> i worry about her. we talked before the election. i've been worried. philadelphia fed president patrick harker said he favored increasing interest rates and suggested that the central bank might have to hike more aggressively if donald trump's administration enacts fiscal stimulus. the fed said it will increase rates gradually otherwise but inni independei ininvestors believe inflation could increase. weekly jobless claims out at 8:30 a.m. eastern. headline cpi forecast to rise. housing starts are due out at 8:30 a.m. followed by the november philly cheese -- sorry, philly fed survey at 10:00.

when you see philly, don't you think philly cheese steaks? >> yeah. >> i would love to have one. sometimes if we mention them, they deliver. >> yeah. >> half a dozen fed officials are speaking throughout the day. the highlight will likely be fed chair janet yellen, testifying on capitol hill before the joint economic committee. that's at 10:00 eastern time. in earnings central, walmart, best buy reporting before the opening bell. target yesterday was interesting. hearing from gap and sal salesforce.com. yesterday i mentioned cisco, whether that's something -- i thought that was interesting yesterday. all we talk about is social media. >> and software. >> cisco is trying to move towards software, like everybody else. >> was interesting if we talk about everybody sitting around at home surfing facebook and

twitter and snapchat -- >> no wonder productivity is at zero. >> the reason that facebook is worth a gazillion dollars in market cap is because they have to be advertising something that people buy. if we're not making anything to buy, there's just advertising george bu -- in my stream i get advertising for apps. >> still sitting there in your basement. >> exactly. mm-hmm. >> i hope that's not a day of reckoning. the social media, that's not the first internet bubble s there? is there a social media bubble? >> a lot of those dotcom companies didn't make money. facebook makes money. >> you know what today is? >> thursday? >> the 17th or the 18thment. >> according to my apple watch, the 17th. >> national black cat day. i didn't know they needed a day. >> why?

>> they're the last to get adopted. >> really? >> yeah. they would be my favorite. i got married on friday the 13th. i block cats. >> mysterious. >> sleek. >> i don't worry if they walk in front of me. >> you encourage it? >> i do. that's the nonconventional wisdom. how many times does it have to happen? >> i think it will happen over and over again this year. >> it never doesn't happen. >> that's true. that makes life exciting. >> well -- >> sometimes. >> for some people. >> turn that frown upside down. >> let's tell you some political news. japanese prime minister shinzo abe is set to meet with donald trump today. he will be the first foreign leader to do so since the election. abe says he wants to build a relationship of trust. among the president-elect's

other pleatimeetings today, nik haley, henry kissinger. fedex ceo fred smith and safra katz. cisco's first quarter profits falling 4%, largely on restructuring charges related back to job cuts that were announced in august. revenue was down more than 2%. the company also warning that revenue will decline again this quarter as challenges continue to mount. ceo chuck robbins on the conference call. >> we delivered a strong q1 in an environment that continues to be challenging. we executed very well in the quarter with revenue growing 1%, non-gaap earnings per share growing 3%. along with continued strength in non-gaap gross and nonoperating margins. this quarter total product orders declined 2%, largely due to service provider orders declining 12% which was worse than our expectations heading into the quarter. we'll talk to an analyst about

cisco in a few minutes, and later on this morning, robbins will be joining "squawk on the street" at 9:00 eastern. han celestial says it has found no evidence of wrong doing in relation to its financial reporting this is after conducting a review of its own accounting. the company's audit committee examined whether revenue from certain distributors into the u.s. were recorded in the proper period. first solar is cutting 1600 jobs or more than a quarter of the its work force. the company expects to post a loss for the year and is forecasting 2017 sales will falwe falwell e. fall well below estimates. the dollar is pulling back, 2.2 on the ten-year. the 30-year got above 3. >> a month ago it was 1.7. the delta matters. >> when we went from, like, 9%

to 7% on the way down, it was the most powerful thing for stocks. >> tremendous. >> it was unbelievable. >> right. >> we will never ever in anyone's lifetime see anything near 5% on the 30-year. >> on the way down. >> never happen. >> i remember. i remember. >> 5% sounds like -- 5% sounds like 500%. the dollar also pulling back after climbing to 100.57. >> strong index. >> highest level in 13 years for the dollar index since april of attention to janet yellen's speech today. joining us is alison and jack.

they've done it. they've waited so long to raise rates, that at this point they're absolutely -- with the election, with what's happened in yields, with the markets, with all the notion of inflation coming back. they can finally do it. >> now the bond market has done it for them. >> they can finally do it without wringing -- how do you wring your hands? do you go like that? >> i thought it was more like this. >> that's shaking your wrists. >> shake it off 6. >> the notion that these guys are smart, they know the future of economic activity, you have to beat them over the head and say it's okay before they do it. are we excited and watching with great -- >> relieved in. >> are we watching with great anticipation? >> no, not at all.

>> why did we say that? >> why did we say what? >> i said we'd be watching with great -- >> you said it. whoever wrote it said it. the bond market is telling us what is going on. and it's healthier to overly worry on the government to do things and drive things. now i sound like a republican. >> you never -- you never sound like that. that's why i'm trying to cheer you up. >> that woman did it a lot more. your face -- >> i was like what is she doing? the next thing i realized. >> i think she was coming for a march two days ago and hasn't slept yet. >> you could smell her through the window? >> gross. >> jack what we have going for us, after they raise once -- >> they generally raise a second time. >> we can talk about when. >> then a third time. >> next year, once we get this one, we can talk about whether the next one is coming.

>> where's three, four, 25, 50? that will be a long time before we have that discussion. >> are they going to change the wording? >> they will. >> for people who believe they're behind the curve, that was one of the reasons people thought they should have raised a while ago. if you start back here, then you can go slowly. if you wait up here, it becomes much steeper. >> you should also keep in mind what has the fed been asking for for years? in every bit of testimony we would like some fiscal stimulus. we would not like to be the only game in town and we would like help. i think that's what changed at least in terms of the market's perception coming out of the election. we might get a stimulus bill and tax cuts. we don't know what we'll get. we keep trying to guess. >> is it regulation in your view if you get rid of the heavy handed regulation, is that like fiscal stimulus to you? because it is. >> i think it lets management

teams make the decisions off of what they think will be most profitable and hopefully they can move faster. >> did you hear sam zell yesterday? he said the last couple of years, the amount of paperwork he has to do. >> when you look at the way economists think about gdp, population growth versus productivity. if you assume regulation decreases dramatically, i assume you get higher productivity, which feeds no you s ns no feed expectations for gdp growth. >> gets you more sustainable productivity. >> this is a matter of fewer lawyers running most of these firms. >> think how bullish that is. >> i'm playing a violin. >> i want a marching band. >> you're worried about the

stock market still? >> for the past year i thought the market was overvalued and we needed something to drive the market. i think the infrastructure spend is fantastic. some healthy deregulation and tax reform is good. if we get into trade wars, 40% of the s&p's revenues comes from oversees. i don't see how you don't have a ballooning deficit which means higher interest rates? i would not get out of equities but i would trim back. >> given how we -- given how we have been trying to engender any inflation at all, and rates are basically zero, wouldn't this be the time f you're not going to worry about blowing out the deficit and you need economic activity, isn't this the time where you don't have to worry about it quite as much? go ahead do it? knock yourself out? >> fiscal stimulus, that's fine.

trade war, that's not fine. we're a global economy, the corporate and stock market relies on global revenues, not domestic revenues if we back off from the trade wars, eliminating nafta, not going through any aspect of tpp, it would be less worrisome. that's significant. >> the other thing about trump which you would be hard to admit, he is a businessman and does want to succeed. unless you're not a smart businessman -- >> i would love for him to succeed. >> you understand about global trade. there's rhetoric before you're elected and action afterwards. i think if you came to him and said if we do this to china, they're never going to buy another iphone, i think that might cause rethinking. do you think? busine businessmen are more pragmatic. >> we like to think we are. to the point we talk about the s&p generating about 40% of its revenues internationally, you

also have to think is that true exports or local operations? to the extent you can look at somest multinationals, they have costs within those economies. and their revenues are in those economiesy s ssh economies, is it a translation impact? a ballooning deficit may get you higher interest rates or a higher dollar? so we're trying to handicap the way the market goes and how people respond. it's a set of probabilities. >> both candidates were -- pretended to be anti-trade. i don't believe either one of them. i don't believe hillary clinton would have been that way. but if you go to the true center of the democratic party right now, bernie sanders and elizabeth warren, they wouldn't just say it. i don't know why you're so -- they would do it. they would do it. they would follow through on it.

surrounded by paul ryan and all these other people. just -- i would been more worried about your party and the fringe elements there. >> you just called them the centermen center. >> i think the center is fringe right now. >> both fringes average to the center. policy takes longer. it takes a year or two before you can change anything. >> you take the average, you add bernie sanders and elizabeth warren, cut that in half, you're way the hell out here on the left. aren't you? michelle caruso-cabrera? >> yes. yes. preach to the choir. >> you can nod and give me help. >> okay. they're playing music. i'm a first child. they want me to go to break. i'm not talking. >> you had brothers and sisters? >> i was the first child. >> you were the first. >> okay. >> oldest. >> oldest. >> that happens. >> for eight years? >> eight years. >> eight years? >> only child for eight years. >> that's an only child.

>>ky go i can go to break now? cisco posting an earnings beat. the stock is falling sharply this morning. reaction from an analyst next. and later, neel kashkari is here.

cisco posting better than expected results for the first c fiscal first quarter. joining us now to break down cisco's earnings is brian white, global head of technology at hamilton. i think of them as ibm. they used to do one thing and now want to try to do something else. they used to have all this hardware. the biggest part of the revenue, they would like to be doing security software, recurring revenue, annuity streams. this feels like it's slower than what people wanted, this report. is that a correct way to think of it? >> i think all big i.t. companies are going through a

transition, transitioning to the cloud. no doubt they're making the transition. their transition has not been as painful as ibm's. last night they called out carrier spending, service provider spending was weaker than they thought. i went back the last four novembers, and the stock on average has dropped 5% after earnings. there is something about a hangover effect. the fiscal year ends, you do okay in the first quarter, but the order of growth is slow and it impacts the second quarter guidance. this is when the bad quarters usually come up. that's in november call. >> i would do they think carrier spending is week? >> good question. orders were down 12% year over year. they mentioned a lot of different things. number one, fx, some of the fx still had an issue. also a lot of regulation change. net neutrality, trump is against net neutrality. we'll see what that means. that would be a positive for cisco. in certain areas of their

portfolio, they weren't well positioned. capex hasn't been phenomenal. to be down 12% year over year is a big decline. >> you ever have a buy on this stock? >> we have a buy on it, yeah. >> i wasn't going to use dog with fleas anymore, i love dogs. this has been dead money for ten years? >> so, if you go back to a lot of these big tech names in the bubbl bubble. >> if this is tech, we need a new word for what tech is supposed to be. the market cap is $150 billion right now. it was 600 billion at one year. i want to see a 10 or 20-year chart. i don't care to see where the -- >> i do. >> oh, remember that? >> yeah. >> i'm talking about in the last five years. the last ten years. you can do anything with your money. is there any reason -- you have a buy at 30 on this.

why? >> well a couple things. i think it's still cheap. it's not 100 times earnings like in the bubble. >> i guess when you have single digits, it's a buy. >> you have a dividend yield in this market that's attractive. i go back to the coca-cola, pepsi, kellogg's of the future, they get better multiples but are not growing at the hyper growth rate. if you look at a basket of those companies which have grown 2% for the past five years, trade it 21 times earnings. cisco growing 7% a year over that time frame. >> what's the best you can expect for eps growth over the next five years? >> they're looking for high single digits. that would mean low single digit revenue, high single digit eps. >> what multiple is that? 10? >> because they have a great dividend yield, i would say you could probably give it a mid

teens multiple. >> mid teens. >> what is the market? what does the market grow at? 5%? >> it has 15 or something for a multiple. >> yeah. this is not a company that i think has meaningful downside, doesn't have huge upside, but you have that nice dividend yield, it's cheap and they dominate the market they're in and they're expanding in the new market. under a trump administration, gdp growth will be good. net neutrality won't be an issue. >> all this talk about a trade war, they already suffered. >> it's only 3%, 4% of revenue. they've had their trade battle with china. >> there's no hope there? >> there is hope because the jv they started with was announced a year a go kicked off this wee.

inspur has an initiative, billions of dollars over the next five years or so, to create a jv with inspur that is that size. it just kicked off. 51 is owned by china based inspur. they will trail blaze like they wouldn't be able to because of exactly whether you said. when you partner with chinese companies, you can do well. >> they were switchers, routers, all that stuff. building out the internet. >> yeah. >> they need to transition? is there still a business there? >> 30% switches, 17% routers. they have a big data center business. they're in security, in software. they're in servers, number two blade server in the world now. >> the cloud, too? >> all this is in the cloud. all of this can be sold into the cloud. that's the initiative. >> look at you throwing around the cloud? >> i need to go back to school.

i'm not -- we always used to talk about cisco. i thought that the color selection for the routers, i thought they didn't have -- all they had was that tan. i wanted a blue or a teal or something like that. because i'm not sure what the hell -- so you hook everything up with this stuff? >> keeps the internet running. >> if you could have your -- they didn't care about what color. >> pink. >> you know, mcintosh came out with -- remember, they did come out with a bunch. they had it right. those routers, same ugly tan. >> there's purple switches out there. >> are there? >> extreme networks. >> it's the game. now they're selling to business only. >> really? >> yeah. they're not selling to consumer anymore. >> when we do remote access to our computers, there's some type of cisco thing i use to click on. >> yeah. i've seen that. it's a software thing. >> 60% market share. >> is this the best idea in tech? >> i think it's a core tech

holding. an attractive play. >> that's a no? >> not the best idea, but a solid play. i'm noticing more and more value investors have warmed up to cisco. why? execution. their operating margins this quarter were the highest since the second quarter of 2005. that's impressive. >> we've seen what happens with high multiple stocks in the face of higher interest rates. thank you, brian. >> thanks. >> tune in to "squawk on the street" for a first on cnbc interview with cisco ceo chuck robbins. >> when do you think they pick the medal of freedom winner? >> i don't know. >> do you see who the two are? springsteen, de niro. right after -- remember all of the publicity before the election, both of them, de niro said it feels like 9/11 after. and springsteen felt -- do they pick after? i don't know. does the president pick? >> i think the president picks.

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welcome back to "squawk box" on cnbc. u.s. equity futures at this hour marginally positive for the session. nasdaq looks good this morning after a winning session yesterday, even though the broader averages were down. the s&p is indicated up one. wouldn't take much of a rally to get the s&p to new all-time highs at this point either. guess that's all we'll look at. jpmorgan will reportedly pay more than $250 million to settle a government hiring probe in china. allegations are that the bank hired the children of chinese decisionmakers to win business in china. $200 million will be paid to the s.e.c. and the justice department, and more than $50 million will be paid to the fed. no individual prosecution is expected. >> in deal news, oil refiner

toroso is buying western refiner in cash and stock for about 4.1 billion dollars. a 22% premium to western refining's close yet. the company will have refining capacity of more than 1.1 million barrels a day. some stocks to watch, our own experience with l brands earlier today. l brands third quarter, a flasher -- a flasher earlier. >> happened. >> we're in new york. wait until we moves to times square. they don't have to flash. >> they're naked all the times any way. >> i hear elmo is completely naked. >> underneath? it's hot in there. >> elmo is always naked. he doesn't wear clothes. >> that's right. >> l brands falls following weakness at victoria's secret. the company is giving a downbead outlook for the fourth quarter which includes the holiday

shopping season. >> that means snuffaluffagus was naked and big bird was naked. >> you know how nice elmo is. if you don't pay him after your picture is taken, he slugs you. that's new york. >> that's why you don't take a picture with him. >> that's times square. elmo will sucker punk you if u you don't pay. >> you hear we're moving. >> i hear. >> how i do get from the car into the -- >> i think you have to walk a half block. it's a pedestrian zone now. yeah. >> is there a carrier? do we have a -- >> an egyptian thing? >> no, am i allowed to -- >> a carry? not in times square me. >> is times square before giuliani or after now?

before, right? >> kate rogers is here more on the minimum wage debate that wall street has been watching. >> main street is closely watching that wage debate with 29 states and washington, d.c. currently requiring wages above the federal floor of 7.25 dollars an hour. on election night higher wages were approved in four states by the year 2020. president-elect trump spoke out in favor of a $10 minimum wage while on the campaign trail, but small business advocates hope raising the wage won't be a priority. >> i think it's very unlikely this congress will increase minimum wages beyond where they are now federally. however, a lot of states and localities have increased minimum wages where they are. for the minimum wage debate, the debate will continue to move to states and we'll see big disparities with some states and

localities moving to $15 wage. >> i think it's a concern for our members if there's going to be an increase in the minimum wage at the federal level. i think what we've seen and supported is state and local action on this. and we think it's impossible to set a federal minimum wage. >> also on the main street radar, potential lclaw backs of the overtime rule and obamacare, a lot of the reporting requirement that's take them so much time and money. >> the compliance cost. >> people think it's just about the employer mandate, even if you don't have 50 or more employers, if you have less than 50, you have to prove you have less than 50. >> so tons of paperwork. >> there's no denying that momentum is swinging towards higher wages, but a lot of advocates say while members do pay above the federal minimum, they would like to see it continue a state and local battle rather than something at the federal level. >> a contract between the

employer and employee. what? i don't think there should be a minimum wage period. zero minimum wage. >> i was going to ask that. a lot of people say not federal, but let the states do it. that makes more sense, in the middle of the country versus new york, you can't have the same or similar -- >> or do new york city versus new york state. >> in a growing economy, wages take care of themselves. remember nixon? i don't remember nixon. he did wage price controls, which we still talk about and laugh in economic terms. >> because it's venezuelan. >> you don't set wages and prices. we're setting wages here. you can feel virtuous on the front end, just don't look at the possible consequences. coming up, google earth goes virtual, a look at the vr app, and neel kashkari will talk rate hikes and his new blueprint to end too big to fail.

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time for the executive edge. activist hedge fund starboard value is up by 10% this year.

returns are said to be led by its sake in this company, depomed. so far this year the drugmaker's shares are up 14%. starboard best known for its shakeup of yahoo! which you probably recall. funds performance stands out given disappointing results from other activist investors this year. i asked the other day, starboard? what's a starboard? starwood. these guys look around what will we name the hedge fund? starwood? no. no. someone -- >> isn't it part of a ship? >> starboard. starboard. >> it pronounced -- >> i tonight know. >> they usually talk to faber, don't they? the activists? google earth is getting the virtual reality treatment. the company's new app lets you stand in the middle of outer

space or fly over the eiffel tower. users point and click with controllers to travel through 3-d renderings of world cities, landmarks and natural wonders. you can download google earth for free in the steam vr store. it is on the side of a ship or aircraft, on the right. starboard. that's how it is pronounced. >> starboard. is that the other -- >> i have to read. spacex is requesting government approval to operate an extensive satellite network that would provide high speed global network coverage. the proposal -- >> port. >> a digital communications array of 4500 satellites. the network would we begin with the launch of 800 satellites to expand internet access in the united states. elon musk said the project would cost at least $10 billion. >> left and right. starboard is right. port is the other one. >> aft?

lee? >> you know who knows these things? kids who grew up sailing. near the ocean. >> children of the elite? >> kind of. coming up, minneapolis fed president neel kashkari rolling out his blueprint for too big to fail banks. he'll join us on "squawk" next. mary buys a little lamb. one of millions of orders on this company's servers. accessible by thousands of suppliers and employees globally. but with cyber threats on the rise, mary's data could be under attack. with the help of at&t, and security that senses and mitigates cyber threats, their critical data is safer than ever. giving them the agility to be open & secure. because no one knows & like at&t.

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minneapolis -- it's a jumble. i shouldn't tell people the answer. minneapolis fed president neel kashkari releasing a plan to end too big to fail. kashkari says the plan will enable the u.s. economy to grow without exposure to risk of another financial crisis and taxpayer bailouts. joining us now with the details minneapolis fed president, neel kashkari, steve liesman is also with us. someone who e-mails me quite a bit says if we get 3%, 4% growth, you may not have to worry so much about banks every five, ten years, and whether they would fail. it would be nice to have some serious growth. the other thing -- the other comment, we really have not fixed this? we still need -- i guess we get rid of dodd-frank, then we have to go back to the drawing board?

>> here's the thing. thanks for having me. the imf has a database of history of financial crises around the world. this is the best we have at predicting future crises. it's like terrorist attacks. you have to look at history and draw from that. we've reduced the risk of a financial crisis over the next century to 67%. >> with the current level of regulations. >> with the current level. but there's still a 67% chance. if most americans knew that, they'd say that's ridiculous. that's much too high. >> according to a lot of people, there was a 98% chance hillary clinton was going to win the election. how much confidence do you have in those numbers? i mean, how do you get them? what's the margin of error? what's the standard deviation? do you have faith in -- i mean, do you believe those numbers? >> no. >> well, it's the best data we have. otherwise other people who say -- >> do you?

is this like your work when you come up on unemployment friday? i just can't believe that -- do you believe we've lowered it from -- >> i don't doubt the work that was done in that regard. i think it's a really uncertain proposition. i think what he's trying to figure out is the chance of another financial crisis in the next hundred years. the question as i said yesterday when i reported the plan from minneapolis here is this. we can reduce it, but at what cost. i think it's worthwhile to go through the plan here, right? you're going to hike the equity to risk rated asset level from 23.5% to 13%. let's stop right there. >> would most bank executives be throwing up in their coffee as they see that? >> they're already throwing up in their coffee at 13%, neel. one of the reasons why dodd/frank is now potentially on the chopping block is u.s. growth has underperformed. one of the reasons people think

u.s. growth has underperformed is because of the stringent regulations in dodd/frank. you want to hike it up by another ten percentage points. >> here's the thing. borrowing costs in the economy is very low. it's cheap for cooperations to go into debt today. it's not like they're saying cost of credit is so high that's what's holding us back. that's clearly not holding back the economy. >> but the spirit in what steve says is true, right? there's a basic issue here. the more capital banks have to retain, right? the higher the ratios are, the less they have to lend out. >> i agree. >> i mean, that is the tradeoff. the more you raise it, you yourself acknowledge that the overall cost is a percentage of gdp could region 41%? that sounds extraordinary. >> correct. and you know what the cost of the 2008 financial crisis? 158% of gdp. if my plan avoids one financial crisis, main street the u.s.

economy is way better off than if we accept financial crises. we as a society have to ask ourselves are we comfortable having a devastating crisis every 50 years. >> let's put this in a way -- >> first, i want to understand that math. so it was -- more than 100% of gdp. what are you including there? >> that's not my estimate. that's the consensus estimate for the bank of international settlements. >> right but what is in that? how much the u.s. government spent on bailing out the banks? >> no. it's the long-term effects of a slower growth economy responding to a financial crisis. as we started the segment acknowledging the economy's been growing slowly. if you take that present value to today that's 158% of gdp. you tell me. do you want a 158% of gdp downturn event every 50 years? i don't. maybe you're okay with that. >> there's a lot of other things that have happened in the wake of the financial crisis that would lead to a weak economy. >> i'm sorry, we're going to run

out of time. and you can go on, read minneapolis plan. >> i've read it. >> i'm telling viewers. of course you've read it. neel, i want to pivot to policy here. >> sure. >> the prospect right now of greater deficit spending, fiscal stimulus tax cuts coming out of washington with a new president-elect. how does that change the trajectory and your outlook? >> we want to wait and see what actually happens. right now they're looking at what the new congress and president are going to do. so far seems to be helping the fed. that would be good if it actually comes true. it would make our jobs a he can of a lot easier. >> but if you get more inflation from deficit spending, if you get more growth, if our neutral rate of interest were to rise, then the thinking of other fed officials has been the fed might have to hike more quickly. >> i think that that's fair. but all i'm saying is we have to wait and see what happens. it's hard to know. there's a lot of speculation

coming out right now. >> you done on monetary policy? >> never. >> i'm not done right now. >> you go. >> right now we have no idea what your rate of increases are because in your tugtenning cycle, you've only done it once. so if you have a point, you cannot measure slope. don't you need two points? >> that's what forecasting's for, joe. >> yeah. >> "a" is real and "b" is a consensus forecast. >> you have another one so we can see the slope? it's not a cycle if you do it once. will you just do it? you have a chance right now right here to say you're going to do it in december. >> i don't think it's helpful, personally. i'm just telling you my own personal policy. i try not to make these predictions because when they're wrong people like you get really mad at us. i'd rather not -- >> i'm mad now. >> is the time right in december? >> i want to go back to -- >> let's go back to december. in december, would you support a fed rate hike? >> it depends what happens between now and december? >> given the circumstances right

now. >> i'm looking at core inflation which is still under our target. i'm looking at inflation expectations and i'm looking at the headline unemployment rate. those are the three measures i'm most focused on right now to see if this story is going to keep running or if it's running to a conclusion. >> you like the room to run idea. >> i think there is room to run but i'm going to reserve judgment. as the markets are changing the signals they're telling us, we need to factor that in. i'm not going to change based on one market move. >> one time you were a republican. i don't know what happened to you during the financial crisis, but if we do get supply -- scarred. he's scarred i think. >> he ran in california. >> i know. but if we do get supply side policy, do you think we can do 3% and above for gdp again some day? >> yeah. i think it's possible. >> okay, good. that's all i need. >> absolutely. i'm an optimist, joe. >> good. me too. now at least. >> thank you. earnings alert. walmart and best buy just minutes away.

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earnings alert. the nation's largest retailer reporting quarterly results. the numbers, a preview of holiday rush, and reaction from the street coming up. plus janet yellen heads to capitol hill. expected to be grilled on mop tear policy and potential trump plans. what the markets will be watching today and where you should be putting your money to work. the president-elect looks to fill his cabinet. reports and rumors are flying this morning. senator rob portman will join us to talk trumponomics 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" here on cnbc. i'm joe kernen along with michelle caruso-cabrera and wilfred frost. wilfred frost is here. welcome. >> morning. >> you missed all the fun in the first hour with the flasher. >> i know which is a great shame. but the second hour is going to be more fun. >> good ride? >> smooth ride. >> don't come down 5th avenue. >> i don't know what route they take. i just let them go. >> he's reading. futures at this hour are indicating a little bit higher this morning. we'll see what happens as we get closer to the open. but the dow is indicated up about nine. the s&p up less than a point. nasdaq which had a good session yesterday for the bulls up about 5.5 points. and walmart is just out with the quarterly results. courtney reagan joins us with the numbers and more. >> looks like this is a mixed quarter. beat the street by 3 cents.

revenues a little light. u.s. comparable sales are up. strong 1.2%. but that is just a hair shy of what the analysts had been expecting at 1.3%. now, the world's largest retailer is also upping the lower end of its full year guidance. traffic in the stores up 0.7%. transactions increased as well. i spoke to walmart cfo brett biggs and he said it was strong akrss the board in e the u.s. he continues to point to walmart's continuing story of transforming the business from a position of strength. they also have a lot of cash. it's in the process of exiting. with it, e-commerce sales were up 20 points. that's what's comparable. jet.com was also included in the

quarter for several weeks. when it comes to the election, there's no notable change in the spending patterns. when it comes to changes in a trump administration or anything that he may implement, biggs says we'll be paying attention as everyone does. we'll be prepared to react as we see things come along. then he laughed and said we're ready for the holiday season. i think we are. we want the election behind us and have to move forward. >> a continuing transformation of the company means going from big box retailing to more online? >> yes and no. stores are more the main business and will likely remain the main business for a very long time. the vast majority comes from upward of 90%. that's the piece they need to offer more options. >> that's the transforming part. >> exactly. but the stores, too, have actually come a long way. their cleaner inventory levels are down but they're also in

stock more. really there's been a lot of things that walmart is working on. basics. getting the retail basics right. >> execution. >> already had a good year. thanks. we've got a couple other analysts on walmart in the next hour. japanese prime minister shinzo abe set to meet donald trump today. he'll be the first foreign leader to do so since the election. he says he wants to build a relationship of trust. among the president-elect's other meetings today, nikki haley, jeb hensarling, rick scott, henry kissinger, fred smith, and former oracle ceo. >> wow. that's pretty interesting. a lot of -- busy, busy, busy. going to be focused on the fed today. as looking for the sign of a rate hike next month.

here now is mike ryan chief investment strategist at gbs and jason trenert at. >> i was on the day after. >> you're out of the fetal position now. you going to be okay? >> i'm going to be okay. i was on the coast election week. >> this was not in your models. >> we thought hillary was going to be in. republican congress. so this was surprisings. >> and are you negative now? >> no. at the end of the day -- in fact, we talked about this before. we were going to look past the elections and focus on the fundamentals and binary election outcomes. i think what you're also seeing is it's amazing to me how quickly we shifted from focusing on the vices of the candidate to the virtues of policies now.

we're starting to focus now in terms of regulatory relief and whatever the infrastructure program is going to look like which could be something from the government but also private sector as well. >> there's no doubt and we've had people come in say the reaction in the stock market was a continuation of the improving earnings picture -- >> interest rates were already going up. >> blah blah blah. market went up on the animal spirit by maybe doing supply -- right? maybe supply side? >> so i was -- >> been having both houses. that's supposed to be bad. if people love gridlock, why is it trading up? >> i was on the morning after the election with you. then after that i was on for four days in a row. thursday, friday, monday, tuesday. and it is amazing. i was at a conference.

many ways this has been the bull market no one loved. if you actually look at that mutual fund and etf flows since 2009, there's actually been net redemptions of money flowing in. and now we're starting to see our clients or institutional investors. maybe there's some good things that will happen here. i think people are weighing the fiscal and regulatory side of things more than trade. and that's positive. >> how much more until you know? the markets see exactly what you saw. tremendous run. but doesn't take over until january 20th. so what do you do? >> i'm very much in agreement. i think you want to be a little bit careful here on certain things. because the devil will obviously be in the details to use a cliche. i think the move down in

technology in my view is overdone. i think people are worried about trade but you're also going to have a tax cut on repatriated profits. that will help them. i'm not so sure it's going to be as bad for tech as people think. and the other question is the dividend question. just to talk about broad themes, you know, things we can't necessarily discount. i think we'll get more inflation at the margin. the height of end payers are going to have trouble. so people are less willing to pay 20 times earnings for utility than they might have been when you were looking at steady growth. >> so you haven't -- given that it's not going to be hillary clinton at this point as was your assumption. with all of the myriad assumptions you can make from that whether it's higher capital

gains taxes, whether it's more regulation, whether it's growing government. take your pick. hillarycare versus obamacare. so now you've got a different set of parameters. you haven't changed anything about ubs' outlook? the world is almost 180 degrees from what you expected. >> let's go back to what was said before. we'll see what is transformed into policy. i would say it's more encouraging. by the way, i wanted to share one thing. we did a survey of investors both before and just after the election. so it's already interesting how the sentiment changed dramatically. before the election we had more people concerned, in fact, taking more defensive positions in their portfolio raising cash. it's fascinating how their outlook has changed. opposed to 25% before the election who were constructive on equities. now 53%. this is a radical shift in terms of just a few days. in terms of the way we're looking at things, joe, is we had gone in with a pro-risk bias

into the election. we didn't think this was going to translate into a significant outcome. whether we've become more constructive going forward and we start raising our earnings forecast and our growth forecast will depend upon how these policies ultimately translate into legitimative solutions. >> why aren't we concerned about the stronger dollar? suddenly we're relaxed about it. >> this is the one thing we're focused on. what it will do. this act z as de facto tightening. we're also concerned about our earnings outlook is contingent upon two things. first of all, the continued solid gains in terms of business model. but also a weakening of the dollar and also a recovery in energy prizes. this is creating once again head winds for earnings. this could create some issues for our 2017 earnings outlook. >> jason, the sector yesterday was banks. was that a bit of a pullback?

>> i'm quite bullish on financials from here. the yield curve is steepening so that helps. and then also on the cost side, one would presume especially for the smaller banks that have been hit most by dodd/frank, their cost should moderate some. i think going back to what he was saying, we think the dollar is very much the responsibilisp. wasn't the fed tightened in december. as they talked about tightening four times. then you saw this cascading series of events where oil prices got hammered and widened and all the rest of it. so i think it's going to moderate. the dollar is going to moderate how quickly the fed can tighten. >> thanks, guys. when we return, street's reaction to walmart earnings. and we're also watching shares

of bust buy reporting earnings of 62 cents per share. beating estimates by 15 cents. sales also better than expected. they are up 7% this year. take a quick look at oil this morning. it's gained in the last hour or so. now up 1.4%. the president and the ceo of american petroleum jack gerard will join us in a bit. all that still to come here on "squawk box." on a new job, or fill a big order or expand your office and take on whatever comes next. find out how american express cards and services can help prepare you for growth at open.com.

walmart reporting earnings just minutes ago. joining us to discuss them, robert good morning to you. let's just summarize them at the top in terms of the u.s. compare same store sales. strong but a little below estimates. is that right? >> 1.2%. we were expecting 1.3%. i think what you do need to keep in mind is the environment in terms of, you know, with all the retailers that have reported that we cover with the exception of off price and tjx, walmart's the strongest number so far. >> in terms of moving forward if they continue that sort of momentum, the comps get a little bit better for next year. >> yeah. our expectation is around a 1.5% comp in the fourth quarter but also into 2017. they have a lot of momentum. traffic was positive this quarter again. up 70 basis points in retail that's one of the biggest and strongest metrics you need to have positive. >> and of course the big story.

this transition to e-commerce integration of jet.com particularly. what are the signs of how that's going? >> so far so good. it's still very early days. overall we like what they're doing in e-commerce. with a lot of the investments they're making, with the infrastructure in place. they're really trying to approach the business from two sides. one is keep the store operations humming along and they're doing a solid job with that. and the second is to really stay focused on the e-commerce opportunity the company has in front of it. >> and from both walmart earnings and other retailers and your own expectations, how do you think a trump presidency changes it? >> i think ultimately it remains very strong and that helps a lot of the consumer spending. that should also put additional pocket in the moneys -- pockets of the consumer.

overall i think the consumer's in a very good position. hopefully continues to be strong. >> the shares we're looking at them now. they are down sort of 3% in the premarket. based on the fact they've had a strong run this year. what's the call on the stock? >> we like the stock. you have 2.8% dividend yield. they've been very transparent and very open about the investments they're making in e-commerce. and really part of what they're doing is accelerating the e-commerce investments because they feel so good about their operation. so we think the earnings estimates as we saw today, they were a little bit on the eps side. they're managing very well. we think it's a very solid stock to own in this environment. >> and your price target? >> $82. >> thank you for joining us this morning. >> so best buy also raised its outlook for the fourth quarter. the estimate was 158 and they raised it to 167. in addition to the big beat in the current quarter. >> remember how bad it was for

retail just a few quarters ago. >> people supposedly shop at best buy and buy on amazon. i wonder. >> we'll find out about that later. >> still got that image of if all you played soccer, what would dick's suppoporting goods >> it's not based on soccer. it's based on sporting goods. soccer is a feature in its if it wants to be. >> his point is you can't have a dick's sporting goods and you can't because there's only one sport. >> there's lots of sports in the uk. >> there's more than soccer? >> you can sell merchandise. you could sell cricket. >> balls like that with a different design on them. and you could have -- but it would get old really -- you would not need to browse and go through the entire store. >> there are collectible soccer

balls. >> it's funny because i'm pretty sure it's comfortably the biggest sport in the world. on almost every single measure. >> don't let facts get in the way. >> spoken like a true globalist. coming up, speaking of which, who is the most valuable player in baseball? now, that's a sport. plus google earth is bringing the most amazing places to you thanks to virtual reality. details after the break. "squawk box" will be right back. . aflac! isn't major medical enough? no! who's gonna' help cover the holes in their plans? aflac! like rising co-pays and deductibles... aflac! or help pay the mortgage? or child care? aflaaac! and everyday expenses?

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translation? goodbye 60/40, hello 50/30/20. you recognize that version? right. the peanuts. >> got me feeling very holiday.

>> very nice. yeah. in culture, all those peanut christmas special, we hear that music and we think christmas. >> and we think of snoopy. stocks to watch today. cisco falling 4% on job cuts. they were announced in august. revenue is down more than 2%. company also warning revenue will decline again this quarter as challenges continue to mount. ceo chuck robbins on the conference call. >> we delivered a strong q1 in an environment that continues to be challenging. we executed very well in the quarter with revenue growing 1% and nongap earnings growing 3% along with continued strength in nongap gross and operating margins. this quarter total product orders declined 2% largely due to service provider orders declining 12% which was worse than our expectations heading into the quarter. >> later this morning, ceo chuck robin will join "squawk on the street." that's at 9:00 a.m. eastern

time. haines celestial found no wrong doing. auditing committee looked at whether it was recorded in the proper period. solar now expects to post a loss for the year and is forecasting 2017 sales will fall well below estimates. stock off 12%. >> google earth is getting the virtual reality treatment. the company's new app google earth vr will let you stand in the middle of outer space. users point and click with controllers to travel through 3d renderings of world cities. you can download for free in the vr store. >> that looks cool. i love it. >> and none of us can go everywhere. well -- but none of us can go everywhere, right? >> of course. sbl speak for yourself. >> you're going to bhutan. you're going to nepal.

are you going to go to -- >> yeah, probably. >> places in south america. >>. >> probably. >> you're going to all those places? >> some day. >> iceland? >> i'd love to. >> it would be need. feel like you've been there. major league baseball will announce the american and national league mvp winners today. the panel of 30 voters for the american and national league will make the announcement later today. mlb network will be hosting a live special at 6:00 p.m. to announce the winners. like our bats, they're round. >> is that possible? wow. >> experts say mike trout of the angels and chris brian of the world champion cubs are the front runners. >> that's "take me out to the ball game" that song. >> i swung a bat a few times in one of those cages. good fun. still haven't been to a game yet. >> they're great. >> i know i want to do it.

>> did you watch any of the world series? >> i didn't, no. it was too late. >> oh, my gosh. >> it was late. but the seventh game -- i didn't get to either but it's unbelievable. >> yeah. i need to go to a game next season. >> but not with you, joe. >> i've tried to get joe to take me to american sports and he refuses. >> he wants to bring a camera. >> and he's very tall. i wouldn't do it either. >> he's very tall. that's what i said. people see him and think i must be 5'6." but people said i'm very -- >> so you're a heightest. >> i am. i can bring a couple of other anchors around here and we'd have everything. right? coming up -- >> and then they'd see i was actually normal. >> and i'm what? >> you're tall. you're like 6'6." >> where could oil prices be headed? we'll ask the head of the

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welcome back to "squawk box." among the stories front and center, a grand slam of economic data coming up about an hour from now at 8:30 a.m. eastern we'll get the october consumer price index, october housing starts, the november philly fed index, and the department look at jobless claims. you might call it a quadruple play. >> i don't understand. grand slam i do understand. do you understand it? >> i do. >> bases are loaded and it's a home run. >> but a grand slam in tennis is all four majors. >> it started with baseball. are there bases in cricket? when a guy swings the bat and hits it, what are the maximum amount of runs? >> six. >> you can score six? >> if he hits it over the boundary. >> but there's nobody on -- he's not scoring other runners?

>> and if it's just a normal hit that doesn't reach the boundary, you can run back and forth. >> the same guy can have all those runs? >> yeah. >> that is such a stupid -- that is really -- >> you're offending a large part of the world. >> very big following. >> any viewers from southeast asia are going to be angry right now. >> i just got the idea of how it should work and i heard that and it just -- >> we're going to go to a game as well, joe. lord's cricket ground. >> they've got a big thing at citi field some time. >> they do. let's get back to what is front and center from the business community today. janet yellen has a date before congress. she'll testify for the joint economic committee of congress beginning at 10:00 eastern on the economic outlook. and check out shares this morning of electronics retailer best buy. they're surging after the company reported earnings that beat on the top and bottom lines. also better than expected comparable same-store sales jumping some 6.5% in the premarket. >> wow.

>> fourth quarter guys. american energy priorities about to change drastically under donald trump. he's vowed to rescind obama's job-destroying executive actions including the climate action plan and to save the coal industry. joining us now from washington is jack gerard, president and ceo of the american petroleum institute. good morning. >> happy to be here. >> are you the happiest guy on the planet as a result of the trump win? >> i think there's hope for optimism we're going to focus now on energy and really look for opportunities for the united states to achieve its full potential as the energy superpower of the world. >> people say sometimes he shifts his position. still, bottom line, when it comes to what would have been better for the energy sector and investment in the energy sector, hillary clinton versus donald trump you agree donald trump was the better outcome for what you'd like to achieve?

>> yeah. i think it's clear. while mr. trump has talked generally about issues related to energy, i think there's two key areas we should focus on. the first one is he's commented about the need to review the regulatory tsunami, if you will, that we've been dealing with with. we have 145 pending regulations on the oil and gas industry right now that we're dealing with as this administration concludes its service. so a focus on there to make sure we're regulating smartly, not overburdening it. but the second piece we've been heartened by is his focus on infrastructure. as you know right now, there's opportunities potentially for keystone pipeline, for the dakota access pipeline. recent studies show there's a potential $1.1 trillion in infrastructure investment. these are private sector dollars just from the energy opportunities. so this is a big deal getting us back to job creation, economic opportunity for all.

so we're heartened by this. look forward to working with him and the new congress to see what we can do to achieve our potential. >> jack, do you think the big exporters around the world, do you think they should be worried about a trump presidency? >> well, i'm not sure anybody should be worried about a trump presidency. but i think you'll see the free market come into play perhaps more so than it has over the past seven or eight years. what i mean by that is i think you're going see more focus on things like export. more focus on domestic opportunity. we believe that if given the opportunity to compete, we can compete well all over the world as it's been demonstrated with the shale revolution. so i don't think anybody needs to worry so much as folks -- >> that sounds like a lot more supply coming online down the road. >> it could be, but at the end of the dau, our view is let the market decide where it comes into play and where it comes from. because we believe ultimately as

u.s. producers, we'll do very well under those circumstances. so our hope is get back to market forces. make sure regulation is smart. it's not excessive, it's not unnecessary, and duplicates what the states are already doing. >> jack, when we think about some of the campaign rhetoric for mr. trump that everyone's now debating which parts of it gets carried through into policy and which parts perhaps gets left behind. specifically with his rhetoric towards the coal industry and getting back jobs and supporting that. is that somewhere that you think might be left behind? there might be a commitment to domestic policy but not so much towards coal? >> well, i think once again if we allow the free market to work, what unfortunately has happened over the past eight years is we've got government putting its finger on the scale on behalf of preferred forms of energy. we shouldn't discriminate against the coal industry any more than we should discriminate against oil and gas, solar, wind, energy efficiency. we need a true all of the above.

so i think the market will ultimately dictate what portion of the market place is filled by what form of energy, but we need to get back to a true, a more free market, if you will to allow those energy sources to compete. so coal is just one example of that. where the current administration's put their finger on the scale and my view that's harmed the coal industry. they should be allowed to compete like everybody else and let the market decide what benefits the consumer most. >> jack, i'm reticent to pick this topic up with joe so close to me. but what about the climate talk. >> i think that's one of the great misunderstandings we need to get focused on and talk about. what i mean by that is look at where we are today. cleaner burning natural gas brought to us by the rich abundant supply we have in the united states has driven our carbon emissions down to a

20-year low. but you don't hear the administration talking about that. we should have gone to paris and said we found the model. it's called clean burning natural gas. but we don't talk about it in those terms. so the we develop the technologies, the capabilities to protect the environment. we can have it both ways. some people think it's an either/or. it's not. we can improve the environment while producing more energy. >> i don't know, jack. the api, you could call it carbon dioxide at least. it's a clear odorless gas found in trace amounts in the atmosphe atmosphere. every time you say carbon, you play right into the church of climatology. in other words that it's some sooty, black particulate material going up into the sky

and blocking out the sun. >> pollution. >> you're conflating pollution with one of the most u bbiquito gas. >> i'll call it carbon dioxide. that's not my intent to create a misunderstanding. >> when you bring up words like denier and when you call it only carbon and you don't call it global warming now. it's climate change. so every adverse weather event can be attributed to it. including isis. it gets hard to separate the fact from the religion. >> i understand. but i'd also suggest we need to talk to the american people with facts and figures on the terms they understand it as well. >> i wouldn't start by calling it carbon. >> well, i -- and i don't disagree with you on that. >> okay. >> i stand corrected. i'll do better next time. >> people say coal. they see black sooty carbon coal and they think that's co2.

which right now i'm expelling a lot of co2. >> i understand. >> ten times what's in the atmosphere. >> i would never accuse you or your colleagues of ever doing that. >> exactly. we might be worse than cow farts, news anchors. >> you, yes. >> as one who grew up on the farm, i understand that very well. >> jack, if the world were to act the way they want it, let's say we went to this freak market utopia. 20 years from now, how much would solar and wind be a part of it? >> well, solar and wind has a place in the broader energy mix. but i think all the experts will tell you and in fact it's the obama administration's projections show that oil and gas will still be the dominant form of energy by 2040 and 2050. >> oh, no. >> and that's a reality. we will continue -- >> god help us. >> -- to fill the role of energy producer. so solar and wind -- >> i guess the spirit of my question was can they be competitive at some point

without getting all kinds of subsidies or forcing people to buy them? >> not for jet fuel. >> some people believe they can continue to play a role. our view is they will always play a smaller role than people think they will. so we need to be realistic about which forms of energy carry the most energy at the lowest affordable price for society and oil and gas is still the leader in that. >> and you've got to be honest with people when they're charging up their tesla and all this coal being burnt to give energy to the grid. >> coal burning cars. >> right. >> jack, good to have you on. >> always great to be with you. >> i feel so virtuous driving one. so good about myself. thank you. coming up, republican senator rob portman on tax reform, immigration, and obamacare under president trump. that interview is next. in the meantime, check out the futures at this hour. largely positive across the board now. headquarters. this is where i trade and manage my portfolio.

since i added futures, i have access to the oil markets and gold markets. okay. i'm plugged into equities- trade confirmed- and i have global access 24/7. meaning i can do what i need to do, then i can focus on what i want to do. visit learnfuturestoday.com to see what adding futures can do for you.

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welcome back to "squawk box." we are watching shares of best buy this morning.

take a look. new all-time high. company reported earnings of -- a new yearly high. 62 cents per share beating estimates by 15 cents. sales also better than expected. trading higher by 8%, a gain of $3.30. also want to show you what's going on with oil this morning. which has rebounded. dollar is a little bit weaker for the first time in days and hence that may be why we see some strength in wti which is higher by 75 cents. a gain of more than 1.5%. still below $50. $46.33 per barrel. if you want your crude delivered in december. some other stocks to watch. l brands, third quarter profits falling among continued weakness at victoria's secret. the retail chain fell more than 1%. company also giving a down beat outlook for the fourth quarter which includes the holiday shopping season. and net app narrowed but still beat forecasts. company's turnaround efforts

continuing to pay off, it says here. the data storage provider raising outlook above analyst investments. and amgen reporting positive results for its new migraine drug. it's in a lawsuit stage trial. companies says paushts experienced three fewer days of headaches per month. which sort of tells you how awful that would be if you were -- >> i used to get them horrendous. yeah. >> amgen is developing the drug to treat both episodic and chronic migraines. president-elect trump has big plans to reduce taxes in america and senators on both sides of the aisle are confident they can work with the white house to help find relief. joining us now with more on this ohio senator rob portman. your name was -- ears were probably burning a lot through the year-long process leading up to the election, rob. starting out with worries about down ballot effects from donald trump.

then you increased your lead in almost all the polls and people said you're the one guy doing it right. not really overtly endorsing but not really pulling a kelly ayotte or anything like that. suddenly you're up about ten points and people said you're, you know, you're the model of how to go through this election season. by the end of it, though, people that were with trump seemed to get that it was almost like a trump tail wind instead of a headwind. did you go through -- it was like war and peace what you went through the last year, wasn't it? >> well, donald trump did very well in ohio. he won by almost nine points. >> nine points. nine points. i thought it was a half a point advantage. >> close, close. very close. >> going into election. it's unbelievable. nine points. and you won by like eight or nine but you had like 60% didn't you? >> i won by 21. >> oh. sorry. >> and it was a good year. >> unbelievable. great state. >> yeah. voters in ohio were looking for

a change and they want to take a new page out of the book, a fresh start. i think that's why he won. i think we now need to deliver. you know, you mentioned tax reform. that's one way we can get the economy going and bring back some jobs. there's so much opportunity there. so i think people were looking for something new and that's what the congress and the new administration has got to do now. >> you also are reaching out i saw on the notes that you think maybe democrats are going to want to be active as well in whatever the government's doing. but be nice, i guess, but it's not necessary is it? >> well, it would be good in the senate because the senate you need 60 votes to do most anything. there are a couple of exceptions to that. one is this congressional review act where you can actually look at some existing regulations and send them to the president. hopefully he'll sign some of those changes. then secondly under b the budget you can change what's reconciliation. there's some exceptions to it.

but i think on tax reform there's a chance we can make this bipartisan. there's a sense that too many jobs are going overseas, investments going overseas. the code is clearly broken. the highest corporate tax rate in the world. and it's affecting workers. i think that's where you can see a lot of consensus between republicans and democrats. >> but you're ready to play hard ball there. you can do reconciliation with tax reform. you know, no one was nice to you eight years ago with obamacare. they didn't say, gee, it'd be nice to bring you along. why would -- you know, tit for tat. >> reconciliation is a way to do it. you're right. it's kind of a fancy word for being able to do it with 50 votes instead of 60. but it also is limited to a ten-year period. and we saw this with the bush tax cuts that we had to after ten years go after a painful process of trying to renew some of them. you want to put permanent changes into law and particularly on the international side i think it's important for us to provide some predictability and certainty. let's see what we can do. and if it's impossible to do it under regular order, then there is another option under the

budget reconciliation. >> you spoke about regulation in certain areas. specifically what do you want to see within that sector in terms of changing regulation? >> well, there's a broad swath now. you know, if you look at the environmental regulations and the finances regulations that come out of dodd/frank. if you look at what the department of labor is doing, there's opportunity here to take in the pipeline and by executive action deal with those. hopefully slow some dun. others, you know, stop them altogether and start over again. and ones already been passed. there's an opportunity for us to be sure that we're using congressional review act appropriately to begin to change those. and then funlly and this is the one i think is most interesting. change the structure and the process of regulation. you know, require cost benefit analysis and the least burdensome alternative to get to an objective. actually enforce the independent

agencies to live under the rules that the executive branch has to live under. looking at the cost and benefits. that would be a huge change and that would be a statutory change going forward not just for this administration but future administrations. and i think that'll make a huge difference. >> a lot of establishment republicans when the win happens said great. paul ryan's got a whole legitimative agenda ready to go. the bills are written. health care reform, for example. all that stuff is just ready to go. is there inevitably going to be some disappointment among republicans if donald trump doesn't want to go along with that whole program? i mean do you have any sense yet of just how much of that is going to happen and how much he's going to want to tinker around the edges as many. >> i'm optimistic of what he's been saying so far. and the fact there is this agenda that's been laid out called the better way. i think we have actually the ability to work together. there'll be some give and take. look, there always is.

and republicans and democrats alike are going to want to get their point of view included in the process. but i think there's an opportunity here to get some things done on the big questions. you know, how to get the economy moving, how to deal with the middle class squeeze. not just getting wages up but dealing with the defense side particularly as you say the affordable care act and the skyrocketing costs of health care for small businesses, for families. and then with regard to regulations and taxes as i talked about, i think there's a real shot here to get something done that will actually help move the needle. so i'm hopeful, but you're right. there'll be some give and take. that's what, you know, the democratic process is all about. >> you've had like every job in washington already. i guess you're not going to be in a cabinet, huh? you'd be good though. you got some experience. you've already done it all. >> i think, joe, i'm best where i am which is trying to get some things done. i ran a campaign about results. i talked about our accomplishments and vision for the future. my view. you know ohio very well.

people want to see things getting done. they don't want to just hire people to throw out the red meat and talk a lot. they want to see some accomplishments. i think that's the great promise and opportunity right now. that's what i'm going to be working on. >> have you talked to kasich? when's the last time you spoke the to him? >> i stay in touch with john. >> what's he saying? >> he's got a couple more years. >> what about that thing he signed about supporting the nominee? did you ask him about that? >> you'd have to ask him. he's fired up for the next two years. >> oh yeah? oh, that's nice. >> talked to him about ohio and reforms. we'll see. i think one area we need help with from the governor like john case sick how do you reform the health care system in a more state based model. and i think that's one place where he can play a valuable role. >> do you think that in ohio considering how big you won -- that's unbelievable that people

said your seat was in jeopardy. you've got that and a nine-point win by trump. a little bit he's like the last guy on earth to come around that's a republican. right? >> yeah. look, i saw a nice statement he made when donald trump was elected. we're all patriots. now is the time to pull together and figure out how to pull the country forward. >> senator, we've only got about 30 seconds left. but quickly on trade is that an area that you'd like to see mr. trump dial back his campaign rhetoric when it comes to policy. >> look, i think it's an opportunity for us to level the playing field more and we talked about this on the show before. i have talked about the fact that i still think we have a real problem with regard to unfair imports. particularly dumping and subsidizing imports. that's an area where we seem to have a consensus now. steel jobs in ohio for instance is coming back.

because we have won some of these cases. all we're asking for a level playing field. that's a scenario we can make progress. i think currency manipulation is one. but we do need to expand exports. trade agreements are important. >> we've got to go. do you know in hamilton county what was the margin for trump? >> hamilton has more democrats. so he didn't prevail there. but it was close. >> all right. but it was close. all right. wow. thank you, senator. good to see you. see you again soon. >> take care. coming up, a not so sexy outlook for victoria's secret parent company l brands. we'll ask an analyst if the company can turn things around. we'll be right back. coming up at the top of the hour, the ceo of dick's sporting goods joins us for the hour. from holiday expectations to washington expectations, ed stack talks retail, the consumer, and the state of the american economy. starting at 8:00 a.m. eastern time right here on "squawk box." ? a basketball costs $14.

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coming up on "squawk box," dick's sporting goods ceo. we're back in a couple of minutes. attention: are you eligible for medicare?

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call now. janet yellen will testify before congress at 10:00 this morning and she will tell them that the case for a rate hike may be appropriate relatively soon and she repeats the case that the rate hike has strengthened. she also talks about of the dangers of rate hike. and delayed rate hike could force financial stability in

nugs to encourage excessive risk taking. the economy she also says is making further progress towards the fed's dual goals of maximum employment and price stability. though she does say that the labor market has, quote, a bit more room to run. that's something we just heard from neel kashkari. she'll tell the joint economic committee growth gdp has picked up. consumer spending showing moderate gains. business investment is soft. and she cites the drag from energy. manufacturing has been hurt by foreign growth and a strong dollar. inflation she says is running faster than earlier this year but still below the 2% goal target. she expects that to pick up. she also expects global growth to firm. guys, just a fun little thing, something we talked about before. the strong gdp number. she is also citing the surge in soybean exports as a reason for the recent strength in growth. back to you guys. >> steve, you're a good soldier

and, you know, we played some breaking news music for you. so give me the most exciting thing you just said and it better be good. >> she's telegraphing this december rate hike, joe. >> isn't it -- what's the fed funds right now? >> it's about 80% or 90% depending upon which metric you use. >> so it's 90% and she's now telegraphing there might be a hike. so you got -- you don't have my break -- you got to -- can we put something out as a flash, an alert or something? come on, man. >> i just did, joe. >> i think it's this one. cites dangers of delaying the rate increase. >> right. she hasn't really done that before. in fact, it's not even handed. she doesn't cite the dangers of hiking too fast which she's done in the past. >> okay. because -- yeah, you're right. but when do you think richard fisher came on and first said, you know, maybe some of the oil

move? that was when oil was $100 a barrel. maybe he was wrong, but other people have cited, you know, there may be some asset inflation that was probably not good. that's about three years old. she's finally coming around to that, there could be risks staying at zero? >> yes, she's definitely citing that. she's trying to tell the market she agrees with this idea. >> that was years ago, right? >> joe, if you don't like what i'm reporting here -- >> no -- >> you can blame me. i'm covering the fed here. talk to the back and complain to him. you can go up the chain and complain even further. i'm doing my job over here. >> not complaining. >> i guess my job is to stand here and take the bullets that you're throwing at me. >> if you throw a bullet, it's not going to hurt anyone, steve. >> thank you, steve. >> another mixed metaphor. >> no i said take the bullets.

>> thank you, steve. >> it's my pleasure, michelle. i'll be back for the exciting cpi report and jobless claims. again, joe, if you don't like that production decision you're going to change that. you have a say in that, i believe. walmart and best buy out with quarterly results earlier this morning. courtney reagan in. >> courtney, your stuff is awesome. >> and we get christmas music and christmas countdowns. >> interesting. >> so let's start with the world's largest retailer because that's interesting and big and important. walmart had some pretty strong results here beating by 2 cents per share for profit. revenue, though, of $118 billion, below consensus. u.s. comparable sales, this is in the u.s., up strong 1.2%. that's actually the best in five quarters. though analysts were looking for 1.3%. walmart upping the lower end of its full-year guidance. so traffic was up 0.7%.

i spoke to walmart cfo brett biggs, he said it was strong across the board in the u.s. he points to continuing story of transforming the business from this position of strength. biggs also points to online progress. e-commerce comps up 20% exkpluding the chinese market place. e-commerce sales were up 20.6%. that's what we're showing here. that's the comparable number to pass quarters. jet.com also included in walmart's quarter for several weeks. best buy's blowout quarter adjusted profits soaring past expectations on better than expected revenue. comps 1.8%. and best buy is keeping its holiday quarter earnings guidance. this is interesting though. it notes its fourth quarter revenue guidance and includes a $200 million hit from the samsung product recalls. it also expects that that's going to impact comparable sales

by 1.5% in the holiday quarter because those products are not available. so that's an interesting call there going forward. stul the showers are up sharply. >> all right. thank you, courtney. let's talk more about retail. paul trussel and ed stack. mr. stack, let me start with you. it feels like for a lot of companies, suddenly retail is better when macy's has gotten their inventory management in place, target's doing well, target's doing better, best buy is doing well. has something changed from the doldrums when we knew everybody was going online? >> well, i think our business has been very good like you said. a lot of businesses have continued to improve. and i think the consumer is feeling a little bit better about themselves and we're pretty enthusiastic as we're going forward into the fourth quart per. >> what's the retail environment right now based on what you heard from walmart, target, poem home depot, lowe's?

>> cautious optimism. i think the consumer as you all have noted for some time has had the ability to spend. has a healthy, you know -- there's an income statement, if you will. i think we've better than waiting for them to make a trip to the store. christmas will always come. so i sense a bit of cautious optimism here across the retail landscape heading into the fourth quarter. >> does the election change your outlook at all when you see what the markets have done, how it's risen? does that improve your outlook? >> the reality is that the election does present some, you know, finalization of that process. and so i do think you can have a consumer kind of looking forward. but for walmart in particular, i think it's more about the rate of change. and while walmart put up very strong results, traffic and u.s.

same store sales decelerated from the second quarter to the third quarter and their guidance for the fourth quarter also suggests further deceleration on a two-year stack basis. and i think that's the reason why the stock down a lult butt premarket this morning. but we have a whole rating because of that rate of change. >> and what would make you chaung change it to a buy? is it transforming more towards online sales to match what's happening with the rest of retail? >> given the law of large nur numbers, we're not expecting robust topline growth for walmart. what we would like to see is better flow through. and walmart is in a period where their earnings growth is relatively flattish to low single digit growth. a lot of that is because of investments they're making. we give them credit for making those investments, but the j

jet.com acquisition was dilutive. which on b one hand is to be in line with aldi's on the grocery side. and to be competitive with amazon on the e-commerce side. i think that's a difficult environment as we look at our earnings forecast. we see little opportunity for there to be upside. >> when we talk about walmart, you are very specialized when it comes to sporting goods. they sell sporting goods. >> right. >> how do you think about them as a competitor? >> we keep an eye on what walmart does, but the overlap between us and walmart is relatively small. we overlap with them on some of the outdoor categories but with the main brands we have, you don't find them as walmart. >> we're going to talk to you after the break and introduce you properly and everything else. >> didn't introduce yet? >> no. that's in the hang at -- >> we have much more throughout

the next hour. thank you very much. still to come, we'll talk to ed stack ceo of dick's sporting goods. we'll talk to him about the collapse of sports authority and what it means for his business and much more. "squawk box" coming back in minutes. this is where i trade andrs. manage my portfolio. since i added futures, i have access to the oil markets and gold markets. okay. i'm plugged into equities- trade confirmed- and i have global access 24/7. meaning i can do what i need to do, then i can focus on what i want to do. visit learnfuturestoday.com to see what adding futures can do for you. hey!nicole. i just wanted to think your support team for walking me through my first options trade.

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welcome back to "squawk box." let's have a look at the futures right now. this of course comes after the dow had its first decline in eight sessions. a slight decline down about 0.3%. the nasdaq was positive. as you can see we're pretty much flat at this hour. s&p and dow fractioning the red. we did get some sector rotation yesterday. banks the worst performing sector were down 1.5% after a strong post-trump rally on the prior week or so. oil prices, let's have a look at those. they are up about a percent or so. big move in oil came on tuesday. up 5% then wti in positive territory today. quick look at the bond market. yesterday we saw the yield rises that we'd seen recently go the

other direction. but today as you can see, the 30-year at a session high. the 10-year note pushing above 2.2% after the comments from janet yellen. >> the markets acting like they really believe her this time. >> they certainly do. >> the 2-year note playing catch-up. >> she's been so dovish for so long, here she is -- kicking and screaming into the real world and maybe she will do it this time. >> but this move today, yes it's -- but it's a fractional move. >> but it's moved for them already. the bond market has already moved. doesn't matter what they do. they can do it without worrying about repercussions which i think made them feckless for years. in the middle of next year if it's marching higher, will they have to pause it and prevent having an outright move in it? >> the dollar's not going to get out of control with 0.75 point. >> it's not but if -- >> the world is a sad place if we can't stay in 1% without

currency -- >> i'm not disagreeing. i'm just stating. >> it's great to have you here, ceo of dick's sporting goods. and who was it that started the company? >> my father. >> your father started it. when did the first superstore -- when was it built? >> 1986 up in syracuse, new york. >> in syracuse. when was the store built out in near where i live. i go all the time. it's on route 22 or route 10. how long has that been? about ten years? >> about that. >> i'd never heard of dick's before. to see a superstore concept come into that fragmented business and really put everybody else out of business, that's what we're trying to get at. how did that happen? >> well, we grew our business in concentric circles. we started in binghamton, new york. then we moved the company in '94 to pittsburgh. we stuck to our knitting and

never tried to do more than we could really accomplish. and what happened with these other guys is they were all private -- >> all of them? >> the ones that went out of business. this year around 20 million square feet of sporting goods have disappeared. city sports up in boston. sports authority. >> and the ski -- >> they were full line sporting goods. they were big into ski but they did full line sporting goods. you know, baseball, golf, athletic footwear. >> did private equity make the classic mistake of too much spending? >> all these guys -- they all imploded at the same time. we did this we said our business is going to be great right now. we need to take a look at these businesses and dissect them and say what was the symptom of the disease that ultimately they died from? and we went back and looked at a number of things, attributes they had. they were all privately owned, a lot of debt.

they squeezed cost. they really never invested from the internet point. our first e-commerce was in 1999. we've been involved in this for a long time. >> so servicing the debt didn't allow them to spend money on getting into e-commerce which helped you. were they able to carry everything? >> it seemed like from the debt. and they didn't invest in their stores. their stores looked the same as they did 15 years ago. they didn't really invest in those stores. we looked at that and that's what we think they atrophied from and died. we have no debt. we have no long-term debt at all. we continue to invest in our stores. we've got an e-commerce business this year that will be roughly a billion dollars. we feel that we don't have the symptoms that ultimately they died from. >> because most areas of retail are pulling back from brick and mortar stores. are you saying you can expand that now because these other guys stepped away?

>> we've continued to expand. we've got a very small presence in south florida. very little in california. a couple weeks ago in houston which is the fourth or fifth largers city in the country. we just opened up there. >> tell me about the size of the square footage that you assume though. i imagine that with the shift to online retailing, are you assuming your stores are going to be as bill as the old superstores? >> they will. our primary store is 50,000 square feet. the categories that we carry and the choices that the customers are looking for, we don't see the store changing in size. >> where do you put them? do you want to be in a mall now? or is mall traffic declining so rapidly that it's better to stand alone? >> we want to be in the best piece of real estate. if it's in a mall and we can be there, we want to be there. it's in a strip center along with walmart, target, costco, we

just want to look for the best piece of real estate. that's where we want to be. >> think of nike -- i used to think of it as a sneaker maker. now it's the world's largest apparel maker. i think of you if -- i've bought gym equipment and all kinds of stuff. what i really see there is apparel. how much dick's success is apparel now? >> we do -- there's a little more than 50% of our business that is apparel and footwear. a little bit more than 50%. >> that's totally different than the way i used to think of a sporting goods store or baseball gloves. do you make money on that other stuff? >> yeah, we do. but the issue today is that apparel and footwear is part of the equipment that these kids and these athletes are wearing. so whether it's an underarmour compression top or bottom or the shoes they're wearing, that's part of the equipment today.

wuch has been great for our business. >> notwithstanding the fact that clearly it's doing great overall, has there been a slowdown in athleisure over the last six months or so? >> not for us. we're really focused on that core athlete. so that young man, young woman who's going out playing baseball, softball, soccer, football, whatever it is. they need that product. and they need to replenish that product. all of us with kids, they're out playing in their uniform or compression top. this stuff gets dirty. they need to replace it. >> when joe asked do you make money on all those baseball gloves. the look on your face you smiled. are the margins that much better there than apparel? >> they're not that much better but from a hard-line standpoint, people think there's not -- there's little margin in the hard-line side of the business and there's a lot more margin than people think. >> you mention nike and under

armour? how's adidas? >> adidas is doing well. they're doing great. mark king has taken over the adidas north america. i think he's done a great job. it's a hot brand right now. >> i'm touched you mentioned the word soccer at least for me there. >> you know what they sell? they sell soccer balls. >> we've done this too much. >> all right. >> it's doing well though, soccer, right? >> it's doing great. the world cup was terrific for soccer. >> got to admit you stand corrected. do you stand corrected? >> okay. so -- and think about it. you've got all these kids that need equipment and to be a good corporate citizen, you can do stuff in neighborhoods and find ways that, you know, that help your business but also help all these kids get equipment. you thought about that?

>> we do. so we've got the dick's sporting goods foundation that we did a few years ago. there's a real funding crisis in this country around youth sports. it's expected that by 2020 you could have 27% of the public high schools have no sports program. and if you think about that, all of us that kind of grew up playing sports, going to sports, you think about what your high school life would have been with no sports and to have these kids not have a place to go, a place to belong, it's catastrophic for our kids what's going on. and this is going to impact the most and first is the places that need it the most. we produced two movies about this. where they combined germantown high school and martin luther king high school, these two rival high schools. and what happened with this doomsday budget, they couldn't

have programs and coaches. they ended up putting it together in this football team. and we film these kids at home. we filmed them at class, at practice, in the streets. you see how important it is for these kids to have a place to belong. it's a great movie. if you get a chance to see it. >> that's trusk. you're staying for longer? >> yes. staying for the hour. >> i saw that. >> there you go. you going to do more? >> we are. we did a second one called "keepers of the game." >> you're not going to do a soccer movie? >> i think that's a great idea. what do you think? >> definitely. >> that might be next on the list. >> it should be. i think it should be longer than normal. so you get all that great stuff. >> you know what the big thing, someone scores a goal. that would be. all builds up to that. coming up, bad news for 6 million linkedin users in russia. why it has been blacklisted in russia. that story next.

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welcome back to "squawk box." no more connections for linkedin in russia. a russian communication regulation ordering that public access to the site be blocked after a court ruling found the

company guilty of violating storage laws. websites that store personal data are required to do so on russian servers. something that authorities said linkedin had not done. it will be blocked in 24 hours. it's the first major social media company to go dark in russia. it has more than 6 million registered users in the country. >> tough luck there. coming up, a flood of economic reports. we're minutes away from weekless jobless claims, housing starts, and cpi. we'll bring you all the numbers and market reaction next.

welcome back to "squawk box." rick santelli here live on the floor seeing a litany of data points. let's start out with jobless claims. wow. a big drop. they dropped 19,000 to 235,000 from 254,000. you're having to lean in the early '70s to match that. even continuing claims dropped dramatically to 1.97 million. unreal. philadelphia, november number. 7.6%. we were looking for 7.8%. it's a decent number.

let's get into the money ball. 25% jump on housing starts. 25% jump. we're expecting a number about 1.15 million. it just leapfrogged to 1.323 million seasonally adjusted and annualized. if we look at the permits number, you know, it was only up 0.3%. we were expecting a number a little under 1.2%, ended up with 1.229 million. not too bad. all right. cpi. unlike ppi we are up. we are up on headline number -- up 0.4%. so much data. up 0.4%. strip out food and energy, up 0.1%. year over year, core. we've been watching this one. up 2.1%. now, that follows 2.2%. we were expecting 2.2%. just to give you some context on this number, the low read for the year was 2.1% which equals

what we have here. we've had several of them. it was august to 2.3%. and that year over year core to find a higher one than 2.3% had to go to the fall of 2008. okay? so if i had to summarize the data, housing starts, i don't know why that is such a big jump but most likely it'll mean revert. but the data should push yields higher all things being equal. and it has. just not by very much. we continue to play around in the mid-20s. and the preopening equities have yawned through this whole thing. wilfred, back to you. >> thank you very much. and for that, a litany of day pa, litany of people around the desk that want to comment on it. steve leisman here with us. and michelle meyer. >> what's going on around the table is disbelief in the numbers in their sustainability. a huge bumpup in housing starts. probably the place to start. 25.5%. now, i will say the underlying question here has always been

how is it possible the united states is producing housing at such a low level given the demographics, all of that stuff. but i don't think we get back to where we should be in a single month. so i think what we're going to hear later from michelle meyer who is here thankfully to help put all this in context is this is an unsustainable rate. big jump in single family. you had a jump in multi-family which was expected. but a huge jump in single family. i have to go back and find out when the last time we did housing starts. the other number that is just jumping off the page is this 235 on claims. i was trying to figure out when we last were at such a level. what's that? >> down 19,000. 235,000. i don't think that number -- let me just take a number. what is that right there? that's 253. i don't think i can find that number. i've got to go back a thousand weeks hooer. >> all of this is so better than expected. there is not a single thing here that would prevent a december

rate hike. only pushes it more likely, right? >> that's a good point. i don't know what the 2-year is doing right now. i can check right here. but not just that, but it was not a lot of inflation with it. you also had 1.6% on the headline numbers. that came down as well. let's just bring in michelle. you've had a chance to process this. while i'm spewing out the data here. what do you got? >> it does seem like it's clearly better than expected for housing starts. better than expected for initial jobless claims by far. although i think we're supposed to be a little bit careful with how much we read into these numbers. >> single month's data. >> yeah. it's one month's data. there's got to be some noise here. you've got this big multifamily the single family gain i think was interesting. it wasn't with a comparable gain in permits. i would want to see both starts and permits move up in tandem to feel confident. but i think generally speaking what we've been saying is the

trend is higher for housing construction. it's not supposed to happen all in one month, but it is higher. >> the core cpi was 0.1% month to month. you were expecting stronger than that? >> we were. that's a little bit softer with core ppi also coming in a little bit weaker. but look. i mean, if it is the case that we're seeing these gains in activity if it is the case, initial jobless claims continue to come down. job growth accelerates, it's a matter of time before you see more inflation pressures build in the economy. because you're hitting up against capacity. >> in terms of the release comments from yellen earlier, what were you main takeaways from that? >> so i thought largely as expected in that she didn't really change her tune from the last time she spoke. i think that's largely appropriate because there's just a lot of uncertainty as to what will end up happening on a policy front out of washington. so i think she reiterated that the case has been made for a hike before the end of the year. the markets have priced that in. the data this morning is consistent with that. >> i was going to say, so, rick

highlighted yields should be rising. and he looks at them but not as much as he might have expected considering this data here is up. because it's all priced in because we've already had such a tremendous run in yields. because this inflation wasn't quite what you expected? >> yeah, i think it's because people know following the housing data that there's a lot of noise that comes with the housing statistics so you have to be careful over, you know, jumping the gun on it. and then inflation was a little bit softer. i think probably the biggest thing is you're going to wait to see what yellen says. >> michelle, if this number were much higher, if housing starts were lower we'd be talking about the dangers of an economy that was slowing. i wonder now if it's time to start having the discussion we did three and change in the third quarter, rapid update has been rising. we're at 2.5% on the fourth quarter. >> on gdp. >> is it time to start talking about an economy that is potentially strengthening here? and by the way, a labor market that is strengthening quickly. >> yeah, i think that clearly from the first half of the year to the second half of the year we saw acceleration.

part of that is because you had these diminished head winds. first half of the year you were dealing with the drop in energy investment. the hit from the stronger dollar. the kbangts. now you have some pent up investment and pent up spending which i think is relevant. but look, i mean, this has been the recovery of fits and starts. i would anticipate it continues. >> could wow ask the guest host quickly are there any signs out there? if there were pent up demand and more money in my pocket, i might go out as i have done and buy a more expensive baseball mitt for my son or more expensive bat. what are you seeing in terms of purchases? >> our comps in the last quarter were up over 5%. >> not too shabby. >> very good. it was a big surprise to everyone we beat the street by a wide margin. and we think the consumer is feeling a little bit better. you know, as paul said earlier, we think they're cautiously optimistic on a whole. we're pretty optimistic with our

business because of the consolidation that's going on. we saw both an increase in traffic and an increase in ticket. >> the retail numbers were better than expected and there was talk about being better. you want to be careful not to take this too far. because it's one month's worth of data. but so far the data is pointing in a better direction. >> we'll have to leave it there. thanks. coming up, it's a big week for auction houses as art lovers are placing their bids on classics. ted smith will be here to weigh in on the market right after the break. stay tuned. what i love most

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welcome back to "squawk box." have a look at futures right now. pretty much flat after seeing the dow snap its streak yesterday with a quarter percent decline. we are fractionally lower for the s&p and nasdaq. the dollar index this morning just fractionally giving up some of the ground. but it's gained back a little bit today since some of that data came out. a little more dollar strength than an hour or two ago. big week in the art market as the auction houses hold their fall actions. robert frank has more. is this the biggest week? or every season there's one? >> the spring and the fall. may and november. but this was big and it was a great week.

christie's last night selling one of monett's grain stack paintings for a record. that brings the total for auction houses for the week to more than a billion dollars. tonight is sotheby's night. they're going to hold their contemporary evening sale expected to top $200 million. joining us for his first-ever live tv interview is sotheby's ceo and president tad smith. thanks for coming. >> thanks. good to be here. it's not my first, but it's my first on "squawk." >> is it? >> first on "squawk." >> then it is your first. >> i guess that's right. >> so the big question. has trump been good for the art market? >> it's a really good question. i have to say, this week since the election -- you know, if i step back, really the election both had an impact and has an impact. it had an impact leading up to it because the uncertainty around it gave some consigners some pause. and so the overall level of sales this week reflects that.

but since then, i think earlier today we talked a little bit about some animal spirits and the markets feel a little better. and i think there's been a fairly good feeling among the art collect irs this week. >> it's your first live interview as sotheby's ceo. that's what i meant. >> that's right. >> you mention that the problem -- the reason that the market is down from its 2014-2015 peak is sellers not buyers. there are tons of buyers out there that want stuff. but it's the guys who want to give up their paintings. and there was so much uncertainty. looking towards the spring, you probably have some visibility conversations. is the spring going to be better than november? >> i think the spring is going to be better. and i think consigners as long as the week continues to do well and it should are going to feel better by the spring. >> and why are collectors feeling those animal spirits this week? is it because tax cuts are going to give more money in their pockets?

sit because they're more bullish on growth? is it because of the market run-up we've had? what are the main drivers for that optimism we're seeing in the sales room this week? >> well, everywhere i go around the world, and really for almost 15, 16 months, we've had a long group of buyers that have plenty of money to spend and they want to buy things. the trouble particularly in the last 6 to 12 months has been there hasn't been enough that they were offering. and as long as we have a good confident week and i think we're going to do that, we're going to have more offered in the spring. that will free up the buyers. it's convincing those sellers that the buyers are there that's the opportunity here. >> we are blowing through these estimates by -- i mean, that was supposed to sell for 20, 30. it went for $60 million. this hay stack went for millions more than expected. do you think that we're going to see in the spring another $100 million, $150 million picasso. are we going to get back to that

level in six months? >> too soon to say, but i wouldn't be surprised. the short answer is if you see big numbers going out for big pieces of art and high quality pieces of art, it brings out people who had been thinking about it but had discretion not to. >> a lot of people think about the art market as a place for flight capital. is a lot of sales driven by people who are in some countries where they have to be worried about their rights with their money and it's a really great way to sop up a lot of liquidity in a very small space. >> yeah. it's a great question. the truth is when you look at it, the people who are buying art around the world are the people who are buying a lot of other things. and they're buying from all types of countries. some where there are capital things and some where there aren't. fundamentally the underlying opportunity here is that there's just a lot of really very wealthy people and they have a lot of capital to deploy. >> it's like we've been asking about all different assets. will the rise in interest rates that we're seeing which -- when

you're at zero, that's great for art. people move out the risk curve and asset values go up with rich people. as they rise, will it be offset by a stronger economy, lower taxes, everything else? are you okay with rates going up? is would you like to say at zero forever? >> it's a great question. it depends on the reason why rates are going up. if rates are going up because people feel stronger about the economy, growth is pulling a little bit on the tether with the banks. that's a good thing. and rates going up is a strong indicator. and it's associated with something that makes people want to buy art because they have a lot of confidence. if rates are going up for other reasons, that's a bit more worrying. that's not the situation we have right now. >> you don't have animal spirits at zero. >> you have worries at zero. and that's the paradox. >> things are cranking. >> zero makes assets relatively high in value, but the worries take the edge off. >> do you have any of those? >> we just sold one.

it was wonderful. gosh, i don't remember. it was monday night. >> was it more than like $800? >> oh, yeah, it was. i tell you something, joe. we've got a lot of things for you. we have a lot of things for everybody here. at sotheby's, 60% of the things we sold for the last six months went under $10,000. and that's on 50,000-some-odd things. >> does the fee go lower with the price? >> well, the total fee is lower but the percentage is higher. >> what percentage on a sub-10,000, what do you do? >> 25%. >> that's a nice margin. >> speaking of which, i want to end on the stock because you have really transformed sotheby's rapidly the 18 months you've been there. the stock is almost doubled just since february. is there more room to go -- what is going to be your main priority for the rest of this year and next year in terms of transforming this company? >> yeah. the key things that we're continuing to do is rolling out our growth strategy. and fundamentally embracing technology in ways to bring

frankly sotheby's and the power of the brand to millions of people around the world that don't currently experience it. we're excited about the future. >> great. >> growing in the job from what you did before. he looks like sotheby's. >> he came in looking like sotheby's ceo. >> i think that's why he was picked. it's working, tad. >> i hope we can get you all out there. >> you promised me a sutine. >> was it millions of dollars? >> it wasn't inexpensive, no. >> it's like six negatives there. >> thank you. great to have you. >> it's a pleasure. >> dress like the job you want. coming up next, we're going to head down to the new york stock exchange. jim cramer will join us live. stay tuned. you're watching "squawk box" here on cnbc. since i added futures, i have access to the oil markets and gold markets.

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let's get down to the new york stock exchange. jim cramer joins us now. jim, yesterday we were talking about, you know, home depot and how you do something like that. dick's on today, that's pretty amazing as a success story too because there are already sporting good superstores. i don't know how you put them all out of business and thrive.

>> i remember my friend from credit suisse said, look, this is the modern big box winner in that segment. it was hard to foresee that, but it really has been and it did wipe out sports authority. >> you know, i don't think that you would order a lot of sporting goods stuff online. i guess you do, but i thought best buy's best days were gone. but suddenly that's a pretty good number too, isn't it? i thought we were buying everything on amazon? >> 20% increase. it was a remarkable number in terms of online, and they point out mobile phones. this is the same thing as target did, what that is apple target reversed apple from the doldrums of 106 to 110. i think pleasantly surprised to hear about apple. >> and where is walmart in its efforts to -- >> that's a tough one. i think walmart still gets the pass because of what it's doing. and i hesitate to just say, okay, look, base it on 2018. the numbers are coming down,

short-term. but they've got a long term plan to be able to stay in the game with amazon. and it's too early to make a judgment that it's failing. that'd be ridiculous. >> yeah. jim, in term of the sector rotation we've been seeing, banks coming off yesterday, is that a sign that the post-trump rally is done for now? >> i think those stocks still, wilf, represent some value but run up much more than tangible book valuable. if you think multiple rate hikes, i don't think bank of america is going down to 18.5 or maybe 18 before people come right back and start buying because they think there will be multiple rate hikes given the fact what we're seeing from trump. >> jim, if you were like really pow powerful, and you are, but if you could just pick a treasury secretary out of the ones you've been hearing about, do you think any one would do a better job than the rest? >> well, jamie di momon, but i don't think that's going to happen. i actually know mnuchin.

he would be fine. i think people are misunderstanding because he's young, he's not that young. he's been around. i think he would be okay. obviously you would like someone -- dick would be great. >> what about joe kernen? >> how about the captain of arsenal? >> well, i'm okay with that. >> i want a winner in this saturday's winner. why not? we need an international flavor. >> i agree. >> jim, i'm doing epa. >> you have to hope that maybe one of those running backs by committee guy gets it, joe, and that cincinnati team they got seven running backs, make one of them. >> i don't know -- that's not my team anymore. the reds. that's it. >> johnny bench, could he be treasury secretary? >> love him. yeah. >> cool head. big red machine. why not? >> big occasions.

we're talking sports now. he loves when we can get back to baseball. thanks, jim. see you in a couple minutes. coming up on -- have you looked at catcher's mits? they're expensive. >> i know you have a tough time with that. >> i do. coming up on "squawk on the street," a first on cnbc interview with cisco ceo chuck robbins, that's at 9:00 eastern. squawk will be right back. chasing after short term returns. instead if getting caught up with the crowd, the investment managers at pgim take a long term view, teaming specialized active investing with risk-management rigor, to seek out global opportunities. we manage over a trillion dollars this way, attracting many of the world's leading investors. partner with pgim. the global investment management businesses of prudential

our guest host this morning, ed stack, ceo of dick's sporting goods. there are some correlations with someone sent in and i usually don't ask these questions, but this was interesting, so correlations between trump and some sporting goods or nike types that if there was a trade war with china it would be affected. and i heard your stock actually moved negatively correlated with trump and that nike and others did. have you seen that? would it matter if something happened with china? >> well, it would depend on what happened, how it happened, when it was going to happen. i think it will all be fine. i think trump -- so i've never met him, but my sense is he's a deal guy.

and he'll make a deal and he'll make it right for the country. and he'll make it right for all the businesses that will be affected by it too. >> if roger goodell called you and said what happened, you know, you just said off camera something that soccer's taken some interest away, especially with kids playing, some are playing soccer, not football anymore. >> yeah. >> what's ailing the nfl right now, do you think? >> i'm not really sure. i think part of it was we had a great baseball season. so some people have talked about that. we had a great baseball season, great playoff season, and how good was it for baseball to have the cubs and the indians in the world series? and what a great series it was. seven games, you know, goes to extra innings, there's a rain delay. i mean, it was as exciting a world series as in a long time. and i think that had a little bit to do with it. >> i'm not going to say as we go forward because everybody says it but football probably recover later. >> oh, i think it will. football's -- >> this year. >> football's a great sport. you got a lot of people watching it. football will be just fine. >> because of the playoffs. yeah. football, not soccer.

you get confused because you call it football. >> right. over there. >> i've learned to adapt certain words since i moved here, joe. >> say american football. >> could you say e-commerce and what's the other kind? >> bricks and mortar. >> high street. >> bricks and mortar. >> excellent. >> thank you. >> thank you, wilfred. thank you. great having you. >> see you tomorrow. "squawk on the street" is next. ♪ good morning and welcome to "squawk on the street." i'm david faber with jim cramer. we're live from the new york stock exchange. carl quintanilla has the day off. let's give you a look at futures as we get set up for this thursday morning. as you can see, i can barely see, there it is. we are going to look for an up open this morning, at least on two of the broader averages. though not by much. european markets, how are they doing? well, not too bad. >> no. >> you can see it