i think so. it's friday, november 18, 2016. "squawk box" begins right now. ♪ live from new york where business never sleeps, this is "squawk box." >> "happy together" that's a funny song for that story. welcome to "squawk box," i'm michelle caruso-cabrera, along with joe kernen. becky and andrew are off. >> not together. >> not together. not that we know of. equity futures suggest that the nasdaq would open flat. dow jones would open lower by 21 points. the s&p would open lower by four. a decent day in the stock market yesterday. look at yields. across the board, u.s. treasury yields, bank of america, set for the biggest two week fall since

1997, down 1.75%. so the selloff in bond market has been real. the 30-year yield back above 3%. 10-year at 2.30. the five-year, 1.7, and two-year at 1.035%. the nikkei closed higher by a half percent. european equities at this hour, lower. not by a whole lot. except for italy and spain, off by more than 1%. crude prices are mixed. lower by 7 cents for wti. look at the dollar, which is stronger once again against the euro and the yen. 14-year high for the dollar index. 1.06 is what the euro will cost you. you will get 110 yen for every dollar. reuters is reporting this

morning that chinese policymakers are ready to slow the decent of the yuan so it doesn't fall too quickly. it's 6.88. that headline sergeauggests thay will let it fall through 7. >> people saying the important level that could -- the negative for multinationals to the point that where the -- everybody is looking for a reason for this rally to stop. that's another one. i don't employee if that would stop it. >> the u.s. dollar index, it's been steep how far it's gone. if you look 12 months ago, barely up. you had that spike in the dollar late last year. that's why maybe it's not that big a shock. >> in a world where we close the borders and become a domestic economy again and just take care of ourselves, do we worry about

currency translations? kicking butt, making everything here? consuming everything here? you can't do that, i understand that, but is there something to be said if we start putting more money in the pockets of people? get the small banks lending again? isn't it possible we don't need everybody else? >> corporate profit translation is what it is, but you won't go from 40% profit overseas to half of that. >> if you're a consumer products company, you're selling to them over there. >> when we were sweating the dollar six months ago, a year ago, when it was strong, what if this happened without trump's election, without the an ma'ima spirits being conjured up, what would 1.06 on the euro have been like? white as ghosts in fear of what it would do to revenue. >> or said ecb is doing what

they have to do and it's working. i honestly think the strong dollar last year wasn't so much about the trade flows, it was about disrupting capital markets activity. about helping the oil crash and helping -- you had this global dollar shortage story out there. i don't know if that means we'll halt right here. the markets freaked out. that's why you freaked out. >> i never believed parody. >> for the euro? >> yeah. >> but it's looking that close. that close. i remember when the dollar was below. >> and the pound. what the hell? >> approximately the same populations. >> yeah. >> the pound, that can't go up. >> no. >> would hurt. >> among the other top stories, new data on post-election investments. investors poured $23.6 billion into stock funds the last week

alone. etfs took in 27 billion. financial sector funds brought in $6.7 billion. municipal bond funds posted $3 billion in outflows. >> that's one sector where the outcome would be so asymmetric depending on who won the elections. >> munies. >> muny bonds, that's right. go to munies, protect yourself from taxes. now, bam, you see the exit from the doors. >> if the tax rate goes down, the meanings change. that happened in the early 2000s as well. mario draghi speaking at a conference in frankfurt this morning. the ecb president says the central bank will pfocus on recovery in europe even if

monetary stimulus is withdrawn at some point. we remain committed to monetary accommodation which is necessary to secure a sustained convergence of inflation towards a level below but close to 2% over the medium term. we cannot yet drop our guard. >> draghi says he still sees a significant degree of uncertainty for the economy there. >> volkswagen will cut 30,000 jobs at its vw brand as part of a plan to boost profitability and fund a shift to electric and self-driving cars. 23,000 of those cut also come in germany. volkswagen expects the move to save $4 billion annually starting 2020. elon musk is one step closer to merging his two entertains. share holders voted 85% in favor of merging tesla and solarcity.

the $2.1 billion stock offer could create or would create one firm that sells emissions-free cars and rooftop solar panels to power them. musk says the deal will be completed within the next couple of dales, critics say it's essentially tesla bailing out solarcity. but musk said the solar panel firm would not way on the bottom line. mcdonald's rolling out its restaurant of the future concept. the company will now offer table service in the u.s. as well as introduce mobile pay and orrering. and self-order kiosks. cnbc caught up with steve easterbrook who described the big changes. >> to give you an example of how we're changing our attitude, we asked customers to fit around our business model for 60 years and we've been successful at doing that, now customers and consumers in general are demanding more choice and control over their lives so we need to adapt and evolve our business model to fit around their needs. for those who want table service, that's a great option

we can offer. each time we convert a rauchbt, we see the results the next day. >> shares of mcdonald's higher by 24%. sales force i'm third quarter revenue rising 20% on higher sales of subscription and support services. the cloud competing company is forecasting fourth quarter revenue above analyst expectations. here's ceo marc benioff last night on "mad money." >> i've been a huge bull around growth in 2017, 2018, 2019. i feel when you look at the global economy and talk to global customers, whether it's here in the united states, japan, or in europe, i've seen a lot of customers burn off the 2008 problem, and i'm optimistic for what's coming in the future. >> marvell technology's third

quarter results and guidance beating analyst forecasts after the close on double digit growth in its data storage and infrastructure business. the company launching a $1 billion stock buyback. gap's third quarter profit fell 18%. the retailer posted its seventh straight quarter of declining sales. the company says it is still struggling to bring shoppers into stores. they plan to close 64 shops this year up from the previous 50. in political news, president-elect donald trump has offered former military intelligence chief michael flynn the job of national security adviser,s that according to an a.p. report. it's not clear if flynn accepted the role. it involves coordinating information generated by america's defense and intelligence agencies. it serves as the president's top day-to-day counselor on foreign and military affairs. the post does not require senate confirmation. and former republican presidential nominee, mitt romney, will meet with donald trump this weekend and

reportedly discuss the secretary of state position. he looks like a secretary of state, i think. you know who looks like a secretary of state? i think it ends there, john kerry. looks like he would be -- looks like he would be -- remember, they used to say he looks french. >> he speaks french. >> he speaks french. >> >> tallest guy in the room. >> looks like -- that's just my opinion. it ends there. that's according to a report from nbc news. romney was one of -- really? i don't remember that. one of trump's biggest gop critics during the presidential campaign. this is amazing. >> what do you think this is? >> happy together. we played it at the beginning. anyone can get along. there's campaigning and governing. >> so sh, be donald trump, look

magnanimous, romney, how can he say yes after all those things he said in that speech. >> big league for republican unity. it would be huge. it doesn't always work out that way. jeb bush won't be in the cabinet. i don't think john mccain. there's certain things there's no going back on certain things said and done. i'm surprised this one wasn't the point of no return. >> how can he say yes after all the things he said about him? >> i think the way he says yes, the country needs me. it's not about the grudge. that's how he gets there. >> this could be ugly. that relationship. trump would be his boss. i would give him the job just to whip him. get in here! what? what did you get! i sent you over there. what did you get? oh, nothing. i got nothing. >> there's your answer. >> wouldn't you just get the lash out?

>> he has experience on the international stage, remember with the olympics. >> romney is a talented -- >> wasn't he a missionary? >> right. >> he's a talent. i was ecstatic about him. i thought he would make a great secretary -- i like rudy. not sure that's the position for him. >> the irony in 2012, mitt romney said biggest national security challenge is russia. >> the democrats laughed at him at the time. >> now there's a different reset going on here. >> you're intimating that would help counter the criticisms of donald trump, about whether he's too close to putin, russia -- >> or messing things up. former house speaker, newt gingrich told nbc news he won't be in the cabinet for the president-elect. instead choosing to focus on strategic planning through the emerging republican majority. donald trump taking credit

for keeping a manufacturing plant of ford in kentucky instead of relocating to mexico. ford previously said they would move production out of the mkc out of louisville. but never specified that would be to mexico. the president-elect saying i worked hard with bill ford to keep the lincoln plant in kentucky. i owed it to the great state of kentucky and their support of me. in the trump-inspired rally in stocks, janet yellen said a rate hike could happen soon. joining us now to discuss is the chief investment officer at bmo private banks, and samantha rello is also here.

before the election, you had a lot of interviews, jack, saw a lot in print. what was your forecast for who would win the election and what was your forecast if trump did have a surprise victory? what was your prediction for what the markets would do. >> yeah, i, along with everyone else, expected hillary clinton to win. >> right. you were correlating positive market action to her prospects being positive, negative action in the market to trump's prospects. >> right. so the thought was when comey issued the letter absolving hillary on monday, market moved up 370 points, assuming that hillary was going to win. the following tuesday, leak shun day tuesday, the market was up 170 points. so the thought was we have to undue that 500-point -- >> i know how it hatched, but how did you come up with logically that a trump surprise

victory would be so disastrous for the markets? >> i said it was like a v shape. i said an 8% to 10% decline would be a buying opportunity >> but an 8% to 10% decline, you didn't talk about a ten-minute % to 10% decline. how long did you think -- >> i don't know. i thought of an 8% to 10% decline because of his personality. >> even though he was talking about corporate tax reform, not raising capital gains rates. >> right. >> deregulation. keystone -- a litany of things now in hindsight that we're all talking about how the animal spirits have been conjured up, how great it will be. as a strategist, none of that was apparent to you? >> was apparent to me that he was talking about it. i think the notion of closing rank and sealing our borders and trade that really has evolved over -- >> democrats were anti-trade,

too. democrats were anti-trade. so let's cancel both of those out. republicans were -- >> i don't think -- >> democrats weren't as bad about trade as trump? >> i don't think the depositions wanted to cancel nafta. depositions were sus perss pers suspicious of tpp. >> everybody had the brexit play book, instead of 6%, 7 % in three days, you got 6%, 7% in three hours. >> i said the market reaction of the trump victory was as surprising as the trump victory itself. >> that didn't help investors a lot. the people that listen to you. >> the good news is we moved from large cap to mid cap. that was because of -- because of just this whole populism trend. we knew that if anything happens

globally, it's going to impact the largest companies, particularly those that enjoy the left corporate tax rates. >> samantha, are we ahead of our skis now? or is this justified by the kind of economy we'll have for the next several years? >> i think some of the concern around yields rising too quickly is unwarranted. there's a parallel if you go back to the taper tantrum. the ten-year yield doubled in five months and was pricing in a big policy shift on the monetary side. now we're getting that on the fiscal side. we expect higher yields, but we were saying that any way with healthy normalization. as long as it doesn't get too how the of hand, fixed incomes will be find. >> are you surprised the decoupling of the bond market and stock market was almost instant. it shouldn't have happened that way. we were at levels on the ten-year we had not seen in -- >> rising yields are supposed to

be bad for the stock market. >> straight up. that is weird it decoupled so quickly. we were waiting for stall speed in the economy. maybe we haven't. it almost looks coincidental, that trump might be coming into something that already happening. yesterday with the housing starts. >> you know, he may make america great again, but he didn't do anything yet, did he? in a week? >> we're pricing in a lot of things. you can see it in the dollar, that tends to overshoot, price in too much. i would say the divergence between equities and bonds, that's been something that's happening. we've been seeing that in correlation. i was surprised but not really that sbrurprised if you see tha split in the market. >> it's better to be lucky than good sometimes. >> the main point that helped trump get into office was this

huge dissatisfaction between the split between profits and wages. it's the lowest it's been in our histo history. while i think if -- if trump is going to have to make good on his promise to the people that brought him into office, that split between profits and wage also have to tilt back towards wages. unless he can get productivity going or growth going a lot, it's likely going to be at the expense of profits. >> as most people or many people have pointed to the wealth effect that the fed tried to orchestrate, helping people who had the assets and adding to income. the reason the fed was stuck as the only game in town, because for eight years we did all redistribution and no growth initiatives. if you do some growth initiatives, you get the fed out of the way and you're at 4.9 already.

this is stepping into this when wages -- >> they were trying to solve the problem you brought up but never did. >> couldn't. now we'll see -- >> the labor market may be tight enough. >> and let's see what happens in europe. >> who did you vote for? >> i did not vote for trump. >> yeah. >> i see -- i think people -- >> i'm a florida voter. >> i know. i think the forecast sometimes have too much to do with their own politics. the policies themselves were pro business, pro growth. >> thank you, lady and gentlemen. coming up, shares of gap are under pressure. the third quarter pressure fell nearly 18%. slump in in-store visits continues. more on what to expect from the holiday retail season next. i have access to the oil markets and gold markets. okay. i'm plugged into equities-

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shares of retailer gap falling after hours following the company's third quarter results which beat in the top line and matched in the bottom line. gap saw its seventh straight quarter of declining shares. joining us with more is roxanne myer, softland retail analyst.

good morning. >> good morning. >> so, as i see the reaction in gap in particular, stock ran up close to 20 or something in the prior two weeks, maybe not set up for a mild disappointment. where is gap in the overall group arranged right now heading into the holiday shopping season? >> i think the perspective is old navy has been a stand out in the space, one of the few dw divisions or companies comping positive. the market was rewarding that. what we weren't anticipating is the fourth quarter reduction and a ton of headwinds in terms of investments that are entering the picture. management took a cautious tone as it relates to traffic in november. i think gap has its work cut out for it. old navy will keep humming. gap and banana republic are laggards. there's no evidence that a turn is imminent in those divisions.

>> do they have to go deeper with the cuts to the non-old navy chains? what's the solution here? on the surface it looks like relatively cheap looking stock. maybe they're okay preserving margins. a lot of retailers are in that category and it seems like retailers want to give them another chance. >> there's a couple things to think about. on one hand, this company has been -- you could say winning the past few years in share buyba buybacks. this is the first quarter that the company signaled they will be investing again. that puts pressure on the expense structure and the top line to deliver. >> what are they investing in? >> in people, in overhead, in marketing. >> so better training? >> you know, i think it's also corporate. it's at the headquarters level. trying to invest in customer awareness. trying to bring new customers to the brand. it's an attempt to get more

traffic into the stores. >> does gap tell us anything about overall retail? is this just about people don't wear the khakis anymore? >> the issues at gap are fairly gap specific. >> what do you think will happen for the holiday shopping season? not just for gap but throughout. >> i think the top line will remain challenging. there's no evidence there's really -- we're set up for a rebound in top line other than the compares are just so easy. >> inventory is tight. >> exactly. the margin situation is very attractive. and i've been fairly bullish into the fifth quarter knowing how lean inventories are. we're now two quarters in. virtually every company has been able to check the box on higher gross margin and leaner inventory and reiterating full year guidance. >> that means fewer sales. >> we'll see. >> what kind of khakis? >> any kind. >> i thought you said mini khakis.

>> the strongest stretch between thanksgiving and christmas. >> who sells those, banana republic? >> the gap institutionalized the khaki. >> all right. thank you. coming up, m&a activity picked up. a new report says we could see more deals in the first six months of the trump presidency.

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♪ welcome back to "squawk box" on cnbc. u.s. equity futures at this hour are a little bit weaker so far. except for the nasdaq. playing a bit of catch up perhaps. we have the s&p down 3, the dow jones indicated down about 16. st. louis fed president james bullard says he is -- at this point he's leaning -- leaning towards supporting a december rate hike. in remarks in frankfurt this

morning, bullard said the real question is about the path of rates in 2017. i just figured something else out that we should do. we should make this job, instead of a full-time job for these guys and gals, it should be like part-time. they should meet once in a while part-time, and be a hobby. because they think the entire world revolves around what they're doing. it shouldn't. you know what i mean? >> it has recently. >> but the forest and the trees, they're so -- every day, they're in there talking. a quarter point. should we? should we? what about the latest -- >> the regional fed presidents will tell you, they're running a business there. they're owned by the private banks. it's a crazy structure that you have all these fed presidents out there -- >> do you remember shakespeare?

hamlet, how heart it was for him to get off the snide. >> yeah. >> procrastinating, thinking of these different -- the sill lhe and on. >> we have 95% certainty as to what they'll do in december. >> would you like bullard to say things are going great, i see no reason not to raise rates? instead of i'm leaning towards supporting what the market says is 90%. just say, yeah, we're going to do it. >> still four weeks out. >> only good things. >> yum brands is adding $2 billion to its stock buyback program. which will run through the end of next year. williams-sonoma reporting lackluster sales in the third quarter and the retailer is giving a downbeat forecast for the fourth quarter. the chain continues to face weakness at pottery barn chains.

same-store sales falling 4% in the fourth quarter. shares down 3% before trade opens. ross store's third quarter profit rising 13% beating forecasts. the retailer benefitting from strong revenue and margin growth. the company raising its full-year guidance. merger announcements are picking up in the second half of 2016. according to intralinks, we are likely to see a 5% uptick in announced deals in the first few months of trump's presidency. joining us is matt porzio, vice president of intralinks. these are not closed deals, but announced deals. so when we talk about at&t doing the deal, that's an announced deal, even though it has not closed, you're including it in the numbers for the year. >> yeah. yeah. as the leader in virtual data rooms, we're seeing deals typically six months before they're announced looking to leverage our technology in that due diligence phase and get that early insight into activity which relates to predicting.

>> what i see is there's a pick up in this quarter, which you guys find surprising, because historically during a presidential election season that slows down due to political uncertainty about what will happen with any deals depending on who wins. >> yeah. the uncertainty around the election, just general uncertainty in the market, global economic growth. a lot of things were weighing on the m&a market. we see a shift where dealmakers, corporate dealmakers, boardrooms are realizing that m&a is the clearest and best path now to growth, innovation, profitability. >> any way to handicap what the regulatory set up will be heading into the new administration in terms of vigilance on antitrust, whether they want to block deals as's s what the long-term policy changes are going to be for the ftc, doj. still only 5% of the market that

goes through that strenuous review process. >> what are your predictions then for 2017 given all the input data, specifically for the united states? i know the numbers you talk about are global. you monitor asia, latin america, europe, but what do you think hooches? >> there's regional differences. the good news is in north america and in the u.s., we've seen the reversal of two quarters of down year over year declines. we're seeing 5% growth in an upswing there. the u.s. is the bellwether driving the rest of the market. we are seeing strong growth in deal activity out of europe. even post brexit the uk has grown in the last quarter. >> matt, what do you think the probability of the at&t deal is? the reason i ask, trump supposedly will -- is anti-net he said stuff about size, the

populous, the big companies are bad, they keep moving, taking jobs. if you had more of a republican justice department just the whole tone changes there from the last eight years, if they went to him and said it's vertical, this is what it's going to do for consumers, do you think he's going to stick to that populous rhetoric? what do you think the chances are? i think the chances are better than 50/50 that it goes through, don't you. >> i would agree with that. a lot of it is already seen as rhetoric. the dealmakers i'm talking to believe that, you know -- the way the markets reacted, even the equity markets. there's a pro business vibe of the republican government right now. i do think it's a better than 50% chance the deal moves forward. >> the uncertainty principle, those are -- there's so many new entrants coming into this. i have no idea what media looks

like in five years. i know most people will be behind unless they do things like this, it seeps like. >> absolutely. m&a is the new key business strategy for a lot of these companies. >> thanks for getting up early, matt. you're in san francisco. it's 3:30 in the morning there. i know that. >> no problem. >> nice place to be. >> thanks. >> awesome. >> love san francisco. >> mostly. it has his drawbacks, too. obviously. now to sports, and thursday night football. the new orleans saints traveling to charlotte to take on the carolina panthers. in the second quarter cam newton hit his wide receiver in the back of the end zone for a 40-yard touchdown. catch was initially resulted out of bounds. saw this? >> i didn't see any of it. >> go to bed. you have to be ready. after review, the call was overturned. carolina held off a late comeback by the saints to win

the game 23-20. that monday game and this both good. >> sunday night game, too. they are on a good streak with the prime time. >> the election is over. >> we did a segment on "power lunch" yesterday about how many delays there are. 35% of the time the players are just standing around. commercials. there's not that much playing time. >> 11 minutes, but still -- all of a >> no. they could improve it. >> they change the rules every year. >> a year or two ago it was like look at the nfl, no way baseball can compete, nba. things go in phases. i'm worried about when brady -- brady is almost 40. >> he says he's going forever. you know him. >> yeah. >> you know, russell, beat him. >> yeah. >> that's good. you know what i'm talking about? >> the guy married to gisele?

>> that's brady. >> you know what? that's good. you're coming along. you know that much. that's good. >> tom brady. >> you know who russell is married to? >> i don't know who russell is. russell sherman? >> know. not jack russell, not a terrier, no russell -- russell wilson. >> my husband will be so mad at me right now. >> when we come back, busted. a $30 million counterfeit sting results in nearly 50 arrests. details next. and preparing for the trump administration. aei's kevin hasset joins us. and before we go to break a quick check at what's happening in the european markets right now.

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one of the featured items today is a 32 inch samsung tv. >> i can't do it. >> you have an echo? >> i have an echo. it's in the box. it was in the house, now i'm so nervous it's in the garage. >> because i don't like all the microphones on. >> i don't know about you, but you -- can you imagine a hot mike all the time with you? can you imagine? i can't. >> what are you suggesting? >> anybody -- anybody, it's scary. i've never turned it on or plugged it in. i still think it's listening. now it's out in the garage. >> it makes me nervous. those security cameras in the house, they make me nervous. >> alexa, do this. >> she's listening all the time. >> she can listen and hear that she's hearing everything. >> right. right. potentially being recorded somewhere, but it's on the cloud. >> right. >> i know.

>> if you don'tdon't -- >> those transcripts can be hacked. >> i hear what i'm making for dinner. >> okay. >> that's what i talk about. >> police in peru seized almost 30 million in u.s. counter fit bills. it's the biggest fake currency bust in peru's history which is significant. peru has been labeled the world's largest manufacturer and distributor of counterfeit u.s. currency. who knew. the bust resulted in the arrest of 47 peruvians and two ecuadorians as well. coming up, closer look at the tax changes we could see under president trump. kevin hassett joins us next. as we head to break a look at yesterday's s&p 500 winners and losers. >> it was wonderful. >> bravo. >> i love that. >> that was great. >> pretty good. >> wasn't bad. >> parts weren't very good. >> could have been a lot better.

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. president-elect trump's transition team working to fill the cabinet while on capitol hill speaker ryan and team trump

discuss how to pull off what might be the biggest u.s. tax overhaul in years. joining us now to talk about what the president-elect's tax plan would look like, american enterprise research institute director of policy, kevin hassett. how are you doing? >> early, but doing great. >> you're not quite like the bill crystal -- what is his organization? what is that money losing thing he's got? weekly -- is that the weekly standard? >> that's a great magazine. you should read it. it's good. >> yeah. yeah. you weren't exactly like that at the aei, but you had quite a few never trumpers at the -- doesn'e any position. every scholar has their own position. i was never a never trumper, joe. >> the individuals there were not particularly enamored of "the kudlow report." were they seeing romney come around there.

and the establishment being welcomed back into the fold. are they -- >> you know, some of my colleagues said some nasty things about trump and probably feel like they have egg on their face. if i have egg on my face, it was because i was a sloppy eater this morning. i've talked about the policy the whole way. from my own opinion, they're building a solid team. they're hiring people you would think they would. >> and some of the naysayers are admitting that, you, this is not ryan all of a sudden, you know, he's solid. and the headwind that trump was going to present for all the down ballot races, they all won. since 1920 it hasn't been this republican. but people -- since 1920. but people love a winner, i guess, right? >> and the thing is every darn election since i've been watching this, everybody says they're going to move to canada but then they don't, right? so sometimes we wish some of them would. but people are now getting used to it. >> and you kind of wish they'd

follow through, wouldn't you? >> kind of? the people that said it this time, i think that put trump over the top. i think people who saw it were saying i was -- i was still undecided. but if they move, that's enough for me, i'm voting for trump. so what gets through? are there, like, tea party guys that are going to be so worried about the deficit blowing out that they're going to have trouble bringing a tax the detail. >> and we might be about to have the most consequential tax policy year since the second world war that the plan paul ryan put together is a big sweeping change in the tax code that would be so much better that if i run the numbers i think the dollar is 20% stronger, i think you have a wave of inversions because foreign companies want to have their headquarters in the u.s.

it's a really, really big change. i don't think that markets have really digested how close we might be to having something that big happen. right now the odds are probably at least 50/50 that a bill based on the tax reform actually becomes law next year. >> you know, your president is like the greatest -- you know -- i i read what he says and i just -- >> of aei. >> okay. >> i wish i could just memorize everything he says for when i'm arguing with people. i can't. i forget too many things. but let's think about what aei stands for. free markets and, you know, private sector and everything else. who do you want for treasury secretary? what initiatives do you think president-elect trump needs to do to further, like, the aei mind-set and do you believe trump is on board with -- as an aei guy or does he want to raise the minimum wage? does he want to do some of these

things that seem, you know, sort of on the other side of the aisle? >> if you look at what president-elect trump is saying right now, he's pretty close to playing out of the aei playbook. he's saying stuff that i think traditionally scholars at aei would support. he's talking about tax reform being a high priority. he's talking about repealing the affordable care act and replacing it with things that are smarter. he's talking about immigration reform. and he himself has said we need to stop sending the talented people we train at our universities home. these are all things that our scholars have done research on over the years. so sure he said stuff about trade to see wra that's going. for the most part the stuff he's listing is this high priority legitimative agenda for next year is going to be drying on a lot of the stuff we've been doing for years. frankly i'm intrigued by the possibilities of the next year and quite hopeful. again, people in markets need to really start to look at this brady tax bill. i think one reason why the dollar is moving up is it's got a 20% move to make if that bill

becomes law. there's a lot of positive stuff going on if that stuff is legislated next year. >> has anything trump or just watching the mood of the country, have you got a footnote on any of the trade policy at aei? is it still just whatever happens happens globalization and free trade? we can't worry about any of the near term problems let's just go for it? is there any word maybe we don't get taken advantage of or maybe there's something to keeping america first if you can? things that benefit us? is there anything to that at aei yet? >> i talked about this just a little while ago on cnbc with austan goolsbee. austan a long time ago said free trade deals, i'm all for that. but a free trade deal should be one page. it should be free trade and there you go. but these are thousands of pages. why do they have a thousand page ifs it's a free trade deal?

>> because it's not that free, right? >> if trump thinks that way, it could be a positive for trade. right now i don't know. as president he has authority to impose tariffs and things. if he were to go down to path, for sure a negative. >> when was this with austan? >> just a few weeks ago we were an cnbc together. >> before or after the election? >> before the election. >> yeah. i don't think he -- i think he's still in that room with a bunch of play-doh, like a bunch of coloring books staying inside the lines. >> no. >> oh, yeah. puppi puppies. >> come on. he's such a pleasant person. >> i know he is. but he's in a safe zone where he's dealing with what happened and i think puppies -- golden retriever puppies are the best. if anybody does see austan, i'd like to hear he's okay. >> we chat on twitter. >> he's got a huge lego thing

he's built. >> he's very nice. >> i'm not saying he's not nice. i'm just saying he's dealing with this the best he can. see you later, kevin. thank you. coming up, silicon valley joining. we're joined to talk tech under president trump. and later on, michael leavitt weighs in. "squawk box" will be right back 37 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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this is how car buying was always meant to be. this is truecar. ♪ the trump tradeoff in tech land. mark mahaney out with a report for his top tech picks under a trump presidency. the names, the price targets, and what he's expecting straight ahead. the dollar powering its way to its highest levels since

2003. closer look at how the trump rally is affecting global currencies and what investors should avoid. plus celebrity chef wolfgang puk puck is here to give us tips before the holiday. >> you really want to stuff it in here. in other words, you really want to pack it. >> as the second hour of "squawk box" begins right now. ♪ live from the beating heart of business, new york city, this is "squawk box." >> boys don't cry. that's another -- welcome back to "squawk box" here on cnbc. i'm joe kernen along with michelle caruso-cabrera and mike santoli. the futures at this hour are about where they were, improved maybe a little. down 13 now on the dow indicated less than 3 on the s&p and the

nasdaq continues to diverge. first it was weaker than the rest, now it's kind of been playing catch-up and it's up about 1.5points. here's what's happening at this hour. james bullard leaning towards supporting a rate hike. bullard says the real question is where it will go next year. he's one of six fed officials will public appearances today. amazon is about to roll out its amazon prime video service in 200 new countries according to "the wall street journal." right now it's available only in the u.s., the uk, germany, austria, and japan. following netflix around the world, i guess. meanwhile, gap shares under pressure in premarket trading. the apparel retailer did see after the close but saw its seventh straight quarter of sales. you see the stocks giving back. switching gears to politics. president-elect donald trump has

offered michael flynn the job of national security adviser. it's unclear if he's accepted. he serves as the president's top day-to-day counselor on foreign and military affairs. former republican presidential nominee mitt romney will meet with donald trump this weekend. one of the issues to discuss, the secretary of state position. that's according to a report from nbc news. romney was one of trump's biggest gop critics during the presidential campaign. meantime newt gingrich said he will not be in trump's cabinet. instead choosing to focus on strategic planning for the emerging republican majority. i want to know what really happened with him. i want to know what really happened with ben carson. and i want to know what really happened with chris christie. >> newt and donald trump to me seem to be very similar people.

i can't imagine the two of them spending that much time in the same room for a long time. >> newt was on board but then would say things during the campaign, some of which were like wow. did you really say that? so i don't know what happened to that. but there could have been something in the cabinet. but he probably wanted state or something. >> running an agency, right? you don't always think of -- >> i don't know if you want to be -- he's in his 70s. i don't know if you want to be working 16-hour days, either, when you're -- of course, trump is 70. he's going to be working some serious hours too. but it looks like he's up to the task. did you see the campaign? >> so you don't think the reagan 9:00 to 5:00 schedule will be there. >> i don't know. i know how he campaigned which was pretty -- i thought there was more than one of him. >> seven or eight things a day. yeah. speaking of which, president-elect donald trump taking to twitter to announce that he persuaded ford to keep

an automaking plant in kentucky than moving it to mexico. it wasn't clear the company was going to move to mexico in the first place. phil lebeau joins us. there's more to this story, right? >> there's some nuance. happens whenever talking about auto companies and their production plants. but donald trump can claim a victory here after saying you'll see lincoln mkc, that production will stay in louisville, kentucky. here's the tweet sent out last night by the president-elect. he said just got off the phone with my phone call with my friend bill ford who advised me he will be keeping the lincoln plant in kentucky. no mexico. well, let's do some clarification here. first of all, this plant overall where they also build the ford escape was never going to shut down, was never planning to move to mexico. nor did ford publicly say we're moving production of the mkc to mexico. however, when they redid the

contract, ford did say eventually the mkc and its production may leave kentucky, where it goes from there would have been determined at that time. could have been another plant in the u.s. could have been a plant in mexico. but there was never any determination. ford released a statement last night saying we confirmed with the president-elect that our small lincoln utility vehicle made at the louisville assembly plant will stay in kentucky. bottom line is this as you look at shares of ford, president-elect trump can claim a bit of victory here by saying look i have locked in that you're going to have production of this small suv at this plant in louisville. and if you're ford you can say, look, hopefully this ends a lot of the public commentary that we've heard from president-elect trump about moving small car production to mexico. which by the way, guys, that's still planned. that has not changed. we talked with mark fields, the ceo of ford, just a couple of days ago and said we're not changing that plan.

we already committed to build small cars in mexico at a new plant and replace the production of those vehicles up in michigan with an suv and a small pickup truck. so this is one of those story where is it'll be interesting to see whether or not this is the end of donald trump tweeting about ford's production plants. >> we'll have to see. thank you. rbc out with a report on their top tech picks for the fourth quarter and beyond. silicon valley and the giants of the internet get ready for a trump presidency. joining us now, lead tech analyst mark mahaney. tech's done well, mark. so has energy. so has domestic oil and gas production. so i'm not sure whether it's been a tail wind or a net neutral. speaking of net neutrality, think about things like that that maybe a president-elect trump and a republican congress, are there benefits to that and other things that you see coming

that will differentiate who wins and who loses? >> yeah. i like the setup, joe. and good morning. tech particularly some of these fang names dramatically outperformed last year. however, since the trump election you've seen a 5% to 10% selloff with the bigger names. the amazons, the netflixs. we think what's behind this is a rotational pull that look much more favorable of the trump administration. whether that's health care, financials, industrials. it's probably not materially impacted. that's our call based on a new trump presidency. but it's less incrementally benefitted by this administration. most of the things that we expect to see and it's, you know, we're really kind of guessing at this point, lower tax rates, most of those things are probably beneficial for tech companies as a whole especially for the internet stocks.

we lined up our stocks again. despite the amazon news. second for us is facebook and third is priceline in terms of our preference. >> kind of interesting. initially i thought you were implying it's like a zero sum game. which i think it is to some extent if it's on a -- might go into cyclicals or i don't know. that seems to be what you were saying. but maybe for other sectors and therefore money comes out of tech and goes into those. is that true? there's not enough money to go around? >> yeah, i'll lean on our strategist for that call. but that's the call of the firm that, you know, there is going to be -- there clearly are going to be policy changes that would have been different with a clinton administration. there are certain sectors that are going to be benefitted and it's kind of hard not to see health care industrials as two of those. and if you're looking as

portfolio managers are looking to reallocate to those, look at the best performing sectors. those are likely to have some money taken out of them. how long is that trend likely to occur? in the tech sector with a couple of the names we look at, we've had a pretty good run in most of these. we're not pounding the table on them. that said, i find netflix extremely interesting going into a variety of reasons. yeah, it's our top pick. >> i just think in terms of rising interest rates if you're risk-free rate of return and a 10-year treasury moves higher and higher and higher and some stocks get a huge multiple. uncertain earnings way out, it sells off, right? >> a lot of times tech seems resistant to interest rates because it's got so many other great things going for it. i mentioned net neutrality, too. do you expect -- how hard would it be to reverse that? do you expect it to be reversed? and we heard at the time how

negative it was for certain companies. why wouldn't we see the convert, whatever. why wouldn't we see the opposite of that if it's possible it's going to come off? who would benefit? >> so, joe, i'm sorry. you did raise that first. i didn't answer the question. net neutrality, we think it's highly unlikely to have a change in that neutrality. but were you to have that with having that removed and have the cable operators, isps to charge more for certain amounts of traffic from some vendors than others, yeah that could be a potentially negative event for the real traffic generators. we think that's highly unlikely to happen. >> and they're the ones that are done. it's gone to a new high in like four days. i just wonder, are you sure it's not going to happen? >> i'm trying not to be 100% confident about anything these days. but -- >> look at that. what's that?

>> if the other thing to keep in mind is the infrastructure costs for these companies over time band width, for tech those costs have plummeted over the last decade. and so just give you an example of netflix. if you look at where they're expense items are, they're operating expenses, most of that money they spend goes on content and marketing. and the infrastructure cost, the band width cost, it's their cost structure. it's pretty small. even if they had a radical change, i think it's highly unlikely. it probably wouldn't materially impact the netflix or google or facebook p&ls. >> okay. mark mahaney, thank you. appreciate that. >> thank you, joe. >> you dump all that crappy dow jones stock. you're a comcast guy. >> not anymore. >> but it was. >> my god. it didn't move for 30 years. >> yeah. did they sell that company great or what? >> oh, my god. >> so do you have -- >> no. i never really -- >> well, did you move it in --

you're here now. >> yeah. >> company people usually want to have a stake in the company they're working -- it might be a good thing. it might be a good thing. did you see it? >> ban huge winner. it's driving -- holding up the media. >> you're not doing us a favor. >> i know. coming up, the dollar rallying to a 14-year high in the past few days. we're going to tyke a look at currencies and fiscal policy changes. later, wol gang puck is going to join us. he's opening up a new eatery. plus we're going to talk jobs and the consumer and more. "squawk box" will return.

welcome back. mario draghi speaking in frankfurt this morning. will focus on whether inflation can sustain itself even if its exceptional monetary stimulus is withdrawn. >> we remain committed to preserving the monetary accommodation which is necessary to secure inflation towards a level below but close to 2% over the medium term.

we cannot yet drop our guard. >> went on to say still sees a, quote, significant degree of uncertainty there. the dollar touching a 13.5-year high. yellen's testimony yesterday to add to it. joining us now on where the dollar and other currencies are headed, chief market strategist. good to have you here. >> good morning. that's just, oh my gosh. how has your world changed since donald trump's election? >> you have the fed guaranteeing practically a -- >> is his mike okay? >> should be. >> now it's okay. sorry. >> you have the fed guaranteeing a rate increase. it looks very much like they'll speed up after that. you have the ecb saying they're going to keep accommodation going for a number of years. you have donald trump planning

on reinflating the economy. all things lining up are lining up powerfully for the dollar. >> what's the best metric you like to use if i ask you where is the dollar going, you're going to quote me the dollar index? what? does this continue? >> i would probably quote the majors. i think it does continue. i mean, what mr. draghi said this morning kind of surprised me. because he said that they're going -- the economies in europe need support for yet a number of years. not now, not next week, not six months. for a number of years. that's a long-term rate policy right there. they have to be as far as their economy goes fairly pleased with what's going on. >> so parity. >> it is looking as if it's possible. i would not have thought so but with what we've seen, the markets have all lined up on the line here. >> so emerging market currencies. boy. so poor mexico. mexico raises interest rates yesterday by 50 basis points and

the mexican peso falls anyway. would you buy that though? to me i think that thing has gotten hammered so much. do you buy the pay toe? >> not yet. >> when? >> i would wait until the emerging market currencies see a turn. emerging market currencies have a problem because you're looking at weak economic growth around the world. if, however, the u.s. starts to pick up regardless of whether it's sustainable from spending, that looks much better for the emerging markets. >> you've done stories about how much dollar denominated debt there is in the world in asia. so all of those countries have all of this debt that's getting a lot harder to pay back. are we getting into something dangerous here? >> we are, but unless the markets notice it, it doesn't matter. >> so this is what i'm asking you. the contrast with last december,

january, february when a strong dollar was one of the things we were so concerned about, why is it not setting off those alarms now? >> the market's been totally focused on the election. it hasn't been paying attention to anything else. it got it wrong as far as the result. so it reversed and then decided it was a good idea. think about what happened with the yuan this past year. equities took a real punch. the yuan is now lower than it was and nobody's paying any attention. >> and today we got headlines that suggest they're going to let it go. >> i don't think it's what the market is focusing on. >> what if it's that back when it was rising before it was in tepid economic growth. oh, we have all these head winds and now the dollar too. and now it's different. now the dollar's rising because of the believe the economy is getting better. >> and high yield was blowing

out for that reason. >> what you're getting is a period of very rapid and uncertain adjustment about what is going to happen both with the u.s. economy, with u.s. policies there's always in the background trade policies. i don't think trade policies are going to change all that much. nevertheless, everything is adjusting and is adjusting to the dollar strength right now. if you have to put -- the world economy is not very strong. if you had to bet against a strong dollar or a strengthening u.s. economy to drag the rest of the world along, i think markets will go with the strength in u.s. economy and that will end up being a benefit. >> why do you think it's so obvious? what are you pointing to? the one day -- so the letter came out. you know how many people can move a market 300 points? >> you're right about that. it wasn't a big adjustment. >> then even on the night of where it had that three-hour move, it almost looks like the

dumb money figured it was going to go that way and the unbelievable amount to turn it around like that and have it still continuing now, that's where the big money is coming. >> you're right about that. the adjustment that took place both from the 28th to the 4th is a reasonably small adjustment. do remember that the futures overnight in japan. then it reverts and went back the other way. i agree with you it wasn't a big -- now the big money is there. >> it's spoken. >> that's right. >> okay. all right. >> thank you, joe. >> my pleasure. coming up, stocks to watch including yum brands. check out the futures at this hour. we're going to talk markets when we return. they've gotten less and less negative which means more and more positive i think. has to do with whole numbers and

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welcome back to "squawk box." here are some stocks to watch this morning. yum brands is adding $2 billion to its buyback program which will run through the end of next year. this is what's left on top of the $4 billion buyback program. william sonoma reporting lackluster sales for the quarter. continues to face weakness at pottery barn. same store sales falling 4%. and ross stores beating forecasts. the retailer benefitting from revenue growth. also raising full year guidance. you guys are going to see

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among the stories front and center after a flood of economic data this week, just one report on today's agenda with leading economic indicators out at 10:00 a.m. eastern time. predicting the index will rise just 0.1% for october. volkswagen will cut 30,000 jobs following the emissions scandal. so far vw has paid about $19 billion in settlements to consumers. tesla and solar city shareholders have approved the proposed combination of the two elon musk-controlled companies. would see tesla buy the solar company.

let's get back to the markets. u.s. stocks on track for positive week. the futures right now looking like they're actually strengthening a bit from the prior hour. about flat exactly to the s&p 500. going to digest those games a little more the last couple days. joining us now isabelle mateos y lago. what a time to be a multistrategist. >> absolutely. >> tremendous moves in bonds, currencies. really a lot in for stock markets. should investors chase these moves. is this the new world. should we assume that the market has it right here? >> what's interesting is actually if you look a little bit further out, this rotation in the market really started around july. this rotation in -- steepening yield curves, rotation into financials, into more cyclicals

out of momentum stocks. and what we've seen is with the election an ak sensuation of it rather than a dramatic turn. so in that sense, it's probably fair to expect this to -- but it has further to run. at the same time in terms of your question has the market got it right here? there are -- there are things that are a little concerning in terms of almost schizophrenic interpretation of the developments. for example, there's sense that developed markets, stock markets seem to think this is all good news. there's much higher growth ahead. great, let's power ahead. on the other hand investors in emerging markets seem to have thought the news was entirely bad. presumably because of fears of protectionist agenda. that agenda gets implemented, this is bad for developed market as well. >> hold on. one thing. emerging markets go down. that's been true for a very, very long time. right? why is that not true now?

>> well, there's an element of truth to that. if the dollar goes up, this tends to hurt emerging markets. but emerging markets are much less vulnerable to these developments than they were in the past. they have lower denominated debt. they have scope to ease monetary policy if need be. and they've been powered by very strong inflows. so, you know, okay. this is a head wind for them. and there's high interest rates, but nothing lethal. nothing that would justify with the kind of pullback in valuation. so there has to be something else. in our view, this is the fear of protectionist policies that have been talked about during the campaign. and in our view, this fear should exist also in developed markets. it doesn't seem to be there right now. >> one of the more profound interpretations of what the markets have done the last couple of weeks is this reawakening of inflation expectation. it's not just growth might be faster, it's reflation. if not inflation that we have to worry about.

is that something that's going to continue to roll on? >> well, we'll have to see what policies actually get implemented, right? for now everybody's guessing. but i think you're right, markets have definitely decided that deflation is out of the way. no longer something to worry about. and how much inflation we do get, this is something we have to see. obviously there's a lot of fiscal stimulus. this is an economy that's essentially at -- you're going get inflation. but how much we're going to get, i don't know. >> so we can't operate for a little while in that comfortable zone or we just don't know? what we're going to do in december which i think is nobody's guessing about what anymore. and you're right the question is how many rate hikes next year. and here again the fed will probably be guided by the data

and again how much stimulus we end up getting. will be very important to listen to out of the next fed meeting is how much comfort would they have letting inflation run a little hot. that we don't know. in the past there's been insinuations they would be comfortable but exactly how much. >> can we export inflation where, like, we sort of spread it around and share it? i mean, it would be good some places. >> that would be very good. absolutely. i'm sure right now the folks at the ecb and the bank of japan are thrilled. yes. >> japan, i mean, maybe they were early to tell us what we were going into and haven't had any for so long. if they ever do solve it, it wouldn't surprise me if we solved it for them. >> when i look at your asset allocation around the world, you're neutral on the united states, neutral on japan, overweight the emerging markets.

that's the asset allocation you want have right now. it runs contrary to everything we've seen since the election. >> right. well, this is a period where everybody sees what is coming out of this election 37 it's hard to get really enthusiastic about any part of the world right now. valuations are really stretched everywhere. would agree with the recent market sentiment that the u.s. probably -- the growth differential with the rest of the world is going to increase and that should be positive. but again, valuations are already very high. and if we end up in a world where inflation picks up faster than growth or the dollar shoots up faster than the corporate sector can digest, it will be very good. it's not all of a sudden there's huge scope for a boom in earnings. we have to be cautious. >> emerging markets did have a very good comeback in the six or

eight months since the winter as well. >> absolutely. very big in terms of flows. maybe just about a quarter to a third recouping the outflows of the previous year. so we think there's still some room to go there. now, obviously if there's a trade war, it will be bad for emerging markets. but if the u.s. powers are ahead, this is going to lift everybody. >> what do you do with your fixfix ed income? >> short duration. we're a bit cautious on that. we may have found the end of the 30-year bond bund market. i think this is going to be from here on. >> is there any part that's safe? can you stay in corporates? i mean, if you're going to hold until maturity and you like the interest rate, i suppose it's okay. but if you're worried about what the bond does, is there anything that's safe? >> like i said short duration is the name of the game at this point, yeah. >> isn't there some pace speen

twe 30-year bond bull market is over, the lows and yields are in and we're not necessarily going to shoot up to historically normal or high interest rates. >> absolutely. that's the whole. there is a feel good story there. and that's why one has to hope you don't, you know, throw this economy into overdrive with massive overshoot in inflation, sense of everybody losing control in which interest rates -- i mean, what you don't want to have is a sense of a fiscal runaway. then you have the long-term end of the curve that picks up. and then that would really be bad both for bond markets but also obviously for stocks. >> sure. i keep saying we started the year with the 10-year treasury at 2.27% i think. it feels we're up huge. >> it does. it's that last two-week move which has been so dramatic. >> and of course at 3% in 2013. >> right. >> thank you very much this morning. >> thank you.

okay. looking at this, i haven't seen it myself but i'm being told there's news from the trump transition team. president-elect has extended an offer to senator jeff sessions to be attorney general. to be attorney general. and there's quite a bit written about senator sessions going back to some previous confirmations and judgeships from 35 years ago that people are talking about. so this is interesting. it was said that because of being the first sort of establishment figure and senator to back donald trump, that he had his choice of positions. i don't know whether that was necessarily true. whether he could have got secretary of state if he wanted it or defense. but who knows. but at this point we're talking about attorney general. when we return, it's that time of year when people start talking about stuffing turkeys and making the perfect side dish.

wolfgang is here. we'll tell you about that, my experience with wolfgang puck goes back 30 years. we're going to talk about his new restaurant. he joins us next. top of the hour, former amr chairman don carty talks about the thanksgiving travel rush. warren buffett's state in the airlines and much more. "squawk box" will be right back. when whirlpool builds an appliance, they put everything they know into it. but once it's sold, there usually isn't a way to keep improving that product. today, whirlpool can analyze iot sensor data from connected appliances on the ibm cloud. so they can continuously learn how customers are using their products. and how the machines respond. harnessing data to make great products better - that's what the ibm cloud is built for. harnessing data to make great products better -

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mcdonald's rolling out its restaurant of the future nationwide. it will now offer table service in the u.s. as well as introduce mobile pay and self-ordering kiosks. steve easterbrook on cnbc. >> we asked our business model for the best part of 60 years and we've been successful at doing that. now customers and consumers in general are demanding much more control over their lives. we need to adapt and evolve our business model to fit around our needs. so for those that want table service. frankly each time we convert a

restaurant in the u.s., business picks up. customers come back and enjoy the experience and come back more often. >> here's how mcdonald's shares are doing. marginally higher. they're up about 9% for the year. all right. and totally on the other side of cuisine and food and restaurants and everything. go from mcdonald's to wolfgang puck, we've got to make a clean break. with less than one week until thanksgiving, food is on most people's minds. let's bring in wolfgang puck. recently opened his first restaurant in new york city. it's a contemporary sleek steak house. and it's not the first cut but it's the first cut in new york city. it's the sixth one of the steak restaurant. >> it's in the four season hotel downtown. really a new beautiful hotel. we have great artwork. my wife is an art curator.

but the main thing is the food service. unlike mcdonald's, look at that stock. we look at food and service. >> how long have you been married? >> ten years now. >> i met the other wife. >> what? >> i met the other wife. >> 30 years ago you're talking about? >> 30 years ago you were on a dunn and bradstreet. i got in to see you and i did not -- i was not a closer. you didn't open an account with me but i was out in your office on horn. >> sunset and horn. exactly. we started in the '80s. >> i was trying to get there. but we'd both be richer. >> okay we eat well and we drink well and be healthy. >> will there ever be another like that one? i met tony curtis. i met joe pesci. every night it was unbelievable. you had it going.

>> well, i think -- >> you still do. >> we still have a lot of clients except some of them died off. i was here last night with ryan seacrest and some other people. so we know so many people. they all come to our restaurants. >> and you know what my favorite -- this is like really bad. i'm like brian sullivan. the catfish on main. >> still there after 33 years. you know in the restaurant business where upscale restaurant come and go like crazy, to be still good 35 years after you open, you know, and still be relevant is really important. so we go through all these changes and open new restaurants. i'm excited to be here in new york. many times people asked me to come to new york i said no. finally i thought the timing was right. and i really love downtown. it is so different from midtown

or anywhere else. >> why is the timing better now? >> for me sometimes the real estate wasn't right. sometimes i didn't have the people. like now i have two chefs raymond and andrew who are with me for ten years and they're really talented, young, and they are the future. the young people, you are the future, you do the changes. so i'm really happy to be here with the right people in the right place. >> how do you do steak better in new york? >> we do better than most of the steak houses. why? because we actually have a wood burning grill. and we grill them, we make up our own seasonings. and then we grill them over wood fire. so you get this smokey flavor which is so different than just under the broiler. and under the broiler, the meat dries out on top. so with the grill, it really seals it and gives it this smokeyness to it. >> how big is your empire now? >> we have 27 upscale

restaurants. >> wow. >> from bahrain to istanbul to london. and in the airports. overall we have a hundred restaurants and we have a big catering company and we're licensing company like i sell things on hsn. so i keep busy. >> what's the harder part? the chef part or the business part? >> my love is the chef part. you know what? if i could do only one thing, it would be cooking all day and forget about lawyers, accountants, and things like that. but it is the restaurant business so i have to take care of business. we have to make money to stay in business. so we have to watch every penny. so it's really important. >> so you got all the different cuts, right? you got obviously filets, new york, primes. >> and meat from different countries, different states here. we have a farm from idaho which i know well. and i go to visit wherever they produce beef for us. >> what's your favorite steak down there in what kind of sauce?

>> i like the snake river from new york. it is a cross in between the black angus steak. >> what kinds of side? like au gratin potatoes? >> sauteed spinach, chocolate souffles, modern banana cream pie. what makes us different from all the other steak houses is we have real talent in the kitchen. so we have great appetizers from different kind of sashimis to salad with dates and so forth. and then great desserts. i am from austria, i love desserts. >> i feel bad for so many europeans who are stuck in these economies where opening businesses is so hard. could you have done what you've done here in europe? >> i think especially not in austria where i am from. >> near where? >> i grew up in the southern part of austria on a farm.

now everybody talks about farm to table cooking. i grew up on a farm so that's all we had. my mother made vegetables. she went in the garden and picked and cooked. >> tough to do that here, right? >> i think america, not for nothing called the land of opportunity. i think because we have so many different cultures here and so many different cuisines altogether, america is probably the most exciting place to eat out. you go to paris, have a lot of french restaurants. london is great too. >> they love french restaurants. it's weird. espago in beverly hills still open? >> actually, it is amazing. we opened in '82 on sunset and moved 19 years ago now. i must say, last year was our best year since we opened. so i'm really proud. >> the new when you make more money it's big. but the old one was --

>> old or young. we had more fun. we go out. you were not married. you had girlfriends. >> you did know him. >> yeah. i think the new one is so different, but for us in the kitchen it's better because we have a bigger kitchen. we can do more things. >> table near a waiter if i come down there? >> okay. you can get a table. >> we could do "squawk box" from down there. >> you're right. we should do it for breakfast. it's perfect. we open for breakfast, lunch, and dinner. >> you do? >> yeah. because we serve the hotel. we are the only restaurant at the four season hotel and on top of it you can get an apartment and call service and might sell you a condo. >> are you affected by the minimum wage increases they're talking about and all the forced -- remember all the restaurants have gone through no more tipping and it disrupted everything. >> the minimum wage is creeping up and i believe it should. in a big city like los angeles and san francisco or especially

new york, it's impossible. so i think $15, it should be. >> at a national level? >> well, $15 in a small town is small than $15 in new york. i think it should be regionalized. but also i think when you look at the restaurant, if they have tipping not where everything includes. a waiter can make $300, $400 a night. but for the dishwasher go from $10 to $15 means a lot. >> you should write not a cooking book. you should write a book about -- is there anyone you didn't know in hollywood over the years? >> i think i met a lot of people. a lot of great people. >> off lot of stories too. >> a lot of stories. it's not good thing to talk about. pen nobody's going to show up in my restaurant. >> discretion is key.

>> i think when people come to a restaurant, we respect their privacy. i know most of the people so i talk to them. if it's from all the presidents or king of sweden that came. then i saw him and said you remember me, he just looked at me. >> you remember in the first "die hard" the guy is trying to impress the girl. wolfgang, he's a personal friend. remember that? they were talking about you. >> yes. >> good to see you. >> we'll see you there. you come down, yeah. >> sure. thanks. great seeing you. coming up, stocks to watch at the open on wall street. check out the futures at this hour. suggesting a positive open. don't move. ♪i had to leave my happy home in exile♪ ♪oh which way should i go? ♪home is where i want to be

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♪ that is awesome. >> got the musician transition to the orchestra. let's taic a look at some stocks to watch. there we go. for me this never gets old. they're just so happy. aren't they? carl hated it.

i don't know. foot locker above estimates. revenue in line with forecasts. same store sales was a little bit shy of consensus estimates. wells fargo was downgraded to underperform from market perform following a 15% jump in the stock since the presidential election. bemo says the stock price no longer reflects the ongoing uncertainty from the bank's sales practices scandal. another big hour of "squawk box" straight ahead. top of the hour we talk airlines, the upcoming travel holiday season, what the airline wills look like under a trump presidency, and warren buffett's stake. don carty is going to join us. at 8:30 ed lazear joins us to talk fed, the economy, and more. and about 8:40, it's former governor michael leavitt on the trump transition. "squawk box" will be right back. attention: are you eligible for medicare?

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apple reportedly exploring to move production to the united states. plus a record number of travelers will take to the skies this season. we'll tell you what it means for the airline stocks as the final hour of "squawk box" begins flight u. ♪ live from the most powerful city in the world, new york, this is "squawk box." >> welcome back to "squawk box" here on cnbc. i'm joe kernen along with michelle caruso-cabrera and mark santoli. the futures have turned positive in the dow and s&p and being slightly negative most of the morning. and the nasdaq was up maybe 1.5 or 1.25. >> for me. >> it's not for you. >> yes. pointed at me. >> anyway. it was up a little, the nasdaq was.

. $45 now on crude. it ran up to $50 and i thought that was weird, santoli, that it came down as we thought the economy is going to take off. >> yeah. >> which has to do with opec and it has to do with -- >> more production coming online. >> exactly. oil's been the one that hasn't gone along with the script with copper soaring, steel, iron. all the things that's more levered to i think near term production is up there. oil is a slippery message based on opec. >> but if you think donald trump is going to allow more drilling, you'll get more supply. zbluld think that. making headlines this morning, $23.6 billion in stock funds. that's the largest weekly inflows on record. and we got data showing there were outflows when it comes to bond funds. mario draghi speaking in frankfurt this morning. focusing on whether a recovery

can sustain itself even if its exceptional monetary stimulus is withdrawn. >> we remain committed to preserving the very substantial degree of monetary accommodation which is necessary to secure a sustained convergence of inflation to a level below over the medium term. we cannot yet drop our guard. >> nothing better than a central bank sound bite, right? draghi says he still sees a significant degree of uncertainty for the economy. fed speakers also out in force today including st. louis fed president james bullard. he says he's leaning towards supporting a december rate hike. bullard said the real question about the path of rates -- is about the path of rates next year 2017. bullard is a voting member of the fomc this year which proves joe's point once they raise in december, then bestart asking

when is the next time. >> it's good for us. think of how many quarter points we get to sweat until we get back to normalized. maybe start going more than a quarter at a time. but what's normal? >> not soon. here's the things. the fed spent of this year redefining what normal is going to look like in terms of rates. they've been down playing how high rates can go in the short end. now they had that rhetorical walkback for a few months before we start to readjust. >> i thought it was kind of funny, charming, ironic. janet yellen suddenly worrying about inflation. they wanted it so bad. now she's talking about these trump policies potentially being inflationary. him theoretically being able to achieve what they haven't been able to achieve for a decade. >> i'm in the new normal. and the savings glut. and this supply glut or whatever you want to call this stuff. maybe it wasn't the new normal. maybe it was the new abnormal.

maybe if we do roll back some of this stuff, maybe it was the new abnormal. because to think we can't do it better than 2%. maybe. >> i'm sure you can bend the line a little bit. i do think, though, ultimately it can be between with yellen and if we do get this stuff. it will give them a lot of head room to try to get rates up to where they think they should be trying -- >> whatever they consider normal. >> and some news from the trump transition team. so it's been a week and a half. so this is early to actually i guess is it official though the president-elect apparently has extended an offer to senator jeff sessions to be attorney general. and he has accepted. that's according to nbc news. and that does mean i think reagan was the sixth week after he was elected. sixth week after he was elected before the first cabinet member was named. >> things moved slower back then. you sent letters to invite people to a job. >> talk about disarray.

do you believe anything you read or hear? i take everything with a grain of salt. >> how many names got floated out of the reagan transition camp in the first couple of weeks though. >> but if i believed everything i heard in the year leading up to the election and then i saw what actually happened election night and thought of everything that i was sure was a fact, how much of it was a fact? not very much. i think they go right back where they are. did you care he went to 21 without the press? >> i think it's an issue if he shakes the press pool on a regular basis. definitely. >> wouldn't you? >> i wouldn't run. >> nbc is reporting michael flynn has accepted the job to be national security adviser. there's two supposed acceptances. news just breaking again president-elect trump has offered the cia director position -- thinking about this last night watching. this guy's well thought of.

congressman mike pompeo from the state of kansas. and nbc confirms that pompeo has accepted that offer. all right. so we got -- do you think cia and national security, they are cabinet positions. >> pretty senior. if not cabinet departments. yeah. >> former republican presidential candidate mitt romney will meet with donald trump this weekend to discuss the secretary of state position. that is according to another report. romney was one of trump's biggest gop critics during the campaign. meantime newt gingrich told nbc news he will not be in trump's cabinet. instead choosing to focus on strategic planning for the emerging republican majority. stocking to watch this morning, abercrombie and fitch falling short on the top and bottom lines. same store sales falling more than expected. poor performance in seasonal categories and the overall challenges of the company's

rebranding effort. foot locker earnings topping estimates. increased store sales. that stock is off 2% in the extended hours trading. the buckle's earnings and revenues missed the mark. the same store sales dropped more than expected. that stock is off by 5.5%. gap's third quarter profit falling 18% and posting seventh straight quarter of declining skaels. it's still struggling to draw shoppers into stores. they plan to close 65 stores. originally thought they were only going to close 50 stores. ross stores beating the street on the top and bottom line. retailer also reporting same store sales increase by 7%. well above estimates. but it's giving cautious current quarter guidance amid what it calls promotional environment. that stock is higher by nearly 4%. williams-sonoma calling the sales environment less surgeon. that stock off almost 3%.

earlier this week we learned that warren buffett's berkshire hathaway is taking stake in four major airlines. that's a change for buffett who soured on them 30 years ago. >> he didn't give me his number. the manager's number. >> i called that one. when i used to get -- >> we're talking about wolfgang puck who was on about 20 minutes ago. >> people you're at the bar, someone giving their number. it never worked. i never got one. don carty the former chairman and ceo of amr corp. and american airlines. i'd get six dij et phone numbers. and you'd be like, wait a second. don, good to see you. can you believe that? is the industry that changed that warren buffett now wants to invest in it? can you go over the changes that you think make it much more attractive now to him? >> well, it's good to be with

you this morning. obviously warren buffett didn't consult with me but i think he has seen something change in the industry that's very substantial. that is restructuring that occurs as part of this consolidation has put the industry in a much better place with respect to the balance between supply and demand. and the airlines are benefitting from it. and generating the kind of cash flows that resulted from the kind of restructuring that occurred in the railroad industry years and years ago. obviously mr. buffett has done very well in the trail industry. i think he sees the change that's occurred in the airline industry and sees the same kind of opportunity for these companies to not only generate a considerable profitability, but considerable cash flow. >> they can screw this up, can't they, don? isn't that usually what happens when pendulums swing even with copper. wow, it's worth a lot. let's get a lot of new production online. then no, we've got too many production on.

doesn't it happen that way? that they find a way to screw it up? >> i think potentially the business remains cyclical. the question will be what happens as the economy shifts and demand drops. does supply still stay at the same level which inevitably would lead to an imbalance. i think with fewer competitors and the opportunity to be thoughtful about capacity, that's less likely to occur. we'll see what happens. but it's unlikely to happen i think in the short to medium term. if anything the economy still seems to have some legs to it. so i don't think we'll see that kind of slowdown. but the question you pose is a good one. what happens when the economy does slow down. these three or four major carriers that adjust capacity sufficiently to be able to remain profitable and continue to generate cash flow. much as the railroad industry has. slowed down tremendously from a year ago. but nonetheless, those companies

continue to generate profitability and cash flow. >> it's very important to the public that we have a viable industry. and it's not quite like power like a utility or something. but it does -- the public good depends on the airlines being in good shape, but also it depends on people being able to afford it. so i know that their profit margins aren't, you know, out of sight and for 20 years they made no money. but is the -- if the shareholders' gain of the airline do the consumers lose? does it shift too much to where the corporation and shareholders are doing better and they should be making less money and the kumpl should be getting a better deal? >> we've gone through a period of history where there were good deals. i think there will continue to be deals out there for consumers. there's always an airplane with

an empty seat. but i think there will be fewer airplanes with fewer empty seats. there'll be a little less opportunity to avail yourself of the heavily discounted fares. yes, there's been a shift, i think, from the consumer to the shareholder. but i think it's one that makes the industry more sustainable in the long run. >> don, what did you think of the move for united saying if you bought the cheapest fair class, you're not going to be allowed to bring on any more carryon? i think i get it. when you sit in the back of the plane, almost all the overhead is full when you're on. so it's an acknowledgment to check your bag. but does it inflame this have and have nots feeling in the world right now? >> i think to some degree it does. i grew up in e the industry kind of old school where everything was bundled and there was a price and you knew what to expect and you know what service level to expect. and i think we are seeing a pretty dramatic change. but it seems to be driven by the

market. i think people that really get a bargain to get on that airplane are going to come to understand that maybe not overnight that the consequence of that tremendous bargain, being able to take the family to disney world at a very inexpensive price comes with some consequence. and that consequence is you don't get quite the level of service. and you don't get quite the same level of accommodation and somebody pays a substantially higher fare. >> so the other thing, don, is that the number of carriers on different routes isn't consistent. some of them have a lot of competition. you know, the well traveled routes. you figure there's real free market competition going on there. based on the way the government gives slots and route okays in different airports, there's some less well traveled routes where it seems like airlines can charge whatever they want. is that just a cost to the consumer cost of doing business, cost of being able to go to

sioux city or something like that or a smaller airport? >> joe, i think that there are some routes where there isn't as much competition. for i think the reality of the business is they can shift assets quickly. they're going to have competition. the number of places where the industry is constrained tends to be limited and it tends to be focused on some very, very big metropolitan areas like new yorks and chicagos and los angeless. those markets generally have pretty good competition. i don't think the infrastructure is dramatically constraining competition. it is making new zri at places like los angeles and chicago and newark and kennedy a little more difficult. but those are the only places where the infrastructure is substantially constraining competition. >> all right. so when you say about and house

and stuff, is that dallas? where did that come from? >> i'm afraid that part of my history, joe. i grew up in canada. >> you don't say. which part? >> well, i grew up in montreal and toronto. i took on u.s. citizenship in the '80s. >> that's what i hear. you say you took it out. >> i'm an immigrant. >> you joined the party downstairs. >> that's right. >> don, thanks. see you later. >> thanks. good to be with you. coming up, why one investor is betting on a battered bank and chip maker. and we'll get top picks from a platinum portfolio member. stay tuned. you're watching "squawk box" on cnbc. a used car,

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. welcome back to "squawk box." several major appointments just out from the trump transition team. senator jeff sessions has accepted trump's offer to be the next attorney general. retired general michael flynn has accepted the offer to be trump's national security adviser. and congressman mike pompeo has accepted the offer to be the

next cia director. the director of the cia. i know we have a picture of him because we showed it once but you're looking at me. i wouldn't know where to start at the cia. >> you are no mike pompeo. >> no. i wouldn't want that responsibility either. so what happened to that picture? we had one. >> so some other possibly related we'll find out maybe, but a made in america iphone could be on its way. according to reports from the nikkei asian review, apple asked two key assemblers to look into making the phones in the united states. citing one source, a source, the newspaper said that foxcon was willing to comply but pegatron declined due to cost concerns. both companies make iphones in china. president-elect donald trump has been vocal about american companies not manufacturing in

america. specifically calling out apple. apple declined to comment on the report. let's take a look at today's platinum portfolio picks. sara's portfolio is up over 18% this year. coming in with a good head of steam looks like performancewise. we've seen all these shifts. maybe they were percolating before the election. but from big stocks to small stocks from growth stocks to value stocks. from supposedly safe stocks to cyclical ones. does it make sense? is it going to continue? >> wyes, it will continue. the reason why value is back is because we've seen the whole interest rate curve shift upward. it's happening in the u.s. u.s., uk, european union interest rates are all correlated. so what's happening in the u.s. is reflected abroad. this is great for banks.

industrials, those companies that are involved in the expansion in the emerging markets. they're all benefitting. and we own them at causeway. >> you own them because they were cheap? >> yes. not just but undervaluation, you learn this in your career is never enough. you have to have companies that are well managed, have excellent balance sheets. they were all sort of hiding, unpopular because investors until just the beginning of this year were preferring the low volatility, higher yield stocks. >> to the novice viewer, explain. why is it when rates start to rise, value more attractive and go go momentum stocks are less atrackive? >> value stocks may be becoming momentum stocks. but for that novice viewer i'd say the rate rise is anticipating a bit more in the way of economic vitality. that's what you need with the value stocks of today. value stocks since the global financial crisis since 2008 have

largely been cyclical stocks. sensitive to the global economic cycle. and those stocks have been left behind. they were risk averse. but now looks like the economic cycle and one of the big catalysts at least for the u.s. is perhaps lower corporate tax rates. that would be an enormous boost. >> one of the reasons you bought alphabet was it could grow into any sort of economic environment opposed to cyclical stocks. barclays seems like one of your picks that you dislike for lots of reasons. right? had. >> despised. it was trading at crisis levels we thought unjustifiably. then we had the brexit referendum vote in june. my colleagues who cover financials were convinced this stock had upside and we see with jess daly as the ceo, really excellent management. this is a company that is shedding unwanted businesses, improving their core bank has over 12% return on equity. slowly but surely getting

rerated. and now we're seeing it again as yield curves turn up. bank stocks like barclays are responding. >> and brexit's not a problem. >> well, we'll see. we will see. but we think the uk government will be rational. will ultimately end up where we began which is in a cooperative environment with the eu. and uk banks having consolidated will be beneficiaries. >> all right. sarah, thank you very much. appreciate your time. >> thank you. coming up, jobs, taxes, and growing the economy. we're going to talk to former cea chairman ed lazear about what president-elect trump should tackle. what he should tackle first once in office. stay tuned. you're watching "squawk box" on cnbc.

coming up, bill ackman with chipotle grill. the details next. before the break, the futures. this is a flat open. stay tuned. you're watching cnbc. now what? how will you keep up with the new demands of today's digital economy? the fact is: some believe they won't need a traditional bank down the road, so at cognizant, we're helping banking and financial services companies think digital, be untraditional, and reimagine what the bank of the future can be.

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♪ welcome back to "squawk box." here's what's making head lines this morning. investor bill ackman nearing an agreement with chipotle mexican grill. that would give him representation on the company's board. that's according to "the wall street journal." paper says the agreement could come soon although such a deal could fall apart. fiat chrysler recalling in the u.s. trying to locate 30 that could

be subject to fuel leaks. there are no injuries or accidents related to the problem. coca-cola selling its stake in its china bottling operations for about $1 billion. coke had owned about a third of its bottling operations in that country. wants to focus on making concentrate for its beverages which is a more profitable business. all right. several major appointments just out from the trump administration. or trump transition team. it's not quite an administration yet. retired general michael flynn has accepted the offer to be national security adviser. and mike pompeo accepts the offer to be the next cia director. and jeff sessions has accepted the offer to be the next attorney general. joining us now former attorney general alberto gonzalez. it is good to be with you today, mr. attorney general. welcome. >> good morning. >> senator sessions has been -- actually has been a judge and i

think has been on that side of things before he was a senator. are you -- is this a good pick in your view? >> well, ultimately that'll be up to the senate judiciary committee and then the entire senate of course as to whether or not senator sessions is qualified. what i can say -- and i know there'll be some things in his background that have been cause for concern and those will be evaluated and i'm not going to speak to that, but i can say as attorney general i met with him as a member of the judiciary committee. he was fair. he was tough, but he was always fair. and i know that, you know, you're worried about the chances of confirmation. i happen to believe, though, that unlike judges which receive lifetime appointments, a president is entitled to his team by winning the election. i think donald trump should be given deference by the senate in terms of who he should have on

his team. and so i would hope the senate takes that into consideration in evaluating all the issues surrounding senator sessions. >> right. i think i saw some of your comments about candidate trump. you weren't necessarily enthralled. what do you make of how things are going so far and the people he surrounded himself with and that are being considered for important jobs? >> well, a lot of it of course is sort of speculation. release trials and names of that sort of nature. i know there's been a lot of stories about disarray. listen, this is a -- there's a lot going on right now. and i don't view this as unlike any other transition. certainly it's not an unlikely transition that existed in 2000 when president obama came in to the florida recount. you're going to have a lot of people coming and going, names being floated, and names being knocked down. so i don't view this as anything

unusual. i think it's business as usual in terms of the transition. and just trying to get the team together. it's a difficult process. it's an exciting time. if you work in the transition, oh, my gosh. i mean, it's so exciting to be part of an effort to shape the future of our country. all the people involved in this are rightly excited. there's a lot of work to be done. i think everyone has done the best to try to help president-elect trump put together his team. yet we all have to remember he won the election and the people have said his ideas are the ones they believe in. he wants that team, they'll help him promote his agenda. >> what did you make of all the controversy surrounding the current attorney general loretta lynch with everything we've seen in the past three, four, five months? >> it's hard to -- really hard to comment on her performance because really i mean she was

sort of missing in action. actually in connection with the e-mail investigation. it's one of the things that i have found most puzzling. you know, you would have expected when making his announcement initially about his recommendation, i think i would have expected -- i certainly would have wanted to be standing next to the fbi director with a unified front and have the fbi director present his recommendation. and then to say to the american people and the world, yes, we received a recommendation, we looked at the evidence as a prosecutor and we have concluded that we're not going to move forward with the prosecution. that is the job of the prosecutor. what jim comey did, that's not the job of the fbi director. so the fact that the attorney general has sort of been missing in action with respect to the investigation to me has been puzzling and interesting and maybe she felt that after the

tarmac incident with bill clinton earlier in the summer that she should recuse herself. but if that's the case, then she should have formally recused herself and then the deputy attorney general should have stepped in. i don't know. it's been puzzling. i don't know what i don't know because i don't know what's going on within the department of justice fop me it's been unusual. >> let me get right to it. if you are the chief law enforcement individual in the country, at this point do you think that hillary clinton -- that this needs to continue and that the attorney general, it would be his duty to take this as far as it goes from here on out? and do you think that president obama will pardon hillary clinton? >> i have no idea what president obama is going to do in terms of a pardon. and quite frankly, hillary clinton may say i don't want a pardon. i've done nothing wrong. i don't want a pardon. she may take that position.

i don't know. with respect to what should happen going forward, that'll be up to the attorney general. if jeff sessions is fortunate enough to be confirmed, i'm assuming -- it's certainly within his prerogative to take the information gathered by the fbi and make his own assessment. i don't know whether an assessment was made by the attorney general loretta lynch. maybe it was and she agreed. but i don't know that to be the case. there would be nothing that prevents the new administration from looking at the evidence and making their own determination to move forward. i am troubled by the notion that from the white house that would be a direction to do anything relating to an investigation that is up to the attorney

general whether or not to do a further investigation. and then whether to prosecute or not. it makes it a little worried this notion that the white house is directing the department of justice to investigate direct in the department of justice to prosecute. that's not the way this thing works. >> all right. mr. attorney general, we appreciate your doing this for us so quickly and giving us your comments. we appreciate it. thank you. >> you bet. bye-bye. now to the coming trump administration and the economy. joining us now hoover institutional senior fellow ed lazear. he's the former counsel of economics at the white house. good to have you here. >> good to be here. >> i see you got up early so we appreciate that. so there's all this talk about who's going to be the treasury secretary. you've been at the white house and seen treasury secretaries come and go. you have any idea of who he should pick or what the qualities of that person should be? >> well, i certainly wouldn't suggest any specific names to

the president-elect. that's obviously up to him to put his team together as you just talked about. but a good model i think that we've used in the past is someone from wall street. the person that was my colleague at the white house i thought did an excellent job was hank paulson. before him steve reedman. before him bob ruben. all those people were fine treasury secretaries that did come from wall street n. that does seem to be a pretty good model. i would say president-elect ought to be looking pretty seriously in that direction. >> so steven mnucin worked at goldman sachs. wall street can handle another treasury secretary. but considering the totality of this campaign, can that happen? >> i don't know about goldman sachs per se. but wall street is the place i would look to simply because the treasury secretary has to deal

so closely with them. there are other -- obviously there are other candidates people that have been mentioned that are not goldman sachs affiliated. you're right. when i say we've looked in the past and had a successful model, that doesn't mean you've got to get somebody from goldman sachs. but the point is you want someone who knows what's going on on the street. you want someone who's very closely connected to the capital markets. and i think that's better generally than using a political person, someone who's been in congress. there are some very fine candidates from congress as well that could do an adequate and even better than adequate job. but the problem is that they don't have the connections with the institutions that are actually doing the work out there. i tend to prefer someone who's coming from the private sector for that. again, you know, that's the president-elect's decision. obviously he can make it work in a number of different ways. >> you see janet yellen yesterday testifying on capitol hill? >> i actually just came in from tokyo, to be honest. so i missed that.

>> let me give you a highlight. she was asked if for any reason she may not serve out her full term. and she said not any that i could think of. what was implicit in there was the criticism from donald trump about her tenure. is that throwing down the gauntlet? what should the president be doing thinking about the independence of the fed on the one hand and then what has been tremendous criticism of the fed for keeping interest rating too low for too long according to to some people? >> right. okay. those are two separate points. in terms of independence of the fed, i think the president really needs to respect that. i know when i served at the white house, we were very cautious to make sure that we didn't step on the toes of the fed. and that was a time when interaction between the fed and the white house and treasury was much more important because we were in the middle of a financial crisis. even then you need to give the fed its independence. and i think, you know, for the

most part the obama administration has followed that rule as well. i hope president trump will do that. so independence is extremely important. in terms of what the fed's policy should be, i think we're all in some sense regretting that we're in this position right now where the fed is so far behind the curve that at the peak of a business cycle and close to zero interest rates. that's completely backwards. we're out of sync right now. i think janet and all of the people looking at the fed probably wish that we weren't there. but that's where wither. the question is what do we do going forward. i would be surprised if the fed doesn't aggressively move to get rates back to a more normal position and do it pretty soon. >> and almost catch up with the markets. ed, glad to have you on. you got up early for us, thank you. >> thank you. up next, we're learning more about who's in and who's out of donald trump's cabinet in waiting. next we'll talk to governor mike

leavitt about the president-elect's transition team. "squawk box" will be right back.

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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. the trump transition team continues to assemble the president-elect's future cabinet. joining us now former utah governor mike levitt.

he advised both sides as the partnership for public service transition task force since spring. governor, good to see you. >> thank you. nice to be with you. >> you also have seen all of the -- i guess the scuttlebutt about the disarray. i saw it presented on another network. they went over eight of the past presidents. maybe even more. and the first week after the election win, a cabinet member was named. and this is still early. a week and a half is earlier than just about every other administration. the reagan administration was six weeks before there was a cabinet member named. does it look like it's disarray to you at this point? >> as best i can tell, they're very much on schedule. there's a lot to do. and so you have to hit the ground quickly. but frankly, this transitioning from politics to governing, there's always just a little bit of gear grinding as you make that shift. and i think they seem to be making it.

and they're making progress swiftly. >> so where should we start? we've got some news today. michael flynn, congressman pompeo, and jeff sessions a senator as attorney general. care to comment on any of those individually or we can then move on to the bigger ones like state and some of those other ones that we want to talk about. >> well, i think the order in which this is done is significant and should be of interest. typically the new president needs to choose a chief of staff and some key white house personnel very early because they need now to build out a team of about 110 people over the next 77 days. so that work will carry on somewhat independent of the president-elect. the second task is typically to build the national security team. why? because it's the most important job of a transition nap is to prepare to resume responsibility for the security of the united states.

and so the appointment of the national security adviser, the head of the cia, very important appointment. i think will then begin to see other members of the cabinet as they roll forward. probably won't be until early december if things stay as they are. we've already seen the attorney general at least it appears that appointment will be made. but i think that's a good indication that they're on track at least in the development of the cabinet. there are many other things that have to happen in the transition. but on that measure, they seem to be doing well. >> how about mitt romney coming into town? when you first -- do you remember where you were when you first saw that? did you think, whoa? or that's business as usual? you know, it's washington and never be surprised by anything, i guess. >> no. i actually stepped off an international airplane and saw it on a tv monitor and had that exact response. wow, that would be interesting. i mean, the truth is it would be a master stroke for donald trump. i don't know whether he'll offer

it or mitt romney will accept it, but it would reach out to an entire range of people in the republican party but more importantly i think it would signal the world that he's very serious about foreign policy. that's been an area where people have worried. that he didn't have experience. i think one of the things that mitt romney has done is demonstrated that he is adept in understanding the cross currents of the world. so it would be a great political move. i think it would begin to heal an important divide in the republican party and give him a strong team. whether it will be offered or whether it will be accepted, i know not. >> and it's on both sides, governor. you know, for those people that were just furious with romney, it's amazing how quickly they said, wow, he's -- suddenly he was a very talented guy and we know he was. he probably would have been a great president. and then there's the never trumpers that thought he was doing the right thing. and they're also saying, wow,

look at this. this is pretty amazing. so it would be a lot of -- i think it would heal a lot of rifts and certainly show a united republican party. that's for sure. >> indeed it would. may i say, i think that is actually a function of a transition. there are four or five things you need to accomplish. and one is it's a period to heal and to reach out to people who may not have been part of your so-called coalition. and to begin to bring them in. and i'm pleased to see whether he offers that role to him or not. i'm pleased to see them sit down and clear the air and begin to move forward. >> all right, governor. we appreciate it. thank you. good to see hhs, weren't you, a one point? >> yes, i did. i was in bush 43, it was a terrific experience. and i look with interest to see who has the pleasure of occupying that role. >> okay.

great. see you later. thanks, governor. >> dealing with health care reform. when we return, jim cramer is going to join us live from the new york stock exchange. we'll get he has take on today's top stories, take a look at dow futures right now. they've been up and down, around flat, mixed right now. don't move. hey, jesse.

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let's get down to the new york stock exchange where jim cramer joins us now. all said and done yesterday, another up day even though the euro's 1.06, jim. give me a number on the euro or for the dollar index where people just say, okay, this is just -- this is just going to be devastating. >> i don't know. it's kind of a vote we have for potential growth. my old partner from larry kudlow used to talk about king dollar, it was something we didn't like for a while when it came to earnings translations but i think we should start liking by the fact the rest of the world must be jealous about the kind of growth we're going to have next year. that's what it's about. it's about a belief. >> earlier, we can't return to a former time but i was thinking, wow, what if our domestic economy was really consumers making things, we were doing things and where it became less important, you know, whether the

dollar was strong. because it was strong because we're doing stuff here, we're consuming stuff here. can we ever do that again? or the genie's out of the bottle. >> i don't know. my friend jim stewart had a piece this morning on the cover of "new york times," by the way "new york times" not necessarily failing. just put that on the record. about what could happen. about what we could build. about the next hoover dams, about the things that could happen in this country. you wouldn't be caring about the dollar. you would just be caring about how many people are being put to work in jobs that are not necessarily where you need to work in a solar panel factory or a degree at stanford. real jobs the u.s. can do and i think the strong dollar has much more to do with an ethos than it does with people in pajamas trading currency. >> you know, jim, i got to like -- i'm not sure what i need. i have a whole new way of thinking then, because we've got some things that we've been sort of just drilled into us for a while. and maybe it's not everything we think is true isn't necessarily true. >> well, maybe it's not as much of a zero sum game.

maybe it's not that we're just another pathetic, you know, fifth rate country that is being held hostage by other countries. maybe that's not going to happen anymore. >> how do you know they're wearing pajamas? >> well, that's what they do because they're trading overnight. >> is that what you do? >> no, i actually get a couple hours sleep as i wait for bran don cooks to get a touchdown so i know i'm going to win in fantasy football. i felt bad for drew brees. he was so tired. >> i just had a vision of you with one of those caps on and a full on -- i don't know. >> i used to trade in feet pajamas in the old days, but that's the carter's, carter's trades well, children's place trades well here, must sell to those guys. >> i have a onesie, i tuck in the shirt because i don't want it riding up on me. >> would it be a shocker rather than come up with the usual nonsense? >> it would be.

pendulum swing and it's hard for us to bring it back. maybe we will. >> yes, it is. >> see you in a couple minutes. coming up on today's top stories, "squawk box" will be right back.

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weak traffic and poor performance in the overall challenges of the company's rebranding effort. a final check on the markets for today and for this show i plan on doing this again next week in checking on it. i hope it's not my final check on the markets. and it really wasn't worth it, was it, for me to go into all of this? anyway, s&p up less than 0.25 point. the dow indicated up a little over 1 point. there's oil, which is also a little bit quiet today, not a lot going on. mike -- >> russell 2000 small caps at a ten-day win streak. >> all-time high? >> yeah. >> i'll see you next week, right? >> you'll see me at 11:00 if you're watching. >> oh. >> yeah, i'll be here one day next week. >> i'll be reporting overseas next week. >> our international correspondent. >> yeah.

>> where? >> in paris. >> nice. thank you. make sure you join us on monday. "squawk on the street" is next. ♪ good morning. welcome to "squawk on the street." i'm david faber along with jim cramer. we are live from the new york stock exchange. carl quintanilla has the day off. let's give you a look at futures as we get started on the last trading day of the week. you can see joe just told you of course he went through it