and "squawk box" begins right now. >> live from new york where business never sleeps, this is "squawk box." >> that's when the one in my fridge expires. good morning, welcome to "squawk box" on cnbc. i'm kelly evans along with joe kernan. the s&p 500 applied to open up four points. the dow up 21 and the nasdaq 11 higher. so modest gains as you can see in a short trading week. what about the ten-year note? this one has been the story. when we left friday, it was in the range of 2.35. 2.33. the two-year, 1.068%. looking at green arrows across the board, the sang high is up.

the highest since january. so catching up to the u.s. rally. european markets largely the same, except for italy do down .75%. i wonder if that is referendum related. spain is fractionally higher. >> good to have you here. what did we decide last time? you weren't smart enough to be a nurse so you were just a geek, what was all that? because you are smart. >> dorky. >> dorky. not nerdy, nerdy implies -- >> too cool. >> i'll tell you what got my attention after meeting over the weekend, i'm worried about the emerging markets. i'm worried about if this continues with the dollar, they pay us back in dollars. they are not going to be able to do that. >> they don't have the reserves for it. >> if we are a nationalist place where we really have to worry about just domestic consumption, we better do pretty well here.

because the rest of the world -- >> we'll have to drag everybody else along with us. by the way, the risk is financial market like the thai crash and all the others. we have a blow up in the hedge fund. that's the problem with the stronger dollar. >> i saw something about the ring ets problem. can't you get some kind of cream for that? >> it's called devaluation. >> if i get ringetts, watch out. it can jump. we were rallying earlier for wti crude, 1.73%. we are going into this economic rebound given what happened with interest rates. why wasn't oil cracking a high?

>> they have to compete with the massively stronger dollar. and oil is still wrapping, that is kind of interesting. >> you're not nerdy, you're smart, you're good. >> michelle is like, i don't know how to respond to that. >> we'll take a quick look at the dollar getting problematic. but people worry if we go to 1.05 or 1.04 -- >> i remember when i started to watch it was at 1.40. >> this referendum, do you have any idea which way it will go? >> let's not pretend we do because we have seen this time and time again. it's pulling a little bit ahead. >> this is what you would think would happen if you believe in the brexit and trump effect. >> in a week you're the italian people that fwlooef the sentiment expressed by the companies, which is pay attention to us and our concerns. but then why wouldn't you want to make a statement on the international stage? >> right.

and i often talk about, if you can't -- if you can't do well in italy with their climate and the beauty of -- all you need is tourism. they do make it pretty nicely. >> italy is just how productive they are. >> it's the greatest place on earth. >> i've been there once but it is beautiful. >> it's unbelievable. all right. >> i've been to rome, which is stunning. >> all right. how about you? anything to put on this? >> i have done venice in two days. >> you are not trying to do venice in the shortest period of time. >> there's a lot of other people doing venice. that's the only problem with venice. i'm afraid it will sink from people doing venice at one time. >> two days in venice. you walk around, you can't get lost after the first day. >> although it is possible to

get lost. because of all those -- you have to start remembering certain little stores and cafes. anyway, we'll take a quick look at gold, which i missed it at the price to buy some. gold is a beautiful thing to touch and handle. it went up to over 1,300. it's back to where i was going to buy it, but now i'm not that anxious. i need some financial experts here to talk about that. oh, i'm sorry, i do! i do! here you are. >> let's get to some headlines, symantec is buying lifelock for $2.3 billion. the deal provides protection services at $20 a share, it's a

premium to friday's close price with 4 million subscriber. in other merger news, boral is buying headwaters for more than $1.8 billion. it will pay $24.25 a share in cash. that acquisition doubles the size of boral's u.s. business. and wells fargo is facing tighter controls. a bank regulator ruling the lender must seek prior approval before naming new leadership. the office of the controller of the currency also reversed an earlier position allowing it to pull back pay of former wells executives. mortgage rates hitting the highest levels since july of 2015. the average touching 4.25%. that's more than half a percent higher from the average on election day.

you don't remember -- >> i got something in the threes. protesters were clashing with police last night gathering on highway 1806 just north of the main protest camp. the protesters say police fired tear gas and rubber bullets on them. and firefighters intentionally sprayed them with water cannons in sub-freezing temps. but a spokesperson for the fire department said the firefighters were using hoses to put out fires set by protesters. the sheriff's office describes the clash as a riot prompted by very aggressive activists. in last week, gas prices came down just ahead of the thanksgiving weekend, which is a very busy driving period. the average price fell 6 cents to 2.20 a gallon. analysts call it seasonal weakness and demand. refiners are increasing splice after wrapping up the fall

maintenance projects. >> it's amazing to me that the price is higher than last year. it feels like it's been falling so much. airfare is up 21%. stocks to watch, novartis is buying selexys pharmaceutical for $665 million. they are looking to fight blood diseases. and glaxosmithkline is looking to seek approval for a new lung drug. and blackstone is looking to buy anbang insurance. their investors include ge in 2014. this will be japan's biggest property sale since the financial crisis.

and yet another blackstone sale to the chinese here. and facebook is going to expand reportedly its staff in the uk. media reports say the social network plans to increase staffing levels by 50% or 500 people and move to a new headquarters in london. where supposedly there's going to be a lot of cheap office space, but you're someone moving to london in spite of the price. we'll see what happens. you're worried about that. you're worried about brexit? >> worried about what? >> the financial firms moving their headquarters, abandoning buildings -- >> it's like the europeans are more anti-financial markets than the british, so why would a bank other than because it has to -- >> this is a non-conventional wisdom that i like. >> it's probably wrong. >> they are not going to be at the end of the q with the trump administration. they will be at the front of the q. we made our own trade deal with the uk. >> i understand inflation is a risk for the british and their

cost of living is a problem for a lot of people. government spending is big in terms of the budget, but they just got a massively cheaper currency. and they want to be a global trading center, so i think it's too early. half a billion dollars -- >> it would be cool to have a house where we are going to do some renovations that cost $500 million. that's a nice spread. >> you don't even have to move. >> but that must be pretty nice, to fix it up, you can spend -- >> or it should be pretty nice and it's not. if it's going to take half a billion. >> i think the garden behind it is pretty cool. is wilfred -- he'll be here at 7:00, right? >> i'm sure he knows. >> you know what? he can get in, he can get himself in there. >> this will be a big test for him. intel is reportedly planning to cut investment in wearables. intel could have an unannounced

fitness watch but it is expected to never make it to retailers. and apple is replacing batteries for those who have the unintended shut down on the iphone 6. the company notes this is not a safety issue. and it only affects devices within a limited serial number range. they were all manufactured last fall. and now for a look at the markets, we are joined by the chief investment strategist along with michelle girard, the chief u.s. managing director at rbs. thank you for sitting here patiently while we got through all of that news. >> we learned a lot. i love that. >> would you invest there? what do you think is happening? >> i remember back in '99 and 2000 when they were one of the last countries to convert their lira bonds into europe. and they were so frantic to find people who knew how to manage

equiti equities. they were saying come on over and run a portfolio. and the italians typically are pretty good investors at turns. so we'll see what happens with that. >> did you -- i mean, were you interviewing? >> it was a very awkward moment. i was actually there -- >> you sound like an american basketball player that finally can't play and they go over to play in italy. so you were going to manage money there? do you speak italian? [ speaking italian ] >> that's all i've got. it's sad. this is a true story. i was in a meeting. we were talking about u.s. strategy. and the portfio manager looks to me and says, would you like to come over here to run a large capital business? >> would it be based in rome? >> milan. >> and then you come back to play for the spurs. >> what about you, michelle?

italy is more in focus this week, especially after we saw the numbers out of france yesterday. >> i have to say, i think that political risk in the eurozone is going to be front and center in terms of investors' concerns as we move into 2017. we have italy, but then even looking ahead to the big elections in france and in germany, i think that that's going to continue to sort of overhang the markets as you look ahead. we're -- in the wake of the trump victory, we have been focused on the implications of all of that here, but als the implications for, again, follow-up to brexit and trump and what that means. will the eurozone suffer another crisis if we continue to see the same similar type of outcome? so i think that -- as we know, the polls, these polls are showing a little bit more toward the no, but nobody believes the polls. so no one is going to believe anything that they are hearing about the outcome of the big votes. so that will continue to be an uncertainty overhanging the

markets. >> i think one of the things you have to think about is the case for excess volatility on a near-term basis. volatility has been excessively low for the last 10 to 15 years. we just published the forecast for 2017 and are looking at a target for the s&p 500. but more importantly, for the next three to five years, our primary investing themes are dividend growth. we believe that dividend growth is going to be an asset allocation sleeve going forward in terms of equity dividend growth and u.s. capital value. >> no matter what happens with rates? >> yeah, because the more simplistic your yield strategy, the more it underperforms. in a rising environment we have shown dividend growth companies, those have dividend yield that can continue to build and grow dividend, outperform the market in general because it's a total growth proposal. think about the trillions of dollars sitting in fixed income. fixed income for all intensive purposes is a fallacy. we need to provide income for our clients. and we believe the best way to

do that is through a dividend growth strategy from u.s. companies. >> what do you think of interest rates, michelle? >> i think they are headed higher. obviously, we are on a different interest rate path or are going to be post the election with -- i do believe that the individuals that trump will be appointing to the board are going to be of a whole different elk than the crew that we've got now. but some of the things you all talked about, our concern in the near term, you are talking about the economy and markets that have been living with interest rates that i think have been too low for too long. and the adjustment up as we're seeing happen right now, to the expectation of, we're not necessarily going to be at these low levels for the next three years, but we could be looking at a very different interest rate outlook. that adjustment up as we see this price in with the dollar and the rates, you don't know if that is going to smoke something out, you know? again, this is a market that has

sort of been on a drip of -- and now that adjustment is -- just exactly as you mentioned, whether it is yen or china, i mean, there are risks as you reprice for a market that has been held artificially too low for too long. >> that's not very bullish. at 7% or 8%. are you assuming that we have already gotten ahead of ourselves based on hoping for these policies? we already got only some of that, so there's only 7% to 8% left? there are some people who unleash some of the animal spirits, they get interest rates more normalized, would you be wrong because you're too low at 23.50 or is the risk on the downside? >> as we like to say in canada, 100%. we provided three cases, a bull case, a base case and a bear case. the bull case is 2500. we think this market can get going.

unfortunately, we think on the near-term basis, we are robbing peter to pay paul a little bit. >> the dollar. >> the dollar. the other thing has been the slowest grind in economic history in terms of michelle using a great analogy like the drip, the morphine drip. we need to jump start the economy. we need to think different for the stimulus. the stimulus trump is starting is literally jump-starting the economy. we have not seen the fiscal policy, it's all been monetary policy. we need to sell america again and start to build confidence in america again. we think the fiscal policy with with respect to doing some of the things he says he's going to do, tax cut and regulation means more business expense. i think that will be really, really key. >> it's all about shifting, right? the whole policy, less monetary to more fiscal. and in the u.s. it's going to happen at a breakneck speed. but that transition and handoff is potentially going to be bumpy. >> do you see these guys? this is like a who's who, do you

see these guys? kudlow, wilber ross. put those guys in. you say the crew, you say the crew now -- >> i thought for the current crew. >> you didn't have an adjective for the crew. >> not that i was willing to say it. >> that's a 3000 s&p crew. >> under promise, over deliver. >> thank you. coming up, the top global stories including the surprise result in the french primary over the weekend. but first, as we head to break, here's a look back at this date in history.

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welcome back to "squawk box." while paying attention to french news over the weekend, nicolas sarkozy came in third and is retiring again. what happened to nicolas sarkozy? >> he almost read the tea leaves right. >> almost. le pen will be on and we'll talk about it.

the former prime minister francois fillon was the winner. and political analysts say the winner will likely face the leader of the far right of the presidency. michelle caruso-cabrera sits down with marine le pen later today at 7:30 eastern. i think there are too many things going on here. because to the elites in france, she's very similar to donald trump. >> and also for everybody who is so granulely accepting the outcome. brexit did it first. this is not happening in isolation. >> but she's subject to the same phobias. >> they have struggled to -- people are willing to give her the benefit of the doubt. >> but in france. >> yeah. in other political news out

of europe, germany's chancellor angela merkel announces she's run for a fourth term in office. she told a meeting of her christian democratic union she expects this to be her toughest campaign to date. general elections are expected in germany next year. >> that one -- i don't know how to handicap that one. she bounced off her lows, obviously, the immigration issues, but -- >> if anything surfaces with them before that election, you have the alternative for the party sitting out there. i don't know, i don't know enough about the coalition to the german market. >> if you had to bet -- >> because there's nobody else that you see if not her then who? but i would like to think that she did the right thing. she's a son of an anglican minister. it would be nice to see that rewarded. >> in germany the european union was supposed to dampen the effects of -- instead they get

the weak currency. so they have reason to want to stay to keep the jury-rigged system together. >> but the disprerersion there, germany's economy continues to do well while the rest struggle. >> it's expensive. >> then get the cheaper currency. back here, u.s.-president-elect trump is continuing to make his picks. we are live outside trump tower, some people probably wish he would stay in bedminster instead of coming back to fifth avenue. >> reporter: it would certainly make life easier for the retailers here, but news emerging over the weekend, mr. trump met last week with three executives who are his business partners in india. they are building a trump-branded complex in mumbai. now the trump organization saying this was not a formal meeting, but one of the

executives telling the indian press over the weekend they discussed expanding their business relationship with mr. trump now that he's president. now, this followed that meeting also last week between mr. trump and shinzo abe, the prime minister of japan. ivanka trump was also at the meeting raising questions. remember, the family promised once the children took over the question, they would have no involvement in government and they would not discuss politics with their father. and then we had a report with their father in "the washington post" also over the weekend detailing how the trump hotel in d.c. invited over 100 representatives of foreign embassies to use the hotel when overseas dignitaries are in town. one asian diplomat telling "the post," quote, it would be rude to tell the president you're staying at a competing hotel. we had common cause in more than a dozen groups on friday signing a letter saying that the president should put his private company into a trust that's truly run by an independent trustee, not the family. or that he should sell the

company. now, we also had congresswoman clark proposing a bill that said that all presidents in the future including mr. trump should follow these rules. in other words, put it truly into a blind trust or sell the company. now, of course, the trump organization saying, quote, this is a top priority at the organization. and the structure that is ultimately selected will comply with all applicable rules and regulations. the problem, of course, is that there really are no rules and regulations about the president owning and operating a company from the white house. guys, back to you. >> right. we went from feast or famine. zero private sector experience to this huge octopus of private interests. it's bizarre. one end to the other. unbelievable. i don't know what -- go ahead. >> reporter: we want people from the private sector in government. so we're going to confront this. the challenge is that in the

past, in the past, all these -- when a congressional person or presidential candidate had assets, they were typically liquid and could put them in a blind trust. this is an ill-liquid privately held company. so we'll be in unchartered waters like a lot of the trump presidency. and i think it's better to sort it out now so we do pave the way for more people in the private sector to get into government, but we have never had this before. >> not hearing a lot about how the perception of trump's wealth was kind of an illusion and not really a good businessman, but take a look at trump tower. then look at bedminster, did you see the layout out there? i think i've done all right, you know, what i mean? i'm not a huge raving private sector success, but i have a house and stuff. i don't own trump tower or don't have bedminster or a place in scotland or mara lago, he's done okay? am i right or am i right? the wealth reporter, there's some wealth there, isn't there,

robert? >> reporter: it's between $3 and $10 billion of wealth. some say, trump, just sell it. these are a lot of prized they have to fi assets. that if you sold in a fire-sale, this is his life's work. if you're telling him to sell this house, he's just not going to get a fair price. so those to say, just sell it and liquidate it, they don't understand -- selling bedminster, selling mara lago and trump tower in a year-long period is not feasible. >> you have to decide, either he's a success in business or he was just a big scammer, trump university bankrupt casino guy. we have to make up our mind. the left has to figure this out, which way they want to characterize it. i guess that depends on where they can get the money. robert, thanks. coming up, why an italian referendum has the markets on edge globally? we'll talk about the stakes and the expectations. first, heading to break, here's a look at last week's s&p 500's winners and losers.

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good morning. welcome back to "squawk box" on cnbc. the futures are continuing to add some gains. the s&p 500 is up 5, the dow up 28 and nasdaq up 14. and symantec is buying lifelock

for $2.3 billion. they are paying $24 per share. lifelock has more than 4 million subscribers. and it was a magical weekend at the movies as the "harry potter" spinoff dominated the country. oh, that is what this is. "fantastic beasts" took in an estimated $75 million in the u.s. and canada. i thought it was the sequel to that other thing, that guy that was -- >> i'm surprised it did 75, that's a pretty good number. >> 75 is good. what's that other guy who wrote about the beasts -- i never can remember. anyway, the film also collected $143 million overseas. the movie is about a secret group of wizards in 1920s new york. where are the beasts? >> "where the wild things are"?

that's right, they did that movie out of it. right, right, right. >> did you see it? >> no. >> brutal. >> i heard it was bleak. if you went to bed early like some of us, chart toppers like nicki minaj and drake won. selena gomez won favorite female artists. she got emotional talking about body image in her acceptance speech. and adam levine performed with kendrick lamar. and arianna grande walked away with artist of the year. >> what network does that? >> i don't know. >> just not enough music awards. >> vmas, amas, grammys. landon dowdy is joining us with a look at the consumer staples sector this morning. hi, landon. >> hi, good monday morning to

you. consumer staples have taken a turn for the worst in the second half of 2016. and the sector is down marginally compared to the overall s&p up 7% year to indict. while staples tend to underperform during periods of rate increases, there are bright spots. gugenheim partners says they have been benefiting from ways sectors haven't. who is benefiting? sysco and tyson up 30%. they are posting a 10% in the latest earnings report. and archer daniels midland up 18%. but who are the losers year to date? beauty products company coty up 26% as investors are concerned that the recently purchased p&g plans need more spending to turn them around. kroger is down 20% on severe food deflation for about ten

straight months now. back over to you, kelly. landon, thank you so much. >> and back to global political news, polls say the uptick in anti-establishment sentiment may spell doom for matteo renzi. if he loses the vote on constitutional reform, he'll resign. for more, we'll bring in fredericko sante. good to see you. in terms of where we stand right now, i know it looks like a pretty solid yes for a while, and now the no's have taken over. what do you think the real numbers are right now in terms of whether this passes or not? >> the polls are fairly unanimous in suggesting that there's a lead over the yes vote, implying a defeat by the government. we are focusing less on the polls that haven't been spectacular as of late.

but also looking at other factors in addition to just voting intentions, they all seem to support the same outcome, at least for the time being. so, for example, most voters still perceive the vote to be primarily for or against the government. which is problematic in the context where approval ratings for the government are near historic lows since renzi has taken office. this is the perception that only the ruling party is supporting going for yes whereas a lot of the parties aren't. and when looking at the polls and the way the vote breaks down by party, it doesn't seem like the government is making end roads with opposition voters, which it would need to do in order to secure a victory. furthermore, another important indicator is trackers of online opinions, so things like social media, for example, which has proven to be a better indicator of election results. most recently the u.s. election. and we tend to favor the note overwhelmingly.

>> if we're polling for italy economically, and we want them to succeed, what should we be hoping for? >> yeah, well, there is a lot at stake. i'm not going to argue that the referendum poses an immediate threat to the eurozone membership, which is the elephant in the room, as always, but there's the stakes quite high. this says they will simply make or break the anti-government. he's pledging to resign in the wake of a defeat. the question is whether he will or not, but on balance, it's likely a defeat by the government will lead to a government collapse. which has investors worried they could overturn the stability in italy. this will be the fourth change in government is just over four years. this could, in turn, be poorly or cause the reform process to stall entirely, which is another source for concern. and the slow, ongoing process and restructuring of the banking

system would also probably suffer. now, this is the prevailing view amongst investors now when it has been priced in for the bond yields as the polls that point more and more to a victory. i think the reality is more nuance that you see momentum considerably already as they lose political capital. and whether or not the referendum passes, the chances that the government could undertake far reaching reform of the banking system that would effectively involve sitting in the public banks like spain that are slim. on top of that, i think fears that this could lead to elections that could propel the populist skeptic five-star movement to power is overplayed. i don't expect this to lead to early elections, we could see a care taking government. >> frederico, thank you for your

perspective. coming up, mortgage rates hit the lowest rate since july. stay tuned, you're watching "squawk box" on cnbc.

welcome back to "squawk box" on cnbc. i'm joe kernan along with kelly evans. and joining us for the rest of the show is wilfred frost. >> good morning, guys. >> we were talking about something that you probably could have added. >> i tried to get here in time for that one, i couldn't make it. >> the one thing, we went too long on the interview so i couldn't ask him, but if we were to see the reform efforts in italy actually slow down. would we be able to did certain something slower than it actually is? could you actually tell if it slowed down from where it is now? >> well, you're right. this pace of reform has been pretty slow anyway. so you can understand why renzi put this to a vote. the interesting thing to point out with this is it doesn't meetly spark a non-eu government in place, but it means we get the election early next year. the thing that is really surprising is all three of the

main parties now, if they are anti-europe, which is why if we fear early next year, there's a bigger chance of getting a le pen outcome. >> some of the things he wants to do which are part of the referendum are the needed reforms, so it's a different kind, not just a straight-up election. in a way he's trying to get the people's go-ahead to make the same kind of reforms. you would imagine the anti-reform party would make it. >> competely correct, but this has become a referendum. and he's trying to make reforms that almost all the people as you correctly said would applaud, but the other parties, whether it is the five-star movement or whatever, they have made it into a referendum on slow growth at the moment, which we blame on europe. >> i mean, with the currency -- i want to -- i want what germany has. and they won't get what germany has as long as they are in the

eu. >> the big question for the eurozone members is how much pain does it take to leave and start with a new currency? essentially it would default on your debt because you would then be saying to creditors, you will pay them in the new currency. and the question is then, does that lead to a five-year deep depression? >> i've thought about that before. >> but it's a tough question. >> we'll talk about housing. time now for the executive edge this morning, we are talking housing. rating are creeping up and now above 4% for a 30-year mortgage. mark flemming is here, the chief economist at first american. i was just reading here, a dear john letter in the post over the weekend, it says, i had an ek krushuatingly hard time getting an interest rate before the election, and now i'm having a hard time on the close. is this affecting the market or not? >> sure. we have seen the rate increase of over 50 basis points on the mortgage. i think trump may have trumped yellen in this case because we expected yellen to pull the rates up in december.

that probably will still happen, but this is having a much bigger impact on the housing market than we were expecting. >> we have had guests argue that this has no impact whatsoever. if you go from 3.5% to 4%, that's basically not the biggest -- that's not the main way people are assessing these days the ability and cost of a home. >> that's right. it's still amazingly expensive. a 4-plus percent mortgage is historically low. but giving that person on the margin, yes, some people are priced out of the market. we look a year ahead and say, about 200,000 home sales a year won't happen because of the rate increase. now, there are other things to push-up demand, millenials coming into the market and things like that. and there's a benefit, the house price growth will slow by a percent and a half. so that creates affordability even though rates have gone up. we'll have both happening. in addition, why rates are going up is in large part due to an expectation of better economic

growth, which might have increased wage growth, which is beneficial. >> we talked about aig getting into the space this morning, and the banks are making the mortgages. it's like at least the majority, at least 50% or more are coming from the non-bank sectors. how is that affecting us if people can see in a foreign property the ability to get one? >> well, part of it is it takes a while to get a mortgage today. that's something that may not be necessarily better than before, maybe more so today, but whether it is a not-bank or bank, it will still channel through the same government-insured lending where most everything goes. and i think the challenge really is that, you know, it takes a lot of documentation and time. and people miss that mark. i mean, i was actually on twitter with a colleague the other day who said, thank goodness, i got all of my buyers to lock in rates before the election. and that was all very wise moves. >> we know the block chain will

make this smoother. >> yeah, right. >> but they are saying, why do you have to wait and pay for someone to check a title? there's like a million fees in the process to draw this whole thing out. can technology fix this problem? >> i think there's a lot more technology that can be applied here. real estate lending is one of the markets where we have seen some of the least innovation. that's partly -- there's not going to be an uber for real estate, but can we do more? in fact, the industry is very much talking about now the morph-in tech. it's gone through working through so much of the regulation and compliance and sort of now making that pivot to more on how we make a better loan product, particularly because millenials who are going to be the dominant source of demand will want that. >> mark flemming, thank you for joining us this morning. >> thank you. still to come, gold bouncing off five-month lows this morning. we'll talk the dollar and precious metals coming up. don't go anywhere.

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gold prices, we dropped about it earlier, dropping 6% before the election. roy, historically, gold is hard

to figure out. we understand it's an inflation hedge and we understand in times of uncertainty so i can always make the case it should go up or down based on a lot of recent events. and the narrative about trump and what he could be for global stability, gold should be soaring right now, with his finger on the button, so to speech, and instead interest rates may be headed on the rise and gold goes down. is it that simple? >> no, and there's a lot of misinformation when it comes to gold. we live in a service-oriented economy. you have to take a step back. gold is different from almost everything else, and it's one large inventory or stock, and when you look at the gold price, it's more measuring other things

than being measured and if we look at something like currency, you can't measure gold in one currency, you have to take a step back and take a look at all the currencies. it's akin to me giving you the weather in one city. if we look at gold over the last seven days, we have seen it decline in u.s. dollar terms but many currencies around the world declined much more against the u.s. dollar than gold. and let's say the turkish or british pound, gold is at or near an all-time high, and also if you take a look at something like gold and trade-weighted dollars -- >> great, you have a bunch of your clients buying gold, and they said i bought it at 1,300,

and now it's at 1,200, and your client says, i have bought this -- hey, sorry. >> that's the issue with floating currencies. >> let's bring it home to people thinking about buying it. the night of the election, one sold all of his gold, why? are y are you bullish on bold? >> it's natural money. if you take a look at, say, what we are seeing right now in markets, we are seeing a lot of contradictory pricing, and so i can understand why people are excited and the animal instincts are back, we have for the first time a government that is going to implement a lot of pro growth policies, and we have to be

realistic with inflation, and we will have growth and not inflation and rates are rising but somehow will not impact $100 trillion -- >> if your argument is just gold is a better value, than why do you think it's priced in against other currencies, and it doesn't really matter what it's worth today? >> you can reconcile it's money not in the physics but in the math, and these currencies are just declining against gold over time. when you said earlier when i started working here the euro was the same cross as today. why is that after so long it's the same cross? because they fluctuate against each other. >> 2,000 people are saying it's

going to 5,000 based on that, and it's at 1,200. coming up. cme group can help you navigate risks and capture opportunities. we enable you to reach global markets and drive forward with broader possibilities. cme group: how the world advances.

crude climbs, and we tackle what you need to watch on the holiday-shortened week. donald trump is hiring. meetings over the weekend with key political people. and kellyanne conway joins us, and plus the democrats play defense. congressman tim ryan joins us to talk leadership on the left. and we sit down with the leader of france's far right national front, marine le pen.

welcome back to "squawk box" here on cnbc. the futures at this hour are continuing to start the many mornings, even though from all-time highs are close, with some strength. the s&p up about 5, and the nasdaq up 12.5 points. and we have crude up 1.9% at 46.56. the dollar is okay today. it's not sending shock waves through in markets, and the euro stabilized a little bit and the pound has been around 124. >> having hit a 14-year high on friday. >> true. >> strong dollar.

here's what is making headlines this morning, wells fargo finds itself under new restrictions this morning. on friday there was new rules imposed that are required for executive business decisions, and it reverses parts of the settlement agreement originally stuck in september over the bank sales practices. and mortgage rates are now at their highest since 2015. and analyst say that 4% mark is a mental barrier for consumers that became close to a low interest rate environment. gas, average price at $2.25 a gall gallon. some political news from overseas. an unexpected outcome in the french primary race, ahead of next year's election.

sarkozy is out, and there will be a runoff for the party, and the winner will likely face le pen, and we will have sit down with her and have more on that in a little bit. angela merkel announcing she will run for a fourth term in office, and she said in a meeting this expect this to be her toughest campaign to date. check out the european markets at this hour. they have turned around and are in the green except for italy. >> and the polls -- not that we should trust polls.

>> it would be a larger no if they are estimating the populous. >> yeah, you could spread it the other way and say -- >> you know what i'm saying. >> i know what you are saying. >> these guys looked around and said we have to figure out how to do the polls that are more accurate, and they were steut al yes and it was like -- >> your point is the anti-establishment pressure within a poll is understated either way. >> if it was a 4-point yes -- so many people, so many polls, she had the four or five-point margin. >> and now you can't drive across the contphaupbt --

>> from key west florida to the canadian border at port hill, idaho. >> you go west of there and it's a different story. president-elect trump meeting with potential cabinet members over the weekend. mitt romney met privately with the president-elect for an hour, and during the campaign romney called trump a fraud. >> we had a far-reaching conversation with regards to the various theaters in the world where there are the interests of the united states with significance, and we discussed those ear kwrauz aareas, and a in depth discussion in the time we had and appreciate the chance to speak with the president-elect, and look forward to the coming

administration, and thank you. >> romney did not answer questions but whether he would consider joining the trump administration, the president-elect met with rudy guiliani, and christie arrived at the golf course after guiliani, and meetings will continue at trump tower here in new york. >> we had a far-reaching conversation in the time we had. >> good, kelly. that's nice. i did not know you had been out there. >> you have to be ready on the show. >> better be safe than sorry. >> i think you were channeling the president-elect, or was that -- >> i am ron burgundy. >> that was a sound bite. >> it was a written version.

>> good. >> people that wanted to read it, i should just read it. >> kellyanne conway -- >> i wonder if she has given trump. >> i don't know which one you are supposed to do if you are a good person. >> probably both. >> hard to forget, especially the speech. meantime, nancy pelosi is facing a challenge from her position, and it's coming from our next guest, tim ryan, who is joining us from capitol hill. you are a brave man, congressman, and what kind of support do you think you have here? >> i have been making calls all weekend, and there are people in the caucus that know we need a change and the real question is how bad does it have to get, and we have lost 68 seats since

2010, so how bad does it have to get? do we have to lose 80 seats? 90 seats? what's the number. like you were saying you could drive across the country and not hit a democratic state, so i am saying it's time for a change and message and an economic message that resinates with all americans. >> are you being asked by your colleagues to do this, or did you just feel as though, hey, nobody somebody is doing this and i have to step up? >> there were a lot of people that talked about doing something and nobody was doing it and i felt obligated after watching what happened in places like ohio, and seeing droves of working class democrats, black, white, brown, gay, straight, middle class, poor, going to vote for donald trump, and when that happens we are doing something terribly wrong, and i don't blame them but i blame us, and we didn't focus on the

issues they need us to talk about, and people want middle class jobs and not minimum wage jobs and we have all areas of the economy that we can help grow additive manufacturing, and advanced manufacturing and driving investments into places like youngstown or coal country. >> congressman, you are from god's country, ohio, and -- >> yes, sir. >> and right out of the box to me it would seem to be way ahead of the game compared to a different type of democratic party in ohio versus san francisco, for example, where speaker -- not speaker, but where congresswoman pelosi is found. it's always going to be speaker ryan, if you were to take over again. too many ryans. you have thought about that?

>> there's a lot of happy people in ireland if that's the case. >> do you khaeuf at what some of the far left members of your party, at the way they approach things, do you shrink away from that and think that was not the best way, and the whole center of the party moved to the left, and do you agree with that? >> to me it's not about where you stand on the issues, and clearly i am a progressive, too, on a lot of the issues but the question is do we talk to just sub groups of people because of the color or ethnic group or religion, and do we have a message we could take anywhere in the country. and in many instances, we talk to working class people and it's not just working class white people and there was an article about african-americans in milwaukee that were not inspired to go and vote because we did

not have the message that provides opportunity for every american, and we have to talk to everybody's need to do better, and everybody's hopes and dreams, and i think there are opportunities for us and sectors of the economy like advanced manufacturing where we can make things again, and focus on how we could make these minimum wage jobs better jobs or drive investments into the higher wage jobs that people want. they need to see us on their side and frankly they don't see us on their side, and a lot don't feel like they have a home in the democratic party and that's heartbreaking for those of us that worked hard within the party to try and take care of those people and provide opportunity for them. >> do you feel things could get worse for your party than get

better? if a trump presidency in the republican house does spur growth, that's eating the democrat's lunch. >> if something positive is going to happen we need to be part of the solution, and i read about his infrastructure program and the devil will be in the details there, and you know, i am going get up in his face as a leader and fight him if he will try to throw people off of health care, and at the end of the day, our focus needs to be on working class families. they felt alienated from our party and to me that's heartbreaking. i will say, we have a lot of work to do in this country, and i think we need to come together to some extent to try and make that happen. >> congressman, just finally you

are challenging congresswoman pelosi, of course, and is it her fault, or should you not be blaming the candidate at the top of the ticket? >> there's lot of blame to go around and i think we need to take responsibility for where we are as a party, and i don't hang what happened in 2016 around pelosi's neck, and she's an amazing woman. >> your chances are slim. a lot of people say you want to get your name out there and maybe run for governor of ohio, and she's going to be mad. >> probably. >> is this personal or do you think you have a chance? >> as i said before, i love nancy pelosi, and i have more respect for her than you could imagine, and i was a foot soldier for her when we took the

house back in 2006, and the question is moving forward. who could we have as a leader that can go into the 40 congressional districts in every corner of the state that we need our leader to go into and pull votes in the democratic column for us. i think we have to turn the page and i think we have to start new. this is what the american people have asked for. again, i think we are in denial as a party. how big does our -- or how small does our majority have to begin, and we have to wake up and the american people need a strong democratic party and we are not giving them what we need right now. >> congressman, thank you for joining us this morning. >> he says he loves nancy pelosi, and that word is reciprocated this morning. >> i think it's respect. is that a problem, you can't have anybody run? >> i think she has so many votes lined up already.

>> all the fund-raising she has done -- >> her leadership is not in jeopardy, but this kind of stuff is the beginnings of leadership being challenged. she is 76, and looks like about 50, and i have run into her a few times, and she's amazing. it has been 1920 since the legislators -- >> since it has been this out of whack, yeah. >> and the republican party is supposed to be in shambles. >> and here are the futures on this holiday-shortened week. later, donald trump's campaign manager, kellyanne conway, on president-elect's cabinet strategy. whether it's bringing cutting-edge wifi to 35,000 fans...

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it's a shortened trading week, and investors will be looking for clues about what the president-elect's administration will do once he takes office. joining us now is a strategist and chief market strategist at russell investment. good morning to you both.

if i start with you, jim, you think the rally initiated before the election and it's not about the election but other factors? >> i do, and we have more under performance by defensive stock, and it was going on beginning in the summer and accelerating in the fall ahead of the election, and inflation expectations were climbing prior to the trump election as well, and what is driving it is through the second quarter we had real gdp growth and that jumped in the third quarter, and the number for the fourth quarter is 3.6%, and now in the third quarter we look stronger for the fourth quarter, and growth abroad, china and uk reports are turning out better than expected.

i think the economic momentum and earnings momentum was turning up prior to the trump election. >> not just the stronger dollar but the stronger yields, we were talking about how various mortgage rates are above 4%, and does it inhibit the growth people are hopeful to see? >> i think the trends can continue to be. brexit was really the first domino to fall in the more anti-globalization field but inflation data, economic data, and the fed speak that we have been getting, and i think the electi election amplified that, and no valuations have been a challenge come into 2016, and u.s. equities base, you don't want to panic but pull back and trim and valuations are more friendly elsewhere on the planet, and the

dollar is something that will have to be considered and all the action is in the bond market and currency market. >> you are not concerned about the political votes. >> political headlines can create opportunities. it's not exactly headlined in my opinion in italy, and we have seen opportunities coming out of brexit and italy for a pull back, and if it were to happen it would be an opportunity to get in. and the cycle in europe is improving, and so as you get the divergence, be selective and be active. >> is that something you agree with at the moment? >> i do, i agree with stephen. i think those markets are under owned and they are better relative values and have younger earning cycles than the more

mature cycles in the united states, and will have longer policy support than the united states will, and i personally think that -- i think the big wildcard in 2017, i think the dollar will go down, not up. and if you look back historically, everybody thinks the dollar is going to go up because of the fed raising rates but there has been five major increases in the fund rates since the 1970s, and in every one of them the dollar came down, and what is going higher is inflation expectations and as they go north, that's a deterrent and a negative for the u.s. dollar. i think that will be the surprise and the big kicker that will do a lot of things, and it will force inflation up higher here inactivity, and also boost international returns more in the coming year. >> a quick comment. i think the debate in the fed

went from 1 to 2 and 2 will be the baseline. so a lot of this is priced in, but you also look at some of the disinflationary forces coming off of it that are not u.s. oriented, china, and there's a lot of deflation and oil being one that is contributing to this. coming up, france's first. we'll hear from the leader of the far right national front, marine le pen right here on cnbc. we'll be right back. attention: are you eligible for medicare? the medicare enrollment deadline is just a few weeks away. changes to medicare plans could impact your healthcare costs.

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we can help you reach your goals. call us or your advisor t. rowe price. invest with confidence. nasdaq's tech run-up, and the companies on his radar. that's today on cnbc. still to come, kellyanne conway joins us after the break. check out the futures which, have been stronger for most of the session, about where they were up, 27 on the dow. "squawk box" will be right back. make healthcare more personal with patient-centric, digital innovations; from self-monitoring devices that can interpret personal data and enable targeted care, to cloud platforms that invite providers to collaborate with the patients they serve. that's why over 90% of the top 25 global pharmaceutical companies are turning to cognizant.

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♪ ♪ >> welcome back to "squawk box." here are the stories front and center for us this morning. apple is offering free replacement batteries to certain of its iphone success model uses. a limited number of those phones are experiencing unexpected shutdowns and there's no safety issue involved. and samsung's name is still held

in high regard despite the smart 7 phones. and their customers are still loyal to the brand as apple customers are to theirs. and the market says the euro will tumble, and it's down 4% against the dollar in the last two weeks. and then tighter controls after the lender must seek prior approval before naming new leadership, and there was an earlier position allowing it to pull back pay. >> how many times -- yeah, i would be hiding if i were any pollster right now, i wouldn't put out any polls because i

wouldn't want anybody mentioning my name. >> straight after brexit, everybody was like, pollsters, this was be the end of their industry, and you need something to go off of. >> if you don't have them, what do you do? we just need 50 points is well within the margin, and we need a 50-point margin of error. if something has a probability of 60%, then it's either 110% or 10% is the margin. >> another thing wrong over the weekend, was the french campaign. >> they will have to call and say hit 6. >> of all the things inside psychology, that's the closest

thing, and even that part we now know is really? you do 1,500 people and the margin of error is 3%. really? >> and one of the greatest century -- when there was a landline, you could get them on the phone. and this was a high-scoring affair. washington wins 42-24, and it's good to see the redskins are having a good year. the packers have now given up 30 or more points in the last four games, losing all four and currently falling out of playoff of convention. giants won, and it's interesting what the big story this year, obviously, it's dallas. there he is. dan snyder, he gets into those games. don't try to talk to him. it was a magical weekend at the movies as the harry potter

spin off took in an estimated $75 million in u.s. and in canada, and it collected 1$143 million overseas. and there's a secret group of wizards in the 1920s in new york. and then novartis to by selexys. and aig is looking to move into residential loans, and the financial times shows the move would give more financial backing to $2 trillion market as banks pulled back since the financial prices.

and then blackstone in talks to china's anbang insurance. it would be the biggest property sale since the crisis. and president-elect continues to fill his crisis, a -- fill his cabinet. joining us is kellyanne conway. what do we call you now that the election is over? >> some believe it's not over. they are still fighting the right war. >> there will be songs about you. >> oh, no. >> do you know what you are going to do? >> i don't want to talk about me. he has been talking to literally

dozens of people these last two people, and heads of state and very distinguished men and women of all back grounds and a diverse group of people with diverse people, and not everybody is seeking a cabinet position but want to give their advice. >> last night the rumor was there was going to be a late afternoon or early evening news about one of the appointees, and it's fun to watch this because people are wondering about state and treasury. >> sure, and we are right on time. president obama did not announce -- we didn't even know who the president was in 2012, so we are ahead of that. >> nobody started before the third week. >> yes. >> you have seen all of them? >> i have seen on another network, they have had the -- >> yeah, the chart. and that makes sense, because you can't rush these decisions and we have a long short list for each positions and the man

who is going to be the next president of the united states, donald trump, has spent a life and career of listening and learning. and it's a sign of a great leader that you want to make the decision yourself. >> including former rivals like mitt romney on the list, and does that surprise you? >> i think it was gracious of governor romney to come and see donald trump, and i am told he came all the way from hawaii, and they had a fabulous conversation, and they are two very successful job creators and businessmen that have the distinction of being successful, and much of what governor romney said when he ran against obama has been true around the world and about the economy, but, look, it's great, and he also --

president-elect trump is taking calls from jeb bush, and john kasich, and -- >> he called? >> yes, and a week ago ted cruz was in the tower with him. i think they all love their country and want to meet with him. >> bush, the first bush did two in the second week. carter didn't do any until the fifth week. >> but there was not twitter, and impatient media. >> going out and seeing what i got wrong and -- >> it's said you will not be

al allowed normalize him, and you will stick to all of the abnormal things about him. >> guess who won't care? the american people that voted him in, and they love his plan to create 25 million jobs over ten years, and to unleash energy, shell, coal, natural gas, and to do the infrastructure that has many democrats excited. >> i have a question for you and it's about polling which we were just discussing. and for the kind of poling you do inside the campaign, when your polls better? did they tell you we know we have the edge, and we are ignoring everything out everybody is quoting, or were your internal polls, did they also not capture the strength of this -- >> no, our internal polls and

modeling, which is separate, were much more on the mark. if you need prove, see where we sent our two greatest assets, trump and pence. we kept going back to pennsylvania. >> was it the modeling or the polling? >> a combination of both. >> what was the edge? >> we don't go into polling with the conclusion and search of evidence that she will win, so how do we ask questions about this year? forget the horse race number. the questions were all about temperament, and nobody talked about experience as an important qualification, which senator obama had little of it and it was about making history and charis charisma. we did not arrogantly think who the electorate would be before it formed itself, and we saw clinton was struggling to hold together the obama coalition

which were a lot of minority voters and millennials, and we saw, what i talked about for months, the quote undercover trump voter, not people that were too shy to say it, but people that did not look like trump voters, and -- >> did you want -- when you saw the polling and the way it looked so consistent, did your campaign have a sense of getting out there and correct the narrative or were you glad to have the false narrative run? >> both. i was on the tv daily, and i was being cheerful and critical of what i saw, and you are thinking the 54% approval rating is somehow transferable to hillary clinton and it's not. in the end, the polling statistics that never budged were the americans that said this is a different election and i want to take it in a different

election, and 70% of americans did not think clinton was trustworthy. >> people said romney is there to talk, and you are quoted as saying he is underactive consideration -- >> did i say that or somebody else? >> i think governor pence said that. >> does he want it? is it a question of whether he gets it offered to him? >> you have to ask governor romney if he wants it, but we have a long short list for secretary of state and these other positions, we just do. you heard corker from tennessee, and obviously mayor guiliani is considered for that position. >> and i heard diamond wants it and the president-elect wants him and he may not want it. do you know which is -- >> one of those is true.

>> have they spoken personally on the phone, the two of them? >> i am not sure of that, so i can't comment on that. and i also know he spent there other two names alone, a budget expert in the congress, and steve mnuchin, also a finance campaign chairman, and it shows how diverse and the back grounds and the individuals are that are being interviewed. >> can i ask about his priorities in terms of international interests, and who is on the list? >> that's a long list and i don't think it would surprise you, the g8 countries, and many other heads of state called him on the phone. we are sensitive to the fact that he is not yet the president

and the commander-in-chief and we have a president that is on his last foreign tour, visit, and so we are sensitive to the deference to give to the president in that regard, but the number of people who called from around the globe and who have called president-elect trump in the last two weeks is staggering and numerous. >> does he have to be outside the oval office while it's redecorat redecorated? >> nobody asked me about decorating, i can assure you that, and it would be like asking me about skiing. >> will he run the country from new york? >> i think he will run the country as president wherever he is. >> the criticism, the old white guy, racism, will -- i guess this is politics and politics is war and it's amazing to see some of the charges -- >> one is, he is met with a

diverse group, a diverse gender, race, ethnicity, background, just this weekend we had michelle ray, and bob johnson and robert johnson from bet, and the list goes on and on, and i don't worry about people who have this formed narrative that falls on its face, and we are imperative, and impervious to naysayers in trump world. you have to be qualified and capable to do the job. that's criteria number one. it's not how do i make this look good to america, that will happen, and it's the same thing when we get to supreme court nominees, can you do the job on day one? are you a conservative in the mold of scalia, which president-elect trump has made clear is his basis.

>> you have to weird love and hate relationship between schumer and president-elect, and he said he will work together and he will want a mainstream candidate, and they are going to filibuster the supreme court -- >> we are ready for it. this country not only elected a republican, a conservative president and advisory president, joe, they elected a republican house and senate. we won michigan. if we are going to go to grand rapids michigan and get back at 2:30 in the morning, we better have won michigan. >> the fact is that, you know, he has the right to form his cabinet as he wants and it's going to be an impressive collection of men and women and those that are not in the cabinet and have come to give him advice and counsel, that

will reflect as well, and that's what he does, a problem solver and fixer and he's a great list junior and learner. >> always positive. thank you. >> thank you. and when we return, speaking to the national leader in front in france, and marine le pen next, and we will hear from the french candidate that can be winner of the anti-establishment wave herself. "squawk box" will be right back.

welcome back to "squawk box." she called herself, ma'amam frexit. michelle joins us from paris with the main takeaways. good morning, michelle. >> reporter: good morning. donald trump's victory has caused a firestorm here in france. it has led political observers to believe that a previously fringe candidate is very much the frontrunner, marine le pen, she wants france to abandon the

euro and go back to the frank and she is thrilled with donald trump's victory. >> translator: i am very happy about the election of donald trump. the choice of the american people was courageous and advantageous and i think the united states will once again regain its former image in the world, which had become very damaged especially for the administration in which hillary clinton worked. the united states cannot have the image of warmongerers, and so the united states has once again regained an image as an organization of peace is beneficial for us all. >> when donald trump won, the french establishment woke up and seemed frightened and said, wow, marine le pen can win in france. do you think trump's win brings good things for you? >> caller: i think that the

elites lived too long among themselves. we are in a world where globalization which is an ideology has been forgotten and put aside the people's interests and aspirations and dreams and they acted like carnivores that used the world to enrich only themselves and whether it's the election of donald trump or brexit, they realize the people stopped listening to them and people want to determine their futures and regain control of their destiny and that panics them because they are losing the power they had given themselves, so yes, in these conditions, if the french people, too, wish to regain their independence and wish to regain control of their country and wish to reinforce the elements of security, the borders and rule of law and economic patriotism, then i will be elected president. >> reporter: we already see

anti-establishment affects here and there was a republican primary here in france, and nicholas sarkozy, the polls say he would be the winner and he came in third. another victim of his anti-establishment wave. the winner, interestingly, guys, a very pro free-market guy that insulted civil servants that went on strike and survived, and seems very unfrench. we are seeing changes here just like in the united states. >> michelle, talk us through quickly some of the things marine le pen stands for. there are some similarities with the anti-establishment nature with donald trump and brexit as well, but also stock policy differences? >> reporter: they are both similar on immigration, on controlling borders and who should be allowed in the country, that's very, very similar. and her economic program is slightly muddled.

she is very french and she believes there should be a lot of state intervention into the economy. she's very comfortable with that. she said she is pro business but when i asked her specifically what is the best way to divide the nation's resources, the market or government, and she said both. if you look actually within the economic plan on her party, they talk about price controls on things like bread and flour, basic food tphnecessities, so i not a free market. >> thank you, michelle. the really fascinating thing is whether she can unite some of the left as well. if the system means it will go down to two, probably her and the republicans, and then can she win some of the socialists voters? >> trump did. >> trump did. crazy. >> will the french voters really

go right? >> that would be an extraordinary thing. >> and it's synonymous with being french. >> it's tough because there will be narrowing down to two people, and it's hard for her to attract the traditional left. >> that man right there is coming up. like education will shrink. in just 8 years, interest on the debt will be our third largest federal program. bad news for small businesses. the good news? there's still time for a solution. ask the candidates for a plan to secure our future. whether it's connecting one of or bringing wifi to 65,000 fans. campuses. businesses count on communication, and communication counts on centurylink.

coming up, bob johnson joins us to talk politics and business. it's the return of the former

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futures pointing to a higher yield on wall street.

trump in transition. the president-elect meeting with potential cabinet picks over the weekend with less than two months to go before he heads to the oval office. and it has been 40 years since rocky balance kwrae pwabr screen. >> announcer: live from the most powerful city in the world, this is "squawk box." welcome back to "squawk box" here on cnbc. i am joe kernen. we will hear from our guest in a bit, and we are less than 90 minutes away from the opening bell on wall street and the futures have been stuck there for most of the morning, up 26 indicated on the dow, and 13 on the nasdaq. checking out markets in europe, initially down now and they are up modestly in italy and spain,

and the 10-year made nice moves in yield and now it stabilized at 2.3% on the 10-year. stanley fischer about to deliver a speech. steve joins us with some of the highlights. >> good morning. stan fischer is making positive comments about the potential for fiscal policy changes coming out of washington and points the federal reserve is close to being the only game in town when it helps to helping the economy, and it can help confront some of i think so's challenges and fiscal policies can promote faster growth and he mentioned infrastructure spending and better education and looser regulations. he said by raising equilibrium interest rates, the economy and the federal reserve will have to contend more than is necessary with the effective lauer bound on interest rates and that means the fed can raise rates more

than people expect right now and get all of the zero lower bound, and he said lower rates make the economy more vulnerable to shocks and can threaten financial stability, and he points out the reach for a yield. on the broader economy, he says it's performing, quote, reasonably well and points out the job gains from been robust, and then he goes on to say, this has not been a happy recovery, and there are low rates and sluggish productivity. on the recent interest rates, which joe just read being at 3.2%, and stan fischer says they may be low, but they are low after the recent rise. a little room before the fed chair, janet yellen at the joint economic committee made more cautious comments about physical

policy, and stan fischer is more positive about the fiscal side taking the reigns for the economy. >> great stuff and thank you for that. among today's top stories, the price of oil climbing and expectations of an output deal, and opec leaders approved a plan to cut out paot, and vladimir putin said he saw no obstacle to the country agreeing to freeze its oil out paot. wells fargo facing tighter controls. a bank regulator ruled the lenneder must seek prior approval. tomorrow look for october existing home sales, and wednesday weekly jobless claims a day early, and new home sales and the final read on november consumer sentiment. and the markets will be open for

half day on friday, so closing well will be a couple hours early. now to politics. president-elect trump working to put his cabinet together with about two months to go until he takes office, and eamon joins us now. >> reporter: they gave me the weekend off, joe, and i got here in trump tower this morning. so donald trump got here last night after being in new jersey at the trump national golf club. over the weekend he was hosting a round robin, a very busy weekend with notable figures and some of the people he met with included governor mitt romney, and billionaire wilber ross, and robert johnson the b.e.t. founder, and ari emanuel, a hollywood super agent, a democrat, well connected so questions there as to why donald

trump may be reaching out beyond to just the republican party. when you take a look at the weekend donald trump had it was busy in terms of the meetings but also in terms of some of the twitter controversies, and trump feuding over twitter with the cast of "saturday night live," he didn't like "saturday night live" this weekend, and attracting attention to a meeting with india, and questions about trump's business srepbchures and political life can co-exists at the same time, and pence said he will be able to keep those separate. here's what he had to say. >> the president-elect of the united states, donald trump, is completely focused on the peoples' business, and i can assure the public they will have the proper separation from their

business enterprise. >> reporter: joe, some questions now over whether we are going to see major names announced today. and the indications from the trump camp, we might see names rolled out today, and we are here at trump tower to keep an eye on it. we will let you know if there are any announcements. >> ari's head is longer now and looks better. i guess i should not care. it could have been my money, and dollars are fundable. that could have been -- i paid for his ticket flying back for him to go see trump -- i guess that's all right. there could be a worse use -- >> i thought you meant trump's tickets. >> no, ari. not specifically my money, and it's in one big pot, and i didn't get a call.

we have a lot of off camera conversations with my good friend, bob johnson, founder of rlj company, and also a cnbc contributor. who called whom? give me the sequence of events, because we just had a conversation about a week and a half ago, and i don't remember if it was before the election or after the election, and i think it was before, wasn't it? >> yeah, it was before the election. by the way, good morning to you guys. yeah, it was before the election, joe. >> how did it happen? did you get a call? did you reach out to him? do you feel comfortable telling us how it all came down, your meeting out there? >> you know how these things happen, a friend calls a friend and they say, you know, bob, president-elect trump would like to meet with you to talk about how he can better reach out to the african-american community, and i said, that's a positive sign, so i accepted the

invitation. we had a great chat and the most important thing that came out of the meeting, he and i agreed, and if you recall in the election, he asked what do african-americans have to lose, and i said president-elect trump, the real question is what do they have to gain by your presidency, and he said you are right, we should talk aspirational, and we should talk about things you believe are important for african-americans and i want to have that dialogue and that's what we talked about. >> we have had our conversations over the years, and you are a private sector guy, and unbelievable intrapreneur in companies that you have built and you certainly like when the environment is better for a private sector. would you characterize your meeting with donald trump, were you expressing concerns or was there a degree of wanting to work together to try and really

get this economy back over 3% again? >> joe, it was exactly about that. we talked about things, what i call business solutions and social problems. i didn't get into the political stuff they talk about. we talked about repatriation, and if you are going to repay that back to the u.s., why not have that as a program where tax incentives go to companies that invest capital in the urban markets or with fund managers that know how to invest with those markets, and we talked about the retirement system where billions are being leaked out, where if you had a labor department support on a auto portability, which means your 401(k) follows you where you go and you are not tempted to cash out and lose the retirement upside as well as pay taxes on it, and we talked about, for

example, encouraging companies to hire more minorities to do business with more minority companies, a variation of the rooney rule, and that focuses on making sure that minorities for jobs and suppliers are hired. president-elect trump is a business guy, and i think he's going to tilt towards finding the way to use fiscal policy and his own efforts and knowledge as a business guy to move the economy forward for jobs and economic growth. >> these are hyperpartisan times, obviously, and i have seen articles being written that there are certain members of the political class, and they are using the word normalized for trump and they don't want anybody to normalize trump, so acknowledging he is president and going to see him, i can imagine you can come under criticism, and as far as some of

the protests and what is behind the protest, whether it's the racist accusations to the people that he is appointing or whatever, what would you say in this atmosphere right now after meeting with him? is there a lot to fear for minorities and immigrants and everything else? >> you know, joe, i have known president-elect trump for sometime and i knew him when i was running b.e.t. and had seen him at a number of events and it's my conclusion that we can find common ground with the trump administration. i know i had a great dialogue with him, with his son-in-law, jared, and i know reince priebus, so my approach to these guys is, look, i don't look at you as enemies and i don't look at you as necessarily friends, and i look at you on behalf of african-americans, we have permanent interests. that doesn't mean that one day

we won't support you or one day we will support you and that's where the african-american voter should be. this is something that a member of the congressman from missouri said when the congressional black caucus was founded, and black america should have no permanent friends or enemies, just permanent interests. with the trump administration, that's the philosophy we should take and we should not lock ourselves in one side or the other, and i'm a democrat, and i say it with all due respect to the democratic party and the republican party, this country needs somebody that is going to lead it not somebody that is going to force us to choose sides. if donald trump believes he should be talking about what black americans have to gain, and as president obama said and hillary clinton said, let's give him a shot and give him the benefit of the doubt and see if we can find common ground. >> that's an up lifting and

positive view of things. what do you think of the names being suggested of the remaining post? what would you like to see happen? >> i don't know much about the inside of baseball republican party politics and personalities, so i tend to stay away from that. i am a ceo, and to me all decisions emanate from the top. whoever trump puts in, defense, secretary of state, national security, they are going to follow his orders and if he takes the position that his policies move the country one way or the other, the buck stops with him. i am not worried about his cabinet, i am worried about what he is going to do. mine was a face-to-face conversation, because he's going to be the president for the next four years so whatever comes out of the white house starts with trump. >> it had nothing to do with you joining the administration in

any way? is there any chance you will be asked? a zero chance? greater than zero or zero that you would be part of the administration? >> i got a great day job. i got a lot of great day jobs, and there's no way -- i never worked for the government and never wanted to work for the government. >> zero? >> zero -- what is below zero? sub zero that i will be a government official or cabinet official. always an honor to be thought of, but no way, jose. >> good to see you. and we appreciate you coming on today, and, you know, we will see you again soon, hopefully, and we will keep monitoring what is happening. >> there's an inauguration coming up. >> certainly is. >> we have to get back to that. bob, the elitist still rule, and i don't think they have

cancelled it. >> the jets are warmed up. we're going. >> i may need a ride back. maybe not. >> all right. still to come on "squawk box," futures right now, as we go to break, a little positive, and the last week we saw 2% gain on the s&p. and we'll get our guest host to take on the markets next. "squawk box" will be back in a couple minutes.

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welcome back to "squawk box." among today's top stories, tyson foods out with earning results, reporting a quarterly profit of 96 cents per share, well below estimates. and tyson also announced the ceo will step down and be replaced by the president, tom hayes. life lock is being acquired by symantec for $2.3 billion in

cash. they are jumping 14% in the pre- market. and nobody is quite sure what is coming next with president-elect trump. and let's talk to our guest, barry. good to see you. >> great to be here. >> what to make of the landscape. the reagan analogy has been made, and markets up 8% after he got elected in that week, and then fell 5% over two years, and then inflation was crazy, and then they were gaining their footing higher, and have we gone too fast with the market prices? >> no, i went into the election long, and under the expectation like everybody else, hillary clinton would win and health

care was overdone. the back drop is the market has done nothing for two years. we did have a significant slowdown in capital spending, first as a consequence of the energy, a spillover from the energy affect and then election years it runs below trend, and this is what happened in 2012, capital spending turned negative -- >> because people are saying i want to know what happens? >> it's not actually supposed to go negative, unless you are going into a recession, and of course we are going to remember 2013 was a tremendous year, and you had earnings growth go from a very robust initial recovery and it went to zero in the third quarter of 2012 and reaccelerated. >> this just keeps happening. it's bizarre. and the latest earnings experience was four straight

quarters of year end declines and those are recession nary conditions, and -- >> well, if you look at what happened, first of all, energy was a huge contributor to that. unlike the other bubbles that bursts in the past, this was an investment bubble in energy, and this is a positive, and it had a first part of the covere -- recovery to three. and the strongest dollar was the collapse of the energy crisis and the trade deficit. we had a $440 billion trade deficit in 2008, and that had to be finance. that was the driver of the weaker dollar. if you think back of why we went off the gold standard, that caused the weak dollar in the '70s. >> and the other thing that has gone along with horrible

earnings has been -- does the manufacturing industrial production, it has also been down, and 11, 12 months, something like that, that's bizarre. would you connect it back to the same phenomena, which is the economy is so strong it absorbed the collapse of an energy investment bubble and we are going to be fine and okay and pick up. >> there's a bigger dynamic that relates to the political back drop, the biggest gain in globalizations that peaked in 2008, and labor share of income bottomed in 2011, and it's on the move higher, and so that whole globalization dynamic was a once in a lifetime labor supply shock that is now in reverse, so you have really powerful set of dynamics for the whole industrial renaissance of u.s. manufacturing, and it's already in play, and the final step to this, to me, is to get

the corporate tax structure and territory al tea piece of this correct. it will be a big driver of productivity, potential growth, and this is really the early stages of that. >> well that sounds exactly like what the president-elect wants to see happen. barry, stay right there and we will come right back. coming up, from small-time boxer to champion, a look back at the film's legacy. and then we will get richard fisher's reaction, and stay tuned, you are watching "squawk box" on cnbc.

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today we are celebrating the legacy of one of america's underdogs, "rocky" debuted 40 years ago, and it was shot with a largely unknown cast, and it was the highest grossing movie, and it has since been followed by six sequels. wow. >> and the recent of the sequels were not too bad, and some were

bad but the most recent was good. >> and the first one, i remember where i was, and it was 1976, right? i was in college, and went to see it. without high expectations. i liked -- it became a huge deal after that. he had trouble getting a follow-up role and then he had "rambo." >> i saw it on uconn's campus. and then coming up, former fed president richard fisher will join us next. vers. accessible by thousands of suppliers and employees globally. but with cyber threats on the rise, mary's data could be under attack. with the help of at&t, and security that senses and mitigates cyber threats,

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♪ ♪ good morning, and well can come back to "squawk box," and here's what's making headlines at this hour. citigro citigroup has received a nonobjection from the fed about the citi stock.

oracle struck a deal to buy a company dyn for an undisclosed amount. and "fantastic beasts and where to find them" topped the box office and it's a spin off of the "harry potter" films, is jk rowling writing the screen play. the u.s. central bank could look much different in trump's presidency. the vice president of supervision that leads the bank's supervision is up for grabs. joining us from dallas, richard fisher, former president of the fed bank of dallas, and more prestigious, and the top thing on your resume, a cnbc contributor. >> that's it, joe.

you got it. >> where do we start, richard? how quickly should they go? everybody says, all right, we know december is done and now we are worried about 2017, and how many do you think they do in 2017? that depends, obviously, do you think they could get foreign in 2017? >> it's a guessing game, but stan fischer, the vice chair will speak today in new york, and he's usually a good guide. what is so interesting to me is starting with two members of the executive members a couple weeks ago and then following on with reports from the bank of japan, the mantra has become low interest rates for too long is doing enormous damage to the financial infrastructure, hurting or killing insurance companies, and hurting pension funds, and then when chair yellen appeared before congress she echoed the same thing, so

they clearly teed up december, but i think they have come to realize something that i was arguing at the table and other things like jeremy stein when he was a governor, that holding these rates for too long does damage and now the 10-year is trading at 230 as you know, and so the market is doing a lot and i think it's time to catchup and they are behind the curve, and we will have to see what happens in the new administration. there could be room for moving the fed fund rate, the interest rate up several notches next year. we will have to see what the conditions are, but i wish they had not waited this long. >> richard, were you watching last week? i heard from you. >> i was watching. >> you were watching it. >> i do nothing else, joe, but watch you guys. >> no, no, and there's something about bureaucrats. your ears should have been

ringing because i brought you up. janet yellen finally mentions there could be negative affects, and i said, richard fisher said -- was it three years ago when you said that? >> yeah. >> do we take great confidence that the head of the fed three years later, finally it occurs to her that maybe theres's negative affects or do they speak in bureaucratic ways where they don't want to say anything until it's so obvious to everybody else -- now, the markets moved, and now -- you never needed any foresight, and the market does it for you and we are supposed to say, wow, you guys are -- it's frustrating. >> i was not the only one, and a professor from harvard was also on that front. we were just warning. joe, you live in washington and

i think janet is doing her level best to get it right and do the so-called exit, and it's not uncommon in history they wait too long, and not just under chair yellen or bernanke, but it goes back in history, over 100 years, and too often in history when they waited to achieve the conditions they are looking for and then they begin to tighten, the economy particulars over into a recession and they don't want that. i will not question her ways. i wish they moved earlier, and that's history. the market is giving them plenty of cover, and also giving them cover as to how they reinvest the market portfolio, which is perhaps more important than raising the base rate a quarter point. and they have 100 billion in securities maturing, and they have u.s. treasuries, and

there's a hunger for the higher rates for the securities. >> you mentioned the yield curb steepened and shifted up, and you said that will force the fed's hand and you could argue the other way and you could say with the shift up and the stronger dollar it means automatic tightening already has taken place allowing them to delay a bit longer? >> i think it gives them cover or an incentive not to move. this has been discussed for so long, and then it sort of, you know, a three card monte game or hide the potato, whatever you want to call it, they don't act. i do think the fed is -- the market, in my opinion, and market participants, i just came from london, and really lost respect from the central bank and it's unfortunate, because they feel they don't have the kind of fortitude that joe was

talking about to move. now they have a chance to move and that should diminish some of the discussion. >> richard, this is barry napp. you hit on the key issue i wanted to ask about, which is the reinvestment of the portfolio, and the back end of the curb, the 30-year out performed, and that part is flattening and there's demand as insurance companies as you eluded to as well, and my view on this is that the housing market is not nearly as sensitive to a rise in mortgage rates as was the case during the taper tantrum, and you have first-time buyers back in the market and the channel is open and i think that's more significant than how many times they tighten next year, and i would love to hear you elaborate on that more and do you think they will come to a conclusion

soon. >> i don't know if it's a matter of where you place the curb on the rollover, and that market has moved and there's demand for the securities. the way i look at it, it's a chance to diminish the size of this portfolio, and give you future buying power, should you want to do so if the economy slows down. janet yellen referred to this in her economic speech in new york, and she said, this was interesting, we have an asepl tree of risk, and we don't have a chance to give it back, but she did refer to shaping the yield curve by where they invest the rollovers, and i think that's the key point. i am glad you agree with me, because that's to me what people should be paying attention to. >> who did you vote for? did you write me in, richard? >> eisenhower.

>> seriously, what did you do? a texas democrat, i don't know what you are, a weird species -- >> i am totally bipartisan, nonpartisan. >> you have to vote? >> yeah, i do have to vote, and i will wait until the music plays louder and i am not going to answer your question. i am not unhappy, by the way, with the way the new a administration is proceeding, just so you know. >> good job. thank you, richard. >> thank you, all. >> richard fisher coming up. pack your bags, more than 48 million americans are expected to travel for thanksgiving this year. former continental airlines ceo will be with us and "squawk box" will be right back. what powers the digital world. communication.

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welcome back to "squawk box." the holidays are officially under way as 48 million americans are traveling for thanksgiving. it's the highest level since 2008. and we have the ceo of airlines, and the weather certainly in new york took a turn south over the last 24 hours. is that a big swing factor or should we be overly worried about it? >> not those kinds of changes, and there are no major storms in

the forecast that i see. >> and let's look at the bigger picture, and trump has mentioned how poor the quality of the airports are. >> we like to see an air traffic control system come to fruition, and that would be the biggest impact on the airlines. let's hope that some renewed emphasis on aviation is coming with a new administration. >> we saw warren buffett take a big stake in the airlines recently. was that something that surprised you? would you be positive in timing of the valuations at this moment? >> i think what we will see is stability, and they are managed by smart people that will not over capacity or have fare wars, and there's earning stability and operational stability that i

think warren buffett sees that he didn't see in 1989. >> he could have seen it -- it's joe, gordon. he should have started building a position a couple years ago. he is so late. if he had watched you and seen what you were doing, and i am saying all the time, you are only good as your dumbest -- you have a more colorful way of saying it, you only are as good as your dumbest competitor. >> you know that, and you saw it whittle out, and the 24 airlines are down to a reasonable amount, and the dummies have gone broke and gone home. let's hope we don't see new stuff, like hooters air and stuff like that. >> united, with that merger, it was continental, and that's your baby. for a while was it rough sledding, am i wrong, or oscar

seems to have it humming now, and are there issues left or is united still -- is it now something you would say it can take the man all the continental you left and it's now just as good? what do you think? >> i think it's headed that way. oscar assembled a really strong team, and so scott kirby from american will be a plus, and their major failing was operational. >> did you see that decision to say they can't take on carry onluggage any more, and that a big surprise to you? >> that's just a few seats that can't carry on luggage and those seats are being sold that spirit and allegiant are in the market, and they are going to put a portion of the airplane in that kind of configuration where if you want the absolute cheapest chair, you can get it on allegiant or united, and with

united you can get a movie. >> i bet you are still talking to those guys about what is going on? you still talk to scott kirby? >> i do. those are my friends, obviously, i owe them a lot, and scott and i put on the board back in 2004 as the cfo, and oscar is a really human guy and is humanizing the airline and they have an operational team that will make it run like it should run. >> thank you for joining us this morning. >> good to see you. thank you so much. okay, up next, we are going to head down to the new york stock exchange, and jim cramer will join us live. here are the futures right now, and we'll be right back.

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let's get down to the new york stock exchange. jim cramer joins us now. jim, i like talking markets, obviously, and we have bedminister, and you know where

that place -- >> sure, have done charity auctions there. very beautiful. >> do we get rid of dodd-frank? who do you want for -- >> gray from blackstone, he would be unbelievably good. a guy i looked to going on in r. amazingly sophisticated. he would be a huge step up and fantastic. i don't know. i mean, whenever i saw his name floated i said you're kidding me, i mean, that's a guy i would pick in terms of what you do for a living, what we do for a living. wilbur ross. how many times have we had him on and he speaks sense on our show? >> right. >> i mean, these guys are like, let's hope. i mean, these are guys that we all know as being guys that we want to have on as market masters or we have on as people really savvy about the economy. i don't know, these are not rubes. these are as good as it gets. >> animal spirits, jim.

the election was a week and a half ago. does this make sense in what we're seeing? all different markets seem to have their own take on what the future's going to bring. >> i think that growth could be 4%. hate him or like him, you get 4% growth, a lot of good things happen. we can't necessarily drag along europe, i mean they have a standoff between merkel and everyone else. i think if we get growth, like goldman and 3m, illinois tool works, those are ill advised. we're setting up for a growth economy. >> jim, i was watching. i saw the two points and i was like, wow, eight plus three is 11. then i saw that onside kick that was -- but that guy, he had good hands. if they'd gotten that, i thought this could be unbelievable if it happened. were you holding out hope at that point? >> no. i was so devastated. sprawls is my absolute player in

the nfl. my favorite. i hated to see that. >> what happened? >> we're still waiting. >> well, we wish him the best. >> absolutely. he's the greatest. greatest guy we have. >> you can hear a pin drop in that place. anyway, i know, terrible. jim, thanks. see you in a couple minutes. coming up on "squawk on the street," don't miss vanguard founder jack bogle 10:00 a.m. eastern "squawk box," we'll be coming right back.

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take a look at some stocks to watch this morning. facebook announced a stock buyback program of up to $6 billion which will kick off during the first quarter of 2017. and deal based news, utah based products maker headwaters being acquired, construction firm buying head kwaerwaters. >> let's get back to our guest host, barry knapp, head of medic strategies at blackrock with us. we haven't really talked to you about some of the international developments. so it seems like there's a pivot right now towards what's happening in france and italy. is the euro going to parody? how much do these things matter?

>> so i think probably not. jim paulsen was on earlier saying generally when the fed is tightening that the dollar's actually gone down. my view on this the thing that's really driven the dollar has been energy prices and our energy trade deficit. that big shock is behind us. so, yes, the dollar's had something of a move here, but i don't think it's going to follow through as we get into 2017 at all. i think it will find its level. i would be buying emerging markets, for example, because i think the chinese hard landing already happened. >> can we talk a bit about what we expect to come out of the trump administration, particularly the banks rallied very hard, partly yield curve related, partly hopes we will see significant deregulation? is that something, a, you expect? and what might shape it come? >> yeah, so those people followed my work when i was at barclays, i was underweight the banks almost my entire six years there. and the idea was when you cap return on equity because of policy that forces the banks to invest in government assets at the expense of the private sector, the same thing happened

after world war ii, roe never above 10, banks uninvestable. you start squaring back the basel iii, parts of dodd/frank that's forced banks into this position, you can make the capital levels high, but you've got to allow the market to decide where the capital goes. they become investable again, which i can't believe i'm saying because i was so negative and so bitter for so long. but i think it's a very big deal. i did not think it was going to be a trump administration priority. everything i've heard from credible sources since then says it is a big priority. >> we've heard that. and there's some signals like potentially if they did approach jamie dimon, that clearly suggests a more favorable towards wall street generally. that said, steve bannon, lots of people a speech he gave very anti-wall street, also mentioned several times bring back

glass/steagall, do you think it's run? >> to a point. i don't think i would be selling anything in the month of september going into the year, really. but that is going to be more complicated to do reform in that sector is more complicated. chuck schumer will stand as opposition -- >> they have nothing to do with regulation. >> no, this is why i asked richard fischer about reinvestment and all. >> i mean, that would be a double whammy. two plus two could equal six. >> if you start scaling back -- right, all this financial repression stuff, then there is huge potential for the banks. you bring that cost of capital down, you can get roe back into the double digits. the banks become very investment. >> you just said you thought we could be on the precipice of a two-decade -- why do you think that could happen? >> because the whole period of globalization was we had 760 million developed workers in the world in 1990.

you added 860 million to that in two decades with china and the soviet union leading totalitarianism. but those forces are now in reverse. the chinese labor force has peaked and is falling. so this period where businesses go and exploit just cheap labor -- >> there's vietnam -- >> -- at the expense of capital, that's past us. as i said, our market share of global exports is actually going up already, right? so global supply chains are stretched as much as they can be, businesses are going to invest in things like internet of things and productivity enhancing investment, that's a huge boom for the manufacturing sector. the downgrade jim mentioned today, i agree absolutely with jim. you should not be downgrading the industrials here. this is like tech in the '80s where it's just the start of a two-decade move. >> final -- barry, final thoughts, 20 seconds left. top industrials of the year? >> health care, industrials, small tech and buying emerging markets into the weakness for sure. tech, that's a core theme. >> health care?

>> health care for sure. yeah, you've got costs going up and, you know, they didn't bend the cost curve. we've got a powerful force driving. look at cpi for medical care. it's 5% year on year. that is a powerful driver of revenues for that sector. >> all right, barry, sticking with the k in knapp? >> i'm sticking with the k for sure. >> there's no reason. get rid of it. >> when we go to germany knapp. >> it is knapp, or get rid of the k. >> make sure you join us tomorrow. "squawk on the street" is next. ♪ good monday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. happy birthday to rocky. holiday shortened week with thanksgiving and black friday obviously on deck. futures steady as the russell coming off an 11-day win streak and the dow is on track for the