"squawk box" begins right now. .

>> what are you doing this grinch thing this morning? >> not going to work. not going to work. >> six years. six years. >> we haven't seen her in three months. >> i bet she looks exactly like when she left. >> what? >> before she was pregnant. >> looking good. >> not that sheing looked bad. >> stop talk. here are the big stories we're watching. fed begins its two day policy. we have to wait until tomorrow for 2:00 p.m. report interest rates. quick check on u.s. equity futures. if this holds this looks like another record for the dow jones industrials average which did close at a record high yesterday. s&p and nasdaq hit intraday highs. overseas markets chinese economic data breaking overnight november retail sales and factory output data coming in

stronger than expected. shanghai and hang seng were flat a day after the shanghai composite suffered its worst single day loss in six months. in europe uk inflation overshooting estimates hitting the highest level since 2014 and quick check on european equity, green arrows. italy gaining the most after plan was leased by unicredit to do a regap. taking a look at the currency board. u.s. strength is holding up here. mixed bag here across the board. let's get a check on crude. >> crude, some of the moves we see -- dollar got really strong. yields were over 250 for a year on the ten year. this got almost 55. 53 right now. take a quick look at the ten year. no longer 250 but now 246.

gold was back to 1160. first thing i saw this morning was on competing website, a few websites in addition to cnbc.com and it was headlined -- i can't find. headline was this is definitely, things are happening now at these levels that indicate this is overdone and this is likely, you know, teetering. this time -- it was written by the same people that wrote that for what is it, five weeks now. >> what do you think is a realistic number >> by when? you never give both. >> what number do you give, you say this makes sense. >> you meantime? 30,000. within the next five years. >> is that a really bold call? >> no. you either give a number or a time frame but if you don't give them both at the same time -- i think we'll be at 100,000 in

infinity. >> infinity. >> where is oil. give me a number. >> that's what we're trying to figure out. >> nobody knows. higher. it doesn't matter. probably the more you hear people saying it's overdone -- you have been asking every day for the last five weeks whether this is it, sort of. >> not this is it. >> has it gone too far. >> i've asked whether it's gone too far. >> four weeks ago when we were from 1750 then 18,1. >> what you're mapping out jean you think it will go up. the lead story of your favorite website the drudge report has mitch mcconnell talk about how he may not be on the same page with donald trump when it comes to tax and they are not necessarily voting as one

contiguous block. what does that mean you have to map out what the tax plan resultly. you have to ask these questions. >> i don't think the specifics matter. >> if we saw the market go down by a commensurate amount we would ask if that's the bottom. that's the nature of financial news. >> when you see a sea change in just the approach. >> we have to talk politics because there's news crossing the tape about rex tillerson. we know the news is coming. there's this breaking news, president-elect donald trump just announcing his pick for secretary of state in a press release that pick is exxonmobil ceo rex tillerson. john harwood joins us now and outside the trump tower in new york city and he has a number of other stories for us to watch as well. john. >> reporter: good morning, andrew. that's just one of a couple of cabinet announcements we expect today. rick perry former governor of texas we expect him to be named

secretary of energy, that's the department that he forgot about when he was in our cnbc debate five years ago. but rex tillerson is the big news of the day. this has been expected. telegraphed over the weekend, donald trump defended him on fox news on sunday. this is a very interesting pick because you saw some signs as andrea indicated a couple of minutes ago of growing republican concern about the issue of russia, russian interfere rer interference with election. they called for bipartisan hearings. i think rex tillerson is going to face a significant confirmationing fight that the trump team will be ready for that and he has backers including bob gates former defense secretary, the jim baker former secretary of state but this is going a challenge. you also have news breaking overnight with donald trump

saying he was not going to have the press conference he had planned to have on thursday to discuss the details of his separation from his business. he cents osent out a couple of posts. he said his two sons don and eric will run the business. didn't mention ivanka which raises the issue of whether or not she will come in to the administration. but donald trump said that there would be no new deals during the course of his presidency, but that's not going satisfy people who are concerned about conflict of interest. so donald trump is seeing the concern among republicans and democrats in washington, embracing it and going right it a. this has been his hallmark throughout his campaign and we're in for more of it, guys. >> okay. john harwood, standing outside

of the trump tower. we'll see more of you. some stocks to watch this morning. eli lily is raising its quarterly dividend by 2%. viacom naming bob bakish as ceo. >> fed kicking off two day policy meeting today. central bank expected to raise rates by a quarter point. joining us now ed keean. jim i had read something you said this morning and was searching for as an answer, to if we're going microanalyze every time mitch mcconnell has some type of indigestion or gas as to whether this rally makes

sense your overall take was we've gone from the prior regime of secular stagnation which is shared misery to shared optimism and it's that simple. that's what's accounting for the 2,000 point move we've seen in the averages here, it's not specifics, it's not will this get done or that get done it's a total 180 degree shift and it's reflected in analyst spirits and that's what caused -- >> that's right. the animal spirits are a big part of it. we have to think about the economic linkages. when we look at gdp and how sluggish it has been it's been because of business investment. we think about cap x, business investment that leads to prod t productivity. this change reaction could be take place and we have to be watchful for it. clearly there aring risks. there are geopolitical risks. trade and protectionist risks and these other things out there. what's important is we have to

recognize has the market reached its full potential? people say it's overvalued. yields can't go up much higher. expectations for growth in 2017 are about 2.2%. if we get this chain reaction, cap x, business investment, productivity, we could get possibly and not a forecast but possibly have around 3% growth. if that's the case then the markets aren't overvalued at all. we could go hire. there's risk on the down side but we have to recognize where our full potential is. >> you're optimistic as well. you think 3% on the ten year what next year? >> over the next six to 12 months or so we'll get to 3% or higher. >> nominal gdp numbers you're talking about. >> inflation plus real growth. i think we can get up as high as six. >> that's nominal.

>> i think we could probably hit at least a few quarters of three, four, maybe better than that. >> three to four? >> three to four. that's not sustainable. >> when are you calling for that? >> most likely the end of next year. it will take a while, assuming you get a big tax cut and surge in spending for infrastructure and so forth, take a while for it to take effect. maximum benefit of that little next year and neps especially i 2018. >> will businesses spend in apgs of something being passed, legislation will move along to a point where they feel more confident and spending will to be done? >> both. both businesses and skoornls will start to spend in advance much what they anticipate to be stronger growth. one of the things that will get it started. we still have -- headwinds. we still have the demographics. there's plenty of things. you can get back to the

post-world war ii era. a lot of policies which president-elect trump are talk about are policies that barack obama would have loved to put in place. infrastructure spending. almost a nixon to china feel about this that policies that couldn't have been put in place because of resistant because of congress are likely to be put in place because of the election of donald trump. >> last week they said forget infrastructure. it's not infrastructure. not things barack obama wanted to do. things that barack obama would never have done and that's deregulation and lower corporate taxes. other people point immediately to deregulation for small businesses, getting rid of dodd-frank. >> it's a combination of things. >> some people say you don't need infrastructure, that's your deal. you say a combination.

last week don't even try. takes ten years for infrastructure to kick in. not shovel ready. your guy tried to do it eight years ago. not got nothing done. >> tunnel project. >> might be as successful as the big dig we saw up in boston. >> took a while. people were getting hit by falling concrete. >> eventually it looks beautiful. >> how much over budget was that >> billions. cost a fortune. >> that's your example? >> i grew up -- >> believe me, you reflect that when you're on it. anyway. what do you think? the reason rates are going up now, we can decouple stocks from bonds because in this case maybe they are going up for a good reason. >> they are going up forring the right reasons. what's important that we need to watch for the fed is do the fed

dots move down? think about that for a second. if we're in a situation where the fed's core pc e forecast for inflation goes up to 1.9% from 1.8 when it was last made in september is that enough? the fed is not reaching their 2% target. should the fed dots move down. here we are with an equity matter up 10%, high jeeld up 15%, investment grade up 5% and things going well what if the fed dots were to move down. i think what that does it create as steeper yield curve. puts more pressure on the back end and continues the stimulus going forward. we can overshoot our inflation target. >> there was a speech that janet yellen gave in october in boston that argued for a high pressure economy and so in this case, although during the campaign president-elect trump criticized janet yellen they really need each other right now because you'll see that more stimulative

policies out of the fed combined with a tax cut and deregulation and simla negative ptimulative raising labor force participation rate and improves the long term growth potential of the economy. >> what if donald trump tweets the fed is political. he calls janet yellen to trump tower. is that a tape bomb? >> the way i look at it you look at fundamentals. there will be lots much tweets and lots of tape bombs and you look at the fundamentals. you watch the data. >> traditional republican at the fed might be more likely to raise rates and put a damper own some of that growth. i think actually in this case there's a real symbolic relationship between janet yellen and president-elect trump. >>cy >> boeing plans to cut reduction

of that's 777 program next year. but the stock is being driven higher this morning. at the top of the hour, tom barrack will join us. we'll weigh in on trump's cabinet picks. "squawk" returns in just a moment.

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welcome back to "squawk box". donald trump just named exxonmobil rex tillerson as his pick for secretary of state. artilleryson said i'm honored by president-elect trump's nomination and share his vision for restoring the credibility of the united states foreign relations and advancing our country's national security. donald trump selected rick per zwroi be the secretary of energy. perry who was trump's rival during the campaign metropolitan with president-elect for about an hour and a half yesterday. and trump will be appointsing goldman sachs president and chief operating officer gary cohn as director of national economic council. cohn will be his top economic adviser and help him crack economic policies that will grow

wages for our workers, stop the ex0 did you say of jobs overseas and create many great new opportunities for americans who have been struggling. goldman sachs ceo blankfine weighed in saying he's confident cohn will do his part to making economy stronger for americans. david faber said the job will be split in two. david solomon is expected to be one of the people taking on the role of coo. a lot of appointments and then a lot of goldman news as a result. >> they split the job and you wonders if both of them stay. >> they've done that for a very long time the split. if you remember gary cohn that role was split originally and this has been going on -- this is a normal course for their culture. >> little bit surprising cull purr.

>> twitter ceo will interview edward snowden by video conference this morning. dorsey and twitter will broadcast the event just after noon. it can be watched on the @snowden twitter handle. questing diagnostics reporting a data breach. company says health records of some 34,000 individuals were accessed by an unauthorized third-party late last month. information includes lab results and in some cases phone numbers. but social security numbers, credit card information, insurance and anything, you know, worth having was not accessed. so you could see that, you know, someone has really high hdl and then call them up and say -- i

guess. you're overweight. i just saw you have high clo cholesterol and our fat. it's not information -- might be a couple of things. whoa. you had that. or you had that. >> i doubt anybody is going through all the records. >> for what? >> they were trying to get the valuable information to sell. to sell on the dark web, absolutely. >> i would imagine you can find stuff in there people find valuable. >> like what would you have if you were blackmailed? >> somebody had a disease that they were hiding. something that was terrible that happened. there's -- >> is this why -- >> quest diagnostic has never been out of my mouth once in my

career here at cnbc. i've never done a story on quest diagnostic. >> you have blood tests. anything interesting? >> no. nothing that i would like to share. >> see. >> phil is here because boeing has news out. dividend hike and buy back that crossed yesterday. phil lebeau joins with us the latest. >> one-two punch of news yesterday afternoon. we knew that we were going gate production cut. we'll talk about that with the 777. this is when boeing raises its dividend. this is what people were expecting. some were saying could we see a 50%, no you got 30% which is still darn good. it will now be $1.42 a share starting in the first quarter of next year and also took the currents $14 billion stock buy back program, they said let's replace that and add a new $14 billion stock buy back program. they are putting their cash to

work. mike santoli said is that nice defensive move coming after the news they will cut the 777 production rate. what they are doing with the 777 is going from seven per month down to five per month starting in august of next year. what's interesting is that new production schedule of five per month that includes the anticipation that the iran sale which includes 30 trip777s go through. if we don't see a new order you could see further pressure on that production schedule. take a look at shares of boeing and this is the most interesting chart. remember right after donald trump tweeted out about the cost of air force one the stock took a big hit and it has come back. this is since the election. right the end there you saw it drop down in the last week. it made everything up by tends of the week and don't move higher yesterday after hours. >> in terms of air force one and

the political head winds, unlike some of the other defense contractors and i only say that because boeing's business is a mix between commercial -- in terms of the divide there how does that break down? >> commercial is bigger than defense. i don't that have exact percentages. my zbes if you sat there and looked at probably a 60-40 or 55-45 in terms of commercial versus defense contracts it's worked well to have that nice offset. it wasn't long ago you looked at production schedules for commercial airplanes and they were much lower. go back about eight years. nice they had that defense part of the business to hold things together so to speak. >> phil good to see you. coming up president-elect trump's tweet about the high cost of the f-35, wiped out of $4 billion of lockheed martin's

net value. how should ceos respond a trump tweet about their company. as we head to break look at yesterday's s&p 500 winners and losers. very nice girl. you never got the brakes looked at? oh yeah... no. at cognizant, we're helping today's leading manufacturers make things that think and do, automatically. imagine that. a world of new digital products and services all working together for you. can i borrow the car when it's back? get ready. because we're helping leading companies lead with digital.

♪ welcome back to "squawk box" right here on cnbc.

take a look at u.s. equity futures. we'll have some green arrows. things looking to open higher again. nasdaq will open 10 and a half points higher. "sopranos" "sopranos" looking to open up six and a half points hire. in europe similar story. green arrows across the board. you would have done well to invest in the italy ftse. would have been a good gamble about 1.75%. some stocks to watch for you. verifone earnings topping expectations. full year guidance well below street consensus. jetblue expects fourth quarter unit revenue to decline by 1 or 2%. unit revenue compares sales to how many seats the airline flies and how far it flies them. urban outfitters updating its guidance. comparable sales are up by low single digits so far this quarter. analysts have been looking for an increase of only 1.5%.

that stock moving a little bit higher this morning. >> japan's asahi is buying five eastern european beer grand from anheuser-busch. the price is $7.8 billion. this is the largest purchase by a japanese brewer. they are looking for clearance by regulators. global bank transfer system swift confirming some new cyber thefts and hacking tactics in the months since 81 million were stolen from the bangladesh central bank back in february. in a letter to banks last month swift warned of the escalating threat to financial systems saying hackers have become more sophisticated in thaeir tactics. time for you nor the executive edge. president-elect donald trump taking a swipe at lockheed martin's f-35 program saying the cost was out of control.

joining us now on trump's communication tactics and how the company should play defense, jeff sonnenfeld. >> grocho said i have something for say before i speak. there's something for say. as we take a look at the aerospace industry this is a national treasure. 90% of your jobs in aerospace are here in the u.s. huge global imprint. what lockheed martin and boeing and united technologies have been doing which is a fabulous model for other ceos right now is, there's a great trade association here the aerospace association are not relying on third parties to speak information.

in fact every company has being identified individually many times individual ceos president-elect is raising their name and in a lot of cases he's right to raise the issues. they are coming back with specific response. in the case of the f-35 we see that lockheed martin has come with an incredible product and yes it's expensive but we need to understand how these cost overruns happen and they've got some pretty good explanations. >> the thrust of this is essentially anybody who does business with the government, be prepared because the government wants to negotiate and negotiate pretty hard under a trump administration. with that said, when you take a look out at sectors or companies do you think there are certain companies or sectors at risk of being the target of the next trump tweet? >> certainly, you know, in health care we're seeing one offs happening there. we might see more. there are ways even in the air

you're seeing them going after pfizer. there's not this blanket shared faith. there's a monolith there was being a myth of business communities. even sector bisector there's differences. they were complaining about runaway prices that some pharma companies have been throwing out there instead of investing in research and production and coming out with nuances they are jacking up prices too much and the runaway case we talked about befo before. some industries are targeted. some financial service where there's areas of misconduct. with large government deals absolutely be prepared and be prepared to show that we have in the case of these places 45 almost 50 states involved in the subcontracting, 100,000 jobs in the case of this boeing deal to tern planes, the iran jets and,

of course, the f-35, it's long in production process. we have to understand how we start to put. >> wish list, maybe more bells and whistles than we need early on that means companies need to develop great expertise in the design phase. the runaway costs start in the r and d. >> trump on one siepd he gets a lot of public points, if you will, forgoing after what seems like overspending on things like this. right? it's a great headline. on the other side he's made his campaign and his entire economic policy about trying to help workers in america. and this is clearly an example of one of those situations where while we may be overspending we are helping workers in america. so where do you think he ultimately lands? >> well, it's important that he

not get trapped in a concern. he's not good at being penned in and then coming to a resolution. every one of these companies have avoid the spotlight in responding to president-elect trump. he does listen to criticism. he's very, believe it or not very open to different points of view but doesn't like insults or feeling humiliated. these companies are really good. lockheed martin, boeing and united technologies in saying here's how we're supporting your growth mission, your trade objectives. we're a national treasure. what do we do for employment. and also giving him some opportunities to make some good suggestions that we have, for example, sometimes come up with some systems that there's a jamming device, i think an e 68 or something that was developed, effective jamming device for aircraft carriers that jammed itself and awful lot of morgan goes down, seems down the drain and in technologies that we

don't understand that are being developed. >> let me get you to weigh in on the other big headline. the viacom/cbs merger in this case nonmerger and what you think really took place behind closed doors. >> you know, this is sheer speculation. i don't have any knowledge. but i do think it's possible, you take a look at the 80% stake that the redstones have essentially in controlling boston these enterprises, that they were once created 35 years ago as one business, came apart, came back together again and now apart again. it's very likely for either or both they are getting feelers for attractive offers of these pieces might be worth more than the whole. there's a possibility verizon was interested in looking at the at&t time warner deal and the

success of the comcast/nbc universal deal. perhaps there's other parties out in the media world that want to buy into these pieces. that's my guess. two pieces are worth more than the whole. certainly they have great talent to lead them as a combined enterprise. >> jeff, great to see you. thank you. you're the watercooler guy. >> the soap opera that is. >> do we believe these numbers? 18 million to a flight attendant. >> you're talking about the sumner stuff. >> this is water cooler. 18 million to a flight attendant. to her sister 6 million. 21 mill thrown an aspiring reality producer. millions. is that tax-free? >> not tax-free.

>> women have to declare the 18 million. in services rendered. >> would be considered income. if you're get -- unless -- >> do you think any of these women declared this money that they got like the 18 million. >> yes, actually because, first of all, any kind of -- >> so they have to declare. >> they weren't employees. >> no. people will see the money transfer. you declare it. >> declare it. >> of course you do. >> you declare if you get 18 million as a mistress. >> yes unless you're doing it in cash in briefcases. >> it didn't explain that. coming up crude prices coming up 18 month highs. cut production from opec and non-opec producers.

we'll tell you where it can go from here. they would have done better under the tax policy of donald trump. we're back in just a moment. >> announcer: coming up billionaire bill gates sits down with becky quick in a "squawk box" exclusive. we'll hear about his latest energy vest. the future of energy policy. what's next for tech under president donald trump? that's coming up at 8:00 a.m. eastern time right here on "squawk box" on cnbc, profit from it. this car is traveling over 200 miles per hour. to win, every millisecond matters. both on the track and thousands of miles away. with the help of at&t, red bull racing can share critical information about every inch of the car from virtually anywhere. brakes are getting warm. confirmed, daniel you need to cool your brakes. understood, brake bias back 2 clicks. giving them the agility to have speed & precision.

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welcome back to "squawk box". let's take a look at the equity futures here at this hour after a record close on the dow jones do you know average. we're looking to open 64 points higher. s&p 500 up 7 points. nasdaq up 11 points. dow up 8% since the election. you were to story this morning president-elect donald trump just named exxonmobil ceo rex tillerson as his pick for secretary of state. we'll talk to tom barrack about the pick. he's chairman of trump's inaugural committee.

trump also selected rick perry to be the secretary of energy. perry who was trump's rival during the campaign met with the president-elect for about an hour and a half yesterday. food pric >> oil prices coming off a year and a half high. joining us now on where prices are head from here, matt smith director of commodity research. good morning. what's the question, jack, he should ask later today? >> where oil prices are going. >> i ask that question. that's an easy one. you should answer that. that's why you're here. >> i think they are fairly priced at the moment. a lot of optimism priced in over the last few weeks here given everything that's happened with the non-poke non-opec and opec .

there's a few things about those meetings that have been key for me. i was back here early in november and said saudi would bamboozle the market. what we've seen from then they've sprinted to really the end of october in terms of their production, all of these guys have done that. they got this record level. we also got all these guys can domain nance, they can forward this maintenance over the next six months. all right we'll cutback but they go into maintenance. with the non-opec deal we've had, we've had mexico who said okay we'll cut by 100,000 barrels a day but that's a natural decline. so they are dlopg back by 100,000 barrels a day over the next year. >> you think we're a little high, a little too high? >> no. the fact if we did see 1.8

million barrels a day come off line in the next sort of six months, then prices will probably justify around 55. >> but they don't cheat. >> there's a certain degree of cheating going on but what they've done is these guys have come together okay we'll go for 1.8. they haven't gone for half a million or a million. let's go for shock and awe on expectation some will cheat but even than good volume. >> you heard that the saudis didn't believe that the fracker would be back at these levels being it would take more? rex tillerson will be secretary of state. we've got scott pruitt who will be epa. we saw how much energy was developed in the last eight years and wasn't exactly the tail wind from the administration. they didn't want to bring fossil fuels out of the ground the entire time. if we go full bore with guys

like that in the cabinet and someone who wants to make the u.s. energy dependent we go full bore, why isn't this a good selling opportunity at 53. why shouldn't long term things go back down to 40 or even below? >> producers are showing us prices are at a good level now especially along the curve. we've been seeing them going out and hedging their production for next year -- >> for the next four years would you say it will be tough to keep prices high if we go full out on exploration in this country? >> absolutely. >> totally tough. this may be the high end of the range? because we'll get back to 70 or 80 is what people thought. >> this is this new paradigm. as prices push higher to 50, 55, more u.s. production coming online, seeing those efficient circumstance increasing, doubling, tripling every six months, 12 months or so. >> seems long term may not be a

great time for prices. >> offset that you might have an increase in demand next year. a lot of people are forecasting deficit in 2017. >> people say demands is elastic we've been in this range of 40 to 60 for the last couple of years. desmands elastic for china. china loves bargain hunting. they going when prices dip and fill their boots. as prices moved higher here they are not likely to going and buy as much to stockpile. that's going to be a bearish thing for the markets because that demands will get bitten away at simply because china won't be bargain huntsing as much. >> thank you. >> thanks. >> greet to see you, sir. love the vest. >> i love the ties. >> you're into the ties. >> holiday thing. yeah. >> what i love about his vest always -- >> double vested vest. >> sometimes double vested but they have the collar. the lapel is key.

>> they sell those. >> they are harder to find. i have to start sporting one of those. >> i'll get you one for christmas. >> that's very kind of you. >> i'll get it after christmas. >> you can get it on sale. >> i don't want anything. >> cufflinks. >> how to play the trump rally. 000 puck the consensus and selling the rifts. >> announcer: still ahead the federal reserve looking to cap off the year with an interests rate huge. could it topple the trump rally? we'll ask former dallas fed president richard fisher at the top of the hour. "squawk box" will be right back. ♪ ♪ 'cause there's a million things to be ♪

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trump rally rolling on. but should you jump on or -- this is in quotes -- sell the rip? is that the opposite of a dip? >> that's an opposite of buy the dip. maybe look at the stocks that haven't been participating in the rally and which ones have promise. a lot of traders these days are talking about these momentum-related terms. like are things overbought or oversold. how many of these stocks have these relative strength

indicators or moving averages. they're all measures of basically whether or not stocks have gone too far in one direction too quickly. so let's take a look at this. we're looking at one particular measure. we looked at the s&p 500 and right now its 200-day average price, it got us thinking what other stocks in the s&p 500 are way above their average price. we looked at the s&p, and looked at the ones trading above their 200-day moving average. that average price the most. turns out that 14 stocks in the s&p 500 are at least 40% above their average price over the longer term. so some of the names are perhaps a little indicative of what's going on. we know financials have been really big in this trump rally. you've got names like united continental. the airlines, transportation stocks they're hitting record highs. just hovering around there. united up 40% above the average price the last 200 days. also financials. we've spoken about golden sax

quite a bit, but mohr tan stanley also up about 44%. regional banks always play into that discussion. a lot of these stocks benefitting from a steepening yield curve. coe mer ka bank of those. 48% above. and technology has been lacking overall but in particular nvidia, the stock 61% above its price. that makes nvidia the single stock in the s&p 500 the most above average price. when koit ms to opportunity, it's not to say these won't go up continually for the next near medium term. but for a pullback, some might be looking for opportunities to take some profits or perhaps take a look of at least taking a pause for some of these names. back over to you. >> all right. thank you. >> you're very welcome. coming up, colony capital's tom barrack joins us next to talk about trump's cabinet picks.

and later, becky quick's live exclusive with bill gates. "squawk box" will be right back.

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donald trump tapping exxonmobil ceo rex tillerson as secretary of state. how will the executive handle being the country's top diplomat? we'll hear from tom barrack straight ahead. the trump rally rolls on. where you should be putting money to work right now. two top strategists join us straight ahead. plus the fed is set for a two-day meeting where they're expected to raise interest rates. the results of the latest cnbc fed survey and reaction from guest host former dallas fed

president richard fisher are just minutes away as the second hour of "squawk box" begins right now. live from the beating heart of business, new york city, this is "squawk box." >> welcome back to "squawk box" right here on cnbc. i'm andrew ross sorkin along with joe kernen and melissa lee. take a look at futures at this hour. dow looks it would open higher by 55.5 points. s&p 500 looking to open 5.5 points higher. take a quick look at oil. we're now at $55 $53.25. and interest rate now at 2.464%. first some breaking news. within the last hour, rex

tillerson has been officially nominated for the post of secretary of state. john harwood joins us now. he's in front of trump tower with more on that story. >> reporter: andrew, world class business leader, world class player. that's what donald trump has said about rex tillerson both in tweets this morning and interviews over the weekend. he is now the choice to be secretary of state even though some republicans have expressed concerns joining democrats with his closeness to russia and vladimir putin. of course he's made business deals with russia. now he's going to be in charge of the foreign policy of the united states. and he, for example, has opposed u.s. sanctions against russia, imposed after crimea. is that going to remain the policy? all of that is on the table when the trump administration in january pursues rex tillerson. of course the president-elect is also going to be nominating rick perry the former governor of

texas to be secretary of energy, a department that rick perry had said he wanted to eliminate from the federal government. this continues a pattern of the trump administration electing people who are fundamentally at odds with the mission at least it's been understood up to now the government agencies they'll be heading. all of that will also be on the table for confirmation hearings. one other thing which donald trump has deferred discussion of are the questions of his own business ties and potential conflicts with service as president of the united states. donald trump was going to have a news conference on thursday in which he was going to outline how he was separating himself from his business and putting some distance -- putting some walls between his service as president. but in fact, he put out tweets last night close to midnight saying he's going to turn the business over to his two sons don jr. and eric. but he is not going to have that press conference until january.

and the issue of potential conflicts is going to be out there for donald trump as well as it will be as i mentioned earlier for rex tillerson and the carryover between his private work for exxonmobil and now the foreign policy of the united states, guys. >> all right. john harwood, thank you. joining us now tom barrack. listening to that, just a lot of unbelievably daunting problems facing the transition just right ou the box. at least that's what i think from that report. every day it's something else. but the recount seems to be -- maybe that's not going to be what we thought, i guess. put that on the back burner now? picked up votes in wisconsin, i think. and pennsylvania and michigan are both done. put some -- move on to this russian thing i think might be the next step. don't you think? >> i think it's time, you know, all this was interesting until november 7th.

and america engaged in a great debate and dialogue. and a lot of emotion. november 9th, we have a new president. and american style, we all get behind that man or woman. >> john podesta said they're starting to plant the seeds of a non-legitimate presidency. and as much as they left -- did you see the journal's lead op-ed today? they're now saying it's rigged. >> it's irrelevant. right? the man is in the seat. the judiciousness of what he's doing in his picks is brilliant. >> tell about mcconnell and mccain how they won bipartisan looking into the russian hacking. go ahead and tell him about it. >> you just told him. the only thing we talked about in terms of where the market is

today and given the hope so much of the market has. the question is whether the republican paefrt is really one contiguous block which is what i think the market assumes. and yet, i think if you were to talk to paul ryan, mitch mcconnell and john mccain and others, they would say actually there are some cracks in that. there are some different factions in that. and that ultimately while donald trump may want tax policy of 15% for example in terms of the corporate rate, there may be others that want it to be 25%. there are others who may not want stimulus the way donald trump does. so you may not get all of the things that donald trump is asking for. and everybody's trying to figure out and estimate what's realistic. that's all this is. >> you're a producer.

he's not writing the script. he's not the lighting man. he's got the vision. now he goes out and picks the actors and directors. and he's done an amazing job. right? you're attacking a bureaucracy an a budget. the only way to do it is through the hardware. you've got to pick warriors who have the ability to be able to navigate through these complicated bureaucracies and they are not setting policy. congress is setting policy there are people that are going to join with the president-elect to figure out what's going on. but how do you implement a plan? someone like branstad or tillerson is genius. you find somebody who has negotiating style, who has run a half trillion dollar company. who has that cultural -- >> all these picks are in the face of his critics though.

i mean, okay. so you've got an oil guy who is friends with putin, theoretically after all the criticism of the russian connection. and he picks him as ceo of secretary of state. he meets with al gore. then he picks scott pruitt who has been suing the epa. he meets with the president and says, okay, i'll think about keeping some of the features. then he nominates someone to the left to obamacare. i mean, at this point, he doesn't look like he really cares what the other side thinks about a lot of his stuff. >> sure he does. >> i'm not saying it's a bad thing. he's -- it's like the campaign. >> he has a constituency. and that constituency got him in office. what he's doing is saying i'm going to do what i said. whether it was good or bad, that's not what's happening.

but his ability to implement that policy is based on negotiating skills of the fabric of the legislature. he's not a dictator. >> is there some concern, though, that tillerson for instance already the republicans who have come out against this pick, that there's going to be a certain amount of political capital used to get tillerson through and therefore will weaken the ability to push through his agenda through congress. >> i don't think so. i think what's happening is warning shots everywhere. right? it's a negotiating table on all of them. so congress is saying remember us? you're going to deal with us. send whoever the legislative conduit is. >> i would argue accurate critiques of the obama administration was the misplaced sense in terms of how they pushed through obamacare without anybody on the other side participating. and so the question i would ask in terms of donald trump's administration is whether there

should be anybody either from the other side or folks that the people on the other side would say, you know what? okay. i like that. i get that. whether he has any plans to bring in people like that because he wants all the sides to ultimately come together as he's talked about. >> sure. let's take tillerson for example. let's take romney which would have been a reach across not the aisle but -- >> sort of. >> no, it would have been. by the way, that would have been one of those type of examples. >> it was logically considered and for a lot of reasons discarded. so the idea is that let's take state. state runs a $70 billion budget. offices in 50 countries. it's less than running exxonmobil. but it's staffed by foreign service officers and a political regime which is exactly what you say. so he's stepping into an organization that's already set

up. what he has to do is drag and pull this very fine toothed -- service officers are great. they lean to the left. the state department is always representing the other country. he has to pull them along to another agenda that is not yet set. the president doesn't set the agenda. so he can influence, he can cajole, but at the end of the process it's going to happen. it's going to happen in the setting of somebody with accountability. terry branstad in china. xi jingping is a friend of his. but nobody's saying -- why is putin the enemy? you need putin to solve the middle east. you're going to have to have a day with him. somebody who understands him is better than having somebody that doesn't understand him. >> just ask you on the business conflict which is now pushed out to deal with in january. again, one of the terrible things about an accurate

criticism of hillary clinton was this issue about government corruption. right? and as a principle guy. what do you think he should do to solve that problem to make sure that criticism isn't leveled at him and doesn't become noise over the policies that he wants to succeed with. >> you're absolutely right. and i try to convince him. instead of saddling me, give me his company. and it'll solve the problems. look. it's a complicated issue. because what he has to do is economically divest in a way to rid himself of even the perception of impropriety. and take apart the mechanics of that business. there's several ways of doing it. you can keep it public and keep a piece. even that doesn't do it 100%. if you have your two sons running the business and you still have a relationship, so they're trying to figure that out. what they've done is say the

importance of that fact is less important, staffing the first hundred jobs. >> fair enough. >> there's 4,500 jobs. remember, this administration nobody took him seriously. we were sitting here before and the reservoir of candidates were limited. because people wanted to put their hat in the ring. they thought hillary was going to be the successful candidate. so now that they all are tloeg their hat in the ring, there was no -- bill haggerty was running the transition team and vice president-elect pence had done a great job. but you're drinking out of the fire hose. to find somebody who will do it, number one, it's a tremendous sacrifice. number two, somebody who is confirmable which is another gigantic thing for somebody to hop over. and somebody who has the time and opportunity to do it has not been easy. and i think this president's selections have shown he's taking really good people who may not be of the system and whether they're antagonistic or

not, they understand the system. but the antagonistic aspect is going to be blended because they're not dictators. they can only operate by a budget and the budget is controlled by congress. they have to convince congress what they're doing or it doesn't happen. >> so when you're having conversations over trump, i would imagine that -- you know, today the "financial times" it's the kremlin hacking. "new york times" has gop looms. podesta yesterday said, you know, we need to have the electoral voters need to be updated on the cia's investigation before they go and actually vote for the electoral college. there are steps after following a recount, there are steps that continuously going on in whether you can ignore or not. this is what people are talking about on the major networks and the other cable channels. is there any discussion about this over at trump tower about, you know, trying to break away

electoral voters that don't vote what the people -- >> not really. trump tower, you have a president-elect that's focused on -- >> is this just noise? there's a lot of noise during the campaign too. but then you had to watch the nate silver polls. they go up and down. now the votes were already in i thought. >> look, he is focusing on governing. he's not focusing on the rhetoric of what goes on with the disenchantment and disappointment of what a country felt. except to say i'm going to heal it. part of the inauguration is that. to be inexclusive. >> still in the middle of it though. can't heal it finding new things. >> nothing you can do about the middle of it. does intelligence interfere in politics or does politics interfere in intelligence and what difference does it make? you've got a president of the united states, we've got conflict all over the world. just get over it and back this man and give him a chance. i'm not a political person. i really am not. but the process that we're in

right now to me is cancerous. it undermines the very pinning of the american system. >> if you thought the justice department was conflicted in that process, or whatever, now john brennan is a close confidant of president obama. president obama asked for the investigation whenever it was ten days ago on this. and it's ongoing. you don't see any motives there to delegitimize. >> it's more of the same. everybody's sick of it. >> everybody's sick of it except for the front page of every newspaper. >> who reads them? right? news is becoming -- why do you think the president tweets instead of worrying about this? it's becoming irrelevant. and the more it goes on, the less relevant it's going to become until we start dealing with substance. everybody is sick and tired of listening to the noise. let's try own address substance somewhere in the dialogue. maybe it starts january 20th, i

don't know. but i think america and the world is exhausted from it. and the world is exhausted from the lack of clear and definitive american foreign policy. so a guy like tillerson who can step in and be effective, that has a relationship with the president. i like john kerry. i also like president obama. the problem is they didn't really agree. so when kerry's out negotiating, everybody on the other side knew he had no power or ability to affect what it was that he was saying. not that he's not capable. >> it's weird. there's a lot happening already. he's not president but in certain ways it almost seems like the mantle's already been passed. i wonder what it's going to be like on january 20th. i mean, assuming that everything goes as planned. >> i think january 20th you're going to see the president-elect take office, prepared. a group of executive orders that will be issued that are aligned with what we're seeing and

happening. a great desire to be inclusive to those to make them for trump. that will be the objective. >> market's up a couple of thousand. think it was down 2,000. might even be tougher. you'd really have the naysayers. when was the hanging chads? they didn't like that election much either. was that 2000? it was hard to lose. hard to lose. difficult to lose. hard. anyway, thank you. appreciate it. >> you've heard of sore losers. there's also something called sore winners. thank you. >> great being with you. >> sore winners much better. i've been both. i've been both. i'll tell you one is much better. coming up, the dow notching its 15th record close since the election. find out where you should be positioned to take advantage of

the trump rally. indicating a higher open across the board with the dow looking to add at the open. coming up, bill gates sits down with becky quick in a "squawk box" exclusive. we'll hear about his latest innovation investment, the future of policy, and what's next for tech under donald trump. that's coming up at 8:00 a.m. eastern time right here on cnbc. profit from it. revent damages fm happening in the first place. at cognizant, we're turning the industry known for processing claims, into one focused on prevention with predictive analytics... helping them proactively protect the things that matter most. get ready. because we're helping leading companies lead with digital. incr...think it wouldotection in a pwork, but it does.dn't...

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fed office two-day meeting today so let's bring in mike ryan. our guest host is former dallas fed president richard fisher. also a cnbc contributor. good to see you all. ethan, what are we expecting the fed to say in the news conference? we're all expecting the 25 point increase of course. >> i think they're going to be optimistic. they have to explain why they're hiking interest rates. if you get a move you sound more optimistic about the economy. we have a lot of big -- >> will they mention the stock market? will they mention the new administration? is there going to be a nod to politics? >> i think they're going to try to use code words to get around directly addressing that. they do not want to be in the business of speculating. there'll be some general nod to

the fact that we have a better financial conditions. we do have the prospect. they need to see how that plays out. >> in the context of the trump rally, are you concerned about what the fed could say to derail this? >> not on the short-term. i think what you're going to see is be pretty tempered with what they say. in terms of additional policy. i think they'll certainly move now. i think what they'll do is set expectations around that continued cautious, deliberate, fed rate hike. i think a lot is going to be contingent. it's going to be what do we see in terms of moving toward the fed's inflation target. i think that's going to be more the focus now. we've been so focused on the labor conditions. so the real issue now would be on what we see in terms of the inflation data. and whether or not that will change the pace of the fed's rate hikes. what we've seen so far is if you think of the fed, it's upper

limit. it may well be the channel markers now. >> you said you're unwilling to move from overweight. that doesn't sound like a hand on the table banging the table at this point. >> first of all, markets have moved pretty quickly. we've had a pretty impressive rally since the election. i think it can continue. but i think we still have some uncertainties ahead. what we see now is a set of policy priorities from a macro standpoint. the question is how many of those will translate into legislative accomplishments. i was just going to say i'm still encouraged by the mix, but we have to be careful because these are not yet coded into certainty. these are still policy priorities. >> so, richard, here's what i -- >> i agree with everything he said. >> here's what i worry about. you've pointed out we've been in a emergency of fed accommodation

during the unemployment. 4.6% it's like where are we. so that was before you got trump. and now you got some guy who's supposedly going to do a trillion dollars, cut taxes, and he's going to like on the burner go like this. so he's -- we're at zero. and he's doing this. do we worry that they're way behind the curve or are we still in this long-term low interest rate environment? >> are we going to pick this up after the music stops? >> yeah really. >> he'll be here. but we've got to say good-bye to you guys. thank you, guys. >> we will get his answer plus results from the latest cnbc fed survey an reaction from our guest host richard fisher. then we're going to talk tax reform with kevin brady and the top of the 8:00 a.m. hour, you don't want to miss this. exclusive interview with bill gates. "squawk box" returns in just a moment.

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welcome back to "squawk box." top story this morning, president-elect donald trump has just named rex tillerson his pick for secretary of state. in a statement tillerson said i'm honored by president-elect trump's vision for the nation and restoring the foreign

relations and increasing our country's national security. trump has also selected rick perry to be secretary of energy. perry met with president-elect for about an hour and a half yesterday. separately goldman sachs' president and chief operating office gary cohn has been appointed director of the economic council. the president said in a statement that cohn will be his, quote, top economic adviser and will help him craft economic policies that will grow wages, stop the exodus of jobs overseas, and create many great new opportunities for american who is have been struggling, unquote. cohn called the appointment a great honor and said he shares trump's vision of making sure there's a secure place in a thriving economy. confident cohn will do his part to make the economy stronger for all americans. as for cohn's successor, david faber reports the job will be split in two.

this has been done before. in this case david who served as head of the banking division to 2006 expected to be one of the people who will take on the role of coo. >> well, today the fed kicks off its two-day meeting. that means the results of cnbc's exclusive fed survey are in. steve leisman joins us with the detames. >> interesting stuff. we asked about the policies of the new president-elect. here are some of the details regarding outlook for monetary policy. no fewer than 96% say the fed is going to hike in december. not huge. then interesting is the next, 44% say the next will come in may. everybody else is actually before that, believe it or not. there's a sense the fed may pick up the pace. when they think the fed will reach the terminal rate or the last hike in the cycle in this second quarter. that's a quarter later. but the amount or the terminal rate is 292. that's about 50 basis points

higher than previously forecast. it has been a long time since we've seen this group adjust upward the trajectory for the fed funds. you can see that in the next chart. and what the fed funds -- the average funds rate forecast is. it is a changing group but in general a bunch of the same folks all the time. you can see there up 0.2% next year for the funds rate. a bigger one up 0.5% to 2.7% for 2019. these are not high rates but relative to where they were, you can see they're looking for higher rates. then the other fascinating thing here, if you look at the next chart which is relative to the fomc, you now see the market. which this group has been right the whole time in being below the fomc's projections. and the fomc came down to them. now they've come up. this raises the critical question for tomorrow when we get the forecast of what the

fed's going to do, does the fed come up? do they see conditions being looser? time to project or forecast higher rates. do they adopt some of the optimism that's out there in the markets for what's going to happen on the fiscal side? >> in order to do that, though, do they have to acknowledge the new environment. i think haif done three or four for fed cokes in the interim period since the election. they said this a all perspective. none of it's done yet. if you go to cnbc.com, promo here, to read my story -- how was that? >> bingo. >> smooth. but anyway, if you go to -- if you go to cnbc.com and you'll see the story, what you see is that 56% believe the market is too optimistic about what they think is going to happen and when it's going to happen.

it's a timing thing and magnitude thing. it is too optimistic -- well, yes. that would be a way to put it. >> the flip side the 44% in may, right, 56% say it's going to be sooner? >> right. >> what we were asking richard before break. okay. steve leisman with the latest all-america survey. >> wrong survey. >> that wasn't the all-america survey? >> this is why -- >> i know, i know. >> it's because of your confusion that i worry every time. >> i love the all-america survey. this is different? >> this is the fed survey. >> it was just like last week. you were making this big deal about all-america. now it's something else. >> that was last week. this is this week. get to richard. >> all right. let's get to richard. learn a lot from the all-america survey here. >> but this is the fed survey. >> so the question before we went to break was -- and then we talked at break -- we're at emergency levels and probably in your view, we didn't deserve to

be here. so does that mean because the fed didn't move sooner, does it become steeper and how quickly do they need to? we just talked about that may come more quickly. then i think it gives the fed cover. they can finally extricate themselves from this box they're in. and it's like trump might save the fed. or at least the animal spirits. >> he was critical they've held rates too low and bubbles have been created. they're going to raise a quarter point. and the key i'd be looking at is the term slow and gradual. >> if you really look at what's happening, the index of industrial prices of 29% year over year, if you look at the turn commodity cycle. that's begun to turn. the wage index, up 3.9%.

we're getting in the key demographic which is age 25 to 54. i don't fall into that demographic anymore. but that's fully employed other skills mismatches. and then the true meaning of the dallas fed which is what stan fisher and other people really look at pit and the cpi above 2%. >> shouldn't we worry? >> here's the thing i'm worried about, joe. we've he did parture here. it moved to 188 since the election. it's moved on either side of the election. and we have rising stock prices. it shouldn't be occurring that way. general optimism about what this new administration can do. kevin brady will be here. deregulation and really dealing with this act. and so that leads you to the

possibility to have more capex, better top line growth. i want to know when it's going to be rates rising. you're going to discount in a different way. than just to infinity. is there any risk to that or we're already -- the income inequality -- >> we're seeing that and it's a big issue in the uk. more damage to come from behind. >> they have some cover to move quicker than the market assumed. and i'm wondering as steve was saying, you've got a bunch of people saying they're going to move sooner than your survey. >> don't join joe. because then i have no hope. if you were a policy maker right now which was not all that long ago -- >> right. >> how much would you be incorporating what the president-elect is saying and

what the market is doing into your forecast? >> i would be discounting the fact we're going to have for the first time since ronald reagan the chance to bring real change nap means breaking out of the sec tar stagnation alley. the point is that thesis which everybody's been bound by i think now will be challenged. and if we're able to break out of that channel then you're going to see past the horizon. >> so you'd be upping your growth forecast, inflation forecast, and your rate forecast. regardless of where he might have been. i assume you would have thought we were already behind the curve. >> that's my policy perspective. i wouldn't change them radically yet. but you'll see that in the so called -- >> you think we ought to brace for that tomorrow in terms of the market -- >> i'm not sure bracing for it. the market's already discounted this. >> to see the fed move in that regard should not be a surprise

to the market. >> it should not be a surprise. we will see. >> that's a view in the business and financial world. not here in this. but in the business financial world, it's clearly the case. >> where are you going with this? >> i'm just describing -- >> all-america. >> now you are talking about it. >> now i am talking about all-america. that's why we do two different surveys. the all-america survey shows there was a rise in optimism and a lot of different elements. it was republicans and independents and our pollsters were surprised to see one in five democrats believing the economy would get better. >> it doesn't matter political party. set that aside. we're talking about small and medium sized businesses that create jobs in america. they're seeing a lit bit of opportunity here to have regulation come back, by more

positive, reinforcing. and tax reform. by the way, just having a budget. we haven't had a budget from the congress since i can remember. just having a budget. if you don't like it, you can work around it, but it gives you some certainty. i don't want care about republicans, democrats, independents. what i care is how do businesses operate. and they're more optimistic now than they were before. >> do you think the markets factored in this? if the signal of acknowledgment that the world has changed even just a little bit or the world might change very soon? >> i think the market sometimes thinks it's factors in. >> i don't think it's factors in. >> notice that richard correctly picked upd on the emphasis on should. they should have done this. but we should not be surprised if they up the forecast -- the dot blot and the market sees -- it's spooked by that. however, i think it's interesting. it seems to me that trump's

tweets trump fed statements. i think whatever is going to happen on the fiscal side now is more important to the outlook on rates. i think if the fed stays just behind the curve, it won't be leading here. >> can i say a word of caution here? ronald reagan gets elected. the market s&p 500 up 8.5% until he gets inaugurated. next year, down 20%. what it illustrates to me is expectations are very important. optimism runs strong but then the reality sets in on how long it takes to get things done. and so we'll see. >> okay. coming up when we return, joint economic committee chair kevin brady's going to -- is set to have a hearing on possible tax changes coming in the new administration. he's going to join us right after the break to discuss it all. then at the top of the hour, you don't want to miss this. a "squawk box" exclusive. becky quick is back and she's going to be sitting down with

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the -- welcome back. guys, we're back on.

the house and ways and means committee will be meeting tomorrow and thursday regarding the path towards tax reform. our next guest says tax reform has a better chance than in 30 years of actually happening under president-elect trump. house ways and means committee chairman kevin brady joins us now. >> thanks for having me. >> we think it's real for the first time in a long time. >> it is. >> help us understand what is realistic in terms of where we think the corporate rate will ultimately go. donald trump has said 15%. we've heard others that suggest 25%. >> we have to be low to be competitive. both the trump and the house republican blue print, about 80% similar. i'm confident we can reach common ground on the rest of it. but that's not enough. you know, we need to unleash business investments. so we're going full on full unlimited business expensing in the year carrying it forward.

we redesign the international side to be able to move that capital where you need it. but level the playing field with our competitors. making sure we eliminate every tax incentive. >> you saw what mitch mcconnell said yesterday. he said this whole thing has got to be paid for. >> here's what i read of his take. we designed this to break free of the budget. so it will lose some revenue in early years, make it up in the next years and break even over ten years. which is exactly the way to go. >> one of the questions about repatriation has been whether it will ultimately create jobs here in the united states. and one of the answers that we have heard repeatedly even over the last couple weeks, we say okay you're going to talk to the ceo of cisco who said you've got $62 billion, what will you do with it. he will say half of it's going back to buybacks and half will go towards m&a.

i'm not suggesting he should be doing necessarily anything else. however, that's a hard public argument to make when it comes to helping the middle class create new jobs. in the immediate term. >> so no one's yet convinced me why a dollar stranded overseas is better than a dollar brought back to the u.s. to be nsted for any reason. what we're seeing with businesses, they are investing. in new research facilities, new manufacturing facilities, growth in stability. exactly what you hope they'll do. what we also see with the new international tax system and essentially creating the u.s. as a magnet for new business investment. you're already seeing businesses asking how do we move our supply chain closer. how do we bring our innovation here. under our blueprint and mr. trump, if you want to access the u.s. market, if you want to access the world market, it's going to be the place to do that. >> i'm sorry, richard. does that mean the environment is going to be more attractive

to make the investment or will there be actual strings tied to this cash? >> i hope not. >> yeah. absolutely. look. every business is in a different position. they're sourcing their competitiveness. their customers. they need to be able to respond that way. but bringing back $2.5 trillion. but more importantly changing that for that capital back in the u.s. we don't lower the tax gate to bring those back. we obliterate them going forward. >> congressman, this is a krital distinction. you're talking about making this a much more attractive place to invest. rather than building barriers to trade. right? >> in a big way. it is. and at the end of the day, if we eliminate every tax reason to move jobs or research our innovation overseas, you're going to see i think frankly trade pays the sins of our tax code. i think there's one of the big

reasons our businesses have located overseas is because of our tax code. we go straight at that issue. >> i think this is revolutionary. i bet if we do this well, if you succeed, we're going to see copycats elsewhere. for example, in britain as they exit europe. they'll have incentives to make themselves attractive as well. >> i think so too. we're proposing to move from an income tax based on where things are produced or profits are booked to cash flow tax base. it's dramatically more pro growth. we go very bold on growth. we go very bold on a simple and fair system for individuals. >> mr. chairman, in how many different areas do you see reconciliation being used immediately like january 21st? >> i think the focus is going to be on the health care side of

things. >> can you use it on anything? >> i think there are some avenues there. they're all being discussed right now. they deserve to see what that first 100 days will be and when. >> we brought up, you know, drudge. i think sometimes shames republicans into, you know, different positions. you may not be able to do if we lose. are they so far deficit hawks that they won't do tax cuts? there isn't anyone out there. >> there is no republican crime here. >> that's a lot different than the campaign, isn't it? >> i haven't met a republican yet on congress who isn't all in

on fixing this tax code. going bold because and you as you start out, this is the first time as you -- >> one question i would ask quickly. the current tax rate 35% statutory, effective tax rate for s&p 500 companies is 23%. what number do you ultimately think it will land on? does it have to be lower than that average rate? >> it does. that's where we're going. we're lowering pass through rates by 43% as well. these are the lowest rates in modern history. lowest ever on the corporate side. >> pass through rate is another question to talk about another time. appreciate it. coming up, becky quick with a preview of the interview of the morning. "squawk box" will be right back. very nice girl.

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coming up, becky quick -- becky quick is back. but for a limited time only. oh, my god. i told you. look at that. >> good morning. >> you look -- >> how are you, joe? >> you look marvelous, young lady. >> thank you, dear. >> do we have any updates? any smiles that weren't gas induced from caylee? >> yes. caylee is actually smiling. i have a ton of pictures to show you. i'm going to get back soon -- oh, there she is. that's a really old picture. that's when she was born two months ago. >> quayle was mad that her first word was joe. that's weird. >> well, i joked, i said she was

going to think you were her father because she heard your voice more than anything. >> you can tell that i've been out of sorts. >> i think that's your way of saying you miss me, right? >> i've been witness. >> all i have is andrew with you gone. >> andrew and melissa. everybody's been having fun. i've been keeping tabs on you. >> melissa hasn't been here every day. >> thank goodness. >> anyway. >> well, i've missed you too. i think that's your way of saying you missed me. i've missed you too. but we do have -- >> we don't say things like that really. men don't. okay. we miss you. >> thank you. guys, i'm here today with a big guest. bill gates is going to be joining us. you know the is the cofounder of microsoft and the cochair of the bill and melinda foundation.

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a cnbc exclusive. microsoft co-founder bill gates sits down with becky quick. details straight ahead. detrump transition. filling his cabinet with names known to cnbc. george takei joins us to help make the world a better place. >> fantastic, isn't it? >> the final hour of "squawk box" begins right now. ♪ welcome back to "squawk box" here on cnbc. it's tuesday the 13th. not quite -- >> not scary. >> this is a good day. i'm joe kernen along with andrew ross sorkin and melissa lee.

becky quick is going to join us in just a minute with some guy. actually with bill gates. but it's really becky quick. becky quick. first, a check on the markets. up 60. typical morning for the last four or five weeks. up 70 on the dow. up 7.5 on the s&p. up over 12 on the nasdaq. and treasury yields have now come back down under 2.50% on the 10-year. you can see 2.45%. as our guest host pointed out, they kind of doubled since before brexit. just about doubled. >> 1.36%. >> it's all relative. i'd rather say 2.46% than doubled. >> carry it out to one more decimal point. >> let's do pi. among today's top stories, exxonmobil ceo selected trump's choice to be secretary of state. trump is also expected to tap

former rival rick perry as energy secretary. it has had an impact on small business sentiment. rose to 98.4 in november. among the highest one-month jumps on record and the second highest reading in the past five years. alphabet's google unit has signed a deal to place servers in cuba. that will help speed up google services in that country. it has increased rapidly in cuba in recent years. now let's get back to becky quick with the news maker of the morning. somebody i have missed quite a lot. becky, that is. but also bill gates. >> i was wondering. >> becky? >> guys, thank you again. we are here this morning with bill gates who is the co-founder of microsoft and the co-chairman of bill and melinda foundation. and now a new billion-dollar fund looking at innovative ways to change energy and really

combat climate change. bill, want to thank you very being here today. first of all, billion dollar fund is a big deal. this is an area that you've been talking a lot and writing a lot and focusing on for quite a long time. this is a different deal where people are investing their own money to look at this. what's the goal of this fund? >> well, it started a year ago. where i went to the november climate talks. and had two groups that came together. 20 governments including all the big ones committed to double their energy r&d. so that's the basic research piece. and i and a group we call the breakthrough energy coalition says we as private investors would take the good things that came out of that and even though it's high risk, we go through and build companies out of that. with a goal of making energy both cheaper but also completely clean. and so with the right innovation of clean energy is actually cheaper than dirty energy.

then even a country like india that needs to build their energy infrastructure at low cost, it'll be obvious to them what they should do. as long as there's a premium, they're going to be reluctant to go that way. innovation is key to solving this problem. >> off long time with this. you and your investor partners are willing to wait 20 years to see returns on that. this is an area that's been risky for investors. i think if you looked at all these funds overall, it's been difficult to do that. one of the biggest road blocks has been cheap fossil fuels. something that we continue to see. what makes you think that as we continue to see technology working on getting cheaper fossil fuels that we won't continue to have that problem and how big of an issue is that? >> we want to be cheaper than coal or gasoline for transport. and so that bar is particularly low right now.

but there are a lot of paths that make us feel confident we can get there. we have five or six paths. we have several companies in each path. the goal is to be even cheaper than those things are. and science is always kind of amazing. it's not good to underestimate innovation. and plus the team of people we have, we've looked at the early clean tech investors. we've learned we need a longer time frame. that's why we're 15 to 20 years. we need a lot of partners like companies in the energy business. we need institutions that both bring their science and will come in at different stage of financing. we took everything suggested about how to make this era even

more successful. >> when you talk about the different pathways, you talk about nuclear or wind power, all these ways of looking at it. what do you think is the most likely path for the best alternative energy solution? >> well, i'll quickly give four paths. one path would be what most people probably expect is to reduce the price of solar and wind. deploy it, put it on an incredible grid that connects the entire continent. and then have some huge storage capability. now, that storage would be over a hundred times better than anything that exists today. so it may not exist. but that would be a path. another path would be to do that but to have natural gas peakers that come in when the renewables aren't in and have carbon sequestration. even then you don't have carbon emission. another path would be if we can

take sunlight and make fuels directly. it's called solar fuels. it's in the lab today. it's almost ready for some start-up companies to go and do that. that's an amazing solution because we know how to store liquid fuels. that's a stand alone solution. then for electricity, nuclear fission, obviously have to make it way more safe, way cheaper than it is today. and like wise of nuclear future. so we'll invest in all those things. we also have greenhouse gas emissions from land use, from industrial processes like steel and cement. so you really want to get to zero which is what's necessary. you've got to have breakthroughs that cover all the emissions areas. >> you mentioned that part of this is based on governments saying that they're going to increase their spending on research and development. while that is something that all these governments agreed on a year ago, we're looking at

different governments facing us in just about every direction. donald trump said over the weekend that he's not sure that anybody really knows the climate change is for real. you can see other instances of this that are kind of in other areas of the globe too. are you convinced that the governments will still continue to fund all of these alternative energy sources? >> well, the breakthrough of any energy is going to go full speed ahead no matter what's going on with climate policy. however, i think this administration likes a good deal. i think i and others will go to them and say that maintaining american leadership, making sure that the products that will be in demand around the world that are lower cost that provide energy security, making sure that our labs and our private companies generating jobs are out in front on that makes energy r&d investments very

smart thing to do. it's not a huge part of the budget and yet it can help the economy just like shale gas has. the r&d piece has been the most bipartisan as i've gone up to the congress, lots of republicans and democrats seeing that this is the unique contribution of the u.s. so we hope they increase the r&d budgets. to find those great scientists all over the world. although most of that will be in the u.s., we're going full speed ahead. wee see that as a necessary piece. we see a few things that really get -- should get a chance to create products. >> donald trump mentioned that he had a phone call with you. how did that conversation go? >> i had an opportunity to talk to him about innovation. you know, a lot of his message

has been about things where he sees things not goods he likes. but in the same way they got the country behind that. in this energy space, there can be an upbeat message that his administration is going to organize things, get rid of regulatory barriers, and have american leadership through innovation be one of the things that he gets behind. of course my whole career has been along those lines. and we have a lot of common friends. but i -- this is my first conversation with him.

>> you mention going to congress and talking to democrats there about it. the senate last year, while they believe in climate change, they don't think man is responsible for it. i guess that's my question. the energy r&d may be something they're open to. why would they spend that money on some of their other areas instead of potentially fracking or finding other ways to advance fossil fuel research. >> the good news is that the energy r&d budget over the last couple years was raised over 20%. the national labs, the universities, they're all over the country. we don't have to import energy from other people if we can avoid local pollution, people are aware that's an issue. some of these energy r&d

programs are going to get big backing. there's even some discussion that the nuclear space might get more than before. >> how will you decide where to allocate the money? how do you think that through? >> everything we go for has to have a chance of significantly reducing climate emissions or bringing this energy that's well cheaper than what we buy today. we have a bigger group. we're interviewing people now. we hope in tloo months to have the team in place and start doing investing. and we're willing to pick some things that are out of the mainstream. even that solar fuels idea, not many people talk about that. one requires a storage miracle to come to take place. i'd say we'll have several dozen

companies that we're going after. artificial meat where there's some people doing there. that's a big source of emissions. >> the cows themselves? the flatulence. >> that's exactly right. methane is coming out both the front and the back. and they've tried various feed things and the way the digestion takes place, it's going to have a methane emission at a high level. and if you can make meat another way, you avoid a lot of the issues about cruelty and you should be able to make a product that costs less money. >> you have some of the best known investors with you. like jeff bezos, reed hoffman, richard branson. is this fund virtually going to open up to people who aren't

gazillionaires too? >> right now we have enough money and i like having a group that really believes in the purpose and they're willing to be patient. the best case would be in the years we spent this first billion. but because we're only going to look at companies to have a real chance to success and have real impact, it could take us five or six years before we get that money out. in the good news case, these people will put up more i feel sure. we're just doing the early stage piece when you're getting the

points. there'll be a whole capital structure as thee are successful. >> there's a lot of news coming in this morning. few hours ago we saw that rex tillerson of exxonmobil is choice for secretary of state. you're around the globe constantly not just for microsoft but also work with the foundation. what do the people you talk to talk about what they've seen with the secretary of state? >> i think there's a lot of fascination to see what the new directions will be. you know, donald trump was elected not so much for specific policies but because of the kind of leadership those voters

wanted. on which he really goes after. and so that's why i think a dialogue now, you know, what are the positive things for america that he's thinking. and who can help out with that? you know, i'm coming in with a strong innovation message. hoping that in the budget priorities and the way things get staffed, we can accelerate innovation in various health areas like stopping epidemics. obviously the energy area. even in education i think good research can help teachers, help students. this digital age is pretty special. and whether it's streamlining government the way that private business has or using it for these research endeavors, now is a great time to double down on innovation. >> he's been very forward about his ideas that this is an america first administration. that what he said is that the

one china policy may not even stand, may not be something that he sticks with. you have a lot of relationships with china. the nuclear company that you're the chairman of has a deal to build a nuclear plant in china. not to mention all the work that you're doing there with the foundation too. how does the one china policy play if we don't go along with that? what do you think that will mean for business relationships in china? >> well, i don't think it'd be a good deal to have trade relations really fall apart. and so i feel sure that he and the team he brings around them even as they try and tune things, they won't want the lose/lose you would get if you start to get large falls. there are challenges, a lot of the strength of the u.s. economy comes from exporters. you know, if you're trying to suppress imports, then you can get into a situation where

countries are raising tariff walls. now, the president-elect is very sophisticated. you know, i hope he's thought through how he's going to get some adjustments there without that typical sort of a tariff tit for tat. the nuclear industry is a great example. if you want renaissance, they have to be able to sell into asia because that's where the vast majority of those nuclear builds are. here in the u.s. because of the low price of natural gas, the complexity of permitting, the speed of construction, nuclear is not -- even if you were to factor cheaper with new design, nuclear is going to have a tough time. their coal's more expensive. so how you balance all those things, you know, that's why a

really top team needs to be pulled together. >> have you been surprised just by some of the tweets that have gone out? some of us thought he would stop using the twitter feed quite as much as president-elect. >> yeah, he tweets more than i do. i come from the tech industry and i can't keep up. and, you know, we're moving into a new phase now. and you know, after january 20th, things like trade policy and what are the aspirations, what are the positive aspirations where we can take some disappointment, you know, perhaps even more pronounced in his voters than the country as a whole. how do we take that once we acknowledge it and say okay let's deal with that. what are the steps forward in education, health, even lower cost energy, companies some of

which will be big exporters. i think all of those have got to be part of that formula. you know, through a dialogue i'll get a sense of is there any way i can contribute to a strong strategy there. >> as we watch the stock market, it has certainly liked what it's seen with the trump administration if you look at where stock prices have headed. as we approach dow 20,000, do you think stocks are expensive? >> certainly stocks are expensive. but it's all in relationship to the macroeconomic picture. which i'm not an expert on and i find, you know, kind of amazing that interest rates have stayed so low for so long. and now because of the way global dynamics work, the dollar's unusually strong. and so the idea of reducing our trading balance is actually harder now with the dollar

having been strong. we're likely to be more stimlative than other countries are. so when do we go back to normal in terms of interest rates, multiples, there'd be a lot of adjustment there. stocks are higher because the interest rate environment. >> you said that back in april when we spoke with you too. that if interest rates were low, then that would be the reason that stocks would continue to climb. the federal reserve is meeting today, the fomc, and will decide tomorrow whether or not to raise rates. many people think they will. it's still only the second time in ten years they've done so. is that a reason for stocks to sell off or would it have to be a significant hike before that kind of -- >> well, if you got this anticipation at such high levels, that's going to be priced into stocks. it's whether the fed starts raising interest rates in a way

that people are not expecting. you could always through the bond market kind of look and see what that expectation is of how many rate increases that would be. >> three over the next year-plus. >> that's probably priced in. so if they go up to six, then you would see some -- the market come down somewhat. >> you know, you are an investor who is active in a lot of different arenas. have you changed the way you look at the markets or changed anything you're doing as an investor based on what we've seen? >> if you can find great companies and invest in them, then the macroeconomics can go up and down and the basic value of what you're holding onto there will be maintained throughout that. and i have a team of people who

manages that. they've done a great job. we're long-term oriented. and don't think that we understand the macroeconomics enough that we're making bets that are specific to that piece. >> you've been very active in currency markets in the past. are you looking at any currencies right now? you mentioned strong dollar but are there other places to look at that? >> companies in mexico give us a fair bit of exposure there. right now the peso's been very weak. it'll be interesting to see during this administration if that's oversold or do those things have further down to go. >> and just one more question on the news of the day. and that's rex tillerson being nominated for secretary of state. his relationship with russia has been something that's been much discussed in the news over the

last week or so as it looks like he'd be getting this nomination. what's your relationship with russia? >> my relationship with russia? >> i ask because crazy news sources were saying you and microsoft were banned by putin. these are not reliable news sources. >> no, no, it's true. yeah. there was a statement by the russian state at one point not to favor our software because of some perception they had. you know, microsoft's done the best it can to correct that. but i don't think we're completely back in their good graces. which is unfortunate, but i had no direct connection to that. nor do i have any particular relationship with russia. >> you haven't been there recently? >> not over a decade.

i did make a trip there for microsoft but it was a long, long time ago. >> mr. gates, i want to thank you very much for joining us today. thank you for everything you're doing with breakthrough energy ventures. we look forward to talking with you again soon. >> thank you. >> i will send it back to you in the studio. thank you very much. >> becky, thank you very much. this limited time experience. we appreciate it. we're going to see you back in january, perhaps from the alps in davos. we will see you soon. meantime, still ahead on "squawk box," breaking economic news due at 8:30 eastern time. plus political realities. we'll talk about the trump transition with former indiaeva. and then speaking with actor and activist george takei. stay tuned. we'll be back in just a second. very nice girl.

you never got the brakes looked at? oh yeah... no. at cognizant, we're helping today's leading manufacturers make things that think and do, automatically. imagine that. a world of new digital products and services all working together for you. can i borrow the car when it's back? get ready. because we're helping leading companies lead with digital.

good morning and welcome back to "squawk box." we are waiting on import export prices due out at 8:30 a.m. eastern time. let's look at stocks to watch this morning. anheuser-busch sold to asahi for $7.8 billion. verifone reported a quarterly profit beats estimates by a penny. stock down 3.25% this morning. deutsche bank has downgraded coca-cola. sees new near term catalysts with the consumer group at or near fair value. okay. we're about 30 seconds away from import export prices. futures have been strong all morning long. doesn't make this morning unique either. up 68 now on the dow jones.

up 14 on the nasdaq. s&p indicated up over eight. the 10-year is now below 2.45%. now 2.44% as you can see there. and rick santelli, a great picture of rick sort of promoing his appearance but he's at cme with the numbers. rick? >> thanks, joe. down 0.3% november read on import prices. last month up 0.5%. lost 0.1% now stands at up 0.4%. we're at about expected on this number. maybe a little drop. year over year, take a macro perspective. we were looking at unchanged. last month, also 0.1% revision. to down 0.3%. that year over year number is pretty important to pay attention to. keep in mind the first three months of this year, we were

down over 6%. so indeed this is the smallest -- i'm sorry, second smallest drop last month october down 0.2%. now stands at down 0.3%. we want to keep that in perspective on the year over year. everybody's talking about interest rates yesterday on an intra-day basis for the first time since 2014. we popped above 2.5%. but we didn't close above 2.5%. june through july of 2015, we had three major tops at 246.5. that is to pay attention to evidenced by how much time. andrew, joe, becky, and the gang, back to you. >> appreciate it. we are now just a month away from inauguration day. donald trump still working to put the finishing touches on his cabinet. today he announced rex tillerson as his pick.

joining us now on the picks and battles former indiana senator evan bayh. good morning. >> good morning, andrew. >> rex tillerson. how difficult the confirmation going to be? >> it'll be a little turbulent. there's a perception that a president gets his cabinet. we need to make sure our policy toward russia continues to be pretty -- >> you've seen comments from marco rubio and others on tillerson. >> there'll be a lot of scrutiny, no question about that. particularly his ties to russia, vladimir putin. my friend john mccain, lindsey graham, are they really going to pick this as the battle right after his inaugurated to take on the president of their own party? i think this is laying down a marker they expect to continue the policy being vigorous. that sort of thing. >> just talk about your party for a second, senator. senator governor. john podesta yesterday. clinton campaign backs a call for intelligence briefing before

the electoral college vote. they also backed the recount efforts of jill stein. i mean, they -- when trump talked about a rigged election, that was -- i mean, that was -- you saw the response to that. it was horrible. aren't they implying this was a rigg eged election by going on h this? >> let me say a couple things, joe. first the notion that a foreign country might have been meddling in our election, that is a big deal and deserves to be investigated. i think the current president needs to get as many of the facts out as he can without damaging our intelligence sources before -- let me finish. and intuitively makes some sense because they had meddled in other elections. i think it is a bridge too far to say you can say definitively that it changed the outcome of our election. i don't think you can say that. >> meddle is a word that voting

machines, what are you talking about voting machines? because it wasn't the podesta e-mails. do you think that change -- that would be enough to -- i mean, a president said it was fox news' fault. and then it was fake news' fault. then there was going to be a recount. this is unseemly. and again, democrats challenging w's first election with hanging chads. get over it. >> i think we need to get to the bottom of what happened. i think we need to let the american people know as much of the facts as we possibly can. that said, there's nothing that we know yet that questions the legitimacy of the election. >> should we assume this is different than the way the justice department behaved in recent months? john brennan is a close confidant of barack obama -- president obama. the fbi hasn't signed onto the russian influence at this point.

>> a couple of things, joe. our intelligence services, i know many of these people. richard does too. they're good, honorable people. they're not partisans. they're patriots. i would not question the motives -- >> you wouldn't question comey's motives. >> i'd question his judgment, not his motives. >> that just depends on -- okay. >> there have been elections before when there's been questions. voting behavior in chicago, what was happening there. the butterfly ballot in florida where you had holocaust survivors voting for pat buchanan which seemed to be an unlikely combination. >> wow. so the republicans are known for voter fraud. that's a new point. >> my point is it is not uncommon in our society for there to be questions about elections. but we shouldn't go to the legitimacy of the election without proof. >> hard to get the voters not to do what intended. that's where you are as a party. >> i wouldn't go there. but the american public has a right to know if a foreign power

attempted to meddle in our elections. i would say there's a history of them doing this in western europe and other places. we need to make sure to the extent possible, this sort of thing doesn't happen again. >> i think the key thing that the senator just said is let's get on with it. i agree, joe, from the standpoint of cyber invasion is an important issue. whether it's here or somewhere else. we've got to make sure we're not being innovated by the russians or the chinese or anybody else. looking into this is not damaging. i don't think it changes the outcome. >> looking into it might be different than insisting the electoral voters need to see the results of the investigation before registering. >> they are well organized to invade our companies as well as our political process. and we have to figure out how. >> let me ask a question which is donald trump was this week going to tell us about how he planned to handle business

conflicts. how would you like to see him handle it? is there something he could do that would take this off the table? because it is something that could clearly create at least new ways or a cloud over the next four years as i know democrats and others on the republican party will have questions about. >> yeah, andrew. we have not had a president with these business holdings before. someone who relishes playing a role in his business or having his children continue the business. my advice to him would be it's in your interest mr. president to disentangle yourself from your business. because it will just be a continual source of distraction for him. you know, back to your point, joe. playing into his political opponents' hands. >> short of selling his business, how will he do that that will satisfy people that will want to use it as a political football no matter what? short of selling it, how will it ever be enough? tell me. >> there's no satisfying some folks. on either side, right? hillary couldn't satisfy some

folks. but this is a job for the lawyers. and as much as possible and i know it may be aggravating for him, but as much as possible it's in his best interest to separate himself as, you know, as substantially -- >> that's what paul ryan said when we were in washington. he said the lawyers are going to handle it and had no interest in talking about it. he wanted to talk what the first hundred days were going to bring for the american people. not this. >> i'm not sure this is unprecedented by the way. no one ever talks about jack kennedy, his family, how they handled things when he was in office. or nelson rockefeller. there are some precedents, aren't there, senator? >> there were, but those were different times and in terms of the scrutiny of business, personal life, all those things were different back in the day. >> to be fair to the president-elect, we have had wealthy people in office before. >> true. >> and i think -- anyway, i hope they resolve this so it doesn't become fodder as you said. >> and already wealthy. they didn't use the trappings of the office to become wealthy which is why i think there's a

big difference between talking about this with trump and hillary clinton. >> going to take the principled stand that there was a problem going on with the clinton family if you believe that was the case, you should have the same principled stand with the trump family. >> but for four years she was secretary of state and no one said a word. and all the influence -- >> what i'm saying is -- >> you didn't like that. then you should also want the same standard. >> you should have not liked that knowing there was nothing back then. >> look, we want him to be successful. we want the country to do well. there are going to be enough problems that we can't do anything about that will come along. why create our own? it's in his best interest to -- >> if he didn't do this to add 10% on to whatever his billions you want to put on it, he's not doing it to add 10% return to that. >> what if he doesn't do something in order to not let his businesses take a hit? there's the other side of it also. >> okay.

starting at zero as you know broke when they left the white house. and -- >> there's an article this morning about his relationship in turkey with the conversation he had with erdogan and this whole deal -- >> hotels. i saw something. >> no, but that is exactly what is going to cast the cloud unless that is resolved in a meaningful way. why you wouldn't want that resolved. so then you just throw up your hands? >> so don't do anything? >> i think it was implicit in the election when it happened. you knew who you were electing. >> i'm not sure that's the case. he told the public -- we can get the tape. he said i'm getting out of my business. >> this could go on forever, obviously. senator, thank you. >> this will gain traction if the country is enduring an economic problem. it's background noise until then. why have this hanging out there? i wish him good luck and the lawyers good luck. >> thank you. coming up, it's a season of giving back. we're looking to the stars. actor and activist george takei is here to tell us how he's working to make the world a better place. "squawk box" will be right back.

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others to give back. our special guest this morning, george takei whose broadway show "allegiance" is inspired by his family's experience living in u.s. internment camps during world war ii. it will be shown in movie theaters nationwide tonight and takei is of course also known for his -- i knew that's how you looked familiar. his role as -- it's weird to -- no one doesn't know who you are. it must be weird to live your life like that. >> my hair has changed color. >> but george, thanks for joining us. >> great being here. >> what always shocks me is ten years goes so quickly. if i do the math on when what the experience that you're talking about, it's really blink of an eye when there were internment camps. >> 75 years ago. >> 30, 40 has gone by like that.

americ >> american barbed wire prison camps. we were in prison simply because we happened to look like the people that bombed pearl harbor. there were no charges, no trial, no due process. and the most egregious violation of the constitution. >> and if you were to take a poll of average people, how many would know about that? >> that's precisely why we did that musical. because i'm always astounded when i tell people that i grew up there. they're aghast. they knew nothing about it. now i think in this day and age, some people knows something about it. i know so many people that i consider well read, well informed that are shocked when i tell them i grew up in american prison camps.

>> so we -- what could we see? could we see the live play? or -- and how is the film actually made? >> well, we filmed our broadway production. >> you filmed the production to get a wider audience. >> we had two performances. one with the camera in the audience together with the audience. and another one with no audience but with multiple cameras. one on a crane roaming over the stage and it came in for closeups, pullbacks, closeups. so it's a group of the filming. that's going to be all across this country and canada because japanese-canadians were put in canadian prison camps. so it's very relevant to japanese canadians as well.

and our musical "allegiance" was directed by a japanese-canadian whose father was imprisoned in a canadian camp. >> wow. >> what's your message, george? i don't want to turn this into a political conversation, but obviously in this day and age, we should be aware that people who look different, maybe not from you and me but in general, minorities out there just because you look a certain way doesn't mean that there are certain assumptions that go along with that. >> it has -- "allegiance" has a powerful and relevant message for our times. because what happened then and the kinds of rhetoric we heard then, lock up the japanese -- and i'm using the long word for japanese. it was a three-letter word. we're hearing those echoes again today. and coming from high sources. the trump administration has

floated trial balloons saying that our imprisonment was a precedent. now, if it was a precedent, it's a precedent for knowing we should never do something like this again. it is -- last sunday night i was at the muslim public affairs council annual dinner and i spoke there. and what was heartening to me there was we had so many elected officials there. the attorneys general of california, congressman ted lou, county supervisor mark ridley thomas who were there to speak to support the muslim people. they are the ones that are being threatened now. these sweeping statements that donald trump made during the campaign saying all muslims should be banned from entry into the united states. yes, some of the terrorists have

been muslims. but there are billions of muslims throughout the world. and to make that kind of all-encompassing sweeping statement is crazy, insane. but that's the same thing that happened to us. and they're talking about a muslim registry. well, we know about that. because they called it a database, a japanese database. they knew exactly who we were, where we lived, what we did. and after that came the curfew. we were to be home by 7:00 p.m., remain in our homes until 6:00 a.m. in the morning. we were imprisoned in our homes at night. >> it's a slippery slope, in other words, to the internment camp. >> after that we discovered that our bank accounts were frozen. we didn't have access to our life savings. we were financially paralyzed. and then the soldiers came to take us away. >> so we're going to learn

through reminding ourselves that history does repeat itself -- >> through music and dance as well. because we were resilient. but part of resilience is also being able to live as human beings, having the strength to fall in love. and strength toall in love and we it tell our story with two love stories. the other aspect of this, japanese-americans were drafted out of imprisonment because they realized there's a wartime manpower shortage and they had classified us as enemy aliens, the most irrational, crazy thing. we weren't the enemy and we weren't aliens. we were americans, three generations and yet we went from behind those barbed wire fences, fought for this country in a segregated all japanese-american unit, fought with incredible

courage, and we sustained the highest combat casualty rate of any other unit and we returned as a single most decorated unit of the entire war, a record that still stands to this it day. >> george, thank you. we look forward to your allegiance tonight, 600 theaters nationwide. >> thank you. coming up, when we return jim cramer will join us live from the new york stock exchange. his stake on the day's top stories. you're watching "squawk box" here on cnbc. what time is it? it's go time. come on. let's go, let's go, let's go. woooo hoooo!! yeah!! i feel like i went to bed an hour ago. i'll make the cocoa. get a great offer on the car of your grown-up dreams at the mercedes-benz winter event. it's the look on their faces that make it all worthwhile. thank you santa!!! now lease the 2017 c300 for $389 a month at your local mercedes-benz dealer.

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down to the new york stock exchange with jim cramer joining us now. another day, another 60, 70 points, jim. what is it today? >> look, yesterday you had exxon going, walmart going and j&j going over an article. remember when you would look and get the bump? we kind of didn't have that for the last five years. it's back. today i just see the boeing numbers, people aren't looking at the wide bodies being slowed down, saying it's more than expected, it's a $90 billion company and they're saying, hey listen, we have happy days are here again. i'm not going to fight it.

don't fight it. recognize there are other issues like interest rates, the dollar that we're overlooking now and as long as the news flow remains positive maybe we can get away with it. >> mr. fisher is here. seems okay, jim. >> we know the fed is behind the curve. we want to see rate hikes. i love because he's a great guy. >> what a nice thing. i think i'll stop there, if i get jim's approval. >> you're just dynamite. here is what i said to jim when i saw him last on the floor of the exchange. negative surprises, i think we have the orange swan now in the form and it's lifting all votes. we'll see what happens when it bumps it's head against increasing interest rates. >> exactly. exactly right. >> now you have the orange swan. >> orange is the new black thing, black swan.

and i haven't seen that. j jim, thanks. >> thank you, guys. >> we'll see you top of the hour. later, don't miss jeff currie. join "power lunch" at 2:00 p.m. eastern. that should be interesting.

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thanks to our guest hosts, former dallas fed president richard fisher. you seem sort of okay. let me say one thing -- >> sort of okay. >> you look great. i'm talking about if rates rise quickly. >> i don't think quickly but i think they will rise. >> what level would we get where we don't want it to add to the deficit because it's so great. >> $42 trillion in nonfinancial. we have about $400 billion, coming due this year. these will be paying points for everybody because you're going to refinance at higher rates. if you have better economic growth it compensates for that. that's the tradeoff that everybody is hoping for. we'll just have to see. >> if it happened quickly and if it wasn't rolled smoothly, that could present some problems. >> i want to remind viewers of

one thing. it's not just the fed overnight rate. it's how the federal reserve reinvests its portfolio. they own 35% of treasuries beyond five years and how they put that back to work when they mature, define monetary accommodate, this is what janet yellen said. >> '18 is around the corner. >> you might be. >> that won't come up for a long time. thank you for having me. >> make sure you join us tomorrow. "squawk on the street" is next. ♪ good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and dave faber. the dow takes a shot at another all-time high. we look at tillerson's nomination to head state. italy swears in a new prime minister and