"squawk box" begins right now. ♪ live from new york where business never sleeps, this is "squawk box." good morning. welcome to "squawk box" right here on cnbc, i'm andrew ross sorkin along with joe kernen and kayla tausche. the markets this morning, the dow pulling back snapping a seven-day winning streak. the move came after the fed raised interraest rates for the second time in a decade and signaled three hikes instead of two in 2017. look at the futures this morning. you are looking for a snap back the opposite way. dow looks like it will open 75 points higher. s&p 500 looking to open 8 1/2 points higher. nasdaq about 16 points higher. in asia, a bit of a mixed picture. hang seng down almost 2%.

finally a look at european equities at this moment. green pretty much across the board except for the ftse 100. joseph, nice to see you back. >> about to be here. couldn't be -- you know, it -- if you could do that, monday, tuesday, thursday friday. >> you like that schedule? >> a little recess? >> yeah. >> hump day? >> slept until 7:00. >> wow. >> 7:00 a.m. was up until 9:30 the night before. >> whoa. >> living dangerously. >> threw caution to the wind. didn't think about going up until 9:00. >> they say nothing good happens after 8:00 p.m. >> there's a song on alt nation, nothing good happens past 2:00 a.m. >> little different. >> bare hands. you don't know that one? >> no. >> you millennials don't listen to the new music.

>> i thought nothing good happens until 2:00 a.m. >> i know you. i know you. i know you, my man. >> any way -- >> that's when he gets up to start prepping for "squawk box." >> thank you. thank you. >> column, tv show, deal book. davos man. broader markets. treasury yields, 2.6. when is the last time we were at 2.6? >> two years ago. >> did we get there? >> we did briefly. >> gosh, that was crazy. wasn't it? wacky fed -- who would have thunk, two rate increases in two years? they're crazy. nuts, insane. there is the ten-year. 2.63. look at the currencies this morning. i saw the yen really got my attention. 1.18 now. in the euro, people worry at 1.05. the world will end. >> inching towards parity. >> good time. good time to go to paris.

some strike around the eiffel tower, isn't there? isn't that -- do i got that right? >> by the time you book your ticket and go, hopefully -- >> you're such a local at this point. >> i do. i do know -- i do know that place pretty well. love it there. price of crude. hovering around 50 or so. up a bit. 51.29. other big stories. big story we would like kayla to do those. >> i'm supposed to be watching some big stories today. yahoo disclosing another breach, this time affecting 1 billion accounts. the hack attack exposed private information of those users such as names, phone numbers and passwords. it's believed to be the largest theft of personal data topping only the previous breach by yahoo of 500 million users. this breach took place in august of 2013.

it's believe to be separate from the breach in september. it calls into questions verizon's planned $4.8 billion acquisition of yahoo which chis expected to close early next year. after the first breach verizon said they may renegotiate some terms of the deal because of the hacking. yahoo shares down 4%. we'll see if we get comment out of verizon or executives about what this means. other deal news, shares of mondelez on the move after a report surfaced in a swiss magazine that kraft-heinz is supposed to acquire or should we say re-acquire? >> that's what it would be. >> the stock rose as much as 12%. that's the stock of mondelez. cooling off after the potential target said it has not heard from kraft-heinz about potential takeover. the stock up about 3% in

trading. mondelez said there is no reason to believe there's truth in the report. officially neither company offering a comment. hours after uber began picking up riders in san francisco in self-driving cars, california regulators ordered the pane to shut don't pilot program. the state department of motor vehicles says uber must get a permit to test autonomous cars on public roads or face legal action. the dmv issued permits to 20 companies, uber is not one of those companies. uber says it cars are not truly self driving because they need a driver to take control of the wheel if needed. it is familiar with legal action. >> in pittsburgh, they got permission. this is different. always question whether technology or government, who is -- chicken or egg. whether the government can actually catch up to the technology. >> they ask forgiveness rather than permission as a rule

generally. we have a jobless claims, consumer price index and philly fed surveys at 8:30 a.m. that always excites steve liesman. followed by the home builder sentiment survey at 10:00 a.m. a pair of tech names reporting after the bell, oracle and adobe systems. the fed hiking interest rates for the second time in a decade increasing the expected rate hikes in 2017 from two to three. the central bank's language took a toll on the markets yesterday. steve liesman has more on the fed's message to the market which is still pricing in two rate hikes for next year. >> well, if you look at the two-year this morning. it's up near 1.20, almost 1.30. as soon as joe said 2.60, it was old, because it was 2.62, 2.64. the spread between the two is on

the rise. it's interesting to me. i thought the market was on board with higher stocks and higher rates. yesterday got a little spooked. this morning it's like i'm in for a dime, in for a dollar on the idea. the fed was tilted a bit hawkish. we came in the fed survey showed there was a split in the market about whether or not they were going to do two or three next year. we had an average of 2 1/2. half the market was not priced in for the third hike. three hikes in 2017, only a slight increase in growth with a somewhat rate inconcrerease in outlook. i want to show you -- let's listen so what she said when i asked her about do tax cuts increase productivity? are they the sort of thing you're looking for when it comes to fiscal policy? >> tax policies can have that

effect. it really depends on the specifics. i don't think there's anything that i could say in general about what tax policy would do. i really can't tell you what the fed's response would be to any policy change, is that are put into effect. >> that was the first of nine, ten, 11 attempts to get the fed chair to comment on the incoming president's policies. she was not really taking the bait. one more thing i want to show you, how did we get to three hikes from two? didn't take much. you had a decline in those who were in the two-hike camp, a decline in those who were in the four-hike plus camp. they met in the middle. we were already close. it's not that big of a change. it only took going in two guys

to raise the forecast for 2017 to get there. it strikes me if that's the new news to the market, it's over reacting to it. >> what was dan rather's thing? >> he said courage. >> that's the word i come up with on this. 4.6 unemployment. the second rate hike in ten year years. >> taking the punch bowl away, saying no to people. no, we can't stay at zero. courage. >> at 72 no62 now better than z. >> i have schlossberg here, boris schlossberg and david bianco. you speak some russian, don't you? >> i do speak some russian. we all will speak russian -- it will become very popular since we're being taken over. >> exactly.

>> i forgot. i have a russian here. >> now it's cool. >> i hope kraft does it, if they buy mondelez, will that name go away? do you know? will that name go away? mondelez? will it come back to kraft whatever? >> can only hope. >> you know where that word comes from? they had a contest with 1700 entries with employees. they came up with a match up of latin -- mushing together world and delicious. in russia, it is as profane as you can get. it's some type of oral sex, is it not? if you say that to a russian, they'll slap you or fine you or -- can you tell us what it means? are you afraid to do that? >> i think i'll refrain myself from saying what it means. >> did you know that? >> i did not know that. family programming. >> 6:10 a.m. >> i think we're okay with saying mondelez, unless they're watching in russia. >> as long as you say it with

that southern twang. >> don't you think of seinfeld when you hear of that? mandoley industries. how about the fed increase? people don't know that. i have two russians here. two communists, but any way -- >> i thought the fed's tone and what happened in the dots is just about perfect. i think they're signaling they do expect some fiscal stimulus. they're awake at the switch but not doing anything or changing the course in a definitive way until they see the fiscal policy. >> isn't once again the global situation masking how behind the curve they are here? probably giving them cover to be behind the curve and now, with rates at 2.6% and people expecting gdp higher, they're allowed to raise. they may extricate themselves despite their best intentions. they may get out of this. >> we're all expecting a faster

pace of hikes. >> they may be able to without repercussion. >> that's welcome. >> growth might pay for the higher interest rates. >> i don't think they're behind the curve at all. it was surprising to see her rhetoric, which was much more hawkish than the reality on the street. the only factor that matters is wage growth. wage growth is still not there. retail spending is still not there. those two things start to go up, yes, we're all on board for further rate hikes if we don't see that improving we're dead and done. >> here's what i saw yesterday. fake news is all the rate. hearing we're at full employment, someone on the right of things said fake news with 95 million people not in the work force and can't get a number. >> it's a fake number. >> say 95 out of context is a bit out of context. you know what the number was before the financial crisis?

85, i believe. >> still at 40-year lows. half of that is probably retiry retirees. >> if we're that tight on unemployment -- >> what janet yellen did, hey, if we can bring some of these folks back into the work force, we don't have an immediate inflation problem, why not try? the reason is a sophisticated reason, the notion called historesis? that's the process of when you sit down on a couch, you get up, the pillow doesn't bounce back. the fear at the fed, beginning with bernanke to janet yellen is do we get into an unemployment problem that does not snap back with the economy? their notion is run hotter. i think now that there's some help coming from the fiscal side, they'll run more neutral

to a touch hotter. >> only if they get support on the wages. if wage growth is not there, the fed stays still. mark my words. >> there's a new show in town, fiscal still plmulustimulus, the rates pivot on. they want to see the corporate tax cut as soon as possible. that's what the fed wants to see as well. >> there's a question do we absolutely get that? goldman sachs says we won't get that until 2018. it will be talked about for a long time, but we won't get it until 2018. >> if they want to keep it simple, get it moving quickly, drop the corporate tax rate, don't get embedded in complicated -- >> that's the question. is that enough? a simple rate drop as opposed to how do we manage the territorial tax system? >> it's extremely confusing. if they want effective stimulus do that another day, drop the corporate tax rate as soon as you can. do more later. >> you may not get the shot the

second time. >> i don't see any good outcome from the border, so i would focus on make the u.s. corporate tax competitive and not introduce protectionism into the policy. >> in the meantime the clear benefit here is to the japanese, the biggest winners yesterday were the japanese. in six weeks donald trump made more roads into the japanese economy. and the nikkei economy -- >> skyrocketing lower. >> it went up. >> i know, but the dollar strengthening against the yen, right? >> the dollar strengthening against the yen makes the japanesecorporates -- >> the yen is not rocketing, it's plummeting. >> a piece caught my eye, it says why china is so afraid of the u.s. fed's rate increase, because of what happened in january and february of this

past year. >> it creates turbulence in the yuan. there's bad debt in china. a lot of it is tied to the dollar. there's fear on the other side. china is the other interesting point. if we have more tensions with china, they warned they will investigate starbucks and gm. if they clamp down on u.s. corporates in china, the japanese corporates are winners by benefit. there's no love lost between japan and china but they will benefit by default if there's tension between the u.s. and china. >> rick santelli yesterday thought it mattered to the market that janet yellen did not in any way bless the policies of the incoming president. i wonder if that's a good thing by giving the market a wakeup call about the uncertainty surrounding the president-elect's policies. that we don't know how much is coming, when it's coming. it's very hard which was essentially her point, very hard to game the potential economic impact because we don't really

have a plan. >> it's normal for a fed chair to not be overly opinionated on fiscal policy. >> clearly i think what you have happen is a fed that welcomes fisc fiscal stimulus, one of the best ways to spend that wallet is that corporate tax cut. when we see the exact package from the tax cut corporate to personal, then the fed can right size their policy against that. >> for 2017, are you balls to the wall? are you -- what do you think? >> i think the s&p -- it's okay to say that. you know what that means? >> i follow you, joe. what does that mean? >> that's a pilot of a jet, the throttle has -- >> balls in his hand. >> pushing it all the way to the wall. nothing dirty. >> i would think he would have his hand on the throttle. >> that is the throttle. >> never mind. >> you have a target for 2017?

>> yeah, 2400. >> not much of a gain. like kissing your sister. >> we like it. >> that's like 4%. that's not balls to the wall. that's, okay, we'll land. >> there's financials, healthcare, tech -- >> how about 2800? take a stand. 2400? >> we'll take a stand one step t at a time. >> all we're saying is it doesn't go down. that's as manly as you'll be? >> we think the markets rallied which is expected and appropriate. the markets should be in the 2200 range. >> i feel like i'm on the simpsons and santa's little helper, woof woof woof, food. >> that is not balls to the wall. >> why is there any surprise every time hong kong follows the

u.s., as if we didn't know that will happen? >> it's natural. >> you make easy money on that. that's why you're smiling. >> >> you sound angry. emotional. >> i'm not angry. the market knows what's happening, and schlossberg makes money. >> you flinched again when i said balls to the wall. >> it's tough. >> why did you flinch again? it's fine. it's a throttle. >> discussing jobs, immigration with president-elect trump yesterday, jeff bay soezos sayi was a productive meeting.

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welcome back. tech ceos representing more than $3 trillion in market value meeting with president-elect trump yesterday afternoon. want to get over to john harwood with more on this story live from outside the trump tower. good morning to you. >> reporter: good morning. you had the potential for conflict in this meeting given the fact that some of the people in attendance, including tim cook of apple, jeff bezos of amazon among many others had

tangled with donald trump during the campaign, but that was not the donald trump who showed up. campaign is over, he moderated some of his rhetoric on some issues, and donald trump praised the tech executives gathered around that table as the best in the world and promised to have open lines of communication with them. here's donald trump. they're all talking about the bounce. right now everybody has to like me at least a little bit. we'll try and have that bounce continue. and perhaps even more importantly we want you to keep going with the incredible innovation. there's nobody like you in the world. in the world. nobody like the people in this room. and anything we can do to help this go along and -- we'll be there for you. you call my people, call me. it denoesn't make any differenc. we have no formal chain of

command around here. >> interesting phrasing in a meeting where his vice president was there, saying there's no formal chain of command. three of his children were there along with jared kushner, that wi will fuel concerns about his businesses and the presidency. the flip side of his message using tariffs against countries and other countries if they're not competing fairly with the united states. the rubber hasn't hit the road. the policy choices have not come. one thing to watch is the issue of immigration, especially since the incoming attorney general, jeff sessions, has talked about restrict i restricting h1b visas, important to the people in the valley. we'll see what happens in

january. >> i think what he meant, about no formal chain of command, that you can call me. >> yes. >> you'll probably make the headline trump admits management structure is in disarray. that could be a good headline for you on that. i don't think he meant that. i think you can reach right up to me. you could look at that in a half empty way? >> yes, i think that's exactly what he meant. >> okay. that's a good thing. >> a couple things. i talked to a couple people after the meeting, there was a suggestion, even though i know jeff bezos said it was productive, but they felt like props in terms of the images and what took place there, that the meeting necessarily was not necessarily substantive and didn't have to happen the way it did. it was more theater than, you know, a true meeting of sorts. >> well, no doubt about it. this was a -- principally a

symbolic gesture by the president-elect to an industry that's extremely important to the american economy. as we discussed before, donald trump said in a rally the other day when some people in the crowd started saying "lock her up" about hillary clinton, he said, well, that was good for it's in the campaign, but we don't care about that so much now. i think donald trump's attitude for the moment, he's said he's a counterpuncher. you notice these companies did not say much coming out of that meeting. i think there's a reason. they're trying to keep their head down, even as they believe -- >> john, we have to run. unless there's questions on how to fix itunes syncing problems, i don't understand why trump's kids were in the room. that was a tweet yesterday. i don't understand that.

>> you don't want his kids there? >> i don't. not if they're planning on running the business. coming up, full analysis of the rate hike plan and a look at how things could change under the trump administration. when whirlpool builds an appliance, they put everything they know into it. but once it's sold, there usually isn't a way to keep improving that product. today, whirlpool can analyze iot sensor data from connected appliances on the ibm cloud. so they can continuously learn how customers are using their products.

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♪ welcome back to "squawk box" on cnbc. u.s. equity futures at this hour have -- when you come in in the morning and you don't see the fair value. i saw 50 points, now if you add

in the minus 30 on the fair value, up almost 80 points. that would almost get back what the markets lost yesterday. not quite. a little over 100. nasdaq indicated up 14. s&p up 9. the cdc issued a new warning declaring brownsville, texas a yellow zika virus zone. pregnant women should avoid the city. those who live or work in the area should make every effort to prevent mosquito bites. the local spread of zika has been reported in at least five cases there. there are more reports across the border in mexico. some stocks to watch, swiss drug maker lonza group buying capsogel for $5.5 billion in cash. capsogel makes delivery systems. the stock is down about 7%. pier 1 imports third quarter

results beat forecasts, and they're raising fourth quarter earnings guidance, however sales continue to be hurt by soft store traffic and a heavily promotional environment. still better than the street and the stock is up about 20%. apogee's third quarter profit rose 20% on strong sales. the maker of commercial and industrial glass is raising its full-year outlook as it benefits from a surge in commercial construction. and shays of eli lilly, reconfirming guidance for 2016 and 17. saying they have the potential to launch 20 new products from 2014 through 2023. fed policymakers decided to raise rates by a quarter point. the second rate hike in a decade. the central bank indicating there could be three hikes next year instead of two the fed will wait and see if president-elect trump's plans for tax cuts and deregulation will boost growth. joining us with that and more for what it all means for

investors, american enterprise director of research policy, kevin hassett and brooksings institution fellow aaron klein. i should not say good friend for one and not the other. good to see both of you. help us understand what kind of growth rate you think given the fiscal measures that may be on the table we could see over the next 12 to 18 months and how that will impact the way janet yellen and company will think about things. >> you hit exactly the right point. the thing that was surprising to me yesterday about the fed is that they didn't change their growth outlook, even though the whole world is changing since president trump has been elected. the oecd staff jacked up the forecast for next year because they see a big tax cut coming and a infrastructure bill. the fed didn't do anything. they lowered their forecast a

bit. the truth is you should ratchet up growth forecasts by a half percent next year if you're cautious and a percent after that. there's a really big tax cut coming and a big infrastructure plan coming, the fed didn't do that. they didn't do that because they really believe that stuff. they just sort of sat there. what that finally means, i'll let you go to aaron, next year the fed will be as behind the curve as the folks at the indianapolis 500. they'll watch all this stuff come. the economy will start booming. they'll not really change rates. they'll not believe it works. >> aaron, do you believe that kevin's right? what growth rate would you ascribs ascribe to what's happening here? >> i believe the tax cuts we're likely to see happen. what i do think is going on, president obama is leaving a strong economy.

economic growth is over 3% for this last quarter. the last unemployment rate is low. the reality is we had this trade off before, when president clinton left and handed the x economy to president bush. i think the fed is lifting off. for years the fed was playing lucy and the football with charlie brown and the markets. this is rather than one and done this will be a sustained liftoff period. i think the fed will be at about 1% by the summer. >> let me ask both of you, what is realistic in terms of the fiscal measures? we just had a conversation before this segment about a tax change. there's a question mark whether that really does happen in 2017 or in 2018. is it a one and done? does it capture the territorial issue? are protectionist measures involved in that?

do we see the infrastructure component of that? bob corker was on the show yesterday, he wanted everything paid for. that makes things complicated. kevin? >> they have two chances with reconciliation, the thing that protects you from a philly bust tore pass a bill next year. the odds of a big tax cut next year are north of 70%. it's really going to happen. the big aspect of it that aaron must concede f we cut the corporate tax rate from 35 to 20, make it a border adjusted cash flow tax that will have a big effect on the economy. they'll do that. they can do it in reconciliation. they'll do it eventually. >> i agree if we have a logical improvement in the corporate tax structure, get rid of some of these loopholes, lower the top marginal rate and use that money wisely to invest, that would have a positive impact. i think you'll see large cuts in capital, you see a gunning after the estate tax. so that, you know, trump's

children can be even wealthier at the expense of our children paying that debt. the question is whether or not the tax cuts are done effectively, efficiently or go after things like the estate tax. >> if they do the corporate and the estate tax, the estate tax is not a negative. >> it's a total negative. >> there's no way you can come i with a way that shows the estate tax a negative. >> absolutely. >> aaron, explain yourself. >> terms of one year, but in terms of the future, you're blowing up the dedeficit. what's the big change in the markets, everybody is focused on equity, focus on debt. there's a huge run up in the bond markets of interest rates, people see inflation coming, huge deficits in the fiscal discipline we have at this point. the deficit under control, that will explode again in a series of cutting taxes so the yankees can be passed on from one

steinbrenner to another tax-free. that's the impact the last time we got rid of the estate tax. >> did you know the u.s. economy was now a 3.2% economy. i like the way you're doing that, aaron. >> yeah. >> what was the second quarter? >> 1.5. >> 1.2. i thought it was 1.2. >> the year was around 2. >> you're saying it's okay to say we're growing at 3%? that's where the fake news comes from. doesn't help your case. >> no, no, no. you're looking at an economy where you have unemployment at 4%, 5%, the last quarter was stronger than the last few. >> just be better, we wouldn't need to have this conversation, if you just kept it in the real world, don't i think? >> i think also there's been higher taxes, lots of regulation, as that stuff gets relaxed, the oecd staff says that growth will go up. the fed is not saying it. the fed has a bunch of

democratic appointees on, they don't believe this stuff. let's sit back and watch. i think growth will be closer to 3 next year. if it is closer to 3, aaron will say that's because we gave you 3. it will go from 2 to 3 over the next few years. >> the facts are the facts. >> i know you're not a market prognosticator. a lot of people compare this moment in time to reagan coming into office. i just want to ask the question whether that's a fair comparison given the debt ratio today is so materially higher than what it was then. pe ratios in the stock market back then were nine times, now about 22 times. people think this market is supposed to double. is that possibility given where we stand? >> it's hard to see how, especially with interest rates so low, which also drives up the multiples. justin wolfer had this great

paper on the stock market response to presidential elections. the first reagan election drove equity markets up. the reagan effect was north of 7%. so you're seeing for trump which is interesting, almost precisely the same mathematical change in markets. so they are looking right now -- the markets are looking ahead to reaganomics or a second try at something like reaganomics, but the ned is not. the fed did not change their outlook. >> we have to go. >> kevin, you are looking at the same paper that said the markets would fall 8% if trump was elected? >> he did a great job with that, didn't he? >> that's my point. you can't selectively quote there. the reality is this handoff is like clinton to bush in 200016789. >> i didn't selectively quote. >> 2001, you had an economy booming, deficit under control and really low unemployment. let's hope we don't squander that. >> gentlemen, i'll buy both of you lunch next time you're in the city. thank you. great to see you both. >> i have a problem with your

22, where did you get 22 from? >> isn't that forward looking? >> no. >> 2017? >> what is it? >> 2017. >> what are we up to? >> i don't know. i'll figure it out for you. i think -- didn't we earn 2,200 -- >> we have a commercial break to do that. coming up, one las vegas hotel is adding voice control to your low tell room, but there will be a device listening to everything that happens. >> i'm miked, joe. >> in a hotel room. >> you got alexa. not me. she hears everything. she hears everything. turn that thing off. not only turn it off, smash it. >> story up next. as we head to break, a quick check of what's happening in europe. market had been mixed. ftse turned positive ahead of a decision by the bank of england. coming up, the dow within striking distance of 20,000. will the trump rally power through the milestone or will bears take control and spoil the party? >> you stink. >> i think you'll have a good

christmas. >> you spell like beef and cheese, you don't smell like santa. >> okay. >> oh! >> ah! >> we'll talk strategy after the break.

welcome back to "squawk box." time for the executive edge. starting with the markets. the march to dow 20,000 is still on despite stocks falling yesterday after the fed meeting. look at where futures are at this hour. the dow would open up by 73. the nasdaq opens up by 12. the s&p 500 would open up by 8. getting us close to canceling out the losses from yesterday. we'll still have a bit of a ways to go if we want to get near 20,000. >> we have a segment, we might as well call it the hot mike segment. wynn las vegas announcing they will be putting the amazon echo in all of its hotel rooms by 2017. >> not in vegas. >> alexa will let guests control room, lights, television by voice command. steve wynn saying i have never seen anything more intuitively dead on making it more

convenient to talk to your room. talk about a hot mike in vegas. >> in vegas. >> talk about what happens after 2:00 a.m. >> put it in salt lake city or something. >> people thought chinese intercepting what was happening in the waldorf was bad. >> think about hacking those. >> put it in the high-end suites there. what goes on there, you -- ♪ >> it will be like "the hangover." >> that's scary what do we know about the security of that? >> what we do know is this, that technically it actually is not recording all day long. it just isn't. it's not -- doesn't work that way. do you have to say the word. >> show me that. don't tell me that. i don't believe that. >> by the way, i imagine someone could figure out a way to hack it so it could record. >> the company could too, or putin now that he's everywhere.

coming up, the ceo of melco international will join us. owner of several international properties. we'll ask him about the health of casinos, preparing to do business under the trump administration and whether he wants to put a hot mike or echo in everybody's hotel room. mary buys a little lamb. one of millions of orders on this company's servers. accessible by thousands of suppliers and employees globally. but with cyber threats on the rise, mary's data could be under attack. with the help of at&t, and security that senses and mitigates cyber threats, their critical data is safer than ever. giving them the agility to be open & secure. because no one knows & like at&t. we're drowning in information.

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macau seeing a recovery recently. scored four straight months of revenue growth following a two-year slide. at the same time increased hopes for growth under a trump administration could spell good news for the region. to talk about gaining in macau and what one could bring to his job in the oval office, the ceo of melko crown entertainment. welcome. >> morning. >> i want to ask about a transaction we got news of overnight where you guys are a joint venture. there are two companies that have holdings in the company. and one crown resorts is basically selling out. how will that proceed and how does that change the way you operate? >> well, i don't think it will change at all. because, you know, after all melco crown was an independently listed company on nasdaq for ten

years. we have a great infrastructure and great team. so the transaction with crown is very excited for melco. now melco is the significant shareholder. >> there's an idea crown will be seeking a quicker exit. will melco be buying those back? >> we'll look at it. ultimately we'll look at price we own about 51% now. you know, james is a very good frnd of mine and we've done many great things together. and i'm glad that this has worked out well for both of us. >> talk a little bit about macau specifically. we just mentioned gaming is up four months in a row. part of the slide is a crackdown from china and stiffer regulations. is that because those are easing or is the relationship strengthening? what's behind that?

>> i think after 26 years of year on year declining, macau has had four straight months. and i think december is tracking very well. and ultimately in the environment that we're in, china policies and chinese economy are the two biggest factors. whether we were in positive or negative territory. and i think the -- there's loosening in policy and at the same time the chinese economy seems like it has, you know, in terms of some of the -- it is doing quite well now. all in all we're positive on macau going forward. >> the chinese economy has been growing for years. the middle class has been growing for years. people have more disposal income to spend on things. will that continue? at what point would you be prepared for a slowdown in china? >> well, i think the slowdown in china, if you look at statistics, china is probably going to be the biggest exporter of tourists by 2020.

and, you know, the growing middle class is really what drives our business. when you look at the gaming business and the resort business, there are various segments and our company has always been primed on the growing middle class. we'd like to think of ourselves as creators of entertainment and excitement. so what we are really trying to develop is a new lifestyle, aspirational lifestyle. and henceforth the growing traveling of the middle class is really what's going to drive our business. >> would you ever come to the u.s.? >> we have looked at the u.s. in the past, but it's such a mature market and there's so much -- you know, there's so much gaming and resorts already. >> how much -- what's the mix of your business? one of the things that's interesting in vegas how over the last decade it went from being majority gaming to everything else. right to the rooms to the entertainment to all those other components. what's it like in macau? >> well, macau is usually over 90% gaming versus less than

10% -- >> and do you want that to shift? >> we don't really want that to shift. because as a company melco crown we really pride ourselves on creating the first attractions and entertainment. we have the most michelin stars in macau, most five stars. but really the attractions there are as a differentiator so people pick us over our competitors. naturally the thing that still drives our business is always going to be the gaming business. >> and so you always want that to be -- because the premium on that is so much higher? >> it's higher and better. you know, macau as tough as it has been the last years is still over four times of las vegas. in terms of gaming revenue. >> how does the trump card affect you? >> i think it will affect us positively. you know, i think having the president-elect said many things about, you know, china, et

cetera, but ultimately -- >> not all positive. >> not all positive. >> very little, actually. >> what's the prevailing view of donald trump in china? >> i think they like donald trump. >> we hear that again and again. >> deal maker, businessman. you know, he's had casinos in the past. so i can't imagine him having some sort of anti-gaming policy. >> capitalists. unlike where we've been the last couple of years, i think they appreciate capitalists. >> yes but then there's the issue with taiwan and how he's handling that. >> you've been sitting right there when many, many people that you -- >> he took a call from taiwan. he met up with kanye west. so -- >> yeah. >> thank you, lawrence. good conversation. appreciate it. coming up, the fed raises rates for the second time in ten years. we'll talk doug da vn chille.

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what it means for investors as we watch march dow 20,000. analysis is straight ahead. the biggest hack in history. yahoo users hit again. what it means for the stock and the company's pending deal with verizon. plus how satisfied are you with your airport? >> a lot faster, you get a free meal. >> if i wanted a joke, i'd follow you into the john and watch you take a leak. >> a breakdown of which airport should be on the list for infrastructure cash when donald trump takes office. as the second hour of "squawk box" begins right now. ♪ this is "squawk box."

>> welcome back to "squawk box" right here on cnbc. i'm andrew ross sorkin along with joe kernen and kayla tausche. the futures are selling off a little bit from where they were. still up about 50 points higher. nasdaq looking to open up six points higher. s&p six points higher. take a look at currencies. you're watching the euro drop about 2% this morning. so that's going to be something to keep an eye on. also check out oil at this hour. we're looking at wti crude hovering right now at about $51. $51.18. and finally the 10-year note. also should say the bank of england leaving rates unchanged. that happened literally moments ago. kayla? >> all right. here's what's making headlines at this hour. it finally happened after a year of talking about it. the fed raised short-term interest rates for the second time in nearly a decade. what investors were really focused on, though, was what

janet yellen had to say about the future and her outlook was cautious. >> the fomc participants recognized that there is considerable uncertainty about how economic policies may change and what effect they will have on the economy. and in so far is that will affect monetary policy. of course we will have to factor those policies along with many other things. we're operating under a cloud of uncertainty at the moment. >> more on the fed decision and what you should be doing with your money in just a minute. in corporate news, yahoo disclosing another major and bigger breach. this time affecting 1 billion accounts. the hack attack exposed private information of users such as names, phone numbers, and passwords. it's believed to be the largest-ever theft of personal data. the breach taking place in august of 2013 and is believed

to be separate from the next biggest public breach in history. that also of yahoo that the company disclosed in september. the latest hack on yahoo may call in the pending deal to be bought by verizon. after the first breach verizon said it may seek to negotiate the terms of that deal. >> russians? russians? >> i'm not sure. >> russians? right? orchestrated by putin. that's what i think. don't you think? >> the agencies haven't weighed in. >> that's why yahoo stock was way down. >> it was a conspiracy. >> it was. putin. >> and self-driving car fleet rolled out for uber yesterday. that despite backlash from regulators saying the company needs a permit to keep the vehicles on the road. sent a letter to uber ordering the company to cease the operations of the autonomous cars until the company applies for and receives the permit. uber responded say didn't need

the permit because they require a person to monitor and take control of the wheel. which doesn't meet the deal of autonomous. to be continued. >> and we were waiting a year, i guess, if you take the first rate hike. but if you just take waiting for rate hikes in general, it's been -- i heard year and it was like year? the we've been waiting for these clowns like -- >> the last was in december. we've been waiting for another rate hike for a year. >> but waiting for them to get off the snide for like six years or so right? anyway. if you think about it. >> it sounds better when you say it. >> is snide okay? who knows. >> schnide. i think it's a baseball term. i believe. >> i said this is my stick and people laugh at my because it's shtick. >> but in baseball i think it was a guy. >> all right. that makes sense.

unanimous and widely expected decision, policy makers decided they're wacky, crazy, nuts, brave. they went up 0.25%. joining nous is rick rieder from blackrock. he looks fine, but he manages so much money that i'm surprised you're not -- your shoulders aren't hunched. do you sleep at all? >> so, you know what? this is a more fun environment. i think you're point is right. i think the fed could have gone june 14 is when we think they could have started going. >> hold that thought. i'm going to introduce jason trenert as well. rick, i don't know if you agree with this. lead editorial, the center of "the wall street journal," seems to think new policies none of these things are going to work unless it's a big infrastructure. they say the current fed governors and staff are so steeped in keynesian models they

don't see it. so their forecasts have been why would we care what they say. do they have this wrong? do they just want -- >> i think there are multipliers from taxes. if you take personal tax, corporate tax, repatriation, you merge them all together, we've run the numbers. if you got 100 basis increase in the mortgage rate but cut in personal tax, you end up doing significantly more than you do because of the rate hike. i think the way you described it is right. so much focus on the front end of the yield curve, it doesn't really matter. in fact, i would argue you are creating more equilibrium today. which gives people a sense we're not distorting interest rates and asset valuations. this is where you see capex growth and companies instead of lever buyback stock. now i've got to grow my business. >> so they actually -- since it's not -- see, there are people that would argue that orchestrated rates really

weren't foe becauaux because thd have been there. they wouldn't have gone up that much anyway. i don't know whether there's any truth to that either. but if people actually watch a market clearing operation, maybe they have the confidence to invest. >> that's right. japan's going to be very slow. i mean, the buying that comes in from japan is slow. the demand for u.s. assets because of where our rates are relative to the rest of the world will keep rates from moving that much higher. that being said, the fed can keep moving and can do this. the short end of the yield curve, we talked about on this show. it's not the short end of the yield curve that drives where funding takes place. it's the back end. capex, mortgage funding moves. >> you know, the irony is i would say donald trump could be the best friend for the fed. to the extent fiscal stimulus actually gives them cover to normalize interest rates. you have enough growth that you can actually get back to some sort of normal or neutral fed

funds rate. >> this is what we've been wanting the whole time. but you needed the fiscal side of things. this is what they've been begging -- >> that's what the front page of the journal says. yellen/trump on the same page for now. >> bernanke was calling for a long time. >> yellen was begging for this. i would argue the obama administration was begging for some kind of -- >> they were begging for tax cuts and regulation. they were begging for spending and infrastructure. >> i think it was a combination. they wanted to fix corporate tax rates at the time too. >> by the way, as well as spending, as well as tax, financial transmission is incredibly important. you start to get velocity has been in the system has been dulled globally. >> you can't be for deregulation as you're writing all the new regulations on a daily basis. you can't have it both ways. >> it depends if you're putting regulation in the same camp as taxes.

>> it might be worse. >> no, no. so that's -- >> what we have for everything. >> that's a question. look at the secretary of the treasury now whose main focus it seems to me wld impede commerce. largely in academic. as opposed to having a cabinet that is basically focused on throwing commerce. >> so the backup in rates will be more than offset by the other stuff that's happening in your view? >> correct. you have to think about the starting place. 10-year when we got to 1.55% people thought what would happen. rates were distorted by 80 basis point. these are not restrictive interest rates. these are closer to equilibrium. so you're not in a dangerous position where rates are. and you'll get particularly because you've got so many other things and confidence has grown that you'll get an economy --

>> all you guys on the same -- we have a different blackrock guy on every week. >> rosenberg and i are on the same page. >> what about larry? >> yes. absolutely. oh, my god, yeah. >> larry's one of the -- wanted the rates to go up for awhile. >> occur rfed talked about lett inflation run hot or let the economy run hotter. when you let the yield curve steepen out, let create that interest margin, capital build in the system. >> september 21st, most important. november 2nd the second most important day? >> i think the regime shifted and you think about where rates started to go. we were on this show and other shows talking about the regime has shifted. and i think you just kick that into another gear. by the way i think what the fed did yesterday continues to ax sen

accentuate this trend. >> do wage increases come immediately? >> wages tend to lag. year on year -- >> it's time, isn't it? >> it is time. and year on year you're at 2.5%. it's not bad. now as we press into the low 4's you'll see -- >> we don't need to work that off before the wage increase? >> no. by the way, you're seeing lower and middle income wages pick up faster year and year. that's about 4.5%. that's pretty good stuff. and if the president-elect is as he says jobs, jobs, jobs, you're going to see pressure particularly if we bring jobs back into this country. which i would argue is a good thing in terms of creating a better economy. >> so we have no -- we don't have any -- we're allowed to have as many blackrock people on in davos as you're willing to offer. so larry, will you come on too? do you need an invite from davos himself? >> i'm happy to do it. >> will you invite larry? >> i've got to think about it. >> all right.

rick, thank you. jason, you don't go there do you? >> no. i don't rate. i don't have enough dough. >> it's expensive. i saw that same one in times square. that big, like, open up the -- exactly. >> coming up, the ceo of provider centene joining us. and later the fed could speed up hikes next year. doug dachille is going to join us with his outlook for the economy and why he says tax policy should be front and center for president-elect trump when he takes office. "squawk" returns with that and a lot more in just a moment.

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yada yada yada. stream some stuff! somewhere! sometimes! you totally nailed that buddy. simple. don't let directv now limit your entertainment. only xfinity gives you more to stream to any screen. welcome back to "squawk box." donald trump's plan for obamacare looming over health care stocks. we spoke to peter orszag yesterday who played a key role in constructing the affordable care act. >> there's going to be a lot of noise in the system as the replace piece comes into being. if you're in the payer space, that's going to be, you know, particularly. but in the rest of the health sector, what matters is continued evolution away from fee for service towards value based payment and what's happening there. the other piece, of course, is the tax piece we were talking about before.

many of these firms do also have significant overseas profits. >> all right. joining us now to talk about business in a post-obamacare world is michael nooe door -- neidorf. shares of centene down since the election. help us to where this all goes and how it's going to impact your business. >> i think short end it's not going to impact the business. there's been a lot of misunderstandings of what's really going to happen. that's becoming much clearer. >> and it is what? >> i think some people thought that on january 21st the day after he's inaugurated that everything would fall off a cliff. this is going to be a two, three-year process to correct it. and when all done, they're going to construct the structural problems i talked about on this show previously. and so we'll see a stronger, better exchange type program. different names, different approaches. but it would be structurally

sound. and they'll continue to ensure not just the 20 million but more than 20 million. >> and how much of your business relies on the exchanges? >> in '16 it's about 5%. relatively small part that's profitable. we are one of the few that have done well with it. >> what are they asking? >> they're concerned that subsidies are going to go away. they're concerned that the whole exchange is going to go away and the margins are going to be squeezed. the bears are looking for story. >> why are you so convinced that's not the case given that if you take obamacare off the table, if you think about the jawboning that whether it's policy or jawboning unto itself, the kund of pressure that he's going to put on margins across the entire industry. >> i'm looking at the population that's coming in. and it's the same population we've always had. and so it's a growing business where i'm not going to front

investor data, that's tomorrow. but it's growing dramatically in '17. so we're going to see more overhead absorption. >> can i ask what impact you think all that might have on the private sector insurance? i mean as a small business person? you've seen plans for employer sponsored insurance programs. it just seems it's hard to square the circle. if you're going to have more people getting government sponsored health care, it seems like the price is obviously for everyone else going to have to go up. >> i think as the commercial side, it's going to come down. >> do you really? >> yes. i'm seeing it in our own business. we have 29,000 employees. and they're -- and we have insurance for them. now, when a hospital is not being paid and they're going to insure people showing up in an emergency room, that gets transferred, the cost of that is

transferred and shifted to us. so as we start to cover more and more people, there'll be less cost shifting to us. >> okay. so walk us through. take us out of your own company for a second. and wuk us through in your mind who are the winners and losers under a trump administration in your sector? meaning, is it the drug companies, biotech companies, where are the hospitals going to land in all of this? where are the insurers are going to land? >> insurers, i think we're going to be fine. not just centene but the industry in total. i think it's going to be fine. i think the hospitals will do a little less well, but they're be okay too. pharma is going to be under incredible pressure just because of their pricing and how they did that. and in my career, i've been in pharma and so i can see why. and that's going to suffer. biotech, there'll be some pressure but i think the advance in the products they have will help protect them and insulate them. >> device makers? >> device makers will have some issues only to the extent they're not uniquely different

and provide a real value. >> in the policy that ultimately replaces the affordable care act, what tenets do you think the insurers will push for and when to get them on board? because they were on board with the affordable care act at first and they've slowly over the course of several years backed away. >> we are deeply involved in trying to help improve the affordable care act. you're going to have more tiers of individuals. you're going to have tax structures removed from it. the insurance tax, the insurance piece of things that have elevated the rates. so you're going to see some of these structural things be reduced to where it will be much more successful. >> is it that easy though? >> oh, it's much easier. the problem with the original act is how it was passed. because you ended up with a bill that never got into a reconciliation committee where they clean up the junk that costs so much money. i think you're going to find something that's structured well, going to find per diems, per capita, block grants.

i think we favor per capita grants because it helps the fast-growing states. >> just broad policy political question which is, when all is said and done, are more or less people in america going to be insured? >> i believe when you get to 2019, 2020, there are going to be more people in this country insured. >> isn't that the first thing you said? >> yeah. >> very first answer. >> you're going to see more people insured and -- >> i thought you said that right at the first answer. >> you'll see the system work for us. >> all right, michael neidorff, thank you for coming in. >> thank you. >> appreciate it. >> you know, squaring the circle by definition is impossible, right? you cannot square a circle with a compass. you know who wrote about that? plutar. when somebody asks you to, you can't. it's impossible to get the same

area. did you know that sorkin? you want to square a lot of circles. you're not listening. what else is new. still to come this morning, yahoo suffering the biggest cyber attack in history. over a billion accounts compromised. and a check on the stock and what it could mean for its deal with verizon is straight ahead. "squawk box" will be right back. . . retiring retired tires. and i never get tired of it. are you entirely prepared to retire? plan your never tiring retiring retired tires retirement with e*trade. i'm in vests and as a vested investor in vests i invest with e*trade, where investors can investigate and invest in vests... or not in vests. sign up at etrade.com and get up to six hundred dollars. ♪ ♪

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welcome back to "squawk box." today's agenda full of economic data. look for jobless claims, the producer price index and philly fed survey. we'll bring all of that at 8:30 eastern time. that will be followed by the home builder sentiment survey at 10:00 a.m. then a pair of big tech names reporting after the closing bell. oracle and adobe systems. and we're watching shares of eli lilly. the company says it has the potential to launch 20 more products in the ten-year span from 2014 through 2023. stock is now up 3.5%. still to come this hour on "squawk box," reaction to the fed from aig investment officer doug dachille. then an air report. we find out which one should be opening their doors for infrastructure dollars. and then stocks to watch at the

opening this morning including reaction to that big new breach at yahoo. as we take a quick break, look at equity futures at this hour. still poised to open in the green. although off of earlier highs in the morning. "squawk box" will be right back. . this is where i trade and manage my portfolio. since i added futures, i have access to the oil markets and gold markets. okay. i'm plugged into equities- trade confirmed- and i have global access 24/7. meaning i can do what i need to do, then i can focus on what i want to do. visit learnfuturestoday.com to see what adding futures can do for you. they are the natural borns enemy of the way things are. yes, ideas are scary, and messy and fragile.

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among the stories front and center this morning, we're watching shares of yahoo today. the company disclosing a new major breach. this time affecting 1 billion accounts. the newly discovered hack attack exposed names, phone numbers, and passwords and just reported this morning, a lot of those were government employees. this new breach took place in august of 2013. and is believed to be separate from a breach the company disclosed in september. the latest attack may call into question the company's pending deal with verizon. after that first breach verizon signalled it would try to renegotiate terms of the deal to acquire the company. we'll speak to an analyst in a bit about this and whether it

would be material to a $4.8 billion deal if the last one wasn't. but this one is twice as big. what does that make for that deal now? >> were you surprised it had a billion users? >> you were. >> that's right. i was. we do some business with them? >> there were some jokes that the hack prompted people to remember that they had a yahoo account to go and log in. >> i think we, like, have some type of arrangement with them. we need to be nice. right? don't we, andrew? >> we used to. i don't know if we do. we have a video sharing. >> we'll probably get an e-mail about it. >> what type of sharing? >> video. >> video. we're looking at the jumble. that was the -- it would be devoid if there were two d's. >> for readers of "the daily news." >> jumble's everywhere. they have the same one. in all the newspapers around the country. just almost gave away the first

word. >> just ruin it for you. >> deals of mondelez on the move after reports surface in a magazine that kraft heinz is looking to acquire the giant. please acquire it and get rid of the name, please. cooled off after mondelez said it had not heard from kraft heinz about any potential takeover. it's not a real word, steve. it's -- they made it up. >> and it's a terrible thing in russia, apparently. >> exactly. >> i have stories about that. >> you do? >> well, not -- >> wait until we go to break. mondelez says it doesn't believe is proof in the firm. what is it again? >> i don't know russian. >> no. the way they came up with it. >> delicious world, yeah. >> the world of delicious things is what it meant. >> i'm lost.

>> but they mishmashed a bunch of latin words to get it, supposedly. >> don't you think it would be great to watch on tv people doing the jumble. >> yeah. that -- i mean, i haven't gotten the answer. >> okay. let's talk about the fed hikes today, guys. get to mr. leisman. the fed hike rate -- the fed hiked rates -- >> they'd rather watch this. >> but also indicated it could raise rates three more times next year instead of two next year. >> there was a company in russia that sold jam without condoms. because the word without preservative. and the western company was selling jam. there's a whole history of these things. like nova. doesn't go. doesn't go in spanish. there's a great history. >> what about the word euro when the currency was introduced and that means to urinate in

italian. you can't please everybody. >> you have to be careful when you go overseas. you also have to be careful when you trade treasuries. as fixed income traders scrambled to get caught up with a somewhat more aggressive fed. the 2-year yield rising. 14 basis points now from when the fed going in, 1.29% right now. the forecaster says three hikes next year instead of two. they moved from e the left part of the screen to the middle. a couple on the right moved to the left. that's how you ended up with the median there at three hikes because six members are there. they got a bit more hawkish. couple hawks as i said got a bit more dovish. and here are some implied probabilities. as you go from meeting to meeting, the data gets less reliable. these are the reuters probabilities.

march, 32%. may, 44%. june is where you get above 60% which seems about right. and when i try to price in the second hike, i get it around september. so that's a little bit on the aggressive side right now. but the 2-year is not that much different from where the -- from the second hiem being september. we went into '16, they planned four. nobody is worse than the fed at telling -- at forecasting where they're going to be. >> nobody is better than the market. >> now by the way they're on top of each other. i shouldn't take any more time because of the brilliance that's on this thing here. >> yeah. stick around. doug dachille is joining us now. aig executive president and chief investment officer. we had rick rieder on earlier from blackrock saying we're closer to where rates would be if they were just on their own

and that should be good for a lot of different reasons. which wasn't paying off dividends anyway. >> right. and i said this a number of times. i think the wild card -- i hear a lot of people talking about fiscal stimulus and the impact of rates. and tax cuts on the impact of rates. what i don't hear a lot about is the consequence to relaxing the regulatory time-out that the financial sector has been the past eight years. one of the big drivers of facilitating has been the banking system. but it was in a time-out the last eight years. the fed had to do all the heavy lifting by doing the lending. and qe was them directly lending and they had to do overshoot in terms of their rate policy. had the banking system been willing to do what they normally do. provide credit and liquidity to the market. so i think you have to really rethink what the path of rate policy will be if you actually have banks willing to lend again. you take away the volcker rule

and willing to take risks again. you have to think what rate path will be at. >> we needed you in the last hour when we were talking about this. and how it was positive that the obama administration wanted to do the same things but was unable to that the trump administration wanted to do in terms of deregulation. i said you can't be the regulating entity and say you want to do the deregulation. >> i mean, look. look. the regulation of the banking system was a natural response. when i think of regulation is like disciplining your children. and the financial crisis was like your children doing something really bad. you and your wife went away for the weekend -- >> houmd are the kids? >> 17. and you come home after the long weekend and your house is burned down. it's going to be natural that the response is going to be pretty severe. but putting your 17-year-old in time-out for eight years, it gets weird that your 25-year-old is sitting there and it's inconvenient because you and your wife have to take out the garbage, mow the long, and clean

the house. it would be convenient if the kid would do some of that. now the house is rebuilt but -- >> you just learned, doug, that they were still messing around. you might have had under obama some relaxation of dodd/frank if the wells fargo thing hadn't come along. and there's been one revelation after another, doug, that i would point out. look, i'm in favor of easing up on some of the dodd/frank, but the banks haven't made it easy to be nice to them. >> i would just say the great irony of these policies, right, where you're stepping on the gas and stepping on the brake at the same time is that it benefitted the wealthiest people. right? so the fed's balance sheet quintuples. if you have financial assets you're great. but if you're a little guy with a savings account, you suffer. i mean, so, you need the banks to -- it's the transmission mechanism for the policy. you can't have it any other way. >> i mean, the question is -- to your point, i accept the point about bad incentives. right? that's an issue about incentives.

but the question is who do you want making a decision about who to extend the loan to? do you want the government to figure out how to deploy capital? if that's the case, you have a situation where inflation adjusted rates are going to be negative for a very long time. and, you know, the question is in this regime, does it really make sense to have the fed fund rates -- >> can i get one question out for jason which i've not understood. a lot of stuff coming from the trump administration and this idea of if we deregulate the banks and also hedge tax cuts, has anybody lacked for capital to invest? >> no. >> so why would there be a huge amount of investment? >> the thing is the regulatory regime i would argue is not just on the financial sector. it's on all sectors. so you've had a massive amount of regulatory overreach which

makes it very difficult. i'm a very small business man, so i don't know what large business guys do. but i do know if i'm not sure about what the future is going to hold and i'm given basically a free cost of capital, i'm going to issue debt and buy back stock all day long. >> now it's more expensive, i'm going to make investments? >> yeah. because you have some on what the rest of the regulatory structure looks like. >> i'm missing that. >> let's look at what the expansion -- the expansion of the bank's balance sheet was done by the fed. the fed made the loans and put excess reserves on the -- >> i'm just saying, doug -- >> the problem is what was on the balance sheet of the banking system was loans to the fed. right. loans to the fed. >> if there was demand -- >> opposed to the loan to a small business guy who's coming in who actually sees a positive net value present project and can't get it. so what was happening is the only parties that people -- banks were willing to loan were the people who didn't need the money. the people who needed the money were too risky to make the loan.

>> but if i had a good idea and i saw the demand for my product, i could go out and get money for it. and now they're going to -- >> if you were a great credit. and also if you had confidence. the hardest thing, of course, to quantify, you can't put it in a model. it's confidence. business confidence, consumer confidence, investor confidence. you can have rates as low as you want, but if you're unsure about -- if you're suing jpmorgan for things that baer sterns did, is it a surprise that they won't be extending a lot of loans? >> let me give you an example. i have a mortgage backed securities portfolio and i have a tale of two cities. agency mortgage backed securities and i have nonagency mortgage backed securities which were the lowest quality. when you look at who got to take advantage of the refinancing capabilities of the lowest mortgage rates in the history of the united states, only the best

credit borrowers got the ability to refie. and those who need to refie are still in 6% mortgages. whereas the high quality were able to refinance their rates down to 3%. so that dichotomy is really what inhibited a number of the -- of spreading the wealth effectively. that the people got access to the capital but they didn't really need the loan. people would ask me if i needed to borrow money. i laughed at them. the people who needed money were turned down. those who didn't need to take out debt, we're fully afforded opportunities to borrow. >> was there any part of that that kept unnecessary risk out of the system? >> that's another interesting question. because it didn't go out of the system, just out of the banking system. what happened was we actually transferred a lot of risks to non-bank entities. so we made the banking system safer. but was the financial system safer? i make another analogy about that. where do you want to have your kids have a party?

would you rather have your kids have a party in your house? or would you rather have your kids have a party at your neighbor's house? well, if you have it at your neighbor's house, it's quiet and you don't get trashed. personally i would have the kids have a party in my house so i can supervise it. what the regulation did was it forced all those risks to have parties in other people's houses that you don't supervise? >> to rebuild your own house however you want. thanks, aig. >> can i break in here for one second? we have a bit of news separately not on mondelez. 21st century fox formalizing its bid for sky that it didn't already own. we knew this was coming. they announced something -- >> i think we have the wrong ticker right there? >> what are we showing there? >> skyline. >> no. we need sky. but they are announcing that deal formalizing it today. of course there has been a little bit of skepticism about

independence of the committee that's going to have to do this given the closeness of the companies. but we're going to continue to watch this. >> i think it would be wrong to let doug go without getting the forecast for where the fed is going next year. >> i think three is conservative. i think it should be 2%. close to inflation where i think inflation is going to be. you shouldn't have a negative yield. >> so that means you think the 2-year is still -- the yield is still too low. >> the most vulnerable part is 2's and 5's. so the 10 -- >> the 10's and 30's is getting closer. inflation expectations of 2%, 2.5%. that's my view. >> what are you looking at for a spread there? so you'd have -- >> tightening of the curve. >> you would have the 10-year up 10 or 20 basis points and the -- i hate doing math on the fly here. but basically -- especially before 8:00, but okay. yeah.

>> i have a party tomorrow night in your house. >> good move. >> and there's all kinds of things to consider. when they're at a certain age, they're not allowed to drink. you know some people are either coming or -- >> your personality looibiabilii may need an exclusion on that. >> you can't expect 17-year-olds not to have a couple beers? >> underage drinking i don't think we cover you. >> joe, stop talking now. please. i'm trying to help you. just stop talking. >> i'm not going to provide it. >> there's liability issues. >> i know. i'm not providing any. >> how many of them are there? >> a lot. >> a lot. so you're playing zone defense. >> stop talking. >> we may need outside help. i'm not kidding. >> there will be no alcohol at joe's party at all. >> no, no. beforehand. that's supposedly what --

>> beforehand. >> no. there won't be. no, no. but who knows. people smoke nowadays. >> kids these days. >> yeah. none of that when i was at university of colorado boulder. >> not at all. >> zero. >> thank you, guys. coming up when we return, it's the holiday season. many of us will be in an airport at some point over the next few weeks. of course they are overcrowded, dirty, and falling apart. where does your airport rank in terms of needing a facelift? we're going to find out right after the break. take a look at airline stocks since donald trump won the election. "squawk box" returns in a moment.

president-elect trump has highlighted infrastructure spending throughout his campaign today. jd power is releasing its airport satisfaction study and phil lebeau is here to break down which airports should be opening their runways for that infrastructure cash. phil, i bet it's a long list. >> reporter: it is a long list, kayla. you and i fly a lot. i know andrew does as well.

the latest report will surprise you to find the survey of 39,000 fliers says it's better than ever out there. i'm not making this up. that's the report. it's at a record high. here are the top airports. portland, tampa, las vegas, orlando, miami. what do they have in common? generally speaking people are pleased with what they are seeing in those airports. and for a lot of these people who are flying, the big question is what's bothering them at airports? congestion is the big issue. >> you spend a lot of time in the airport generally over 90 minutes at most airports. if you don't have anything to do or look at, that leads to boredom. the longer people are in terminals, the dirtier it looks and more crowded it appears. the longer you spend in a space not being entertained, you're going to have more negatives come out. >> reporter: and if you are delayed in many airports with b it's a rough experience. this comes at a time when president-elect trump said, look, we are going to rebuild our airports. in fact, he wants to spend

anywhere between $500 billion and even a trillion dollars rebuilding the infrastructure with a big chunk going to airports. which airports need the most help? not surprisingly, new york la guardia is at the top of the list. we know it is in the process of being rebuilt. i flew out of there earlier this week. it's knot an easy experience right now. newark liberty is number two. philadelphia in rough shape and my hometown airport chicago o'hare listed as one of the worst experiences when you are flying. guys, i'm going there in just a couple of minutes. so for those people flying this holiday season, we hear you. that it's not a pleasant experience. but at the same time, the survey says people are happier than ever when they go to these airport zblps does it gauge how quickly luggage comes out? >> reporter: yes. it has to do with luggage, amenities, security check points. some of this has improved.

security check points has gotten a little bit better. and for some airports, the experience is better in terms of the restaurants and amenities. >> and i'm thinking newark. is it the airport -- it's not the carrier that -- it's the big system they have for the luggage that the airport has, right? that would be like the new jersey port authority or something? it takes -- sometimes it takes over an hour. a lot of times you're in there talking to the person that is going to try to find your luggage by the time -- i'm already in there filling stuff out and i finally look out, it's finally coming. it could be 90 minutes. and other places by the time you get to the baggage claim, it's already there. >> reporter: joe, some of that has to do with size and congestion. some of your smaller airports, you fly into portland, boom. your luggage is going to be there quickly. but they don't have as many flights as in newark. >> it's terrible. it's like if you have an hour flight, you're going to wait long e for your luggage than the

flight itself at newark. >> reporter: true. coming up, stocks on the move this morning. the futures at this hour are indicated up -- now they've moderated quite a bit. up 34 points. they were up 80 earlier in terms of the implied open. we'll be right back. ♪ we're drowning in information. where, in all of this, is the stuff that matters? the stakes are so high, your finances, your future. how do you solve this? you don't. you partner with a firm that advises governments and the fortune 500, and, can deliver insight person to person, on what matters to you. morgan stanley.

we're watching the shares of yahoo this morning. the company disclosing another

major breach. this time affecting 1 billion accounts. joining us on the phone rob sanderson. what do we need to take away from this? why are we finding out two, three years later? >> sounds like the company is finding out two, three years later. the reports are they've been notified by authorities only in november of this breach they were unaware of that even after the investigation on the 2014 breach, didn't surface until the authorities got involved. so why they're unaware of such large scale attacks, unknown to us or to anyone from the outside. but the company themselves apparently is just finding out. >> what's the worst case scenario? anything to be concerned with if you have an account? and what's it mean for yahoo? >> you know, i think as a user, you know, this is an attack that was three years old. so your personal information, whatever was hacked or stolen has been out there for a significant amount of time. if there was, you know, personal

damages or things to be concerned about, they've probably cycled through in all honesty in terms of passwords and credit card information, et cetera. the damages would have been felt, i would think, you know, prior to now. for yahoo i think the question is what does this do to, you know, the business? i'd say on the advertising side really no impact unless this is a catalyst for a significant acceleration in the user decline. and from the user perspective, let's face it. the yahoo brand is not pristine. the reports surrounding this is not going to comfort people. but you know it's a sticky application here. people have been on yahoo e-mail for a long time. reasons they don't move is because it's difficult to replace your identity with your whole community of people. >> okay. well, you know, people are still shopping at tj maxx and target

after breaches. but we'll see if this happening to a tech company that should have known better is different. rob, thank you. coming up on "squawk box," more on the march to dow 20,000, the fed, and where you should be putting your money to work. plus tech titans meeting with trump yesterday to talk jobs and trade. we'll hear from the ceo of tusk ventures about that meeting and yahoo as we just talked about. hit with another breach. admiral james stavridis on that. we'll be right back.

the march to dow 20,000. futures rising after yesterday's pullback and the dollar's surging. we have data points on jobs and inflation that could move the market. strategy talk straight ahead. yahoo with a hack attack. we'll talk to retired admiral james stavridis. plus tech summit could become a monthly meeting of the minds? we'll speak to our own jon fortt and bradley tusk. the third hour of "squawk box" begins right now. ♪ live from the most powerful city in the world, new york, this is "squawk box."

>> welcome back to "squawk box" here on cnbc. i'm joe kernen along with andrew ross sorkin and kayla tausche. we are less than 90 minutes from the opening bell on wall street. the futures up 34 points. they were up as much as 75 earlier. they moderated a little bit. take a look at the dollar. this is some deep stuff going on here in terms of the euro. 1.04 now. have we seen a 1.03 recently? i don't remember. people have talked about support levels at 1.05 or just beneath it being important. mark grant will probably write. what is that word when it starts dancing? that's from alice and wonderland some dance that goes on. it goes on when we get to a certain level where it's going to start doing this johnny depp dance. >> we were supposed to get parity by the end of the year.

>> that's insane, though, isn't it? >> you going to dance for us? >> no. it was -- if you look it up. look it up. fudderwaccing. you got nervous again. >> i'm nervous with the dancing. >> nervous with the word. it comes up immediately. i think johnny depp does the -- it's the jabberwockee. he does that dance. there will be some fudderwacking. it is close. don't say it too many times. don't you even try. but i got -- i think i was okay. checking out the markets in europe at this hour, england left the key interest rate unchanged. and tiger woods has signed a multi-year deal with bridgestone

golf. he will play and perform the high performance balls. he will be featured in broadcast marketing as a bridgestone golf ambassador. he's had -- i mean, i think of him as titleist. titleist clubs, titleist balls, everything. so this is significant. and he's -- he doesn't have to do anything else and he's still going to be tiger woods. but recently he's shown some signs of maybe being -- yeah, he's had some -- >> and he's got more sponsors back. after a tough little -- >> that was years ago. it all happened. it all hit the fan when that 2 iron hit the back window of his car. >> it was a 9 iron. >> was it? >> his wife just -- >> i thought she was further away. so she was able to use a 9 iron. okay. so it was almost an approach shot rather than a -- >> yeah. i remember that morning. here are the stories --

>> you weren't there. >> no. but i remember reading about it. very salacious phase. okay. yahoo disclosing a breach compromised the data of 1 billion accounts. the joke of course, didn't know they had 1 billion accounts. the hackers obtained private information of users such as names, phone numbers, and passwords. it's believed to be the largest ever theft of personal data. breach took place in august of 2013. believed to be separate from a breach the company disclosed in september which compromised half a billion users. one thing unclear is whether there's any overlap in those numbers. i'd imagine there must be. this calls into question verizon's $4.8 billion acquisition of yahoo, of course, which is expected to close early next year. but this may well be reason again for them to try to renegotiate at least the price of that transaction. shares of mondelez also on the move. this follows a report in a swiss magazine that kraft heinz planning to reacquire the snack

giant. the stock rose 12% but cooled off after mondelez said it had not heard from kraft heinz about any potential takeover. mondelez also reportedly said it has no reason to believe there is truth in the report. we are now less than 30 minutes away from economic data that could move the markets today. we have got consumer price index and the philly fed survey. all hitting the tape at 8:30 a.m. eastern. we'll bring it to you as it comes. here are stocks we're watching at this hour. toyota expects to sell 10.2 million cars and trucks worldwide nx next year. up 1% from its estimated target for this year. the company also plans to set up a separate unit to sell compact cars for emerging markets. nokia set to buy deepfield. the deal is an undisclosed sum but nokia says it will help customers gain a better -- and

21st century fox commencing its second takeover attempt of britain sky lblc. owns a big stake of it, but makes that formal for the percentage it doesn't already own. values the company at about $23 billion. some shareholders had weighed in when the deal had first been reported that they weren't happy with the reported price. so we'll see whether anyone else can get on board now that it's formalized. earlier this week, we talked to dom chu about -- we called it selling the rip. i think because it rhymes with dip. if it's going up. now we're going to talk about buying the dip. dom chu joins us now with the overlooked stocks live from cnbc headquarters. and you only have so much time. i'm going to burn through half of it here. so can you believe tiger is not going to be playing a pro-v anymore? did you see that? he signed with bridgestone. >> you remember, joe, he hasn't played a pro-v for years. he played a nike ball for the

longest time. >> you're right. what am i -- i wonder if he really did. we saw it. when it fell in the hole. you're right. i forgot. >> i mean, it's pretty impressive. obviously a big deal because of it because it's the first major equipment deal that tiger has signed since nike exited the golf business. >> still nike clubs? >> he's still using nike irons. but at last week's hero world challenge, he was using tailor made woods. the next level of the story is what he does in terms of golf clubs. >> i got wind of that tailor made switch before. i think it was official but then i forgot. and thank you for saying remember like i knew, dom. like i was just briefly forgetting. >> i know that you briefly forgot because i know you know all the equipment he plays. that's the reason why i said that. >> okay. thanks, dom, we got to go. >> yes. but by the way, joe, if you want to know more about that story we just wrote it up. there's a whole kind of -- a whole detail of what's going to

happen with bridgestone and what to expect for sales. golf data says they're the number three golf ball share in the u.s. let's get back to the market story. we want to balance out the sell the rip story from earlier this week. we flipped around our criteria for the s&p 500. we want to look at all the stocks below their longer term trading average. the 200-day average of the stock. 20 stocks in the s&p 500 are about 20, at least 15% below their 200-day moving average. so let's take a look at this. some of the stocks here included in those 20 names are names like -- reveal -- there we go. generic perrigo 15% below that average price. it's not clear perrigo is part of that whole thing. but generic drugs a part of that story. underarmour below their average

price. coty, 27% below. and first solar. and kayla because we're short on time, i put the other 16 names up on twitter right now in case you're interested to see which ones make up that list. over to you. >> and that would be @thedomino. the 10-year ticki i-- euro below 1.04. joe, talk about the move that we saw in the fx market after -- >> him? >> yeah. >> okay. sorry. you said joe. i know. i thought -- no, no, no. >> he's here to talk. but dollar spiked.

yen weakening dramatically. just a one-day move or do you think this is a bigger trend we're seeing? >> we continue to be dollar bulls. we think the dollar could go higher. this time next year we could do it from the coast and save everybody a ton of money. maybe not a bad option. just putting that idea out there. >> good idea. >> there we go. we do think the dollar is going to be strong. especially against the euro and the yen. emerging currencies a different question. look at the two strongest growth stoer stories out there, we've seen a strong recovery in em as well. but in terms of the trajectory of europe and japan, i think they still have a lot of problems. >> at what point do you think dollar strength would make the fed worry? >> it's certainly counteracting a lot of what the fed wants. the fed wants inflation and stronger growth. you know, by and large they're getting what they want. here they are hiking in december 2016 and it's a far cry from

where they were when they hiked in december 2015. you know, a year ago when they hiked, it wasn't that welled a all. because basically we were in the midst of oil prices cratering, risks of deflation, risks of recession. and a massive earnings recession. you know, the fourth quarter 2015 s&p earnings were down 15.5% for the quarter. so fast forward to today and with the fed hiking, they're hiking in an environment where things are broadly reflating. we've got earnings back on the move up. and so the dollar i think is a risk to that. also a risk to a lot of the foreign revenues. >> i want to get to dennis as well. we did see the euro break 1.05 which was a technical level to watch. but do you see parity in sight? >> i think parity is in sight. i thought it would be in sight for a long period of time. i think it's only a matter of time. i think the economics here in the united states are stronger than are those of europe. i think the political

circumstances here are demonstrably stronger than europe. 1.10 was given. 1.08 was given. now we've given 1.05. now we've given 1.04. only a matter of time until we give par. what's more important is the fact we were trading 1.18 on the yen. i've only been at this for 40 years. but i remember as an exchange trader at 365 yen to the dollar. for me to imagine yen going to 150 is relatively simple. i think that's an easy thing to say. par is coming in euro. and it's going demonstrably over that over an extended period of time. and 125 is going to be taken over dollar/yen. >> what about the china factor? that's something we talked about earlier in the show. there's a headline that beijing is nervous about the fed's raising interest rate because it remembers the volatility of january and february of this year. i mean, are we -- should we be

prepared for a global tantrum in a couple months once the effects of this settle in? or was that a one-time phenomenon? >> first of all, china's always worried about everything all the time. it's just the nature of beijing. that's what they do. if they're worried about rising interest rates here in the united states, they are properly worried. if i've learned anything again over the past 40 years, it's that once the fed begins the process of tightening monetary policy, it shall take the overnight fed funds rate so much more than anyone can imagine. can we see the fed funds rate at 3%? very easily. can we see two or three years from now, very likely. i remember trading spot on settlement winds trading the overnight fed funds rate above 20%. are we going to get there any time in my lifetime? likely not. but are we going to continue to see 25 and 50 basis points increases over the next several years? no question about it. >> you've got a long memory, dennis. we appreciate it.

thanks to both of you. jason, you're going to stick around. coming up when we return, donald trump meeting with tech titans in a bid to mend fences and promote job creation. we're going to talk tech under trump when we return. and later, breaking data on jobs and inflation. and then admiral james stavridis will join us. plus wilfred frost on what yesterday's rate hike means for banks. "squawk" returns in just a moment.

welcome back to "squawk box." tech ceos representing more than $3 trillion meeting with president-elect trump yesterday afternoon. i want to get to jon fortt who was inside trump tower for the main event. good to see you. >> andrew, thank you. by inside trump tower you mean hanging out by the elevator waiting for people to come in, absolutely, i was. this was a meeting that was cordial. i think the tone of it was a lot more friendly than many people expected. jeff bezos putting out a statement after the meeting describing the meeting as very productive and reiterating his goal of seeing more innovation become a hallmark of the trump administration. major topics of discussion included jobs, immigration, and

china. peter thiel got praise from the president-elect for his work during the campaign and his early insight into how well the trump campaign was going to do. going forward, i would expect a couple of major topics to see how much this good feeling sticks around to be h-1-b immigration. a lot of companies would like to see the cap lifted. but the trump campaign rhetoric certainly made that look like it was going to be a difficult one. and encryption. tech bumped heads with the obama administration over strong encryption in things like apple's imessage and to end encryption in what's app. next time we have perhaps some sort of a terrorism issue where the government wants access to devices and the tech industry does not want to give it. on the question of how often this might happen, there was a statement out that trump had

suggested that they get together quarterly. i would be surprised if a large group of these executives get together quarterly. jeff bezos doesn't even get on his call quarterly. microsoft that have government contracts, i wouldn't be surprised to see them wanting to get close to trumpth here on out. >> okay. jon, stick around. we're going to continue this conversation. for more under on tuck -- for minute on tech under the trump administration, let's bring in bradley tusk. it looked like a productive meeting. i also heard from some people involved in this that some of them felt like props in a bit of theater yesterday. >> so this is a president that cares a lot about optics. including a tweet this morning have to do with how people perceive him and talk about him.

so if the president-elect wants to meet, i feel like most people felt they should go and meet. if it's mainly optics and meet and greet and you come out unscathed, if you ask everything going in and nothing bad happened would you take that as an outcome? they all would have said yes. >> what do you think is going to happen in the future with the relationship between tech and trump? it's one thing for the honeymoon to happen now, but there's so many issues both in terms of business policy but also issues in silicon valley where they are on a different side of the world. >> i think what's necessary for tech leaders in the valley is to separate "a," their personal views from their business obligations. two different things. and even within business there are going to be some policies they like and some they don't. for example, i think h1-b could happen now. i can see how trump would let that happen. encryption, it doesn't matter if it's republican or democrat. if you're in government and your job is public safety, you're going to want all the access to

all the data you can get. apple's never going to like that. maybe they can work with this president better than obama or certainly clinton would have been for them. but i do think if they have an all or nothing attitude, policy's not there. >> what's your take on -- jack dorsey was not invited. and in part was not invited because of some kerfuffle earlier in the year during the campaign where they didn't allow a crooked hillary emoji to be made. and so therefore he didn't get the invitation. >> on one hand seems a little silly to me. hard to see trump having the same outcome without twitter as a tool. so i think he probably owes quite a bit to twitter. at the same time, there are a lot of great tech companies that weren't all there. twitter as a social force of significance, twitter as a company has been struggling. it's possible they were making the list.

do i think he went about his day fine? yeah. >> by far twitter would have been the -- >> but it is the one technology that donald trump uses. >> sure. i mean, he might use a dell computer and dell's not public. there's lots of companies he could have had there. but to look at the emoji thing as the reason, the fact it would have been the smallest company by about 3x. tesla has a 30-plus billion dollar market cap. there's a lot of reasons. >> can i ask a question of you because you're a trump supporter. let me ask you this. do you have any problem with his children -- all three of them some of whom were supposedly going to continue running his businesses after -- excuse me? >> he has more than three. >> he has more than three. i apologize i said all three of

them. sitting in on these meet sngs. >> at this point probably not. ip would have probably more of a problem with it when he actually becomes president. i think one of the hard parts for him and i'm not close to the trump campaign so i'm not speaking from any sort of experience. i'm sure it's hard to know whom to trust. and you're still kind of filling out the bench of people that you think can give you unvarnished advice. so at this point i don't see it as a particularly big conflict. >> you don't think it's inappropriate in many of the executives are going to meet now ivanka who is going to be involved but perhaps the sons and try to reach out to him later in the presidency. you see what's happening here, right? >> that's completely unlike -- like all other relationships that people have with companies and there are always some sorts of conflicts. i think they're in such

different businesses that i don't see it as a conflict. if you're meeting with a bunch of construction types and all sorts of things, yeah that could be a conflict of interest. >> come on. that's weird. we have not had him i did sles his business. two blocks from the apple store which has a major real estate presence in new york and other places. there are already questions about trump's interest. >> do you really think the trump sfaem doing this for money? do you think at this point given their -- that doesn't really make much of a sense to me. >> as a journalist, i'm not paid to just sort of trust people, but the trump brand are they doing it for the money? i mean, they've made a lot of it. >> of course. but they're coming into it with a lot of money. i would say as a -- listen, i don't have a dog in this fight. but it seems to me he's not even president yet and these are

not -- these are largely symbolic meetings it seems to me. >> i think the issue is this. given that a large part of this campaign and a large reason, by the way, i would argue that donald trump won is because so many people thought what hillary clinton and the clintons had done was so despicable and so corrupt and whether it was real or not, the perception was very clear that -- and given that you campaigned on that, it's unclear to me -- that's a euphemism being unclear. it's unclear to me why you didn't put yourself in this position because it's very similar -- >> andrew, there's a big difference between president saying i have family members whose opinions i respect. bobby kennedy was the attorney general. and the kids are reaching out saying i need this and this from the private business and it depends on whether you do it or not is whether i put in a good word with my dad, that's a problem. depends what he wants it for. if he's putting them in a

position to make money from this, that's bad. if he's there because he values their opinion, less so. >> i will give him all the benefit of the doubt. >> yeah. >> no, hold on. i'll give him the benefit of the doubt in reality saying he wants to be a great president and he wants the opinions and all these things. but later on, if and when somebodi somebody tries to take advantage of the kids or the kids -- that itself creates the appearance even if it's not real. >> their responsibility is to behave ethically just like everybody else is. >> okay. we're going to leave it there. thank you. all right. coming up, breaking economic data. we're just minutes a i way from weekly jobless claims. stay tuned.

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welcome back. we are just seconds -- quite a few seconds, though, this time around. like 50 seconds. from weekly jobless claims and november cpi. not quite a minute, but multiple seconds. but they're becoming fewer seconds to go. 22 points is what we're looking at now -- 25 on the dow. the s&p indicated up a little over a point. the nasdaq up a half point. lots of stuff, interesting, happening in the dollar. >> 30 seconds more of interesting stuff is happening. >> there is. and i did get something from mark grant that says the

dollar/euro is in serious fudderwacking mode. that's the johnny depp something or other. there's the euro. 1.04. that's interesting. we were above 118 on the yen for a little while. then there's the 10-year. 2.61%. rick santelli is standing by. the numbers, please. >> all right. for current account balance third quarter minus 113 billion. that's the current account, the cousin of the deficit or the trade balance. and that is a little bit bigger deficit than we expected last month. they did shave it from $119 billion. for the month of november, cpi headline up 0.2%. exactly as expected. strip out food and energy, also up 0.2% as expected. everything about this as expected. year over year, 1.7%. core 2.1%. that actually is arguably a tenth lighter than expected.

still has a two handle. and it follows 2.1% in that instance it's unchanged. so maybe for a december read, huh? empire up 0.2%. also as expected. boy, must have some assistance in that kitchen today. all coming out exactly as we thought they would. now let's look at what's going on with claims, shall we? 258,000 last week. you're now at this week 254,000. a slight increase in the weekly continuing claims to 2.018 just shy of 2.02 million. and philly, philly 21.5 on philly. that is about 2.5 times what we were expecting. not a bad number. it's always volatile. you can't ever argue with the wizard mark grant. it's all about the dollar index. i remember the first day it closed above a hundred saying that all the rest of it should come easy. well, easy in market terms isn't

like easy peasy. but 262. big resistance on a closing basis. pay very close attention to that. and if the dollar index is doing well, we know what it isn't. kwi you also mentioned the euro versus the dollar. anybody who doesn't think technicals are important, look at the chart of euro versus dollar. this is the third time of testing now penetrating 1.05 that is very technically significant. joe, back to you. >> steve wants to ask you a question. but i don't want anything to get out of hand here. >> no, rick. you -- >> why not? it's thursday. >> you made a point yesterday that i thought was so interested i repeated it twice and quoted you both times. and i'd like you to talk about it again if you don't mind. you said it was significant yesterday that janet yellen did not -- and used the word bless, i put that in quotations because that's your quote. didn't bless the incoming president-elect donald trump.

why do you think that was significant to the market? >> the only way to get that is to understand what everybody had been telling me for years from about 2011 until as recently as november before the first tightening last december. and that is one of the missing pieces to the market was that the fed by keeping rates so long, keeping policy, moving goal posts was a confidence reducer. if the fed didn't have confidence in the economy, how could investors? donald trump and the house and senate are going to be going after the legislative low fruit. you've heard it all. taxes, regulations, health care. and the fact that investors are so enamored with the idea of getting some of these things done, streamlining government. they've put their money where their mouth is. and janet yellen almost didn't acknowledge that markets have been on a binge since november 8th. >> i agree with you, rick.

rick, i'm trying to understand why the market reacted the way it did. in part i think part of that third rate hike was baked in. some guys were talking about it. it wasn't a complete surprise. i would say from a policy standpoint, it makes sense to me that the fed would wait to see. you know? and i kind of get what you're saying. but i don't think as a policy maker you can up your growth forecast until you have a proposal in hand which by the way is going to get filtered through congress, going to get filtered through all this other stuff out there. that you have to wait. it's going to happen, i suspect, and then maybe the fed has to go a little bit tighter on policy. but it has to wait until there's policy in hand. >> i get why. but i don't think investors were asking about a three-year money back labor included guarantee. even just a small amount to the head. listen, we have to wait and see the whites of the eyes of the fundamentals. investors seem to be trading on today when they occur down the road. but she could have tipped her

hat just a little, say this is what we wanted. some fiscal change. nothing. >> so joe right now on his cell phone is showing me a chart of rising small business optimism. >> not just optimism. since the election, a 20% rise in sales expectations. 23% expected rise in hiring plans. and a 38% rise in what is that? expected business conditions. >> right. okay. but the trouble with that, joe, is that that is not -- >> but it's animal spirits. "fast" a measure of animal spiri spirits. >> these are not real data. the real data has come down for the quarter. we're running 2.1% for the fourth quarter. that had been as high as 2.6% from our rapid update. if it turns into real juice, it's good. but right now -- >> just heard someone say it's a 3.5% gdp world. >> it's a 2.1% gdp right now.

>> anyway. thank you. coming up, nba salaries set to rise after the players in the league agreed to a new collective bargaining agreement. so good. this number for the average player is so good. and it's such a good thing. we'll hear why it's a bad thing, though, from certain sectors. coming up, the dow within striking distance of 20,000. will the trump rally power through the milestone? or will bears take control and spoil the party? >> you stink. >> i think you're going to have a good christmas. >> you smell like beef and cheese. you don't smell like santa. >> we'll talk strategy after the break.

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welcome back to "squawk box." let's get a quick check on the markets. we'll do this quick. up a little bit. up now -- they had been up 80, then 30 as far as implied open. now 41 on the dow. and we've got up three now on the s&p 500. up a little on the nasdaq. there's the currencies which are maybe the most interesting thing to look at today. 1.04 now on the euro. 117 on the yen. the pound below 1.25. now to sports. the nba and players have struck

a tentative deal on a new collective bargaining agreement. the league aunderstand noed the agreement late yesterday. it will help avoid a possible work stoppage for next season. the two sides faced a thursday deadline for opting out of their current deal and under terms of the new contract, the average player salary is expected to jump about 45% to nearly $9 million a year. that's the average salary. $9 million a year. maybe this is some of the wage growth that we're hoping for. >> you're taking my joke. >> did you say? yeah. at the beginning. >> the minimum salary will go up 45%. >> and the minimum salary is now 150 to 200 times the average workers' salary which is what we always hear about being a bad thing with ceo pay and senior management pay and things like that. that's great. i think it's great. >> look, if there's a market that supports it, then that's what they should be paid. >> if it's not a crony board,

they have appreciation. >> they'll also get fewer back-to-back schedules. so looks like a win for everybody. >> it's all good. because you know what? people pay taxes on the $9 million. then they go out and spend some of the $9 million. it's all -- it's good. coming up, yahoo reporting a new security breach that compromised data for more than a billion user accounts. retired admiral james stavridis will join us next. he discussed cyber security with president-elect trump last week. alpha seems more elusive today. is it because so many go after it the same way? chasing after short term returns. instead if getting caught up with the crowd, the investment managers at pgim take a long term view, teaming specialized active investing with risk-management rigor, to seek out global opportunities. we manage over a trillion dollars this way, attracting many of the world's leading investors. partner with pgim. the global investment management businesses of prudential

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hacking of 1 billion yahoo user accounts has renewed concerns over cyber security. our next guest discussed this issue with president-elect trump last week in new york and believes cyber security should be elevated to a cabinet position in the new administration. let's bring in retired u.s. navy admiral james stavridis. stavridis is a former nato commander who's now a dean at fletcher school and nbc news and msnbc analyst. thanks for joining us. maybe it should. know anyone we might get that could be the secretary of this new cabinet level position? you ready? >> well, here's just an idea and it's not me. here's an idea would be to take the position of dni, director of national intelligence, which is supposed to bring together all the intelligence agencies and

make that individual director of national intelligence and cyber security. the functions are kind of similar. there's a lot of overlap in the activity. and that idea of interagency cooperation is key to protecting us in the cyber realm. >> it keeps happening and for some reason i think we haven't seen the real damage. and we're still not -- haven't been shaken out of the complacency. something really serious whether it's financial or the power grid, i don't think we've really seen as bad as this could be. if we don't address it now. i mean, writing should be on the wall. >> absolutely. and if you look at the trajectory here, go back to the home depot and target hacks. about 60 million. blue cross blue shield, 90 million. then just recently as you know, we had 500 million. what's that trajectory look like? today we have a billion.

my first reaction was yahoo has 500 million accounts, i can't believe it. and now another 1 billion. that trajectory is headed up. we are headed towards a cyber pearl harbor. >> so those were the two you're worried about. >> this is jason trenert. as a former nato commander, how well are allies? only 3 of the 28 countries in nato actually meet the statutory requirement at 2% of their gdp on national security. one would imagine that's not just the material. it's also with regard to cyber security. how are our allies doing in this regard? >> they are worse than we are and we're not very good in this particular area. the allies, it's actually 5 of the 28 who meet the 2%. but yeah they're below where they need to be in spending and

it does translate to weakness. i always say about cyber security, it is the greatest mismatch between the level of threat very high and the level of preparation quite low. in other words, we worry about the islamic state and north korea, russian aggression. we're worried about it, but we're reasonably well prepared. in cyber, big threat. very low preparation. >> admiral, i don't know if you're going to take this as -- or we're going to get into a political conversation, but when you think of the biggest cyber threats to our country in terms of foreigners, i imagine you think about russia and you think about china? >> those are the top two, certainly. and they are in order of magnitude more dangerous than the next two which are north korea and iran. we got to remember north korea famously after this idiotic movie "the interview" came out, mocked the leader of north korea. they lashed out with a cyber

hack against zonesony pictures. did millions of dollars of damage to sony. it's not just big nations. it's also small nations going at big nations. >> therefore where i'm going with this is, what kind of relationship are we supposed to have with russia? with putin? there's been a lot to debate about that given some of trump's comments before and since he has won the presidency. same thing with china. >> we need with russia is more transactional relationship. and that means confronting them where we must on things like syria and their support for assad, the invasion of ukraine, and above all the activity in the cyber zone. but we ought to try and find other areas where we can cooperate with them. that's why i think rex tillerson is actually reasonably good pick. he will come at it transactionally with russia. i think that makes sense. >> that's interesting. that's what i was going to ask. because you were -- you're in the running at least bantered

about for hillary clinton's cabinet. i know where you fall. but what have you -- you just said something positive about rex tillerson. what about all the other generals and appointments so far? would you give a thumbs up to most of those? >> first of all, i'm a registered independent. i was vetted seriously for a vice president with hillary and i had a discussion with the trump campaign about state and dni. i think the selection of the generals kelly and mattis are very good choices. they're very solid, steady. they're very experienced and i think will do a great deal of credit to the administration. >> left out flynn. >> i think general flynn is taking some incoming fire right now as we'd say in a combat sense. but he's solid. he's smart. i'm hopeful that he will do what the president wants him to do in that position. he's obviously in a bit of controversy at the moment. let's hope he works his way through that.

>> interesting what you said about tillerson though. he got some award of from friend of -- i don't know of putin but russia. the award was long before putin was there. it doesn't mean -- i don't know if he's a friend with a -- i dot know if he's a friend with putin or not. you'll see everything pulled out over the next several months for rex tillerson. you're okay with it? >> i think i am. i'm waiting for the congressional hearings. i think there will be a lot of examination of that relationship. my sense of rex tillerson is he has the ability to move around the field pretty well. he will bring a businessman's sensibility to the job at state. i think he'll do a good job in that regard. he's got to make clear to the congress, i think, that he can rise above this relationship with putin. >> admiral, thanks for your time this morning. appreciate it. >> all right, everybody. great seeing you. have a great holiday. >> you, too.

when we return, the fed hikes rates for the second time in a decade. which banks are ready to capitalize on the move? wilfred frost will join us with some names when we return. as we do that, a quick check on futures. the dow looking like it would open up higher. s&p 500 up about 4.5 points.

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the fed finally hiking rates. how quickly does this lead to banks passing on higher rates to customers? wilfred frost has perhaps the answer. >> the major banks wasted no time in hiking their lending rates. by this morning all of the major banks, including jpmorgan, bank of america, wells fargo and citi would have hiked their prime rate. the prime rate is what banks use to lend to the most credit wo h worthy customers. however the increase for savers is slower and less full. this is especially the case at the start of a rate increase cycle. this is in part why the change

in direction of rates is so positive for banks. of the large universal banks, bank of america was the best performer yesterday. and indeed has been since the election. i would? it's because it's the most geared towards the interest rate increase because of high domestic exposure, high percentage exposure to retail banking and within that a numerous deposit base relative to the size of the retail bank. overall, relative to the recent run, bank stocks yesterday were muted or down. the reason being that janet yellen actually dampened hopes for growth from the trump administration relative to the last few weeks of positivity. only increased the preelection gdp forecast from 2% to 2.1%. next up. will we see dow 20,000 before the end of the year? what could push us over the top? we'll discuss that next.

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we are counting down to the opening bell on wall street. our guest host, jason trennert. thoughts for investing today.

>> most of our clients have been on the road since election day and tmost institutional investos are worried the market has gone up too far too fast. you're discounting a lot of good news in a short period of time. i think some of it is justified. you will get regulatory and fiscal easing, which will lift economic growth. >> do you think we are losing some steam? >> seasonally, this is a difficult time to be short. i would just say in the next two weeks, you -- if you're really trying to play the game, maybe buy now, sell them on inauguration day or something like that where the market puts back a bit. >> a lot of people holding on simply for taxes, thinking something great will happen in 2017. do people sell early '17 without knowing there's a tax plan in force? >> the only thing you'll probably see early on in terms of taxes is a tax cut or

repatriated profits, that would be a holiday, and they'd try to extend that into structural tax refoo reform later in the year. the hard thing, there's no metric that can account for confidence, it's fair but also real. animal spirits. >> thank you, sir. >> always great to see you. >> thank you. >> thanks for having me. "squawk on the street" begins now. ♪ good morning. welcome to "squawk on the street." i'm david faber along with sara eisen and wilfred frost. we are live from the new york stock exchange. carl and jim have the morning off. one day after we got that raise from the fed,