good morning. markets now looking like it could be another day to celebrate on the street as the dow eyes its sixth straight week of gains. retaliating against russia. president obama vows to take action in response to the alleged hacking of the u.s. election. and driverless in detroit. gm self-driving cars are hitting public roads in michigan. it's friday december 16, 2016. "worldwide exchange" begins right now. ♪ good morning.

happy friday. welcome to "worldwide exchange" on cnbc. i'm sara eisen. >> i'm wilfred frost. good morning to you from me. a new rihanna song. >> yes. let's check in on the global markets. another rally yesterday on wall street. we closed off the highs. got within 50 points of dow 20,000 then backed off of those highs. financials leading the gains. looks like some strength again this morning. the dow futures indicating an open of around 12 points. s&p futures are flattish, nasdaq down about 3 points. ten-year treasury note yield the bond selloff continued to dominate. the stronger dollar has taken center stage. ten-year note yield at 2.55. actually near the high end of the range that we have seen. selling off especially in the short end of the curve. the two-year notes earlier this week and spreading throughout the curve. >> today just seeing yields come

down a bit. bonds being bought up a bit. yesterday the ten-year hit a high of 2.64%. quite a big move in the short end hitting highs not seen since 2009. yesterday we did see another big move, yields upwards this morning coming back a bit. >> on the back of u.s. data. did you see that home builder confidence number? surging to the highest level in a decade we'. >> not only did i see it, it broke while we were together. >> 10:00 a.m. >> on "squawk on the street." about a percent or percent and a half of gains for the week as a whole, but bang-on flat leaning to the down side, but not much. all in all, a positive week. europe has shrugged off the rate hike in the u.s., just as encouragingly as the u.s. did yesterday. let's look at asian trade.

the yuan mid point set an eight-year low. mainland media is jumping on the bandwagon in china asking for fx help. 0.2% gains for shanghai. hong kong down a bit today. the currency in hong kong is pegged to the u.s. dollar suggesting now they need to see interest rates increase. >> that's the question. the u.s. rate hike, maybe the u.s. can absorb it appropriately, it is for the u.s. economy, but with the dollar as the most powerful reserve currency and everything priced in dollars around the world, including emerging market debt, can the rest of the word handle it? we're starting to see moves in the currencies lower, in the stock markets, not as extreme as this time last year, but that will be a major question in terms of stability of global markets. >> china and hong kong are great

examples of this. europe and japan are benefiting because they like the weaker yen and yuan, china has this issue of artificially propping up its currency for so long, the weakness against the dollar is something they have to fight aggressively. it's encouraging to see how europe has responded. they shrugged this off, partly because of the euro, clearly hong kong and china are examples that we have to watch. >> the u.s. market has taken it in stride. yesterday we hit levels that we have not seen since back in 2003. that's going to hurt multinational earnings. we will hear from nike, fedex, general mills next week. it's been painful for them all year long. as we make new highs, you have to think those cfos are thinking just when we're seeing recovery in earnings, this could be a major problem. though so far the u.s. stock market has remained resilient. it's one reason the small caps

are favored now more domestically focused because of that strong dollar. it also did take a toll on oil pri prices and commodities. wti dipping below $50 a barrel yesterday. under pressure again this morning. brent down as well. just fractionally. just below the 54 level. let's show you where we are on currencies. the strong dollar taking a pause this morning after a giant move yesterday pushed the euro down to the low 104s. so we're -- >> low 103s at one point. >> getting close to parity on the euro/dollar. a lot of big banks will say it will come as soon as the first quarter of next year. euro bouncing back this morning. the dollar/yen hovering around 1.18. it's why the nikkei has erased 2016 losses and is up for nine

days in a row. the british pound also has remained strong in the face of the dollar strength. >> the broader dollar strength yesterday was a big talking point. the broader index up 1.4%. the euro hitting a low against the dollar not seen since 2003. the takeaway from that is that people are believing the dot plots this time. last year we were promised four hikes, we got one. this time around promising three. people bought into that. the 25 basis point hike was expected. yet the dollar response has been super strong. that's because people are believing we will see this increase in hikes next year. >> the difference is that the dollar strengthened on the back of the trump election, the republican congress. the dollar rose about 5% since the election alone. you have that one-two punch of stronger fiscal policy, better growth outlook because of some of the pro-growth policies, lower taxes, more infrastructure, rolling back

regulations, meaning the fed might be able to hike next year because the growth outlook will improve. those two factors are bullish for the dollar. the rest of the world is going in the opposite direction. let's show you gold. it's been hurt hard on the back of this stronger dollar. double digits down. almost 20% since the highs reached over the summer. getting a bit of a boost today. up 0.6%. >> just broadly, the next couple of trading days, next week will be important. we sold off initially on thursday on the back of the stronger dollar, the move in the yield curve, the rate hike. yesterday was encouraging to see a bounce back. . yes, we came off the highs, decent bounce back, some big moves. >> as long as banks are going up, this market feels like it's going up. >> that's important. it felt like the post election momentum started again, it was only a one-day blip. as we finish the week and look into next week, it will be interesting to see if that plays out. as for the rest of this week, today it wraps up with a

single piece of economic data. november housing starts are out at 8:30 a.m. eastern after a surprising 25% jump in october. the number of new homes under construction is expected to have pulled back. richmond fred jeffrey lacker is in charlotte for a discussion on the economy with brian moynihan. it's also quadruple witching day, twhich tends to spark late-day market volatility. to politics, in an interview with npr, president obama promised to respond about the russian hacking. >> i think there's no doubt that when any foreign government tries to impact the integrity of our elections, that we need to take action. and we will at a time and place of our own choosing.

some of it may be explicit and publicized. some of it may not be. mr. putin is well aware of my feelings about this. >> the full interview with the president will air this morning. according to a russian news agency, russian's presidency discussed the matter with obama on the sidelines of the g20 conference in september giving a clear response to allegations. intelligence officials believe putin was personally involved in the hacking and that his alleged interference was an attempt to sway the election in trump's favor. >> trump is not finished criticizing boeing for its $4 billion aircraft or lockheed martin for the costs of its fighter jets. last night in pennsylvania he brought up the contentious subjects. >> i have a nice airplane. this plane is going to cost $4.2 billion.

air force one. i don't want a plane to fly around in that costs $4.2 billion. i didn't order it, remember this. we'll work with boeing, we'll cut the price way down. way, way down. and how about the f-35 fighter, disaster. totally out of control. totally out of control. >> trump started unexpectedly negotiating with boeing over the price of the plane which would be used for future presidents. remember on twitter last week -- >> you nearly said twitter like i said it. >> i was part mocking you and part tripping up. >> part not noticing it. he goes on and just -- you know, companies have to get ready for it. >> yeah. absolutely. to today's corporate news, an update on the potential

fallout for yahoo. >> verizon, which agreed to buy yahoo!'s core internet business this summer for $4.8 billion is reportedly trying to amend the terms of the agreement to reflect the economic damage resulting from two hacks. besides the hack that came to light this week, yahoo disclosed a breach in september affecting 500 million accounts. it is believed the two incidents are not linked. in a statement to cnbc yah bshg krshc they say we are confident of yahoo's value and will work towards integration with verizon. the fbi is also investigating the newly revealed hack. shares of yahoo are off 8% over

the past week. back over to you. >> thank you very much. other corporate news. general motors will begin testing self-driving cars on public roads in michigan immediately. this coming days after michigan governor rick snyder signed a package of bills legalizing the operation of self-driving cars. mary barra will drive the cars in the same michigan plants that build the bolt electric car. they will have light sensitive radar, camera, sensors. >> seems to be going pretty fast for self-driving. >> you mean the car. >> yeah. >> i meant the regulation, the fact that they're on board. >> look at that. >> the fact they're on the roads. >> that must be about 40 miles per hour. want to see them test it more. >> i'm ready. >> you're a terrible driver. it's an improvement. >> safer no matter what. >> exactly. still to come, the trade of the day. yesterday the dollar index hitting a high level, highest in

14 years. could that derail the rally for some big dow components? we'll highlight some of the names exposed after this short break. 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. when whirlpool builds an appliance, they put everything they know into it. but once it's sold, there usually isn't a way to keep improving that product. today, whirlpool can analyze iot sensor data from connected appliances on the ibm cloud. so they can continuously learn how customers are using their products. and how the machines respond.

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if the dow finished higher. sixth week in a row. joining us to discuss the rally is alex dryden. alex, welcome. do you expect the six-week running rally for the dow to continue off these higher levels? >> sure, yes. i think looking fundmentals are still looking strong. we have a global economic that's heating up. we have the potential for tax reform making a real difference. that $2.4 trillion worth of profits locked up overseas potentially coming home under a tax holiday that could trigger more m&a activity, share buybacks and special dividends. all of that is supportive for u.s. equities going into 2017. >> one thing many people don't think is supportive is the strength of the u.s. dollar. big move in it yesterday, big

move since the election. what was your latest take on that for 2017? >> for me, i'm looking for a stronger dollar going into 2017, mainly because we have this growing interest rate differential between where the u.s. is versus the rest of the world. that mick divergence that has been a factor throughout the last few years has started to look like it could take the shape of monetartary policy divergence. those domestically exposed small and mid cap companies should be fairly sheltered from it. the exporter names will feel the impact of a stronger dollar for some time to come. that's nothing new. the dollar has been trading at high levels for some period of time. >> the stock market seems okay with it. i wonder if it's because of what you referred to earlier, the

promise and hopes of lower tax rates, tax holiday for repatriation, all sorts of other pro growth policies that would offset the weaker u.s. dollar -- or the stronger dollar? >> the stronger dollar is a significant headwind for s&p 500errings 500 earnings. the potential holiday tax is a big impact for firms going into next year. that's a more powerful tailwind than the headwinds we're looking at. >> one factor is valuations. a lot of positivity towards u.s. equities. are there better valuations available elsewhere? europe has had a decent bounce over the last week or two. the valuations remain way more attractive than they are in the u.s. >> sure. u.s. equities from a valuation standpoint, the s&p 500 is trading around 17 times forward earnings. it's not the most attractive valuation in the world.

nor is it really expensive either. over in europe, you can find cheaper valuations over here. however that comes with the political risk. we're entering into a busy political calendar. countries representing 42% of eu gdp are holding elections within the next 12 months that doesn't include the activation of article 50 in the uk triggering the brexit negotiations or things like the uncertainty over the italian and spanish political setup. >> big risks no next year. you mentioned repatriation would drive m&a in the u.s. any sector in particular you're watching there? >> looking at the ones with the significant overseas earnings, tech firms, for example, earn a lot of revenues outside of the u.s. there's potential more activity within that sector. >> we'll watch it carefully. thanks. still to come, the top political stories, including president obama warning of action in response to russia's

alleged hacking of the u.s. election. as we head to break, the national weather forecast from reynolds wolf. good morning. big change in our forecast for many people across the country in terms of that cold air. it will continue to compiling in across big sky country, the great lakes and the northeast. 1 degree is all you'll manage in bismarck. dallas, look at that. into the 70s. certainly a contrast. with those contrasts, we'll have precipitation out there. at times it can be very heavy with the wind. denver at 41. dallas, breezy. los angeles, a good chance for showers. in new york, sunshine for today. overnight, a touch of snowfall, then possibly warmer conditions going into the 60s by the time sunday comes around. yes, a crazy mix of weather. we'll have more on this coming up in a bit. we go to commercial now, after that, more "worldwide exchange."

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welcome back to "worldwide exchange." let's get you up to speed on the market action. decent week for europe. up about a percent, percent and a half for the week as a whole. shrugging off the rate hike like the u.s. equity markets did yesterday. flat to end the week. slightly clients for france. in the united states, just about fl flat. the dow slightly higher by 8

points. yesterday we saw 0.3%, 0.4 gains for these indices. off the highs of the day, but an encouraging bounceback following thursday's slight declines. banks doing particularly well. bank of america up about 2%. moving on to politics, president-elect trump continued his thank you tour last night. tracie potts has all the details. >> reporter: today president obama has his last news conference of the year. he is sure to get a lot of questions about this russian hacking and whether his administration acted too little too late. >> in four years we'll win by even more. >> reporter: president-elect trump reveling in victory overnight and asking along with some democrats why did the white house wait so long to act on russian hackers trying to influence the election. >> the impact of this operation is not in doubt.

it's not in doubt. it benefited the trump campaign and hurt the clinton campaign. >> reporter: intelligence agencies disagree whether that was russia's intent. nbc learned that the obama administration warned russia including vladimir putin not to interveer. >> this could only happen with the lhighest levels of the russianing government. >> reporter: the administration avoided going public because they did not want to appear being political and thought hillary clinton would win. >> they did not want to be criticized for putting their hands on the scales. >> retrospect it seems as toe it was a mistake. >> reporter: now some lawmakers argue russia must be dealt with. >> whether you attack us with a mig or a mouse you must be dealt with. >> reporter: last night clinton did not mention trump but did take credit for standing up to putin. there are still questions facing

mr. trump about his business interests, his family's involvement in the administration, his daughter, ivanka, has been calling lawmakers on capitol hill about one of her signature issues, child care, raising questions how involved she will be. >> thank you very much. moving on to sports. thursday night football, the los angeles rams traveled north to take on the seattle seahawks. seattle dominated scoring three touchdowns. the seahawks beat the rams 24-3. the win gives seattle a division title and secures a spot in the upcoming nfl playoffs. >> look at that neon uniform. love it. it's new. coming up, all of the top stories plus the dow inching closer to the 20,000 mark. yields on the benchmark ten-year treasury note hitting 2.6%. multi-year highs. >> more thoughts on the markets,

fed, the economy and more when david rosenberg joins us next.

good morning. markets now looking like it could be another day to celebrate on the street as the dow has its sixth straight week of gains. trivago shows some special. the market for ipos not looking so hot this year. and how mcdonald's is making

fast food even more convenient. it's friday, december 16, 2016, you're watching "worldwide exchange" on cnbc. ♪ good morning. welcome back to "worldwide exchange" on cnbc. i'm sara eisen. >> i'm wilfred frost. happy friday. >> happy friday. let's check the global markets. you mentioned a sixth week of gains for the dow. modest gains this week across the board. still the strength continues. dow futures are up a little more than 13 points. s&p up one. nasdaq searching for direction after another negative day on wall street. dow closed off the highs, at one point was 50 points away from the 20,000 level. early indications in europe right now, it's been a strong week for europe as well. a mixed picture again this morning. the german dax positive.

ftse 100 in the uk also an out performer. italy down 0.2%. small moves to close out the week. a calm week, a week in which the federal reserve spooked the bond and currency market in terms of a more aggressive forecast. let's show you the action in asia. that's where we have been focused, post fed. hang high closing up 0.2%. the nikkei in japan has been a winner off the back of the weaker yen. up nine days in a row. hong kong closing lower, not as sharply as yesterday. >> as we said at the top of the show, european equities, japanese equities benefiting from the stronger dollar. >> bringing on those weak currencies. oil prices are a little soft this morning. 50 point 5 on wti. fell about a third of a percent yesterday. for the whole week, wti down

1.2%. the second negative week in a row, albeit off the back of a strong week three weeks ago. the fact we're above 50 is progress for the back half of the year. ten-year treasury note crossed above 2.6 yesterday. 2.64%. just moving the other direction a bit today. bonds being bid up in terms of price yields, but certainly yields have moved sharply higher since the fed meeting. the short end of the curve hit a why not seen since 2009. overall bonds generally seeing prices rise today. dollar very strong yesterday, up 1.4% against the broad index of currencies. the euro hitting a low against the dollar not seen since 2003. 103.64 was the low of the day yesterday. the euro bouncing back nicely by a half percent today.

a currency pair to focus on. that word parity being mentioned. a long way to go, 4% or so, 5% or so in order to hit that. elsewhere, just a bit of dollar weakness against the yen and the pound. gold prices to round things off are a little bit higher. 0.6 0.6%. >> where do we go from here? what does this weak's move by the fed mean? david rosenberg joins us on set. you have been warning -- >> great to have you in studio. >> i was about to say that. >> welcome. >> thank you. >> you have been warned about this late-stage cycle of the rally and the economy, does it look like it's running out of steam? >> i think it is. we have to keep in mind that before donald trump does anything, we had a substantial tightening of things, through the dollar, through libor, through the mortgage rates.

i think the risk that we have a mini replay of what happened last year going into january, that's quite high. we have to keep in mind one thing, there's no sellers. people like to compare reagan and trump. and it is similar. everybody knew going into 1981 that reagan would cut tax rates, which he did. you had an % rally from election day that year to the end of the year, no sellers. what happened in january 1981? >> sellers. >> yeah. >> down 5%. >> then it rallied for years. >> no, the next 18 months we were down 25%. what happens is that interest rates matter more than tax rates. reagan cut the top marginal rate from 70% to 51%. the fed raised rates, late cycle. recession starts in all of 1981. people remember the last six years of the reagan presidency. we tripled off forward pe multiple of eight. >> and lower interest rates.

>> you mentioned we might have a replay of what happened earlier this year, is china a concern for you? is that something domestic i investors are blinded by? >> everybody is whistling past the graveyard. people are not looking at the fact that most of this growth in china now is really credit induced. again, we're going through capital inflows, big runoff on foreign reserves this was happening in december of last year. the market didn't wake up to it until january. the other risk is basically, look, everybody is so bullish on the u.s. my. why? because of fiscal policy. that probably kicks in in the second half of the year. it won't kick in earlier. when i look at the data, the u.s. economy is not strong. we had a 3.2% knee jerk bounce

back from a really weak first half of the year that nobody saw coming. estimates out there have taken things to below 2% for the quarter. what happened last year, big picture, wasn't so much emrnlgiemrnlg i emerging markets and china, what happened was the u.s. economy stagnated it was flat. people wrote that off. it was flat in the second quarter. then we get a reactive knee jerk in the third quarter and we are slowing down again. the economy is far less robust than people think. >> have you done the math on what a cut in the corporate tax cut in the u.s. would mean for higher earnings? >> let's make all the assumptions about repatriation of earnings, buying back stock, corporate tax cuts, nominal gdp

growth. you can get earnings up to 15%. >> that in the market? >> no. what's in the market is 30%. we have trailing multiples of 21, forward multiples of 19. the market has not been this expensive in 15 years. what is a fair value multiple, we're about three multiples too expensive. people talk about valuations, but that's the big constraint on returns. if we were to get back to a more normalized valuation -- everybody hates the bond market. nobody talks about how you normalize the pe multiple. if you do that, we're not sitting at these levels now. >> are there equity markets you buy now? european or japanese markets? >> or rotate it back to bonds? >> our portfolio managers are selectively constructive on europe. understanding there is political risk, we are finding opportunities in europe.

japan, liquidity conditions still flush, super competitive exchange rate. it's one of the few undervalued stock markets, japan. >> david, we'll have to leave it there. thank you very much for joining us. great to have you in studio. david rosenberg. i was going to say david gluskin. great to have you with us. >> now to europe, monte dei paschi opened up its debt swap offer to retail investors today. it's a critical part of the rescue of the struggling bank. italy's third largest bank has until the end of the year to raise $5 billion in capital or face being wound boune eddown b ecb. state aid could step in to keep the bank afloat. rome is reportedly set to spend 15 billion euros to prop up the

banking sector. >> a bit of positive news. other stocks to watch, oracle's second quarter profit beat forecasts but revenue rose less than expensive. the company blames the strong dollar since the election. shares down 2.2%. adobe systems reporting better than expected fourth quarter revenue thanks to its creative cloud business. adobe's ceo spoke to cnbc yesterday and said he is pleased with the subscriber numbers. >> we're certainly seeing increased deal sizes with a number of customers because they're standardizing on the adobe platform across many different industries. we were pleased with the performance we saw on annual subscriber brookings that we continue to see in digital marketing. >> jabil circuit's fourth quarter earnings beat forecasts.

jabil is a big apple supplier making casings for the iphone. it's up 11%. trivago pricing its initial public offering and it came in well below expectations. the offer price 26 million adrs at $11 each. the german-based company planned to offer 28 million adrs priced between 13 and $15 range. they begin trading on the nasdaq. it's been difficult for ipos. the total amount raised has been down 40% in 2016. ta viral video alert. a los angeles based uber driver has been spreading some serious christmas cheer. the driver named jonathan has been handing out santa hats and

moraccas to passengers. >> put on that reindeer stuff. >> you ready? >> so ready. >> let's do this. >> i love this song. ♪ ♪ i don't want a lot for christmas ♪ ♪ there's just one thing i need ♪ >> would it be cheesy if i joined in now. >> wouldn't you like to be in that uber? this is like a take on carpool karaoke. >> i love it. i love it christmas, fantastic time of year. takes me back to "love actually." do you remember that scene? >> my favorite movie, of course. >> great stuff. hope everyone is giving him five stars, six stars he deserves for that. next trending story, mcdonald's is trying a delivery service in select stores next month. nearly 200 restaurants in orlando, tampa and miami will have the delivery option. mcdonald's customers can order

off the menu and have food delivered to their doors through the uber eats app or their website. this is interesting. >> my thing is what took so long? >> that's true. >> mcdonald's, it's a bigger company. have to go through the franchises. >> 24-hour one right by my apartment. >> you don't even need it delivered. you can go straight. >> but you have to go down in the elevator, go back up again. >> they're making their menu healthier. marginal improvements. as we go to break, a look at european equities. they are mixed. pretty much flat. ending the week at about a percent or percent and a half of ga gains. back with more "worldwide exchange" in a few minutes. i have access to the oil markets and gold markets.

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what's critical thinking like? a basketball costs $14. what's team spirit worth? (cheers)

what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley welcome back. time for our must reads. my pick in the "washington post," written by john podesta, former chairman of hillary clinton's presidential election campaign. titled something is deeply broken at the fbi. podesta linking what's happening with russia and the alleged hacking of our election and the comey e-mails. podesta writes finally -- he

calls on congress to do something. congress should more vigorously exercise its oversight to determine why the fbi responded overzealously in the clinton case and insufficiently in the russian case. if if there was a case of intense public interest, this is it. what's broken in the fbi must be fixed and quickly. sharply worded. people will take it as parten it. we hear from president trump on this saying why weren't they talking about this before the election. i think podesta is saying why weren't they talking about this before the election too. >> the word i agree with him on, all of these scandals is clarity. i find it surprising that little bits of information have been

leaked. >> usually on any criminal investigation you have silence from these agencies up thntil t decision is reached, investigation is done. this heart-hearted information that is coming on i find extraordinariment. >> i think that's what he's saying, congress should unclassify a lot of things about russia to find out what they learned what the motivations are, does it lead to the top, figure it out so they can prevent this thing down the road. it's more than just rehashing of the election result. clearly podesta and the clinton cam are not happy with the fbi. >> my pick is from the financial times. positive ripples from donald trump's victory cheer japan. it comes back to who the ben fi beneficiaries around the word

from the rallies. there is a glimmer of hope that japan may be heading out of the twilight world of deflation and negative rates. never mind the fact that the trigger for tipping point has come from an unlikely source. it has been interesting to see the way globally there's now a change in sentiment. nothing has actually happened in japan. yes, the yen weakened a bit, but suddenly people think maybe we will see inflation. inflationary expectations are so crucial to delivering inflation. it's this little kick they needed, that qe and various arrows from the government have not delivered that change. >> they can't deliver their own policy to weaken the japanese yen. but trump and janet yellen seem to do the trick. >> it reminds you one of the key

factors are peoples own expectations. that's what we've all had. >> and confidence. even though no new policies yet. approaching the top of the hour. the team is getting ready for "squawk box." kelly evans has a look at what's coming up from new york city. good morning. >> hi. you guys were just talking about trivago's pricing for its public offering. we will have tom farley the president of the new york stock exchange hanging out with us, we'll ask him about the pipeline of ipos, whether he sees them getting better. we'll also speak to homeland security committee chair senator ron johnson, plenty to talk w h about with him. the cabinet is filling up quickly for trump, so a lot of expectations and hope priced in about deregulation and everything that people will be tasked to do. the question now is can they all deliver. >> great stuff. look forward to it.

i look forward to seeing you down at the stock exchange for closing bell later today. "squawk box" starts in 11 minutes time. still to come, rate hikes and a strong dollar, will it derail the stock markets? we'll have jurrien timer straight ahead. .

welcome back to "worldwide exchange." u.s. futures have improved over the last 0 minutes or so. dow futures up 36. the s&p up 4. the nasdaq up 5. the dollar continuing to strengthen against major currencies, highest level since 2003. let's discuss the markets further with jurrien timmer from fidelity investments. good morning. >> good morning. we heard it that this stock market rally feels a little overdone. valuations are high.

there's a lot of hope built in to the market and earnings next year that he's pretty skeptical of. do you share that? >> i think a lot of good news is being priced into the market. growth bottomed in the first quarter, march or so, and is steady improving. everyone was resigned to the idea that we'll stay in this secular stagnation regime forever and we had this surprise outcome in the election. everyone had to pivot to something more growthy and inflationary, and we saw $150 billion from stock funds and etfs, that has to be reversed now. it all spells melt up to me. the more it goes, the more good news it's pricing in. then we have to get to the

sausage making part of all this proposed fiscal stimulus which has not been proposed yet. when that actually gets enacted next year, we'll have to see if the reality metes the perception. >> how much breathing room does the fed have in the fact that for the last three years it's always tried to forewarn the market of what it plans to do, to make sure the market is at least in line with the action it plans to take. seems to me we're in a position where the market is well ahead of the fed. does that give them more leeway to tighten policy next year? such that it shouldn't derail equity markets in the way we feared rate hikes would over the last two, three years? >> it's been an awkward dance between the fed and the markets, where the fed's dots have been higher than where the market is anticipating the fed to be. the fed is marking the dots to

where the market is. now this week for the first time the fed actually raised its dot by a median of a quarter point over the next couple of years. it's a very, very slight pivot. it is a pivot. and that's significant. i think the fed put the market on notice that it's paying attention and that it will lean into this. it's really following its cues from the market. in terms of the economics, we don't know much yet, but the markets are pricing in higher growth and more inflation. and the fed is following suit or takie ining advantage of it to more hawkish. >> within the sectors there are winners and losers after the election and the fed clearly beneficiaries of those. up sharply the last few weeks and months, jurrien. do you stick with those post election winners or rotate back

into technology? >> financials had been relegated to utilities. you had low interest rates, a flat curve, lots of regulation. now we're supposedly having -- going to have deregulation, higher rates, maybe a stronger yield curve. steeper yield curve. so that was the most sort of uninterested sector that has come back the most. ultimately if inflation returns, which it should. we're getting a fiscal boost, any further growth should be inflationary, so companies with pricing power should do well as they already have since the election. ultimately the big growth stories where you have lots of earnings growth at reasonable valuations, those will always prevail over the long-term. >> thank you very much for joining us. jurrien timmer of fidelity investments. ten seconds left, my chart of the week, bank of america.

>> continues to shoot higher. >> shot higher after a one-day pause. >> so has the dollar. will it be a stumbling block for the rally? so far not so much. "squawk box" is next.

good morning. the march to dow 20,000. the index nearing a sixth straight week of gains as the trump rally rolls on. driverless in detroit. gm's self-driving cars are hitting public roads in michigan. the next generation will be built in america. and facebook announcing its plan to combat fake news stories. the social media giant wants your help flagging online hoaxes. it's friday december 16, 2016. "squawk box" begins right now.

live from new york where business never sleeps. this is "squawk box." good morning. welcome to "squawk box." i'm andrew ross sorkin along with joe kernen and kelly evans is joining us. a look at u.s. equity futures, the dow opening up higher by about 44 points. the nasdaq about 6 points higher. the s&p 500 about 5 points higher. in asia overnight, japan's nikkei rising for the ninth straight session. we're not going to flip it around, it's frozen. maybe we can take a quick check on the ten-year? that's frozen too? let's do -- let's do the news. >> let's talk about the top stories. >> new this morning, goldman sachs is hiking its outlook for oil prices. the