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 investment bank raising its

wti outlook from 55 to 57.50 per barrel. analysts expect 84% compliance to the planned production cuts from opec. crude prices are moving lower. just slightly. wti down about a half percent. just above the $50 mark. a lot of people down on the floor were watching that yesterday in terms of a line in the sand for equities. nat gas down 1.7% today. gold prices headed for a sixth straight weekly decline. trading near the weakest level in ten months. let's check in on gold prices. they had a great start to 2016. the best first quarter in about 30 years. you can see how they melted down since the summer. gold up about 7 bucks to 1136 an ounce. m the metal has been under pressure because the dollar is surging. the euro is quickly headed towards pareparty parody.

the yen about 1.18, it weakened considerably since the election. november housing starts will be out at about 8:30 a.m. eastern. the number of new homes under construction is expected to have pulled back next month. and richmond's fed president jeffrey lacker will be talking this morning. and it's quadruple witching day. that may spark late day volatility. the charts are up and running. do you want to do the honors? >> you can do them. you can do them. you can say green arrows across the board. >> that's right. france and germany kind of leading the way. italy is barely higher. treasury yelledields, ten-year

2.56 right now. the 30-year, 3.11. the two-year, which is where we see the move, the curve has been flattening. 1.2 1.26. >> so we are rapidly approaching parody. >> doesn't it feel like we're there already? >> rapidly approaching 20,000. we don't know if we'll get there. both could turn around and got other way, but it doesn't feel that way. i think the journal has a good -- that should be the headline. >> the dollar story? >> yeah. my favorite headline, not saying anything about the "new york times." fine institution. i will talk about the washington compost. >> oh. >> only took six weeks. apparently investors are proving bullish on trump. first week it's like should we write that? it's up a lot. no, no no probably won't last. second week, what do you think? now? no, no, no. still might turn around.

six weeks. >> is that the curse? >> no. no. >> that's always the question. >> is it a magazine cover? >> investors are -- in what some -- what some are calling the -- not them, but they finally noticed. that's -- it's not -- >> a1. >> you went to journalism school. >> yes. >> is this the most important -- >> that's the most important story. >> what is this typically? >> off-lead. >> number two? >> could be that. >> is it the second most important story? >> depends how they think about the day. dfrnlgt they figu did they figure this out themselves or did an editor decide -- >> i don't know how that took place. >> look at this.

>> that's short. apparently investors are prove ing bullish -- contrary -- never mind. look at some stocks to watch. if you want. it's friday. >> gloat on friday. >> no gloating. gloat-free friday. gloat-free friday. i will tell you one thing, you weren't will last night. when -- just because -- >> what is this? >> in reference to driverless cars. when you go to 30 rock and you go up to where you're going, you get on an elevator with no buttons. >> this is true. >> it's disconcerting. >> were you there last night? >> yeah. what time did you get there? >> right on time, like a true professional. >> i left new jersey at 5:00, got there at 7:10. >> this is the nbc holiday party. >> yeah. i tried. i tried. i gave myself an hour and a half. took two hours and ten minutes. >> i didn't see you there, my friend.

>> what time did you leave? >> 7:30? >> i got there about 7:15. actually it worked out well. no. so you were -- so when you're in a driverless car, if i get uncomfortable just in an elevator that i don't know -- don't you like -- i like controlling. >> all these new buildings don't have that anymore. >> it's weird. you press something, it opens up. this is the one to get on. you get on. when it opens, it's like am i really -- you're trusting a machine. >> when you go back to the other elevators you do it all wrong again. >> you get used to it you like change. >> no, when you don't have it -- >> i've been a beneficiary or something of this. they have those at the "new york times." >> they do. >> yes. >> the fine paper, as opposed to that other one. >> i think jeff bezos has done a fine job. >> did you see him sitting there?

>> he put out a nice statement about it. >> someone else wrote it probably. tim looked mad, too. like you -- don't you -- you are such a -- your hair, the orange face. >> i don't think he -- i disagree. >> at least kelly is laughing. adobe systems posted higher revenue for 11 straight quarters. jbil circuits top analysts estimates. they are seeing strength in the healthcare packages and lifestyle businesses. jabil is a big apple supplier making cases for the iphone. and shares of agios pharmaceuticals, sharply lower after the company said it halted development of a drug to treat a rare form of anamya. t

anemia. this after a clinical trial was put on old. down almost 20%. not sure of the -- agio -- do you know this one? >> that happened yesterday. yeah. >> happened yesterday. $2.3 billion market cap before tha that. >> let's talk about the verizon yahoo! deal and whether it's still on or off. verizon may be getting a discount on its planned purchase of yahoo now that yahoo disclosed the hack of 1 billion user accounts. verizon now trying to amend the terms of the agreement to reflect the economic damage resulting from the two hacks. this is according to multiple reports. besides the hack that came to light this week, yahoo previously disclosed a separate breach of 500 million accounts. a statement from yahoo says we are confident in yahoo's value and we continue to work towards integration with verizon. verizon saying we will evaluate

the situation as yahoo continues its investigation. shares of yahoo down about 8% over the past week on an expectation that something will change potentially in how this all takes place. president obama speaking out on russia's alleged covert campaign to interfere with the presidential election. in an interview on npr the president promised to respond. >> i think there is no doubt that when any for win government tries to impact the integrity of our elections, we need to take action. some of it may be explicit and publicized. some of it may not be. mr. putin is well aware of my feelings about this. i spoke to him directly about it. >> the full interview will be airing this morning.

according to a russian news agency, russian's president did discuss the issue with obama on the sidelines of the g20 conference. just going to the uk and saying if you guys vote to leave, you're at the end of the queue, that's not specifically influencing -- >> that's not -- >> is that not specifically trying to influence an election? >> no covertly. >> true. overtly. >> so i didn't hear -- is there a red line that needs to be crossed before there's action? >> i think that was the last time we heard the phrase red line. >> september, was that the shot where we saw they talked for, like, three words -- >> there's been a lot of -- >> do you remember when they saw each other, they -- it was icy. >> that was more recent. >> so they may have had time to talk about it. for more on the markets and the

currencies following the 14-year high for the dollar, joining us is chris retzler, and kathy l n lien. kathy, i already said that the dollar story is -- the journal got it right on what to lead with. are we going to parody with the euro? >> headed in that direction. i think it's important to realize that this strong dollar poses problems for countries around the world. it will wash back to america's shores. you're beginning to see a bit of wobbliness in u.s. data. u.s. retail sales were far from impressive. i think that unless the trump administration comes out guns blazing with a major fiscal stimulus package, we could see a bit of profit taking. a much needed correction in the u.s. dollar.

i think, monetary policy divergence will get us close to parody. as you mentioned, close is not quite there. i think that between that as well as the aggressive move we've seen in u.s. yields and mixed u.s. data we may find resistance above that point. >> you think by stimulus -- so you don't mean infrastructure, you mean tax cuts. you mean even -- you include deregulation? >> yes. >> all those things. >> i certainly think it's coming, but it may be towards the second half of next year. >> these markets move fast. >> they do. >> chris, sometimes even the stock market moves before anyone really realizes that you -- have you noticed the markets moving higher? it's been six weeks. here. maybe you have not seen it. maybe put that into the -- >> you know what? i'm sure they read this story or have ridden this story before. >> it was in the second section --

>> maybe on page 16 on the eighth paragraph. >> maybe. >> so -- maybe andrew is right. that probably -- when you see it there. >> certainly the truth hurt to some who wanted him to fall off the cliff. >> that's really what's happening here with the post. do you think we're in -- in what inning? not a -- not an eighth grade softball six-inning game. a nine-inning game. what inning are we in? >> the third or fourth now. coming to the year-end. we have an arbitrage opportunity. if we think taxes are going lower next year which is a higher probability that they're going lower this year, people are waiting to sell winners into the new year. so you'll see a lot of opportunity in january. we'll see probably a nice correction of these winners, which is a good opportunity. with the policies we have, the growth expectations, which is what has changed since the election, i see a good economy. we'll see how it filter out.

it will be higher volatility than we've seen in the past five years, again, that provides opportunity. we've seen rotatiorotation. technology was under pressure early. it's come back. next year, we're talking about a strong dollar. it will have an impact at some point. growth expectations are good. people are giving credit for that. >> yesterday one of the headlines or one of the -- only drudge or something, it said america is already great again. dollar hits 14-year high. a strong dollar, if you don't look at it that closely, it is something that on face value is a good thing. it brings assets here. makes our purchasing power domestically higher. it does -- there are reasons why countries like to de-base their currency, to spur economic growth through export. is it make america great for a dollar this strong?

>> it's something to be proud of, but it's cyclical. when you have such strength in the dollar, it will hit earnings. a lot of these companies report earnings misses as a result of the fluctuations. in q4 you've seen a 4% move in the yen from november to december. i think it will come back and hurt us and lead to that maybe first quarter decline or pull back in stocks. some people are betting on a year-end correction in the dollar. i say don't bank on it. usually this could lead to an extended push higher. we didn't see that last year, we saw that in 2014 and 2013. this continued into the last two weeks of the year. it may not be until the beginning of next year that we start to see some of these trends reverse. >> if there's any country in the world that could afford probably to have the strong currency, we have the domestic economy strong enough to weather that. we might end japan's 20-year

malaise. we may have effectively ended that as the yen gets lower and lower. we express it differently on the currency board. we may help all these other countries. they're allowed to de-base their currencies, they may grow quicker depending on exports, but we can handle that, right? >> we're not an export economy, so we can probably handle that. the combination of the rates and the dollar -- >> massive relative increase. >> yeah. it can come back and really hit us. >> by the way, the obvious point is while we may not be net exporter, ultimately the jobs that we think we want to create are the exporting jobs for the most part. >> manufacturing jobs? >> maenufacturing jobs.

>> but if anyone could do it -- you wouldn't want most of those european economies to have a strong currency. >> germany -- >> they already got the deck stacked. their currency much weaker than it normally would be. every treasury secretary -- what did mnuchin said? kind of strong dollar. >> no. >> kind of didn't. >> they usually do. >> yes. if you're trying to have a manufacturing-led economy, i don't flo know about led econom but if you're trying to grow the world -- >> it is what it is. 14-year high. the market has been going up a little too. >> really? really? >> yeah. that covers this stuff? i have to turn on the tv. >> thank you. >> oracle reporting quarterly earnings that narrowly beat analyst expectations and revenue that fell slightly short of

expectations. president-elect trump naming oracle's co-ceo to the team. joining us with more is joel fishbein. good morning. >> happy friday. >> give me your headline out of this for oracle? >> we say look at forest through the trees. that is the fact that while the numbers were a bit impacted by foreign exchange, which you guys were just talking about, the outlook here is very, very positive. the companies did about a billion dollars in annual recurring cloud revenue. about $3 billion in operating income. we think the best is yet to come. we think 2017 is going to be a fantastic year for oracle. as their cloud business overtakes their on-premise business. >> given the amount of money they also have overseas that they might be able to bring back, how do you see them using

that money? for buybacks or m&a or something else? >> i think number one is they have over $50 billion in cash and over 80% of that is held offshore. we think we will see repatriation and lower tax rates. we think it will come in two flavors for oracle. they will invest more money in a capex basis on building data centers, becoming more competitive with aws, but also resonate into more m&a, which oracle has not been shy about in the past. >> they called out sales force a number of times in the earnings release. how was the call? >> the call was mixed. i would say that people looking at the headline numbers were a little bit offput by the fact that the license business, the on-premise business did not grow -- or declined more than

they expected. was very positive. mark herd, who i spoke to after the call, said look for an uptick in conversion rates, uptick in win rates. right now they're on track to be one of the largest cloud companies in the world. most profitable at that. >> what was the comparison between them and sales force about getting to a billion dollars in the cloud? they said we're still growing 81% or something. that's quicker than the other guys. they seem to be just kind of putting out there this rivalry. really playing up to it. >> we cover sales force. they've been the dominated player going from zero to over 8 billion in revenue here. our bet is that sales force is the first one to get to ten. oracle won't be close behind it.

but oracle is converting many customers from on premise to cloudware. sales force has gone from zero and got new customers to move to the cloud. it will be a battle to watch and there will be more than one winner here. >> joel, thank you. >> thank you. coming up, the top buzz stories including a look at the big movie release, "rogue one" and how much money it could bring in at box office. that's when "squawk box" comes 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.

the new "star wars" movie is here, "rogue one" makes its debut this weekend. it's a stand-alone spinoff. felicity jones joins a small rebel group to stop the empire from building something called the death star. it is projected to bring in 280 million worldwide this weekend. without china or south korea where it will open later. i did see a couple of things -- >> the reviews have been mixed. >> yeah. >> "new york post" liked it a lot. a couple other newspapers. the times -- >> the journal was more mixed. >> the times was mixed.

said if i love "star wars," you'll see it but it was not saying it was the greatest thing ever. >> you liked the last one a little? >> yeah. i told you my kids got to meet kylor ren down at hollywood studios. that was an exciting thing for the sorkin family. >> really? >> yes. >> why did that happen? frnlg>> what do you mean? kylo ren. >> not the real -- >> no, in costume. >> are you sure that's not the real one? >> i don't know. you were going to talk about -- >> we don't have to get into a debate about it. >> sort of in the eye -- i don't want facebook deciding what's real and not. >> don't -- >> he's not deciding for me. >> let me tell you what's going on first of all. >> it's in the eye of the beholder. >> facebook rolling out a new

tool to help fight fake news. the company says it will start fact checking, labeling and demoting fake news and hoaxes in the news feed. the site will also allow users to report or flag a story as fake. now i know there are going to be questions about what is a fact and not? >> yeah. >> however, i think it's indisputable on all sides of the aisle that there was news that was created during the -- or things this looked like news reports during the election that were completely untrue, who were not journalists, and made stuff up as click bait. i think that's the low-hanging fruit they're going after. i think we all should be supportive on that. on that score you have to be supportive. i'm sure there will be debates later about different facts or factoids in stories. that may be become more complicated. >> there's an advertising ankle

here. a lot of big companies we talk about all the time, that company would show up against a story about kathy griffith -- >> i guess going back and just checking during the election a lot of mainstream media stories and analysis and interpretations, they didn't intend it to be fake. it was their opinion -- they were totally clueless and wrong, it turned out to be totally fake. >> this is a user generated thing. what happens if they start voting -- that's it. i'm flagging it. >> that's why it's so funny when cnn says we will look for fake news. >> during the election, people would fact check donald trump, find things he said completely untrue -- >> 90% of what you read during that election was not true. >> i hear the point you're making. >> you know japan is our largest holder of bonds? >> guess who was the first

visitor to trump tower? >> we have to go to commercial break. >> you know the relationship with china? >> this is real news. coming up, the ceos of -- if you're going to wish, wish big at the lexus december to remember sales event get up to $2500 customer cash on select 2016 and 2017 models for these terms. see your lexus dealer.

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♪ good morning. welcome back to "squawk box." donald trump's win last month was seen as a boon to businesses, but there's worries about taxes, trade agreements.

joining us is a.j. cabani of tele brands, welcome. >> thanks. >> as shown on tv, we read so much about how this star shower that your company is behind is a hot seller. >> this is the number one selling christmas item, holiday decorating item. >> what is the star shower? >> it projects laser lights on to your home. it's the easy way to decorate your house. i know how difficult it is to decorate your home for the holidays? getting out there in the cold, ladder, staple gun? it's stuff. >> then at the last minute, if you want to decorate, you waited until the last minute, your wife is nagging you, come on, honey, get the lights up. run out to a major retailer, pick this up, stick it in the ground, plug it in, in a few minutes you are decorating. >> you've never done this, if you have one strand, connected,

none of them -- "christmas vacati vacation" the movie, you turn them on, nothing happens. >> this is the easiest way to decorate your home for the holidays. we will sell about $400 million of this product this year. >> amazing. >> how do i look today? do i look well rested? >> no. you look tired today. sorry. >> all right. i have a my pillow. you blew it. >> sorry. >> my pillow sucks, don't buy them. >> sorry, joe. you look phenomenal today. you look well rested. >> work with me, will you? >> yeah. >> since you're here -- >> how many my pillows have you sold? >> millions. millions. >> millions of dollars. >> yeah. >> you have met that guy? he's like a celebrity? >> yeah, mike lindel, he has done an incredible job. the guy with the mustache and cross. we have the retail distribution

rights. he advertises on tv. we do the retail. you go to walmart, bed bath & beyond, target, home depot, you can buy my pillow. >> what percent tam of his total sales come there straight retail versus the tv business? and how is that changing? >> the tv business is changing dramatically for us. we've had a 0% growth over last year. how many industries are growing by 40% a year? it's growing. >> do you think with millennials watching supposedly less television, everybody digital, you would think this is not the case. >> it's counter intuitive, which is remarkable to me. i thought by now everyone would stop watching tv. they keep talking about how people are getting their content online. viewer shup going down. it viewership is going down.

it's half our business is coming from online now people see the commercial, go online and pick it up. they're comfortable because of companies like amazon. >> do you get stuck in the middle -- there was a story in the "journal" the other day about amazon, and amazon can change their prices on a dime. does that put you in the middle of that as the people selling the good? how do you feel about it? >> the retailers can buy the product at our regular wholesale price. some retailers run specials on black friday. amazon ran a special on cybermonday. that's the way it goes. >> do you fight back? are they just able to say we will offer this ten bucks off -- >> they don't tell us most of the time. they pay the wholesale price, they sell it for whatever they want to sell it for. >> i'm sure everyone else -- >> yeah. >> we can't afford to do that, amazon can. okay. they're still paying you the

same wholesale. >> that's right. so we have -- this has been a remarkable business. this red "as seen on tv" logo. we created that logo. now in retail stores, walgreens, you'll see an aisle sign that says "as seen on tv -- or an "s a seen on tv" section. we created that red logo. it went into public domain, it created an industry. the leading brand in the as seen on tv category is ballpad. we're the number one growing brand in the industry. >> we have to go. can you show us how it works? >> mac, you want to give us a

demonstration? can you see it? bring the lights down. a little bit more. a little bit more. come down even more. >> basically have to go all the way. >> put us in the dark. come on. there you go. no? >> look on the table. >> on the table you can see it a little bit. >> you can see it on the shirts. >> joe's light up for christmas. >> you look well rested. well rested, joe. >> a.j., thank you very much. >> okay. thank you. >> coming up, small business optimism soaring after the election, a closer look at the numbers with the ceo of paychex next. 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? >> my tree. >> what's the matter with you?

>> we'll talk strategy after the break. ♪ ♪ ♪ ♪

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time for the executive edge. small business confidence is on the rise following the win of

president-elect donald trump. actually someone forwarded something -- i think we've seen this a couple times already. obviously it's a reflection of animal spirits. it's before a lot has happened. but if we look at -- don't know if we'll show it. maybe we'll get it while we're talking to marty from paychex. small business optimism. this is generated by the nfib. you can see since the election, numbers went from 9, 4, minus 6 to 20, 23, 38. that encompass hiring plans, whether they're excited about confidence in the economy. are you seeing this demonstrated? do you, in looking at that, can you say that some of this is actually happening? even though we have not been to inauguration day yet? >> joe, we have not seen it necessarily in the small business index, the job growth,

it's been consistent with last year. what you do see is signs like that. all the surveys point to a lot of optimism that things will happen. pre-election the biggest issues were affordable care act, taxes. >> so the issues holding things back were those, and those are the top three priorities assuming that, you know, you know, monday goes okay. which depending on which fake news you read, it's either one elector or 20 electors. so, assuming everything -- there will be some deregulation on january 20th. do you think some executive orders will be reversed? >> could be. the overtime rules. right now they're on hold from a texas judge. but he may completely wipe that out. that was going to bring more overtime wages, more employees under overtime. that's a higher cost to a lot of small businesses.

also i think the affordability care act will take a little longer. but they certainly are hoping that the costs will come down. you also see consumer confidence up. when you see consumer confidence up, will they spend more? that certainly will drive more demand and hopefully more jobs. >> it's hard to just understand that people can, from animal spirits or from confidence, change the hiring plans before they know whether there's an actual increase in demand. if you know consumer confidence is up, can you assume demand is going up? then as a -- as an employer decide i will need more people to satisfy the demand? seems like a -- what if it doesn't work out? then you have these guys you didn't need to hire. >> remember, part-time employment is up quite a bit. going from 6% of the total work force to 10% in the last three years. and it will be interesting to see if that part-time hiring starts to shift now more towards full time hiring.

that would be a positive. we'll look for that over the next few months. that will show us an added confidence from small businesses. >> like so many things, depending on how you view the world, there's some people that think it's all about this infrastructure plan, the trillion. that's what will boost growth. that will cause things to improve. others think that has nothing to do with it. they've told me on the other side of the aisle, that has nothing to do with it. it's deregulation, repatriation, lower taxes that are really going to do it. do these small business people, are they hanging their hat on infrastructure and a biggi in trillion dollar plan for that? >> not what we're seeing in the research. the research pre and post election has not been so much about infrastructure as it has been about their costs, their level of regulation. the affordable care act, medical premiums what that costs the

business, taxes. that is really going to impact more small businesses than infrastructure. if you're in infrastructure, that will help you. but i think the majority of small businesses from our research is all about lower taxes and less cost, less regulation that will drive a lot more hiring and spending by small businesses. >> do small businesses feel they have access to capital now? you talked before the aca, dodd-frank, have thin-- if thin loosened up in terms of borrowing money, would that help? >> businesses, if they're start ups, have trouble getting money from banks any way. they get it from their homes, relatives. maybe that's not as much of an impact, but larger businesses certainly are -- a push back of dodd-frank rules could help

them. small businesses need demand, lower regulation and costs to get started and grow. they're hopeful that will happen. >> marty, thank you. happy friday. happy holidays if we don't see you between now and then. happy new year, happy groundhog day. >> valentine's day. >> valentine's day is coming up. my anniversary. me, happy anniversary. >> my birthday is coming up. we forgot to wish a happy birthday to a.j., our previous guest. happy birthday. >> when is your -- >> february 19th. >> february 19th. >> a sunday. >> are you a feces? >> i'm a pices. >> thank you very little. >> you know how many times -- that never gets old, does it? >> it actually does. coming up, the new york stock exchange with president tom farley, our guest host at the top of the hour. we will get his take on the trump administration. and the latest from the trump administration team, chuck todd

will join us on set, too to break it down. plus senator ron johnson just met for trump's pick for homeland secretary. we'll be back in a moment. 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.

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.

a new occupant who's going to be living there very soon. in the meantime, let's talk about famed investors like mike milk, rupert murdoch, and robert paulison. they all bet big over the years and got bit in the education domain. there are a handful of mistakes that characterize these investment disasters. joining us is jonathan knee, the author of a new book called "class clown," a longtime investment banker, and dare i say, michael wolf, the media critic who seems to mate most people, who seems to think you are now the best business writer in the country, even though you don't even put yourself in that category. so congratulations on that.

>> thank you. i don't look a gift wolf in the mouth. >> gift wolf in the mouth. so tell us about this particular book and tell us about these particular investors. a lot of people have tried to crack the code of the education market and have seemingly failed. and that's what this book is about. >> it is. and as you remember, i wrote a book about media moguls, which is a little bit more fun and sexy, but i thought this one was more -- >> don't format yourself. >> i thought this was more important, because although both sides of that equation lstlon money, this one actually matters. the other big difference is actually most of the people who screwed this up were trying to do well by doing good. and that's not typically what -- >> so what's the challenge, though? >> the challenge, i think, is partly psychology, and partly,

it's a tough market. and when you put a psychological commitment to a particular world view and you say, you know what, this is all messed up, i'm going to revolutionize it. and you don't apply the same disciplines these same investors applied in the places where they made a lot of money, it just ends disastrously. >> but your takeaway from so many people in the business realm now look to education either from a for-profit perspective from wanting to invest or just be involved and influence the dialogue and discussion. mark zuckerberg gave money to newark. that was not a particularly successful investment, if you will. others have tried to pursue other pieces of this. is there a larger takeaway? >> well, i think when you try to mix your philanthropy with your investing, you tend to do both badly. and i think it's worthwhile to separate the two things out.

and in education, the important thing about good, for-profit education is that it's sustainable, it's a sustainable business model. and education has got huge ups and downs from government investment and otherwise. and if you have a good business that's sustainable, that actually adds to the ecosystem. so focusing on having the business be good and sustainable actually is the best thing you can do. >> what kind of education are you talking about? are we talking about charter schools here? are we talking about different kinds of -- >> i'm actually talking about everything. most charter schools aren't for-profit, although there are some. i'm talking about everything from early learning centers, like bright horizons, which is a great business. >> so privately run, they might charge a bundle of money -- >> or publishing companies. or continuing education services. or an online software platform that universities use. >> so what are some of the high-profile examples and failures that you talk about in this book. >> just down the block rupert

murdoch in four years managed to lose $1 billion of shareholders' money, i think, because he really did want to change education for the better and thoigt that it couldn't be done in a uh way that was good for shareholders. but he tried to do something revolutionary that involved taking on the biggest software companies, the biggest hardway companies, the biggest curricular companies. all at the same time. you can be revolutionary by starting with one thing, doing it well, and building out. >> who's got it right? a fair number of people have done it right, but in targeted, narrow ways. so you can think about actually early childhood centers, bright horizons is a great example. bain capital, actually backed that originally. that's a business where you're doing childhood learning for corporates, where it's scaleable, whereas milken just wanted to roll up random child care -- >> but i like, one of the messages to me in the book is

the people who were doing this did it in good faith. and there's such a sense -- there's often a sense in the media and elsewhere that -- a cynical sense, that they doing it strictly for profit. >> and overwhelmingly, that's not the case. unfortunately, the fact that you have good intentions doesn't make it either good for the world, or good for your pocketbook. >> jonathan knee, the book is called "class clowns," great to see you. >> thanks a lot. coming up, new york stock exchange president tom farley will be our guest host for the next hour. we'll ask him about the climate for business under president trump. and later, senator ron johnson joins us from washington on trump's cabinet picks and potential confirmation battles. that's coming up. since i added futures, i have access to the oil markets and gold markets. okay. i'm plugged into equities- trade confirmed-

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. wall street and the march towards dow 20,000. guest host and nyse group president tom farley is here to talk wall street under trump, tax policy, and the future of exchanges. that interview is straight ahead. >> president-elect trump takes his thank you tour to florida today, as the white house explains why it kept details about russian hackers under wraps before the election. "meet the press" moderator chuck todd joins us with the latest on the trump transition. are you ready for "rogue one"? a preview of one of the most anticipated movies of the year is straight ahead as the second hour of "squawk box" begins right. >> announcer: live from the beating heart of business, new york city, this is "squawk box".

>> welcome back to "squawk box" here on cnbc. i'm joe kernan along with andrew ross sorkin and kelly evans in studio for the next hour to talk markets, ipos, politics, and much more. tom farley, president of the nyse group, lots to cover. we'll hear from tom in just a minute. first, here's a look at where the markets are indicated at the hour. that's pretty much par for the course every morning, it seems like. >> a little higher. >> 40, 50 points. it's up, again. yesterday, the market did not close on its highs and kind of sold off. looks like it was a little bit weak in some of the other markets, also backtracked a little on some of the recent moves, which have been like, to three and four, and in case of the dollar, 14-year highs. that have seen 265 on the ten-year and suddenly gold's ready to break through 1,100. a lot of things happening. check out the price of crude, which had been below 50. i think it's back above, european markets. they know we have quite as much reason to go high as we do here, although we're going to help

them, i think, if we do better here. some of it will move across the pond. goldman sachs hiking its outlook for oil prices. the investment bank raising its wti price index through the second quarter of next year, from $55 a barrel to $57.50. which i like. because they don't just have a little bit of idea of where things are going. like, i would like to know whether oil's going up or down. that would be enough for me. but to go from 55 to 57 shows you just how good they are. and it's $57.50. and they may know nothing. >> it's true. >> but they're never in doubt, which is why we love wall street. anyway. >> let's tell you what else is going on this morning in terms of the headlines. dow chemical will no longer have to send warren buffett $255 million each year. the recently rally in dow stock has now triggered a clause which allows it to convert preferred shares that are held by berkshire hathaway into common shares.

dow also saves another $85 million per year in payments to kuwait's sovereign wealth fund which also owns those preferred shares. there had been a view, by the way, or speculation about whether berkshire hathaway was shorting the stock at one point -- >> trying to keep it down. >> there's a $21-day period they had to stay above a certain price for a certain period of time. >> he's a great investor, we all know that. but when you have a lot of money and a company could use a little money and you can ask for 10, 11, 12%. if i can do 10, 11, 12% a year just on -- and it's not -- i wouldn't call it blackmail, necessarily, or gouging, but -- >> what would you call it? >> i said i wouldn't call it that! but you are able to extract much higher than what a normal person can get -- >> you have to recognize when that transaction took place, they were -- >> i understand that. >> but you also have to have the confidence. all of these transactions take place at a time, whether you're goldman, whether you're dow,

nobody will give you capital, you're a pariah. >> but it's a guy who's been long-term and said, i know down the road it's going to be -- and he's a guy who always does believe, if you hold it long enough. >> he's a great investor. >> that's what i said! but it helps when you have a lot of money and you can sort of dictate terms to people that are in dire straits. >> now to politics -- >> you'd be great investor, too, if you could get 12%. >> i would be. >> president obama speaking out on russia's alleged covert campaign to interfere with the presidential election. in an interview with npr, the president did promise to respond. >> i think there is 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. but mr. putin is well aware of

my feelings about this, because i spoke to him directly to it. >> he just said there, he spoke directly to putin about it. according to a russian news agency, putin discussed the matter with the president on the sidelines of the g-20 conference in september, giving a very clear response to the allegations. intelligence officials believe putin was personally involved in the russian hacking. it's also been reported that his alleged interference was an attempt to sway the election in trump's favor. we're going to speak to nbc news political director, chuck todd, about all of this in just a bit. turning back to the markets now, the dow -- not chemical, this is the industrial average -- climbing closer to 20,000. joining us now is tom gordon and richard bernstein, ceo of richard bernstein advisers and with us for the hour is tom farley, president of the nyse group. so we've got a full house. todd, first to you, because we are approaching this round number, are we close? going to be today, tomorrow, the next day? >> i hope so.

the financials have kind of taken a little bit of a backseat. what's interesting, what i like about this market, we're seeing tech come back. we saw a little bit of rotation the last couple of days out of technology and into financial. what i'm a little concerned about. kelly, i know you like the technicals. >> do i? >> you do! >> come on, you guys are going to start geeking out. >> look, we did talk about the demarks the other day, how they were looking over bond. and people follow those. >> i'm just concerned, the advancing volume, declining volume, we're seeing a nice breadth, right, but we're not seeing the volume in the advancing shares. i'm wondering, it might be towards the end of december. the santa claus rally has certainly plaid out like we expect. i'm long technology, kind of long oil, not really doing so well, hope goldman's right. i still think we'll push higher, but it looks like interest is starting to wane here. >> what about you, rich? should we be pushing higher? >> people are getting a little too caught up with the number

and forget why this is happening. it's happening because the fundamentals are already improving in the united states and now we have a president-elect who's talking about adding fuel to that fire, right? i think last time i was here, i said, when was the last time you had a discussion of fiscal stimulus package with the unemployment rate of 4.9%? that's why the market's up. that's why bonds are selling off. the fundamental backdrop has been improving and now looks to be improving more. >> but it's so interesting, tom, when you talk -- everybody who you talk to about the trump administration has a different reason why they think the market's rallying. you're saying it's fiscal stimulus or sort of definite stuff. other people say, no, no, no, it's corporate tax reform. and maybe those are two sides of the coin, but it kind of seems to be where you look at and whatever your personal favorite piece of it is the reason why everything's levitating here. >> right, i think the things that move the markets are basically earnings and interest rates. if you're a stock market guy, those are the two fundamentals you always have to worry about. and if interest rates are going up, you have to make sure there's enough earnings power to offset the power of rising

rates. right now it looks like that's going to happen. corporate tax reform is icing on the cake. the profit cycle actually troughed a year ago. it was literally fourth quarter of '014, the profit cycles troughed. we're already recovering. corporate tax reform is not going to hurt corporate profits. >> and you were around for the past eight years. and we got to a lot of times where we said, this is it. this is stall speed. this is -- the economy is now at a point where it's going to move out of the doldrums, with an above 2%. how many false starts do we have? i hear what -- yeah win did. i hear you saying, all these things were already in place and it was just ready to happen. but something -- >> what's different? >> something was different. >> i'll tell you what's different this time. there's a couple of things. number one is, inflation expectations troughed back in january. that didn't happen, all these other times when people were talking about, we're going to accelerate. expectation inflations continue to fall.

credit continues to contract. we're not there. the other thing is, you're now starting to get a global coordinated expansion here. if you look at leading economic indicators around the world, the vast majority of them are actually accelerating. meaning the rates are changing and getting stronger. that didn't happen -- >> could have happened before! why not? >> there is a cost to some of these things. and -- >> okay, can i -- >> i think one of the neatest tricks that president-elect trump has pulled is just turning pessimism into optimism. so the specific reason is, there's a lot of them, but thes. >> i think two factors drive stock markets. i wonder if perhaps the markets are relying on -- >> bernstein, come on. >> -- fundamental technical discussion -- >> got to drag it out of him! "well, okay." >> but will the expectation for yellen if she's still there to hike rakes be taken off an

expectation of fiscal policy stimulating the economy. i don't think we'll see as many interest rate hikes as we expect. >> you don't think we'll see as many hikes? >> i don't think so. >> because the economy's not going to be there? >> it's so overbought at this point, i think the onus is going to go on fiscal policy, i think the dollar is a little overdone. i am long the dollar, i'm beginning to take profits on that trade. we're a little cooked on the top side, and i think too much has been built in. it >> tom hasn't said enough. and you don't need to say anything for me. i've told you that before. but we will talk to you in a second. when you walk in there in the morning, down there, does the new york stock exchange feel like it's getting great again, sort of? >> things are good. if you go back to -- >> you can feel it, can't you? >> go back to the business day before the election, we had to order dow 18000 hats then dow 19000 hats and now -- >> you haven't stopped smiling

since you've been sitting here. >> things are good. i talk to ceos every day i and they feel the same way. i was in california this week, which donald trump got 30% of the vote. i think he lost by 3.5 million votes. >> even in california, there's a feeling of optimism, whether it's taxes or investment or -- >> they hate it, but they are feeling optimistic. >> feeling very guilty. >> but the economy matters. and they actually appreciate that. they want to create jobs and improve quality of life. even californians respect the free enterprise system. >> really? well, once eget rich to do that -- todd, thank you. it's always fun, isn't it? >> the next time, i want to sit next to you, not somebody who's -- >> that's what i said! >> this is just blatantly -- >> i will not allow a two-shot of us being the same two-shot. >> can we get a break? >> yeah, we can -- i like people that have that and act like they don't, like they're not happy about it.

coming up, nyse group tom foreman on president-elect trump's tax policy, the future of wall street and much more. still smiling. "squawk box" will be right back. for decades, investors have used a 60/40 stock and bond model, with little in alternatives. yet alternatives can tap opportunities that traditional assets can't. and even though they're called alternatives, they're actually designed to help meet very traditional goals. that's why invesco believes people should look past conventional models and make alternatives a core part of their portfolios. translation? goodbye 60/40, hello 50/30/20. ♪

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different things with wall street, the feeling on the big board. tom farley is president of the nyse, and there's few places as iconic at the new york stock exchange, tom. in the past, in heady days, you would see the front page of the paper and you would see the traders. they always put those picks -- i don't know whether they drag them out or take them new every time. when there's a bad day on the exchange, you see guys that they look like they're, you know, like they're going to jump or something. are there still -- is it still the center of -- at least symbolic of capitalism. can you still get that feeling at the big board? >> unquestionably. and we're starting our 225th year here in january. so a big birthday celebration. the number of traders is down from the peak, dramatically. there used to be several thousand, now there's 600 traders that come every day. they're still very, very important. and particularly on the open and the close. on the open and the close, two biggest trades of the day, about 6% of the total volume.

that floor community is really, really sits on the open and close. and with our ipos that trade with volatility. but with respect to the nyse, it's really great institution. it's the largest exchange in the world for trading, for listening, for capital raising. we raised nearly twice as much money in ipos and follow-ones this year as the next closest exchange. it is a great constitution and i'm humbled to lead it. >> yeah, i won't mention -- you know, there are other places that do some trading. but the gavel, like, when we did the closing bell -- >> yep, we did. >> in the opening, where you're -- the new york stock exchange -- the button doesn't do it, does it? some other place might use a little button. that's still the new york city. >> i don't like to reveal us on national tv, but when i arrived at the new york stock exchange, the bell would just ring and rang at a preskcribed time and there was a button.

a button does ring that bell and if you screw it up, you screw it up. >> there's two people that deserve to be together on a wedding cake or something. christie brinkley and, wow -- >> wow, that suit doesn't look too good on tv. >> is that one of your holiday -- is that a suit or a blazer -- >> that's actually a full red velvet suit. >> he has a beautiful other blazer i was commenting on, lately. >> i don't have great style decisions, but my decisions in company with christie brinkley -- >> you have a cell phone, for style? you can help -- >> he can help me. >> he did well with that other blazer, is that you were saying? >> yes, a beautiful other blazer. >> soir ipo, what was it last year? >> 2016, it's been almost a washout. setting aside the two other years that were almost the nadir of the financial crisis, this is as bad a year as --

>> in the eighth year of a financial, why? >> the two primary reasons, there's a lot of uncertainty in the world, if you go back to august 2015, when a lot of these companies are ginning up, you have the surprised devaluation of the juan. and january, february, you had a recurrence of that volatility. and then you were into election season. for all those reasons, people just kept delaying. however, as i look now -- so i think we've -- 35 ipos this year as opposed to 130 in 2014. so a very slow year. notwithstanding the fact, there were some great ipos. we had a line in the japanese messaging app, twillio, u.s. foods was $1 billion, so on and so forth. next year looks really good. and i'm not predicting the future here, i'm looking at our backlog and the fact that our phone is ringing. some of the great companies we're waiting for are starting to think about the great ipos. a lot of those companies that went on file way back in august of '15, they're still on file

and now saying, we want to set a date for our ipo. so it feels like next year will be good for ipos and ipos are good for everyone. >> the animal spirits that we're seeing. and it's hard -- and peep are drinking at home ever time i say animal spirits. i understand that. but just the notion that confidence or optimism can actually be very powerful, even if nothing is backed up. we have this discussion every day. nothing's happened. we don't even have a new president yet. there's been no tax cuts. there's been no -- regulations are the same as they were before the election. are you confident that people are placing their bets in the right way right now? and i want to ask you one other question. it was a horrible election year in terms of acrimony and we all felt it and all watched it as americans, what we went through. so just that ending, probably, would have helped optimism and confidence. whoever won. but do you think we'd be as

optimistic if hillary clinton had prevailed right now? >> you saw me, what was it, a month before the election. i wasn't terribly optimistic or confident. >> i helped you though, didn't i? >> you did. you kind of pulled me along. >> off the ledge. >> now we're a month after the election. i'm very -- look at me! i'm optimistic, i'm confident. >> would it be the same if it was just over but hillary clinton had been elected president. do you have a -- i don't think it would. i really don't. >> i'm moving on. i'm looking forward. >> but a continuation of the same policies. and that's what hank paulson said. he came in here and said, i just think if we just keep the same policies, it's stability and people don't like change and that's what the market likes. the market might like less regulation, might like doing something with aca, it might like lower corporate taxes, it might like these -- >> why are we talking about the past. >> i'm just asking whether it was just the end of the election or whether it's the prospect of pro-growth policies. because we heard pro-growth doesn't work anymore.

>> the market likes the new policies, full stop. >> no doubt. >> the hope, the promise of the new policies. but many have twitched the cup -- you know, the cal ripken victory lap quite yet. >> was that shakespeare? >> between -- >> you just pulled that out. >> i knew it by the author, greenspan used it. that was his -- >> the modern-day shakespeare. >> but taxes, let's lower taxes. what are we going to do about the majority of businesses that file as individuals? how are we going to solve that problem? with regulations, let's repeal so many relllations that are business-friendly. which are they? not all the regulations that came about under president obama are dumb. >> do you have proof of that? >> there's going to be a good deal of work. absolutely, there's on the muscle, when -- >> like fake news. >> when ceos --

>> that will be a good thing for the economy at large. >> i agree. there's that smile again. there's definitely a difference. you were sullen. that's a strong word, but -- >> there wasn't a lot to and it was just ugly. and like you said, the acrimony and it just seemed is like everything was negative and cynical and in general, i'm an optimistic guy. i like to -- >> well, i would be, too, if i were you. >> anyway. we'll talk more today. >> coming up, when we return, nbc news political director chuck todd will join us to talk about the trump transition and last night's thank you rally in pn pennsylvania, where donald trump was pushing back against revelations that putin privately approved cybermeddling in the election. dow opened up about 48 points higher. we are back in just a moment. a basketball costs $14. what's team spirit worth?

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coming up, nbc news political director and moderator of "meet the press," chuck todd, will join us. he'll be followed by senator ron johnson, talking homeland security under president-elect donald trump. and as we head to break, a look at u.s. equity futures moving a little bit higher again this hour. stay with us. sometimes when brushing my gums bleed.

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welcome back. among the stories front and

center this morning, gilead sciences has been ordered to pay $2.5 billion to work after a jury found drugs had infringed merck's patents, gilead says it disagrees with the jury and it will appeal but its shares are under pressure today. if you want your holiday cards to get where they're going on time, you may want to consider mailing them out this weekend. the postal service says monday will be the busiest day of the year for cards, letters, and packages. and president obama is set to hold a news conference this afternoon at 2:15 p.m. eastern time. he'll undoubtedly get questions about the tlailatest russian hag reports as well as the latest transition. >> donald trump's cabinet picks have ties the overseas that could be an issue when it comes to senate confirmations. "the new york times" o says that rex tillerson has, for example, billions of dollars of stakes in terms of sanctions on russia. joining us right now is chuck todd, nbc moderator of "meet the

press" and our guest is tom farley. good morning. >> good morning, guys. >> do you think the tillerson confirmation is really going to be that hard? >> if it's about rex tillerson, no. rex tillerson can get confirmed. but it's a proxy fight about trump and russia and this intelligence, then i think specifically lindsey graham, john mccain, marco rubio, and maybe a handful of others, that's enough to put it down. and i think that that's what trump is flirting here, if he continues to essentially fight with the obama administration over this intelligence assessment. >> so what do you think he needs to -- >> i think you're going to see pressure, and we're going to point to this story rnc. is that story good for him or bad for him? because it confirms, this is the rnc confirming that russia was hacking. and right now, he goes back and

forth between agreeing that maybe there was something there and not agreeing there was something there. you see people around him. i think he's trying to get there in some way, and i think the pressure of losing tillerson will, to be that cynical about it, but i think the pressure of losing tillerson will push him in that direction. >> what are these actions that obama's talking about in this npr interview. he's got -- where is this going? >> that's a great question, what can he do that he knows trump will also sort of join hands with him on? he can't do something that essentially trump either rescinds on january 20th, doesn't follow through with, that's one. >> he also said that it might be explicit, it might be, what, covert? is that an issue? >> two months ago, joe biden said, it wouldn't be explicit at all to me. i asked him that question. he said, will the public know, and he said, i hope not. so now they're trying to find some public venue. i actually think that's the president's only option here if

he wants it to be credible with the american public, which is, do an old adlai stevenson type of thing and just lay it out there. lay out all the evidence in public. connect the dots. because that might be the best way to embarrass putin in the world. if you want it to be effective and want to try to shame putin from doing this again, i think you have to go big on this, and big as in, show your work. >> duke that donald trump is going to be using political capital on some of these appointments that he will then lose on some of the larger issues we keep talking about, economic issues, in terms of how the tax reform is ultimately structured, how an infrastructure plan is ultimately implemented? >> depends on who do you believe he has political capital with? right? and i think he's got -- if you look at his voters, i think he's got a long leash with them, right? there was this terrific focus group that i featured earlier this week, peter hart, one-half of a polling team that all of us use. and it was with trump supporters. and they're like the conflict of interest stuff.

they are sort of, they are giving him a long leash. the question is political capital on capitol hill, right? that's, i think, the harder tillerson and mnuchin -- look, i still think mnuchin is going to be a tough confirmation hearing, i really do. >> because? you think one last -- >> i absolutely do. put it this way. i think he's got pressure on him to perform well during the hearing. i think the hearings matter a lot for him and a lot for tillerson. >> that seem to matter for corporate executives. if you don't perform well at these hearings, you're out. >> i think there is a short leash here. look, there are plenty of republicans who are going to want to see populist, too. so if any of these nominees on the wealthy side are connected to goldman don't perform well, i think it will be politically easy for them to basically cut bait. >> speaking of political capital, what kind of political capital is donald trump going to have with the democratic party, with respect to corporate tax reform? >> i think he's got -- look,

there's eight to ten democratic senators that i think on economic issues, he is going to be able to work, because 2018, there's at least ten democratic senators up in states that trump carried. so whether it's a joe manchin, whether it's a heidi heitkamp in north dakota, i think you will have some that work on these tax cut issues, on some of those issues. so i think he's -- and look, i actually think chuck schumer will work with him on something on corporate tax -- >> so to the extent that the market is exuberant about where things stand. joseph, where's your "washington post" article? >> oh, yeah, chuck, the headline today that apparently "washington post" has discovered that investors are seeing something that they think is bullish about trump. so it really is december 16th, right? >> it's obvious that's the point, right? >> it's the regulation. >> it's the fact -- >> it's the taxes and regulation. >> the question i would ask, is, to the extent there are promises that all of this that's going on

in the markets right now is very dependent on -- >> yeah. >> in your mind, in terms of what's realistic, in terms o of what ultimately gets passed, where do you see the sort of trigger points? >> i'll say this, i think sequencing matters a lot here. you know, if he wants to get corporate tax reform done, don't try to do obamacare first, right? i think there's some -- do the things you know you can probably get early -- >> you don't think he'll try to do -- he's got to do obamacare in the first hundred days. >> but it's going to be this phony version of it, which is, hey, we're repealing it, and in four years, we're going to rewrite the law. >> so i think that's a -- it will make people think it's there. i think if he does tax reform first, that's where you'll get some -- and if he does infrastructure at the same time. i think if he does infrastructure and tax reform at the same time, he gets a -- he can get quite a few democrats and get something big done and have an early big victory. after that, it's -- everything gets harder. >> right. >> it's not sunday, is it?

you've got -- you've got another show, don't you? can you just hang out? senator ron johnson, you want to talk to him? >> i have. >> which is also a surf shop buts by this different guy. senator ron johnson joins us now to share some of its thoughts on recent developments, on a recent meeting he had with general kelly. did you have an ifb, one of those things in your ear, senator, where you've been listening to the conversation? >> i have. >> anything really get you -- you want to comment on first? >> no, not really. i think chuck's kind of laying out potential strategies, you know, from my standpoint, i think the first thing the administration needs to do is really start rolling back some of the more harmful regulations that have been enacted and implemented by this administration. i think if you really want to boost the economy or bring some certainty back, let's start rolling back that $2 trillion annual regulatory burden, about $14,800 per year, per household. i think that would really inject a lot of confidence in the economy. i think that's what people are expecting. from my standpoint, that's the

first thing we need to do. and in terms of obamacare, i stopped using the terminology repeal and replace the moment it was implemented. i think what we -- what our approach ought to be is we feed to repair the damage and there's been a lot of damage done to markets, to individuals wloez insurance rates have doubled and tripled. we need to first repair the damage and then we need to transition into a health care system that will actually work to restrain costs and improve quality and access. so i think that's a better way of approaching the process of replacing the disaster that is obamacare, repair the damage, and transition to a process that actually works. >> something that we realized during the election was, just in terms of hacking, you'll see where i'm going with this, when you have so many local places where the votes are cast, we understand how difficult it would be to really swing something. so when we talk about russian hacking, what you're really talking about is whether the dnc's -- i don't even think we're talking about podesta e-mails. that's not what we're talking about here, but is there enough there -- chuck says maybe that

mccain and lindsey graham throw a wrench in the works. it won't be the trump voter. it probably won't be the public that raises the, you know, the outcry about this. do you think there's enough there with the russian hacking to derail either tillerson, you know, or any -- mnuchin, at this point? >> first of all, i wish i knew. i came back to d.c. to meet with general kelly and ask for a briefing from the cia this morning. they refused to give it to me. i was one of the 12 members of congress in that first secure briefing with lisa monaco and james comey. and that was in september, and they were confident that our election system was sound. that there was no way that russia could hack into voting machines and affect the outcome. and the takeaway was, we were all supposed to instill that confidence throughout the country, so that once the election was over, it was a legitimate election, and nobody was questioning it. and now -- right. >> now it's the wrong outcome. >> precisely.

>> and i wonder because, you know, the justice department, we looked at some of the stuff that happened there, and people think there might have been a wink and a nod in certain ways. with comey, it's even more overt what people say about comey, is that he was totally in the republican tank with that letter that came out. but we're afraid to say that maybe john brennan is a, you know, a close associate of barack obama. do we know that there's no political taint to this as well with the cia? >> no, it sounds very political to me, quite honestly. and again, nobody should be surprised that russia might have hacked into e-mail accounts. or spreading disinformation or propagandaizing. they've been doing this in eastern europe for years, the propaganda campaign is pervasive. and of course, you know, i don't like it. it's an insult to our election system here, but it was well known before the election. everybody was pointing their fingers at russia. and then, quite honestly -- >> who'd we send to israel to try to swing that election away

from netanyahu. did we do that or am i overstating that, john? >> i think there were a few political operatives, weren't there? >> joe. >> senator tom farley here, new york stock exchange, first, in the month of december, i've met with two ceos of wisconsin-based companies planning their ipos, so doing our part for the badger state. great companies, i'll add. >> appreciate that. >> no problem. on the one hand, you've touched on, the cia saying, yep, this is russian hacking, and on the other, the fbi a little more circumspect, i'll say. you have access to confidential information that we don't. what can you share with us in terms of what you've seen, in terms of the evidence as to whether or not there was hacking, number one, we know there was, but it was the russian state. >> well, first of all, who can discern the motives? and i have not seen the evidence that it actually was russia. i'm assuming that's true, but who did they hack into? was it the dnc or john

podesta's? i haven't seen that evidence. let's assume that's true. who can say what their motive was. we do know, in eastern europe and other places, they are spreading disinformation. their goal is to destabilize regimes and to really get the public in different countries to believe nothing's true. you can't rely on any piece of information. so this has been their method of operation for years, in other countries. they're trying to do the same thing in america. >> so the democrats are playing into russia's hand, senator, by pushing their concern over fake news? >> well, they're certainly playing politics with this. this isn't to say that we shouldn't be concerned about any foreign government's interference into our elections. but this is happening worldwide, and what we really need to be concerned about is the type of cyberattacks. for example, we believe is russia, that took down ukraine's electrical grid. those are the things we really -- we need to be concerned about all of this, but we need to really strengthen our defenses against cybersecurity. we passed some measures and first steps.

>> senator? >> go ahead. >> it's chuck here. you just essentially made the case that russia's trying to destabilize western democracy. >> yes, they are. >> absolutely. and you're talking about security. isn't it time for the united states to do something about this? >> absolutely. >> so let me ask you this -- >> let's put it this way -- more than serious consequences. that's all we've heard out of -- >> what should they be? >> all we've heard out of this administration is that there are going to be serious consequences. and obviously, vladimir putin is not shaking in his boots. we have offensive capabilities. i think, very quietly, through diplomatic channels and other channels, we ought to be laying out, this is exactly what the consequences are going to be if this continues, and if something has, we quietly enact those types of consequences. but that has not been what's happened in this administration. i'm looking forward to working with the new administration, who will approach the russians and the chinese and the iranians from a position of strength rather than having a strategy of

basic draw. and that's why we have been so weak and why these, you know, people like russia have become so aggressive. >> senator johnson, thank you, for being with us. we appreciate it. >> have a great day. have a merry christmas. >> you too. you too. >> he forgot to say, "go, packers." >> there you go! >> he's still with us. >> and chuck todd, thank you for being here. was there a moment when you decided to come on with the real morning joe versus the -- was it like -- >> it's called -- i just, you know, i love the entire nbc family. >> okay. all right. that's what it is. tibl in the entire nbc family. >> i wondered if there was a moment, i'm going over to the real -- >> i love the entire nbc family. from "the voice," to telemundo, to my friends over at 30 rock. >> coming up, nrk yse group tom farley on the future of the big board. we'll talk 2017 predictions.

a look back on the past year of wall street and much, much more. what is that -- much more on "squawk."

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welcome back to "squawk box." shares of honey well taking a beating this morning. the company saying their fourth

quarter earnings could come in at the low end of their projected forecast in 2017. the fall largely below analyst estimates. prior to today, honeywell stock had been up about 13% this year. a couple ore stocks to watch today, oracle's second quarter profit beat forecast, but revenue rose less than expected. the company, which gets more than half its sales from outside the u.s. blames the strong dollar since the election. oracle is giving upbeat guidance for an outlook. adobe systems reporting a better-than-expected fourth quarter revenue, helped by demand for its creative cloud business. the company has posted high revenue for 11 straight quarters. j bill up -- is that a new york stock exchange company, by the way? >> yes, with three alerts. >> fourth quarter results and outlook topped analyst forecast.

they're seeing strength in its health care packaging, a big apple supplier making casings. >> i almost made him late this morning. it was a car problem. and he helps me out when i'm finishing my breakfast. >> she was eating food and asked me to make sure the read was done. i know you are so, you know -- >> no, you know, you can have all my read. if you did that to other -- there are certain people that think that airtime is like oxygen. >> i'm looking at him! >> you can have all my read. >> i'll take this one. thank you. coming up, we wrap up our special hour with guest host and nyse group president, tom farley. futures this hour are still moving higher. the dow is going to open up 4.5 points. "squawk box" will be right back. ♪ ♪ 'cause there's a million things to be ♪

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tadirectv now. stream all your entertainment! anywhere! anytime! can we lose the 'all'. there's no cbs and we don't have a ton of sports. anywhere, any... let's lose the 'anywhere, anytime' too.

you can't download on-the-go, there's no dvr, 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." we're back with nyse group president, tom farley. so wave been debating during the commercial break about really what's happening here. >> the performance of the s&p under different presidents, republican and democrat. >> the numbers bear out that under democrats, the markets have done better. why do you think that is? >> well, we all have a friend in common. this is his sole theory for why he votes democrat -- >> totally explainable, too. >> it's a little more nuanced than that. i don't -- i think this is a lesson for my daughters in

causation versus correlation. i think there's probably some correlation -- >> takes time. takes time to ruin an economy, takes time to fix the economy to where the stock market reflects it. we're going to hear that barack obama had a great stock market performance. >> by the way, he doesn't want that to be his legacy. >> he took office around 6900 after, what was it, almost a 50% decline or 40% decline in the averages. >> he's gotten us a 10% pop in just the last month, joe. >> that's true. he's going to be sitting when we hit 20,000. so you're going to see it in history books, this is what happened, 6900 to 20,000. but what's the real nuance here? what's the real story behind what happened? it's just one of those stupid, you know, sort of a faux narrative, that, you know, suddenly -- and, even go back to clinton. who was -- in the second four years of clinton, how did that happen? it was after the, you know, the

re-election and the contract with america comes in. a lot of the stuff that was done was in concert with gingrich and with the gop congress. >> you have to give clinton some credit for that. >> go back to kennedy, a good stock market. he was like a tax cutter and a deregular deregular lateer in certain respects. >> who are the wisconsin start-ups you've talked to that are about to go public? >> they're both very good companies. >> uber's not based in wisconsin, is it? >> i wouldn't know. there's so much speculation around those guys, i wouldn't -- >> you wouldn't go near it? >> no. but they're two really good companies. >> do you think that's goung to change, the number tech companies that have tried to stay private as long as possible. do you think that changes? >> yes. >> because? >> because it's been a long time and they have employees that

signed up ten years ago and they got stock and now those employees have two kids. >> do you think under trump, it's going to be more attractive -- there's a whole view also that that it was unattractive to be in the public markets. it was unattractive to be in the spotlight in the post-financial crisis world. unattractive to have to deal what may be the scynicism from the media and investors. >> over the last 20 years, the number public companies is down by half. what doesn't get talked about is the market cap, the aggregate market cap of public companies has tripled. the average size of a public company, i guess if you do the math, is up six times, in part because of that cost. there are some difficulties with a smaller company being public, because of sarbox, because of dodd/frank, because activists dealing and investing in that. but all of the things going with public -- >> for your business, is m&a ultimately good or bad, given that you use a listing of sorts? >> last year was a year with a

lot of m&a, and it's a lot of new york stock exchange companies. >> you have to imagine, given the repatriation issues, there's gou going to be a lot more than that. >> but they're pushing for a lot of spins. xerox, hp, alcoa. we have one recently, r.r. donnelly, they split into three. that's the m&a go two to one, but the spins go two. >> so it's often the one that's seen as the barometer and it's rumored to be around march. as soon as we get, you know, turn the calendar on 2017, does this stuff start to happen? what do you think in terms of the timing for a lot of these? >> sure, and i won't comment on snap in particular other than to say, you know, that's how i'm communicating with my daughters as it's sitting here on the desk at the break. but i do think next year, we're going to see a couple of those really big names and then probably a couple more in 2018. now, that could all change. if we had another bout of

extraordinary volatility in january, all bets are off. and 2017 could be -- >> we have only have 30 seconds. new york and london always vie for financial capital. i'm sure you think new york is it. brexit. the worst-case scenario didn't happen there either in terms of markets and everything else. do you think -- do you see any effects, even after it happens, do you see a different type of, you know, who's on top and who's n not? >> brexit is still far from settled. i was out for a drink last night with one of the leaders of the largest banks in the world -- >> they worried? >> they and we as well, we have large european business, we're all still trying to figure it out. we'll be strong and a great capital formation venue, but there's a lot to figure out. >> great to see you, sir. >> this was fun. >> once italy's out, everybody else will be even harder to figure out. get ready for that and have some contingency plans. >> great to have you here. >> still ahead on "squawk box," the markets are edging towards

dow 20,000. plus, rogue one ready to land in theaters. will it give disney's stock a pop? we'll try to find out. and latas we head to a break, a look at the futures. "squawk box" will be right back. cliff jumping! xerox human resource services... ...soon to be conduent. which allergy? eees. bees? eese. trees? eese. xerox helps hospitals use electronic health records so doctors provide more personalized care. cheese? cheese! xerox healthcare services... ...soon to be conduent.

the march to dow 20,000, the index nearing a sixth straight week of gains. and gm selling cars are hitting public roads in michigan and the next generation will be built in america. details, straight ahead. and facebook announcing a plan to combat fake news stories and the social media giant wants your help in flagging online hoaxes. the third hour of "squawk box" starts right now. >> announcer: 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 kernan along with andrew ross sorkin and kelly evans. the futures are up again.

the european markets are green across the board, at least, there they were earlier. all up, but not a lot. take a look at currencies. the 14-year high yesterday is not necessarily extending that a little bit now, actually. earlier it wasn't. now look, over 118 now on the yen. and getting closer and closer to parody on the euro. >> wow. here are the stories investors will be talking about today. new this morning, goldman sachs is hiking its outlook for oil prices. the investment bank raising its wti price outlook from the second quarter of next year from $55 a barrel to $57.50. >> goldman analysts say they expect 84% compliance to the planned cuts to opec, not opec proorss. crude prices at this hour have turned around. wti crude is now up half a percent. when we last checked, it was all under pressure. it's above $51 again, something for the market to keep an eye on. brent crude up, nat gas still

down. and president obama is set to hold a news conference this afternoon at 2:15 p.m. eastern time. he's set to get questions about the latest russian hacking reports as well as the ongoing presidential transition. and we're less than 20 minutes from breaking edata. they had that surprising jump in october. the number of new homes under construction is expected to have pulled back last month. >> general motors will begin testing self-driving cars on public roads in michigan immediately. that news comes a week after michigan governor rick schneider passed passage of bills legalizing the operation of autonomous cars. they will build their next generation of self-driving cars in the same plant that builds the chevy bolt. they'll have light-sensitive radar cameras and sensors among other safety-related hardware. it really raised the question of who's going to be the brains of these machines rather than the machines themselves.

there was all the speculation about whether apple would create its own car, for example. but now that you have these guys actually -- >> and carnegie mellen were partnering with gm to do a lot of this work. they were using suvs. what is is car going to look like going forward. does it have to look the way we're used to it with the steering wheel and everything? >> by the way, you saw what happens with ooub out in san francisco. they're putting self-driving r cars out there. don't have the license for it. >> one ran a red light. like white knuckles, just holding on, like me in the elevator. elevators, you don't press buttons, hopefully they know where they're going. >> and when there's 50 floors. >> yeah, exactly. stocks to watch today, shares of honeywell taking a beating. the company said it fourth quarter earnings would come in at the lower end of projected forecasts. also projected that 1017 that

that would fall largely below analyst estimates as well. is that something similar to this a couple months ago. honeywell stock had been up about 13% this year. and oracle second quarter profit beat forecast, but revenue rose less than expected. the company gets more than half of its sales from outside the u.s. and blamed the strong dollar since the alex for that. oracle is giving an upbeat outlook for the second quarter. secondly, oracle co-ceo, safra catz was added to president-elect trump's transition team. adobe systems reporting better than expected fourth quarter revenue. the company posted higher revenue for 11 straight quarters n now. >> and the dow is continuing its march towards 20,000. dominick chuy joins us from headquarters with a look at which stocks could be poised to help the most. >> as we talk about this march towards 20,000 and hopefully our economy, the country, and rve

everybody else, beyond 20,000, here are the stocks that show the most upside potential. here are the consensus analyst targets and the upside possibly for these stocks. if you look the biggest gainer could be nike among current members of the dow, right now, analysts target prices have it going up possibly by 20%. visa also up there by 18%, if it can get there. nice move higher for the dow. pfizer on the health care side of things, 16% upside. and apple up by 12%. the one of these stocks that will add the most obviously will be apple. has the highest price. it could contribute the post points to a possible down move. as for the stocks that have had a nice run and could be poised for a move down, check out jpmorgan. right now it's 5% already above its analyst target price. ibm shares after a nice run this year, one of the better performers in the dow is already 7% above its analyst target price. and goldman sachs, the one with

the most gap between its current price and its analyst target price. so of these guys here, goldman sachs has the most weight, has since the election, one of the biggest contributors. but if you're looking for the biggest contributors or detractors from the march on its march to 20,000 and beyond, these are the ones. if you're looking for all the other target prices, guys, i put them all up on twitter, in case you want to know what all the other component and its target prices are. >> totally bass-ackwards. is it ass-backwards or the other? >> you said it. >> the stocks might be wrong! who cares! they've got to adjust their targets! you can't make decisions based on the analysts being behind the curve of where their targets are, can you? >> you can't, but it gives you an idea of where the market or the company that are supposed to know these companies the best -- >> no, they're not! >> i know you're skeptical. >> they know the fundamentals

and the company, they know nothing about whether the stock's cheap or going up or down or anything else. and those targets are -- the funnyiest thing is when the stock would either be $20 above or $20 below their targets. and then they change their target. we're adjusting our target. people know the game, dom. that's a problem with the analysts, not a problem with the companies. >> here's the question, though, joe. if we do know this, i wonder how long it takes before the paradigm for wall street analysis challenges, right? if everybody knows this is the game right now, i wonder how these guys kind of -- do they have jobs going forward? >> when they split the banking and the research division are as good as they used to be. remember, sorkin? these guys used to get paid. once they split the two -- >> they still get paid, just a little different. >> what's the highest paid analyst does not get paid anything -- a tenth of what they used to make in the grubman era, right?

>> i would argue that grubman and a couple of those, that was a very select group that were making this sort of $5 to $10 million -- >> we were even talking about goldman, and thank god they have buy side stuff. thank god they put their money on the line. because that stupid 57.50 versus 50 -- that's some sellside guy coming out with this, i'm going to put out in a marketing letter. give me the guys that are actually have the risks of the firm's own balance sheet. that's like blankfein. that's what they've got to take care of ff. not these sellside guys. are you a sellside guy? good. >> both. >> i'm both. >> good answer. >> we'll get to these guys in just one moment. we have an announcement out from mylan concerning its epipen. it's announced the launch of a generic version with a wholesale cost of 300 bucks per injection, which is less than half the cost of the branded versions. mylan came under huge fire for increasing the cost of those

epipens. said it was going to roll out this generic version and now it is doing so. mylan shares unchanged tonight news. all right, for more now on the march to dow 20,000 and the global risk factors for next year, we're joined by peter bookbar, chief market analyst at the lindsay group, and krishna mamanny. all right, you have some credibility. so when we were in the chairs, we were talking about fake news pinpoi . i want to talk about japan taking the mantel from china as the biggest owner of u.s. treasuries. that happened when? >> that's as of october. and it somehow happened by default, because china's been a big seller. >> and for our viewers, why has china been a big seller? we thought they had a lot of money and had to do something with it. >> their foreign trade reserves were $4 trillion last year and they're now about $3 trillion. >> what? >> well, it's been a combination of -- a lot of it has been money

fleeing or leafing china for a variety of reasons. and they've been trying to do their best to, yes, weaken the currency but make it happen in an orderly fashion. they've been repatriating money back, they've been trying to intervene, and they by default are now the second largest holder of u.s. treasuries. >> but they're swimming upstream, sort of. it's hard. it's always hard, if there's a macro force in action, it's hard to push back again. are they going to stop or finally give up? >> china likes things to happen in an orderly fashion. they dona't want to say, let's let the yuan float. >> they've been selling to a lesser degree. >> this is as of october. we saw a major rally in the en.

so anyone trying to capture the spread between a jgb and a u.s. treasury yield, they gave that back in the yen strength. now the yen is weakening. it would be curious to see what the november/december data is. but the major trend is in tact. >> i think the key thing here to remember is that the trump administration wants china to kind of keep its currency up. that's precisely what china is trying to do at the moment. so pressuring china to do much on the currency front probably isn't the best thing you can do. because they are really right hard to keep their currency propped up, by selling dollars and supporting their own currency. >> but overall, this is so interesting, in terms of the geopolitics. and we know that japan's leader is the first person to kind of come visit donald trump in the tower. would you imagine that their relationship is going to be much friendlier than the u.s./china relationship? and if that's the case and japan the the biggest holder of our

debt, does that kind of change the political calculus? >> i think the political calculus will be driven by trading relationships, the fact that china is a rising power, as opposed to -- rising both industrial and military power, and those are going to be the drivers, rather than who's buying your currency, or who's buying your bonds. >> but -- >> that's important but doesn't drive things. >> people always say, china, they can sell our debt or make interest rates spike. andion it's a self-defeating thing for them to do that anyway. so where does that leave the relationships, u.s./china and u.s./japan. >> to put this into context, at the peak, foreigners held half of u.s. marketable securities. an aiastonishing amount. as money flooded into their systems, petro dollars filled into the u.s. and that trend is reversing. it will continue for a while,

but we have to see to what extent. and $300 billion of selling, we have to put into context, there are still many millions of of marketable securities. but i don't think it's a trend that's going to end anytime soon of them selling u.s. treasuries. >> i think buying bonds prosecute u.s. is really the flip side of the trade deficit. and i think for 2017, as u.s. economy grows faster than what we did in 2016, the deficit is going to widen. and therefore, other people will be buying a lot of our bonds, was nobody in the u.s. will be buying bonds. >> how do you know they're going to step up to the plate? >> they have to. they get dollars and they have to recycle those dollars into buying u.s. bonds. effectively, buying bonds is the flip side of them selling us goods. >> and what does that mean for our ability to have all of this debt? does that mean it's less of a problem? if you sort of put it that way, it's like, all right, it's the other side of doing more business. >> i think the fact that somebody's selling debt is

really not that relevant. what matters is, does the u.s. grow fast enough? and if the u.s. grows fast enough, that means the deficit will widen some and people will have an incentive to buy our debt. >> yeah, i don't think that's going end to anytime soon, probably. it's good that people buy our debt, i guess. >> yeah, we need them. >> we do. >> but when we hear how much they own, we're like, whoa. >> it is the curse of having the reverse currency. if you don't have the reserve currency, people are going to hold and the way they're going to hold it is by buying marketable securities. we have the deepest market in treasuries or bonds and that's why people buy our bonds. >> okay, krishna, thanks. peter, see you again soon, thanks. coming up, the wait for "star wars" fans finally over. "rogue one" is out today and it breaks new ground for the franchise. what critics are saying and what means for disney stocks.

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welcome back to "squawk box." "rogue one: a star wars story" opened last night. the expectations and stakes are high for disney. and julia boorstin joins us from disney's el captain theater in hollywood. good morning. >> reporter: good morning, andrew. here at the theater, disney has a costume exhibit set up with original costumes from the film, to celebrate its first "star wars" spin-off. the film is expected to gross at least $300 million worldwide this weekend. piper jaffrey estimates that it will generate more than $1 billion in revenue for disney. it's a key test of the potential to expand lucas film outside "star wars" core narrative. this film has a totally new cast of characters, and it's part of a push to turn "star wars" into an annual event to fuel not just the studio, but also demand for the "star wars" products and the two star wars land. and so far the outlook is good.

we'll get numbers on the early screenings in just a few hours. with disney shares under pressure in recent years and the concern of health of espn, analysts have been looking more closely at the studio. disney set records this year, dominating one quarter of the u.s. box office with 5 of the top 12 films of the year, including "finding dory" and "captain america," and "rogue one" could top all of them. andrew? >> thank you for that. appreciate it. for more on what this weekend's movie release means for disney stock, lest bring in martin crockett. how much is at stake here? >> i think that this is crucial for disney. it's not just, you know, does this movie do well? but it's the argument that "star wars" can be an annuity business, rather than just a flash in the pan couple of successful movies. so "force awakens" did great last year. it's crucial that the second movie do well in order for the idea that disney can hang on to

the billion and a half lift to studio products they've had as they've gone on to this movie run. "star wars" needs to continue to perform. we think it will. >> they say this "rogue one" is a one-off, meaning the rogue one brand is not going to continue. does that disappoint you, do you appreciate that point? >> i think that "rogue one" is not the brand, "star wars" is the brand. so i don't think that statement really matters at all. >> so you -- and how many "star wars" franchises or films do you think that they need to produce to make this work? >> well, look, they're talking about a "star wars" movie basically every year for as long as the eye can see. so this is not just a one-hit wonder. this is an annuity. but for that to play out, these movies have to perform at a very high level. we think "rogue one" will be about half of "force awakens," but that will still make it the biggest movie release this year. that the follow-on movies need to be in that zip code, otherwise disney estimates are going to be under pressure. >> and why do you look at "force

awakens" and look at this and -- do you look at it being only half and think that's a bad thing? meaning, do you think it's going to be impossible to keep it up to stay at that same level? >> well, look, i think everyone understood that "force awakens" was a very unique phenomenon, rebooting something beloved after a generation. this next movie is not going to be that type of an event, but we think it's still going to be very big. close to 500 million domestic box office, it should be the biggest movie release this year. it will be the second biggest december opening weekend. and i think the "star wars" movies going forward need to be in the ballpark of "rogue one" to "force awakens" to hold on to expectations that they can hold on to the studio profits they enjoy right now. >> whereas your expectation on the stock right now? >> we've got a market perform on disney. i think it's a great company. i think that they're struggling to put up growth. the studio is actually computing

at such a high level, i don't know how you do better than that. and espn is a very slow-growth business. so the growth at disney are largely fueled by disney. there's only so much you can do in theme parks, even with shanghai. so flat earnings this year, you know, high single, low double digit beyond that. we think, ekeeps this stock in this zip code. >> how's the new administration changed any of the math you've done on the stock? >> well, that is a very good question. so if we put through lower tax rates under trump and end the deductibility of interest, that skews very well for disney. disney might be the best exposed media conglomerate in a new tax regime. we had a note out this morning trying to analyze that. they're less levered than pierce. so the value lift to their equity could be -- >> any boost on any regulatory matter or negative? i'm thinking about net

neutrality, for example. >> yeah, clearly, there's a lot to chew on with where the regulatory regime is going. i think net neutrality is more important for the cable companies. and it does put into play the idea that cable companies should do more of what at&t is trying to do with time warner, own conte content. if the chains are taken off your ability to leverage, that can make that content more valuable. >> great to see you. happy holidays pmpkts coming . music streaming, spot any and apple, facing new competition from china. details, straight ahead.

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welcome back to "squawk box." we're hopefully doing real news. some streaming news, apple and spotify facing stiff competition from china. joox is expanding with plans to enter the indiana market. joox does face some challenges. content costs are high, ad rates are low, and there's limited willingness to pay by consumers. software piracy is rampant in the region, putting pressure on streaming services to keep subscriptions cheap. >> i don't know joox. do you know joox? >> i do not know joox. i'm a spotify man.

joseph came to the game a little later and got into apple music. >> i can listen to anything i want to. it's unbelievable. it's free, too. >> after you pay -- >> not quite. >> is that your -- >> your monthly fee. >> did i -- did they take that? >> they do. every month. you pay about $9.99, i believe. >> coming up, new data on housing is moments away. and top picks from louis navellier and brian mcmahon, "squawk box" will be right back. we need to be ready for whatever weather may come our way.

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welcome back to "squawk box." we're seconds away from housing starts for november. rick santelli standing by at the cme, sir. >> well, a bit of a disappointment here. remember, our last look at 1.32 million actually moved up to 1.34. we haven't had numbers like this since mid-2007. this number, 1.09 million seasonally adjusted units. that's down 20% -- thank you, down 18 plus percent, almost 19%. and if we look at permits, also a similar scenario. big miss, 1.2 million, 1.201 million, to be exact, seasonally

adjusted and annualized. and our last look there also took a bit of an upgrade from just under 1.32 to now 1.26. so in the rearview mirror, we have rather historic numbers, in the here and now, we've had some giveback. so i guess you have to think in a mean-reverting sort of way, these numbers may stabilize a bit, but you know, it's never bad to have a high water mark, but this we fell below. maybe the big news this week is, of course, touching levels that we haven't seen the fall of 2014 on ten-year note rates. all the talk of emerging markets, it's safe. maybe they put out less debt denominated in dollars. but no matter how you slice it, that's always going to be the hook. financial physics. if the fed is going to normalize rates, that's going to change all the calibrations in the praise it's felt first is by those who have to procure dollars to pay their debt. andrew and the gang, back to

you. >> thank you, rick. appreciate it. >> we haven't thought about these numbers at all. we absolutely expected this. and what's the good news in this huge drop we just saw in november? is that october, which saw this 25% jump from september and everyone was like, that can't be real, it was not revised down. it was actually revised up slightly. so, there's the silver lining in this. but look, these numbers are very volatile. we saw a drop in september, we saw a jump in october, we see another drop in november. what we want to look at is the fact that we are still building in single family. i'm all about the single family, because multi-family has been doing very well. but single family is still, you know, well below historical norms. and i am not talking about the housing boon, so don't start tweeting me saying we don't want that again, we don't. but we should be at least 1.1 million on single family starts and we're still in the 800,000s. so you can have all the builder confidence you want, which we saw yesterday, and that was a big trump bounce, but we need to build more house ifs we're going

to get prices to stabilize and more people in the market. we need to build entry-level houses, which the builders are not building. the numbers are floating along, this 800 to 850,000 starts. we need to see improvement in 2017 if we'll get first-time buyers back into the market. it's a big drop, not unexpected at all. i like that revision up for october. back to you guys. >> it's a huge number now, 27% pop. all right, diana, thank. now let's look at some of the best stocks and sectors in the market. we're joined by brian mcmahon, the chief investment officer at thornberg investment management, and louis navellier. he's also a stock platinum portfolio member whose stocks are up almost 13% this year. welcome to you both. brian, what do you like here? give us some ideas? >> i like to be mobile. i like it a lot. the stock is about $47 billion,

market cap. 23 billion of debt. trading and have been gaining customers. i think there's a strategic imperative for converged offerings, combining both fixed and mobile. deutsche telecom owns about 65% of it. i think they're seeing that in their markets in europe and i think some players in fixed here would like to merge with them, possibly sprint. i think there's about 40% upside, if they're taken out between 8 and 8 1/2 times ebitda. >> what about you, louis? >> i love consolation brands. and that's one of my platinum picks. and that stock that hit 15% right after the election, and they're the corona beer distributorer in north america. and the perception was we'd all stop drinking mexican beer. and i want to clarify, that's

not going to happen -- >> was it that we wouldn't drink it? i thought that it was more there would be some sort of issue getting it across the border or something? >> that's not gong to be an issue at all. first of all, the mexican peso is very weak. mexico knows what they're doing on the beer front. and anybody that's ever been to california, arizona, texas, knows that we drink lots of mexican beer. >> and not just down there. brian, you like jpmorgan. the financials have been on a tear. how much further upside do you see happening here? >> i do like them. i think the yield curve is going to get steeper. they're not going to have to pass along as much in deposits. but maybe the financials that i like best right now is cme. and the reason is, more volatili volatility. they're trading volumes 24% up year over year and bringing 100% of their research down to the

bottom line. so the dividend's about 4.7% with the dividend they're paying. and it's a great play on volatility. and once you have interest rate volatility, that spreads to the commodity complex, to 4x, basically to all financial assets. >> louis, did i see any financial picks for you here? >> not really. i have a brazilian bank. >> brazil? >> that's about it. yeah. >> i'm imagining the valuation has gotten creamed there? >> no, that stock's been doing just fine. that's the srb. actually, bando sandolars is the bank. i'm not sure of the symbol. but i'm very comfortable with that, has very strong sales and earnings. >> what about health care, louis? anything in that space? health care, big cap tech. these were the lagging areas so far in the rally. >> i still have edward life sciences in my platinum picks.

you know, they make heart valves up 20% last quarter. and that was disappointing to a lot of folks. but it has a currency headwind, obviously, they export a lot. france was slow on their orders for life sciences due to budget cuts. but that stock's coming back. the stocks that rallied don't have earnings, okay? and that's the important thing. the financials, the industrials, the materials, and a lot of the energy stocks, they'll have earnings later in the year, but they don't have earnings right now. so i think the market has been a big short squeeze, and i think as earnings season approaches, we'll sort all this out. >> meaning we'll see reality hit? you don't think the analysts will live up to expectations? >> and everybody's going to rise a lot of things down in january. so wait until january, and this huge surge in the dollar is going to affect a lot of these multi-nationals. >> even brazil. i'll be very honest -- >> yeah, i'll be honest with

you, like caterpillar is the leader in the dow. and caterpillar is not going to earn money in 2017. it will earn money in 2018, when it has an easier year over year comparison. so they have declining sales and earnings, and it's a little overpriced right now. >> brian, what do you think about the market overall and some of the points liouis was just making and the strong dollar? >> the market is more expensive than it usually is. we like to look for stocks that are less expensive than they usually are. you mention health care. we're looking at a fixer up there at cvs health, which has 9,600 drugstores, as you know, all around the united states. they lost some business in the pbm space. but it usually trades at or above the market multiple. one other thing we haven't talked about is tax relief. and both cvs and cme are full 37% taxpayers and if the tax

rate goes down, that adds almost two multiple points or subtracts two multiple points from each of those. so that could be very interesting. >> all right. thank you, guys. appreciate it. brian and louis with some picks this morning. and coming up, we're going to take a look -- a closer look at the trump economy. by looking at taxes, deregulation, and china policy under the new administration and what it could mean for your money. peter wallson from the american enterprise institute joins us next. he was white house counsel way back under president ray gab. ♪iy happy home in exile♪ ♪oh which way should i go? ♪home is where i want to be ♪home we love being green. so the nest learning thermostat connects to your phone, and learns what you like, to help you save energy. and that's something everyone can appreciate. ♪

welcome back to "squawk box" this morning. u.s. equity features at this hour are looking up again, another day. more green arrows. dow looks like it will open up about 46 points higher, nasdaq, up about 11 and s&p up about 6 points. shares of honeywell taking a beating. the company said its fourth quarter earnings would come in at the lower end of its prior forecast and projected 2017 that fall largely below analyst estimates. prior to today, honeywell stock had been up about 13%. >> it's only down about 1.8% now. inauguration day is a little more than a month away. let's take a look at what we can expect from the u.s. economy under the trump administration. our guest host -- our our guest, is peter wallison. that was freudian. former reagan white house counsel, who is now an american enterprise institute senior fellow. and author of "hidden in plain

sight: what really caused the world's financial crisis and why it could happen again." peter, you've -- you've both wrote about the financial crisis. and andrew wrote a tome on the whole period. and you've written as well. is there a way to sort of put the two together and find some actual truth. or it just depends on where you're sitting for what happened? >> well, of course, if you look at my book, i have a lot of data showing that the truth is that it was government housing policy that caused the financial crisis. and the data is pretty clear. in 2008, just before the crisis, a majority of all mortgage in the united states were sub-prime loans. and 76% of those were held by government agencies, principally, fannie mae and freddie mac. so what does that say? it says that the government created the demand for those mortgages. and it was those mornings that created the mortgage meltdown that was responsible for the

financial crisis. so -- >> how did that -- okay, so, then it takes one step to take it to the banks and say that they really had more to do with it. it takes a further step to say that it was supply-side economics, like we've heard in all the debates. it was supply-side economics that drove the car into the ditch and we can't expect tax cuts and deregulation to be a positive when that's what resulted in the first financial crisis. when you heard that in the debates, and it really wasn't even challenged by candidate trump very well. it was almost, they just let it go. so this time around, what we've seen in the market so far, the response, the 10% move. whatever it is. >> not to relitigate the financial crisis, but just as a point of fact, and i agree that the housing issue was a significant contributor to the financial crisis, no question. but ultimately, every -- >> that word.

>> what? ultimately, every financial crisis -- >> such a good word. >> -- you can have all the bad actors you want on the stage, a terrible plan on housing, you can say that alan greenspan wasn't minding the store, that every rating agency are greedy, whatever you want, but ultimately, every financial crisis is a function of one thing, leverage of the system, it's debt. that's the match that lights the fire every single time. and so, this is one component of it. it's not just a major component -- >> of fueling the growth in debt is when the government's greasing the skids for it. >> 100%. but on the flip side, you have the banks doing what they do badly or poorly, if you will. and then you have the regulators -- >> telling you to lend money to people to increase -- if the government is saying, lend money to people to increase home ownership and they do what they ask them to do.

>> i think it's a little more complicated than that. look, i'm not -- i have not been on the side of suggesting that the bankers are responsible. >> let's just get back to whether -- it wasn't -- then you would agree, it wasn't supply -- it wasn't tax cuts and deregulation that caused us to go into the ditch. >> deregulation was a component of it, because clearly, capital requirements went down, leverage ratios went up. that was a component of it. that would that couldn't have happened otherwise. >> maybe good regulation, but why is the market up now. >> anyone would say there was deregulation before the financial crisis in 2008. there was no reregulation in the financial markets. none. the only thing that has been pointed to from people, occasionally, is the so-called, the -- i've forgotten -- >> glass/steagall is what's been pointed to. >> right, under clinton. i'm not pointing at bush on that, on that score.

>> do -- i guess i was trying to get around to -- >> you also had regulators under bush that were not minding the store, at all. that's clear as day. they were appointed by him and they didn't do what they were supposed to do. that's hard to disagree, either. >> i disagree with that. because although i don't think regulation is very effective at all, anyway, if you create the incentives for banks to buy mortgages that have 3% or no down payment so they can sell them to fannie mae and freddie mac, you are creating the problem that we had. >> but with all due respect to alan greenspan, he allowed -- the regulatory component of what the federal reserve was doing at that point was next to nothing. >> they could have stepped in. >> correct. >> all right, which is what they've since done. >> on the other hand, if you looked at what was going on in the markets at that time, there were very few defaults going on. and reason for that is, as the

bubble continued to increase, people were able to refinance their mortgages. so people didn't recognize how dangerous things were. if alan greenspan had gone to the congress and said, i'm beginning to stop all of this -- why? our constituents are flow buying all of these homes. this is wonderful. where are the defaults you're worried about? they're not there. >> so it wasn't the tax cuts and it was supply-side economics that drove the car into the ditch, and not giving the keys back -- you know, so, this time, it seems to be working. maybe that was a false narrative that those things don't work. at least what wave seen so far, and nothing's even happened yet, but the market's up 10% or so. do you expect that to continue went these policies are put into place and there will be a period, maybe look during the reagan years? >> i do. >> in fact, in reagan's inaugural address, he said the thing that was the most important thing he said in his

entire period in office, he said, government is not the solution to our problems. government is the problem. and i think the business community understood that to mean the reign of regulations is over. >> can i just ask one question? where do you stand on -- to the extent this is all about trying to improve the middle class and not the folks around this table or people who invariably even watch much of this program, but it's everybody else. when you look at median incomes that have effectively stagnated since 1977 and haven't changed and didn't change under reagan, either. >> i think people will mostly disagree with that. under reagan, the median income did go up for a long period of time. and that's why bush was elected in the very odd -- >> so the statistics that the median income has effectively started stagnated in '77 is wrong? >> i think so, yeah. >> that's from the census bureau and it's just putting in real

terms when did people in today's dollars kind of actually earn the most? i thought it peaked around '77 or '79. and it might have, at some point -- because that was sort of -- there's always been -- it might have been for male earners. ss

. welcome back. cramer joins us now. >> i love that discussion about what caused the decline. that was terrific, thoughtful and i completely agree that the main point is debt. we don't have as much debt in the system. the upside may be living but the downside may be capped. >> i'm with you. tell us about a stock that's on the move this morning, honeywell. >> i remember they did minus three and this time plus 1.3. at one point the stock was down big time. i would urge people to read the last quarter and go through when dave cody was on "mad money." i would say not as much here to take action. do some homework and rethink. >> to folks trying to make sense of the yahoo!/verizon deal and

whether it's going to go through or get recut, how do you play that at this point? >> this was an arbitrage your play. i don't see anyone who still should have been in. periodically there's risk factors. this is a material adverse change. i mean, if verizon wanted to walk away, who could blame them f they wanted to renegotiate, who could blame them. this has to be completely recompromised. this is dreadful. this is not money thing like home depot or target, this is an actual material compromise for people who should now leave because they -- >> are you going so far as to suggest that you think they shouldn't make the acquisition? >> no. i know that -- i've sat down with tim. i know the plan. tim armstrong. the plan is very real. it's going to generate good numbers in 2020. i just feel like you have to gauge how many people of those that have been hacked have said, you know what, i've had it. that does compromise and make

the asset less and make the turnaround longer. armstrong has a real plan. it's a very real plan. a 2020 impact and this may set it back to '21, '22. armstrong is good. >> appreciate it. happy holidays. coming up this, this morning's biggest movers. your list of stocks to watch is next. 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,

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welcome back. some of stocks to walk. retailer nordstrom downgraded to underweight. it sees few drivers relatively flat sales and those are down. dow component general electric upgraded from bernstein and ge's asset portfolio. those shares up a percent on the morning. las vegas sands was added to conviction buy list by goldman who says the casino operator is positioned well to benefit from the las vegas ka seen mow markets opened higher at 1%. >> one last check of markets and futures. the way we're indicated, it's been consistent by 40 points. dow indicated up 41.76.

the s&p 500 is indicated up 6 right now, 577, and almost 10 on the nasdaq. crude continues to trade above 50. for a long time we've been sort of in a trading range. finally, i think the ten-year, the yield has moderated. it's 257. thanks for being here. your day is just starting, but thank you. >> what about me? >> thanks for being here. your day is over. no, you've got those other jobs. make sure you join us on monday. but this is the best job you have. "squawk on the street" is next. good friday morning. welcome to "squawk on the street," i'm carl quintanilla and jim cramer. futures improving slight.