>> a couple of posz caitive cal this week. >> i've been bullish on bristle myers. get long. >> walgreens. >> photonics. >> thank you. >> "power" starts now. hi, everybody. i'm brian sullivan. well, after being red hot since the election, why have stocks turned as cold as the weather? dow 20,000 seems as far off as santa answers where the questions are and where the market is. plus, with just nine days until christmas, the clock is ticking on retailers nationwide, why many may be growing nervous ahead. will the force be with disney as rogue one hits theaters? power up your lightsabers, "power lunch," your father, begins right now.

>> welcome to "power lunch." i'm michelle caruso-cabrera. the dow just turned negative, moving away from the 20,000 mark. however, the index is still on track to see its sixth straight weekly gain. the s&p 500, the nasdaq are also higher for the week. handful of names entering the all time high club. marriott, quest diagnostics, and allstate and all still in positive territory. tyler? >> michelle, thank you very much. welcome, everybody. i'm tyler mathisen. here's what else is happening at this hour. the 93-year-old sumner redstone will step down as chairman emeritus of viacom's board and that move is sending viacom shares sharply higher right now. also, changes coming to chipotle's board. the company replacing four board members as part of a deal with pershing square. and housing starts falling 18.7% in november. that drop bigger than expected. a busy, busy two hours ahead.

and once again, we're going to kick it off with the dow's flirtation, chilling a little bit today, with 20 k. right to bob pisani on the floor of the new york stock exchange. >> i think it is time for a pause. i believe the optimists are in charge. it is getting choppy and tough to read now. let me show you the dow laggards and leaders. our leadership group, the financials, but guess what is having a little trouble today? the financials. look at goldman sachs, jpmorgan and another leadership group recently, tech, having a little problem as well. intel and cisco on the downside. consumer names not doing as well. dow leadership. remember what is having troubles in the last few days. we would talk about the industrials falling back. guess what is a leadership group. industrials, ges, 3ms and boeing. what does all this mean? look at the markets today. starting to look trendless.

leadership changes on a daily basis now. that's a sign they're trying to figure out where the market needs to go. a little confused now. there is a big fight between the pragmatists and optimists. they're saying, wait a minute, we have no idea on how tax reduction and fiscal stimulus is going to impact earnings. the optimists are saying why don't you shut up and use your imagine, you can see it is going to be good news, even if the companies themselves say we don't have the exact numbers yet. you see this today. look what happened with united technologies and honeywell. both gave 2017 guidance. guidance was below the expectations of the analyst, both stocks are trading on the upside. the company said we don't know what the impact is going to be. but the optimists are winning. the optimists think the companies are going to adjust their numbers up later in 2017. that's why i say for the moment, the optimists still have the momentum. back to you. >> what about the market moving lower on that headline, bob,

that the chinese navy seized an unmanned u.s. water vessel off the coast of the philippines and the south china sea. suggests they're nervous about headline risk or what donald trump means for u.s. foreign policy. >> i think that did have an impact, around 11:00, and cost the dow about 50 points. correct me if i'm wrong, michelle, i believe that this was about 50 miles off of subic bay. that probably is within the nine dashes, you know, that china may claim as part of the territory. that could be a very -- that's a very interesting question. you know about the nine dashes. >> my initial calls were -- people that would be sympathetic to china, they looked at it without knowing the details, only a few from the defense department, they felt it was an obvious international violation of international law, even though we don't know everything. it is the question was why would they do this now. is this a message to donald

trump and a signal of what is going to come in the future in terms of increasing tensions. >> given what we saw with gm and ford, china said they were investing in them and now this, this is one man's opinion, i think there are no accidents here. >> thank you, bob. >> the back of that, watch gold. we saw you were talking about the stock market maybe losing a little bit of the action. but if you look at gold, gold took a big spike, ten bucks an ounce in the minutes after those headlines began to come out. also watch gold on this news. it is a friday. so we have the news alert from the oil market and we have another big jump in the number of oil rigs that are drilling in the united states. baker hughes reporting 12 more rigs added, the seventh straight gain, the 20th out of the 21st straight week where we had gains. 21 last week. even as we talk about opec, maybe capping or trying to cut its production, the u.s. is on the way to more production.

another 12 rigs, not seeing a hit now in crude oil. we're up 71 to 5160 but more rigs continue to come online. >> we are so close. but are we actually going to hit 20,000 before christmas? or has santa already left town? let's bring in brian jacobson with wells fargo a. the santa claus rally usually means a rally during christmas time, holiday time. did donald trump's election bring that forward? is that over now? did we get it or more to come, do you think? >> i think there is some more to come here. i think we're going to transition from the trump bump to the santa claus rally. and keep in mind what the rally is, identified in the stock traders almanac in 1972. it is a seven trading days after christmas. santa shows up on time, just a question of is he going to deliver coal or be giving us some good little gifts here.

i think we're setting up for decent gifts toward the end of the year. >> why? >> you don't have a lot of tax loss selling because the markets moved up. i think you have a lot of people repositioning their portfolios for a more cyclical recovery, because the economic data has been supportive. and just generally speaking, with, you know, as we get to the holidays, i think you have lower trading volumes traditionally and that tends to bias the markets to the upside. >> unless you have a lot of gains you want to offset, why would you sell in 2016 when there is the prospect of lower capital gains taxes in 2017? >> that's a good question. i think that's what a lot of people are looking at. even though it is purely speculative, as to what those tax cuts might look like if we get any at all, people are asking why lock in the gains now when i can wait. let's roll the dice and see what it looks like. it comes to the tax cuts, i think it is more likely we'll get corporate tax cuts and not necessarily individual income tax cuts.

the corporate tax cuts, that only represents maybe 10% of federal revenue, that's low hanging fruit. >> so, bob, to you, let's see where you are on this. wouldn't be surprising on some levels you would get a bit of a pullback after a run-up like this. but might it come after the first of the year? >> it can come after the first of the year. there is a chance it could come between now and the end of the year. if you take away -- if you look at the way the market is acting, we're running up against a little resistance. i think most of the gains from the trump bum have probably been already put into place. now i think you're seeing retail investors coming in and i think as bob just said, there is a lot of repositioning going on, trying to figure out where the market is heading. if you get a little selling pressure fwen now abetween now d of the year, you have people late to the party. these are people hesitant to come into the market and now hear 20,000 on the dow jones and

think now is the time to invest when really they should have been investing before election day. so i think if you get a little selling pressure it could start to speed up. i wouldn't let that worry me. if i'm a long-term investor, we're not advising anybody to sell. we're advising people to ride this one out. if you're not in the market, you have to wait for the pullback. we think that's probably the best course of action. >> what about the money you've got in the market. let's say they have the 401(k) at the end of the year and they're kind of happy with what they see and they're 60% s&p 500, 30% stocks and maybe 10% gold or real estate. should they tweet their 401(k), rebalance more to equities now? >> good question. i think it depends on what you actually own. if you have stocks and investments that are poised to outperform when donald trump and his new administration comes into play and they bring all the various initiatives and you think they -- these initiatives

are going to be put into play and actually, you know, put into action, then i think you stay pad. i think if you're heavily invested in areas of the market that are going to be impacted by higher interest rates and maybe drug pricing issues, then i think you start to rebalance your portfolio. you don't necessarily have to do it right now, but do it in the beginning of the year or if you have a loss, you can offset many gains with the losses. if we look at what trump is bringing to the market, things like fiscal spending, infrastructure spending, the lower corporate taxes, the repatriation of cash, all of these things have positives behind it. i told you a couple of weeks ago i thought the market could get to 2408. i think it could go higher than that into next year. >> it is 2256 now. thanks so much. brian jacobson and bob pavlik. >> president obama will speak with reporters before he leaves washington to spend the holidays

as he usually does. what should we expect, john? >> he's going to be in hawaii for a couple of weeks as you mentioned. soon after that, turning over this building behind me to donald trump and you can expect that he's going to be addressing the issue of that russian cyberhack on the united states presidential election, just concluded. he told npr yesterday they're going to be consequences for russia. >> 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. i spoke to him directly about it. >> this is an uncomfortable

subject for president-elect trump as it would be for any president elected with a boost from a foreign power, even as a bipartisan congressional investigation is getting fired up. donald trump still hasn't conceded the validity of the intelligence that concluded that russia was behind this hack. he sent out a tweet this morning trying to redirect attention away from russia to what the result of that hack were, saying is this the same cyberattack that showed that the head of the dnc was giving a debate question to hillary clinton, suggesting that there was some legitimacy to what they had done and what they had found. you can bet that president obama will be asked about that tweet today and watching this afternoon to see if the president-elect has a response to what president obama had to say. >> he might be asked about the situation in the south china sea with this unmanned naval underwater drone being seized by the chinese, i would think. >> no question about it, michelle. and, you know this follows the telephone call that

president-elect trump received from the president of taiwan, casting some -- his public statements casting some doubt on the durability of the one china policy, china has gotten increasingly truck hrant in its own response. don't know if this particular military action by the chinese is related to that. but that will be a question that president obama will be asked as well. >> thanks, john. up next, why bagels may be the key to making money next year. trust us on this one. an uber driver spreading holiday cheer all across los angeles. what he's doing in today's must see video when "power lunch" returns.

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and add phone and tv for only $34.90 more a month. call today. comcast business. built for business. if you're waiting for dow 20,000, you might have to continue to wait. we're at session lows. only down 25 points. but being on this dow 20,000 watch, every tick does matter. right now, the dow jones industrial average is down a bit. intel, caterpillar and visa are the biggest laggards on the index. it has been a year of acronyms, acquisitions and all time highs in the tech sector with great alliteration. with 2016 nearly out the door, what is in store for next year. your next guest says it is another acronym, bagel, which may boost us to new records. let's bring in mark mahaney. we know about f.a.n.g. stocks. what is your bagel aside from a

delicious breakfast treat? >> well, i'm sorry, we may have had a mix-up here. bagel was our pitch for 2016. and we pointed out that didn't work too well. that was last year, that was alibaba, baba, amazon, google, expedia and linkedin. what is interesting is that portfolio only was -- was flattish on the year, despite a material premium in the linkedin, the l part. what we're doing is getting out of the acronyms business. top three picks for us going into 2017, first netflix, second facebook, and third is amazon. we also in this report laid out what we thought were the ten most important themes to next year. one reason we have amazon is one of those top three picks, despite the fact it is close to all time highs. screens really well against the top ten factors in the internet sector and across -- >> isn't one of the drivers likely to be mobile and the transition to everything mobile devices, whether it is amazon or using facebook or whatever.

>> you know, there is enough data points. this has been a theme building up for years. we really start to get integrated into smartphone usage, tablets a little bit. but smartphone usage, three or four years ago, we're at a point now where about half of travel bookings for a name like priceline has done after smartphone. about half of ebay's transactions are done off of smartphone. it is one of the reasons why we have seen online retail growth in this country accelerate this year. we think when all is said and done, we'll have the fastest growth in online retail growth in 16 than we had in five years. and a couple of factors behind that. the top of the list has got to be we remove friction. >> i think acronyms are way overdone. i think everybody should get out of the acronym briusiness. >> it is like over the top socks. >> over the top socks?

>> socks that -- the flamboyant socks. >> i thought you meant like over the top video. tell me why you're not afraid of the valuations and things like netflix and amazon. >> okay. valuations always matter. what is interesting, across the internet space, we had a relative material derating in the sector. five of the top 12 internet stocks have seen derating or reduction. netflix is in that list. and so is amazon and facebook. all three of those names because earnings have grown faster than multiples have come down. that usually means that fundamentals are getting better. we find fundamentals extremely well in tact. we think a few are still accelerating growth stories in the 17. netflix at the top of the list. we think multiples have become very reasonable. people wanted to know when they would be able to look at amazon and see reasonable valuations. they have been waiting, waiting.

guess what, you can look at amazon and see a stock trading around 20 times next year's cash flow. that's one of the most attractive valuations you had on this name and what is powering that is this wonderful makeshift that they're going through. has challenges. but the makeshift toward cloud commuting. >> acronyms are out. pithy catch phrases may be in. instead of giddyap, can i say giddy yelp. why are yelp and go daddy good small cap logs? >> thanks for the ideas. i like that. may put that in the next note and i'll credit you for it. yelp is among the midsmall cap names. two things to keep in mind. this is an accelerating revenue growth story into next year, we believe. secondly, one of the midsmall cap spaces where we think there is the greatest potential for earnings estimates revisions to the upside. yelp an improving execution story, on the local ads business

that we all know and love. they're also trying to build out and looks like they're having success building out the transactions capability of the site. not just the place where you go for reviews on restaurants, but make reservations, do take-out, order delivery and getting into more of a transaction side with local services providers. call them architects, landscapers, plumbers, neutrals they're rolling out we think they can monetize that will expand this -- the perception, narrative of the story from local advertising to advertising and transactions. >> many other ways to bring in revenue for them. thank you, mark. coming up, the big problem for retailers that you are causing. yes, you. and the good, the bad and the ugly next here on "power lunch." ♪ it's been over 100 years since

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on what matters to you. morgan stanley. you got it! what do you think? 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. welcome back to "power lunch." time for the good, the bad and the ugly and today's trade. first to the good. apple supplier, stock up big after posting a profit and revenue beat. higher by more than 15%. the bad, nordstrom. the stock under pressure following a downgrade to jpmorgan chase. that stock is off 9%. but that's not as bad as what an ugly day it is for the pharmaceuticals. the company is stopping development on a drug to treat a rare form of anemia. and those shares are lower by nearly 20%, brian.

michelle, have you or anybody you know bought something online that you just weren't sure about, but you figured that if you didn't like it when you arrived, you would return it? guess what, you're part of the problem. for retailers, anyway. courtney reagan has that story live from mount juliet, tennessee, where i'm guessing this story has something to do with returns. >> it sure does, brian. how did you guess? all this merchandise you see here behind me is stuff that has been returned to a retailer, including home depot, b.j.'s wholesale and jet.com. what happens is they take this merchandise, using the technology, optimize the amount of money that retailers will get, lowering the losses they take for returned goods. about 8% of all goods are ultimately returned. it gets higher during the holiday season and then when you isolate e-commerce, it can swell to 30%. as online shopping grows, so does the amount of return

merchandise. it is a big posturing. gardener research calls it a ticking time bomb because less than half of the products consumers return are resold at full price. after sitting in a back room for days or months, returned merchandise is often sold to a wholesaler or liquidator for a fraction of the price. it can also be sold at a lower price as open box merchandise. best buy is one retailer working on ways to recoup losses associated with returns, which represented 10% of sales or $400 million when it started improving it two years ago. its ship if store capabilities increased the number of open box products on its site. home depot has three distribution centers that are dedicated to processing returns. but some of home depot's merchandise does also end up here at this warehouse. it is one of the clients. it is then listed for sale, on the site, blink.com.

amazon, and ebay simultaneously and that's where consumers can buy it. >> i bought an open box computer at best buy and got $100 off the already discounted price. thanks. president-elect trump wants to get the u.s. out of nafta. but it is not that easy. could be a headache for the automakers among others. we'll look at some of the costs of exiting nafta next. and the ceo of knex is here. they used to be made in china but now almost all of the toys are made in america. we'll ask him why the company brought production back and how it and other companies can compete when so many toys are made overseas.

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we need to be ready for my name's scott strenfel and r i'm a meteorologist at pg&e. we make sure that our crews as well as our customers are prepared to how weather may impact their energy. so every single day we're monitoring the weather, and when storm events arise our forecast get crews out ahead of the storm to minimize any outages. during storm season we want our customers to be ready and stay safe. learn how you can be prepared at pge.com/beprepared. together, we're building a better california. hello, everybody. i'm sue herera. here is your cnbc news update at this hour. jerome e german prosecutors are investigating a boy who attempted to set off a nail bomb at a christmas mark net southern germany. it is the second time the boy

has tried to set off a bomb. he was taken into custody. the fda has banned powdery gloves used in surgical settings. the powder in the gloves makes it easier for surgeons to get them on and off, but when used on latex gloves, the powder can be released carrying allergens into the air. scientists discovered evidence of ice on saris. the importance of ice is important, because water is an essential ingredient for life. the body of john glenn will lie in state until 8:00 p.m. tonight. glen w glenn was the first american to orbit the earth. a memorial service will be held at ohio state university tomorrow. that is the news update at this hour. back to you, brian. a true american hero. >> yeah, even if you're not familiar with his life, i urge everybody to go back and watch -- my personal favorite movie, the right stuff. it is -- there is a little bit

of fictionalization in there -- >> but patterned after him. >> what the guys did, nobody knew, if you were going to die instantly when you went up. a spectacular tale. >> and back into space, the oldest astronaut to go back into space at 77. amazing life. >> he was a hero. >> was. i'll see you later. stocks aren't very heroic now. they're lower across the board. dow 20,000 seems a long way off. maybe not orbit, but not in the halo. jcpenney, a big decliner. nordstrom downgrade. some other department store stocks are taking a hit today as well. kohl's and macy's with jcpenney down 5% each. donald trump vowed he would rip up nafta, but it is in the as easy as just that. and just saying the deal is off. so what kind of impact would it have? /especially on automakers? phil lebeau has that part of the story. >> we have been talking about

this for weeks and we haven't seen any solid evidence or fresh data in terms of how much of an impact it would have on the vehicles sold, jobs, cost, et cetera. you look at mexico, consider this, this is the hot market in the world when it comes to auto production. back in 2009, 1.5 million vehicles were built in that country. next year it womill be more tha 4.1 million. this is the largest country in terms of export of vehicles built in mexico. what happens if donald trump follows through on his threat of slapping a 35% tariff on all vehicles built there and sold in the u.s. according to the center for automotive research, funded by auto manufacturers, it says a mexico built average auto, the cost will rise almost $6500 if that tariff goes into effect. that would lead to higher cost, 450,000 fewer vehicles sold in the u.s. and ultimately it could cost the auto industry about

6700 jobs. now, if nafta ends, it brings up the question, will the automaker build plants here or move it elsewhere. likely move it elsewhere instead of building in the u.s., likely to low kcost countries, china, india. the echo sport, that is being imported from india. and we're likely going to see more of that in the future. keep in mind, the big three have 64 plants. 64 around the world outside of nafta. so they could diverse if i and say, we'll move small car production here, move this truck over here, and that's likely what we will see. one other thing to keep in mind, mexico auto plants, tariff went into effect, it would not shut down. there are so many free trade agreements with other countries. >> double the number we have. so when they ship u.s. car made in mexico to one of those other

countries, much cheaper when they put it on the lot for sale. thanks, phil. >> absolutely. >> we'll talk more about this with two auto insiders. bob lutz, cnbc contributor and paul ingrasia. good to have you here. donald trump, he talks about putting tariffs on stuff made in mexico is suggesting implicitly that somehow those jobs will move here and phil lebeau has said according to those in the auto industry that will not happen. phil is right, right, bob? >> well, look, first of all, you cannot -- if you're going to increase tariffs, you can't increase them just on mexico. one reason why nafta was a boon to the u.s. auto industry is because we were getting killed by the japanese. and nafta permitted some of the costs to be diluted, especially for tier one and tier two

suppliers. and if we slap any kind of large tariff on mexico productions, it will simply be -- as phil pointed out, he forgot to mention japan, japan would once again inundate the american market with cars. and, look, trump is a reasonable, good analytical businessman. once he takes an earnest look at the pluses and minuses of dealing with nafta, sees what the impact on american jobs and, by the way, a lot of the mexican assembled units contain a very, very vast majority of u.s. made mechanical components like engines and transmissions that are exported from the united states. and we also export cars to mexico and to canada. so my guess is if he wants to look at unfair trade, he said he's for fair trade, for free trade, but has got to be fair,

he would need to look at the germans before anything else because we have a 10% tariff going into the eu, which hits all american produced cars, plus a 20% value added tax when they landed -- when they're sold in a european country, which makes american vehicles practically uncompetitive in europe. >> what bo is sayi ibob is sayi need is more free trade agreements, not less. >> i don't think i said that, but that's okay. >> okay. so maybe you didn't. but, paul, would it be helpful if, in fact, the united states increase the number of fair trade agreements so, like bob was saying, when we sell to germany, that american car gets on the auto lot at a lower price? >> well, yeah. absolutely. look, trade works in a lot of

different ways. not just mexico to america. but bob mentioned the cars built in the united states to go to mexico, but also a lot of cars that are built in america rely on components made in mexico that are shipped up here to assembly plants and make the cars produced here more economical. doesn't make sense to produce door handles in america really as opposed to mexico. so that's one thing to consider. and, by the way, the larger picture is let's put the auto industry aside for a minute. if you want to stem the flow of immigration from mexico to the united states, the best thing to do, forget a wall, the best thing to do is have well paying jobs in mexico, increasing prosperity and a rising middle class there that will make people want to stay there as opposed to come up north where it is cold. >> is this really about an immigration issue or is it about

an employment issue? >> i think the way the president-elect said is really both. he raised both issues during the campaign. >> bob, is the definition of an american made car so obscure right now that i wonder if this conversation is a little bit moot. we can go back to the good old days of the '70s, where for lack -- i'm sorry, i know you're in the industry. the cars are pieces of crap. my dad's toyota tundra was made in san antonio. his silverado was made in canada. what is an american made car anymore? >> that's a good question. i think you have to look at the brand. where is the brand located? where is the engineering conducted? where is the value added of the

design done? where does the profitability return to for reinvestment? that's why i say a toyota camry made in the united states or acem bld sesembled in the unite is not an american car. a bmw assembled in the united states is not an american car. you're quite right. today, there is a global flow of parts and technology. so to where practically -- remember the takata air bag issue, that affected domestic producers, japanese producers, german producers, because everybody was using takata air bags. it is the same thing with climate control systems, brake systems, electronic systems, in car entertainment systems. and, look, final assembly accounts for about 11% of the value of the car. so focusing purely on where the final assembly plant is, i think

it displays a lack of knowledge of how the automobile industry actually works. and, again, i have every confidence that this is a campaign promise, so it is probably designed to be broken when you take a closer look at it. once donald trump takes a look at the numbers, he will find a way out of -- to wiggle out of this unfortunate campaign promise. >> like you said, he's a businessman, thanks, guys, thanks to been and thanks to paul. >> now, let's go to the bond market where rick santelli is tracking the action at the cme. >> let's use some one week charts. you see the fed date interest rate hike did change the direction of the two-year, up 11 on the week. it did the same for the ten year, up 9 on the week. here is the neat one. this is 30 year. guess what the 30 year is. unchanged on the week, very fascinating. dollar index up a full 1.5%, based on that, on the week.

and, of course, the chinese seizing on that underwater u.s. drone did move pretty much all the markets i cover a little bit, rates moved down, dollar moved down, we saw some movement in equities, but in the context of moves of the week, it did get lost. >> thank you very much. when we return, we'll introduce you to the ceo of a toy company, who brought production of his products back to america from china. his buy american pitch for the holidays when we return. julia boorstin takes in a movie this afternoon. julia? >> thanks, tyler. right now a thousand people are watching a sold out screening of "rogue one." we'll tell you how many millions of dollars this latest "star wars" film is generating for disney after the break.

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welcome back.

interesting comments from several members of the fed. mr. lacquer is making some comments saying that based on the recent activity, he says, that engineering of soft landing for the u.s. economy will be a challenge for the fed. he also says that the fed will likely need more than three rate increases this year. he says more interest rate adjustments are needed. in addition to that, mr. bullard in an interview with the wall street journal says that he is revising his policy view and he now sees an additional rate hike in 2017 that the fed should consider shrinking its balance sheet in 2017. and if there is no shrinkage, the fed may want to reinvest in shorter securities. so both of these gentlemen, basically, one was a hawk, mr. lacquer. mr. bullard, much less so, pretty dovish. both saying that given what we're seeing in the economy, especially post election, that the fed may have to do more than what was just mentioned at the recent fed meeting earlier this

week. neither of these gentlemen are voting members of the fed. over to you. >> very interesting headlines there. thank you very much. disney hoping for another megahit with its new "star wars" spin-off movie "rogue one." last year's release of the force awakens was the biggest december movie ever. what will happen this time? julia boor stistin joining us fa movie theater. >> "rogue one" is off to a huge start, $29 million in north american theaters, that's the biggest thursday night preview of the year and it is also the seventh largest of all time. the film has grossed an additional $33 million overseas where it opened so far. the film is expected to gross at least $300 million worldwide this weekend. piper jaffray estimates it will generate more than a billion dollars in revenue for disney and it is a key test of the

potential to expand lucas film outside of "star wars" core narrative. the new cast of characters, part of a push to turn "star wars" into an annual event, like disney's marvel films, to fuel not just the studio, but also demand for consumer products and the two "star wars" that are in the works in orlando and anaheim. disney shares under pressure about concerns of the health of espn, analysts looking more closely at the studio. disney dominated one quarter of the u.s. box office with five of the top ten films of the year, including finding dory, and captain america. and "rogue one" could top all of them. the studio is heading into some very tough comparisons. "rogue one" won't make as much as the force awakens, but piper jaffray projects that disney will top $7 billion at the box office this year, which had put it ahead of universal's industry record of 6.85 billion last year. >> throughout his transition,

donald trump brings companies and jobs back to america from competitive foreign marketplaces whether china or mexico. what will await those companies if they do attempt to reshore production in the u.s. will production here at home mean higher costs, higher prices and the need to employ fewer people? joining us now is michael aratan, president and ceo of the toymaker knex. the company chose to bring manufacturing back to the u.s. from china. you say the move has not only benefited the company but meant more employment. let's talk about it. when you moved production from southeastern pennsylvania to chinainitially, management had had changed, you had a lot of people employed and you do it cheaper. >> it was cheaper in china. when you look at your supply chain today, if you can be closer to your customer, meet the demand, be on trend it makes more sense to make it here.

we also -- one of our core values and lessons was the long-term view of the country, which is the more we make here, the more we have that cycle of great manufacturing jobs, continue to pay really well, more demand will drive. >> and we talked some years ago, didn't you find that when you brought the manufacturing back here, you were better able to control quality than you were at a distance. >> definitely. the 8,000 mile supply chain made it twice as long as it needed to be. for a seasonal company and business, you had all the quality you need and consumer demand at the same time. >> i assume that automation and precision robotics and all the things you're able to do enabled you to bring back -- fewer workers now in your plant than before you off shored it. >> net more jobs because we brought back a lot of work. and there is also that rim effect. we have people across the supply

chain. we have 25% more employees than we did in '09 and because we work with people in maine for lincoln logs, and people in new jersey and delaware, we're -- >> do you have more people on the manufacturing line today is what i'm asking? >> we do because we have more volume. >> more volume. because of growth. >> because of growth, correct. >> we keep showing people this ferris wheel. >> yes. >> can you tell me how much it costs to manufacture it in china and how much it costs to manufacture here? >> sure that retalz for $40. we make it here for under $10. we made it in china for $12. >> why was it more expensive there in. >> over time what ended up happening is shipping costs went up, labor rates were going up every 26 months and additional management and inventory. >> rising labor costs in china primarily. >> and shipping costs. >> because of the cost of fuel? >> cost of fuel and shipping lines have taken lines out of service. >> they have done what the airplanes have done, reduced the

capacity. so all the ships are full, they can charge more. so what do you say to the other ceos, i can't -- why am i using a southern -- >> it is friday. >> to bring manufacturing back to the states. they say that -- you want to look at them and punch them in the face in. >> i want to say to them is part of patriotic capitalism is being a patriot first. just because you can't do 100%, doesn't mean you shouldn't do as much as you can here. >> ultimately if was an economic decision you made. $10 here, $12 there, that's economic. >> it ended up that way. it started a eed as a moral dec. we have to make sure as many people have good jobs as possible. >> i argued that the consumer is part of the problem and i'm sorry because we're always looking for a deal. will the consumer pay up for american made goods? i'm told they're not. it is just the cheapest wins and

that's the way it is. >> it is about value. our products tend to be less expensive than our competition. we're able to do that. but it is about the price value equation. i can get you cheap anything, if it breaks, what's the point? the part of the ingenuity is they redesign products to make sure they are the top quality products in the world and made in the usa brand is powerful, not only here, but in china. >> my experience, this goes exactly to your point, my wife and i, we were just talking about this. everything we buy, like, dies after five years now. dishwashers, is that -- do you think we're going to -- planned -- do you think we'll get to the point where americans realize what you just said is so true? i'm sick of stuff breaking constantly. >> i think people are starting to realize it and starting to

pay for it. one thing we want to make it easier for consumers to do is figure out how much of the content is made in the usa. can you tell if it is made here or not? we proposed a ten star program, a consumer can look at a product and say 90% made here, 70% made here, 80% or 100%. make the decisions. buying power is power. all of our consumers, if they spend $100 of their $600 this year on the holiday on stuff made here, they employ 300,000 people. >> i don't want to get too personal, but you were not a trump supporter. >> so i did not vote for the president-elect. i have voted for republicans and democrats in the past. i hope that his america first message carries through. i hope that he does things like in the school systems and makes sure if they buy things for schools they're made here first. >> this evangelism on your part does not come from a partisan -- >> no, i think american made is not a red issue or blue issue, it is a red, white and blue

issue. >> we'll leave it there. that sounds good. good to see you. fantastic. coming up, an upgrade for one of the biggest companies in the world, and a prediction of 25% upside for you. that name and three other opportunities called street talk, we'll move that ferris wheel and bring you some opportunities. there's a lot of places you never want to see "$7.95." [ beep ] but you'll be glad to see it here.

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built for speed. built for business. big story on power lunch as we head into the final two hours of trading. first, the dow slipping away from the dow 20,000 mark. still could get a late day rally. that's not down by much. just 12 points. stick around to find out. and a live picture from the white house briefing room. the other big story, president obama holding a news conference shortly. last scheduled news conference of 2016 before he goes off on his two-week family vacation in hawaii. we'll carry that live. stay tuned.

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♪ hi, everybody. welcome to the second hour of "power lunch." i'm tyler mathisen. michelle and brian are here today. and here is what we're watching this hour. president obama set to hold a news conference in about 15 minutes from now before he leaves on his annual family vacation in hawaii. we will carry it live. the press conference, not the vacation. the road to dow 20,000, the dow struggling to get there this hour. really struggling right now.

it is down today, in the red, off session lows, but also off session highs. and, man, is it cold? bitter cold temperatures in the single digits, blanketing much of the nation, not quite that cold here in the new york metropolitan area, but sub20 degrees this morning. >> awful. two hours until the closing wei bell. check out the stock movers now, trivago soaring. right now $11.52. nordstrom down 5%. jpmorgan downgrading to underweight, seeing relatively flat sales and no silver bullets on the hour are zone to improve trends. that stock is off by 8%. jabil circuits soaring. more on the markets. bob pisani has more. >> we have a reversal. stocks down, gold up, buying

yields down. it is a reversal. we're due for a pause. the dow jones industrial average, you see what happened around 11:00, we had a little news item, seizing an unmanned, underwater drone, international waters, belonged to the u.s. navy in the south china sea. i think that that did have an impact, cost 50 point on the dow. we were due for a plus, headed in that direction. look at the dow laggards. our leadership groups, financial stocks, they're down today, generally. and recently, some of the tech names have been doing better. they're down as well. the leadership group is falling apart a bit. look at the dow leaders. industrials, saying all week, lacking because people are concerned about the dollar, they're on the upside. when you have all of a sudden just no trend at all, one day to the next, leadership and changes, that's a sign the market is hesitant about where it is going now. the markets today, very clearly, starting to look a little trendless and daily leadership changes is the important thing. look at united technologies and

honeywell, both came out, 2017 guidance and below expectations. but they have been up throughout the day because the optimists are prevailing. they think the companies will increase guidance later in the year when the effects of the trump proposals on tax cuts and infrastructure become known. the optimists are in control. back to you. >> bob, thank you very much. at some point we're probably going to get dow 20,000. it would be nice, but the attention will turn longer term. what do you do with your money next year and beyond? chad morgan is with us on set. good to see you again in person. dow 20,000 is nice. people say it doesn't matter. it gets national attention. it may rejuvenate thought. we also now are trading at 18 times trailing earnings. the market is not cheap by any measure. how do we find your value guy,

how do we find val you nue now. >> you have perhaps a 3% to 5% sell-off. but we're looking far down the road. 3 to 5 years out, our expectation for s&p total return is roughly 7%. we have lifted that, based off of fiscal stimulus, based off the tax cut, and we're a little more optimistic. >> the same for the dow? you see 7% return, that's like dow 21,500. >> valuations are somewhat extended. pe multiples, 17, 18 times forward looking estimates. and the estimates, mind you, are not -- are high. meaning expectations are earnings growth, 12%, revenue growth of roughly 6%. we would perhaps caution investors, just to perhaps modify their expectations on

growth for next year, when it comes to the s&p 500 companies as well as the dow. >> when i look at some of the expectations for stocks out there, they're talking about what will be done in 2018. they skipped over 2017. how far ahead are some people when it comes to stocks? >> we do think you're going to see a nice earnings bounce of 9% in 2017. get a couple of percentage points from a dividend yield. a little bit of a cushion for valuation pullback. we see the potential for high single digit gains out of u.s. stocks in 2017. >> i would like to get both of your thoughts on headline risk. and the headline risk could be a risk to the overall market from something like the chinese seizing an underwater drone or some other kind of provocation somewhere in the world. or the headline risk could take

the form of the president calling out an individual company. how do i process that? it feels like the world is a lot less predictable now, maybe for the better, but a lot less predictable now than it was over the past years. how do i process headline risk into my investment thinking? >> stay balanced. i do believe that there is going to be considerable headline risk. let's talk about trade, for example, as well as political risk within the european union. and what we would overweight equities, but we also stay balanced with fixed income and have a sleep well fund of cash. when it comes to headline risk of individual companies, because of a tweet, there is no way of avoiding that. look what happened last week when it came to the aerospace industry of the defense industry, for example. >> everybody assumed it would be great for defense and brings the hammer down with the tweet and the stocks of people -- as they rallied. >> jim, help me here. it could be something -- some sort of provocation, could be

that, well, you know, we all have been assuming that the corporate tax rate was going to come down to 15%. well, maybe it comes down to 26%. >> headline risk can be a gray area. we differentiate based on whether it is an economic risk or a geopolitical risk. economic risk we worry about the potential of inflation ticking up. geopolitical risk tends to be transitory. so not worth fooling with your portfolio. unless they morph into an economic risk. if you have disruption of oil production in the middle east, that's a geopolitical risk that can really create an economic problem. but on average, geopolitical problems tend to be transitory. >> if i may add one thing, when it comes to the economic risk for 2017, 2018, you have to focus your attention on china, global growth. the expectations for reacceleration may seem -- >> very quickly, give us something for our stocking, the last new stock that you bought

is what? >> consumer staples. >> injecting liquidity. >> later. >> thank you. have a great weekend. >> the economic crisis in venezuela taking another serious and bizarre turn today. it becomes a country without cash. venezuela taking the widely used 100 bull out of currency. the money that was supposed to replace that note has not been put into circulation, leaving many people without any cash at all. remember, the value of the venezuelan currency in a free fall, down 80% since the beginning of the year. you talked about this extensively. down 80% since the beginning of the year. how close is venezuela to the edge?

>> i've been asking that for 12 years. always seems like any moment now it is going to go. what i've been reading is that it is no different than the french revolution, they're having trouble keeping up with printing and getting the actual physical -- >> the money, the physical money is worth so little. >> you have to print so much of it. >> like the -- they're burning it for heat. >> the other country did something very much like this. >> they're trying to get rid of black market transactions but it is devastating to people. >> is bread and milk and rice staples the venezuelan diet, a couple of hundred u.s. dollar on the black market, not a couple hundred bullivars. >> they have major shortages, there are price controls which means you end up with -- if you can't get paid, you don't produce it. u.s. stocks taking a dip earlier on after reports of a chinese ship seizing an

underwater u.s. drone in the south china sea. let's bring in paul christopher. paul, good to see you. the dow did move lower on those headlines. why? >> you should expect that. look, the u.s. and china are playing a remote diplomatic game between trump tower and beijing. first trump, president-elect trump calls the chinese -- the taiwanese president, a call from the president of taiwan, and now showing if they can put other things on the table that didn't used to be there, so can we. here is the thing about china. most of the general media and public and foreign policy establishment is going to focus on increasing tensions, et cetera. i think the bigger story is the outflows they're suffering from, inability to control the currency, a slowing economy, lacquer reforms, financial

crisis in china should probably be their biggest worry right now, no? >> financial crisis in china has been our number one worry for u.s. investors since 2012. the problem has been that the probabilities have been relatively low. we still think the probabilities are low, but they continue to bear watching. and you're right, we do see the chinese starting to liquidate some reserves in order to do nothing more than just prop up their currency. >> another big hot spot that people should be worried that would generate headline risk like we saw today? >> europe, of course. the problem for europe is it is tricky. you have what looks like a pretty resilient consumer driven cyclical recovery going on and that's investable. but the political risk, even though those risks may be a year or two, three, maybe five out to the future, those could have potential to rock markets in the coming year and dissuade investors from going there. we think there is value in some places in europe. just that it is going to be difficult to persuade investors

to take the risks. >> like where and what? >> small caps. if you like companies that are leveraged to the recovery that going on in europe, companies that don't have a lot of debt, companies that have the opportunity to expand, that still have credit lines that are active, those are companies that they're not exposed to the decline in global trade, those are companies that could be interesting in europe going forward. >> one thing about europe is that the biggest of the big caps there, the nestles of the world, l'oreal, volkswagen, do most of their business in the united states. are you whittling out companies that while maybe in bad areas on a macro level sell mostly to mom and pop here? >> that's true. a lost tht of them do. a lot are tied up with the bank problem in europe. they might be affected by the political issues that are to come if certain countries look

like they might be getting close to new referendum on exit. that could be an issue, even though they do most of their business overhere, they may still be domicile. >> michelle just interviewed marie le pen a couple of weeks ago. she came across as moderate in the interview, but we know some of her views. so if somebody like le pen were to get elected not in austria, but france, would that be a sell signal? >> that's not necessarily a sell signal right away. but it is an indication that maybe she's got supporters who do want to pull out of the euro and would be interested in having a referendum at some point in the future. europe's political risks are in the future. you could get other red flags like the italian referendum and brexit have been in the last several months. >> a lot of political stuff coming up, a lost elections coming up next year. thanks so much. >> okay. president obama about to hold a news conference before

heading for the holiday. we'll bring it to you live. look at all the journalists in the white house briefing room? think he'll miss them? world ugly and messy. they are the natural born enemy of the way things are. yes, ideas are scary, and messy and fragile. but under the proper care, they become something beautiful.

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for the last press conference of the year for president obama. we expect a lot of focus on international relations including the russian election hack, which president obama addressed yesterday and that interview with our colleague of npr saying the united states at a time and place of our choosing is going to respond. expect him to talk about that. chinese navy seizure of the underwater drone you mentioned earlier before the break. he's also going to get questions, of course, about the ongoing humanitarian crisis in aleppo, which he's gotten a lot of criticism for that. that more than domestic affairs i suspect, though the president is just a little over a month away from turning over the keys of the white house to president-elect donald trump who made a series of appointments that suggest all of his principle domestic legacies are in jeopardy. and don't know if the president's confident or not, he's expressed public confidence, a lot of democrats

are worried what he's tried to do on climate change is going to be reversed, that, of course, obamacare will be repealed. question is what is it replaced with, all of it on the table for the next news conference before he head to hawaii. >> i suspect there will be questions about the pace and progress of the transition as well. john, thanks very much. we'll be back with you in just a little while. we are waiting president obama's arrival in the press room there. what is expected to be his final press conference certainly for 2016. maybe even for his eight years in office, though that we do not know. the family heads to hawaii after this. let's bring in jim pethakokos and ben white. there is a lot we can talk about here, jim. let me start with the idea of how the transition is going. what are you hearing and while there was a great sort of -- albeit short lived era of great

good feeling, in the past couple of days the tweets from the president-elect in the direction of among other people the press secretary of the president have not been all that friendly. have things sort of run off the rails a little bit or not? >> you would hope that as we move further from the election, and more toward donald trump taking oath of office and sitting in the oval office that we would begin to see a shift, fewer tweets, less of the quick response, and not carrying about the financial health of vanity fair magazine. more policy fekous, maybe just no tweets at all and start to look like a normal presidential transition. doesn't seem like we're quite there yet. still we're seeing a lot of campaign stuff. have the president-elect still going on campaign tours. so i'm sure a lot of people a lot more comfortable if this was a more policy and personnel focused president than still

worrying about the perceived slights. >> so much more boring if he wasn't tweeting. >> there is that. >> what are you hearing about how the operations of the transition are going? >> i think they're going fairly well in the sense that trump is ahead of schedule on a lot of these cabinet appointments. he's named the vast bulk of the folks he'll pick for the cabinet. jim is right. generally people would be more comfortable with the transition, in the marketplace, if there wasn't so much, you know, shoot from the hip tweeting about individual companies as you taubd about before, going after vanity fair, the press. but i don't think jim is i think wishful thinking we'll see a tweet free presidency. this is his mo and reaches over the press by a twitter to amount the attacks. part of his genius and doesn't hold press conferences. >> what you see is what you get. >> we want to look forward, but let's look back because it is going to be the president -- the current president probably last

major press conference. what is his legacy? if it is just obamacare, that's -- everybody in d.c., wiped away. what have we accomplished? >> i would push back on the idea it will be wiped away. at the headline level it will be repealed. at the implementation level, it won't. if you pull the lens back -- the broader point -- >> what will it say? >> he inherited an economy that was crashing, inherited financial crisis, hemorrhaging jobs, created 16 million jobs, have economic growth, not gangbusters, not going to be looked at as a president who gave us a roaring economy, but putting the country back on a reasonable footing, this legacy will be in the history books as of a couple of weeks from now. >> the person who is going to -- he put somebody anti-obamacare,

school choice, something president obama said believed in, but never did much about, even though arne duncan was there. iran and cuba, that could get undone. all of these things that he just really wanted to be the president who did these things and they can be undone very, very quickly. >> they could. and didn't mention dodd frank, but legislative perspective, there are big pieces of the legacy that could get undone and he'll probably talk about that today saying, let's not move so fast, do we want to yank health care from the people who got it. >> we haven't touched on the disintegration of states in the middle east. >> right. listen, when reagan and bill clinton left office, there was a feeling of a real mission accomplished feeling that major things they wanted to accomplish were time of peace and prosperity.

on the other end, you have george w. bush, who left -- still with iraq raging, and also economy in collapse. so the president is in between those two. where the economy is in much better shape, not where people want it to be. you mentioned the middle east, at times looks like the middle east is on fire. between those two things. i think to a great extent, if the entire legacy is obamacare and universal health care, that is significant. but to a great degree, the financial crisis consumed this presidency, devoted time, the weak economy brought the republicans back in power, so didn't have a democratic congress anymore, and there is -- there were many challenges that still need to be met. i don't think -- i think there are great achievements, but not what he wanted to be eight years ago. >> you mack a great point. both george w. bush and president obama to some degree a lot of hubris.

no more nation building. so much for that. president obama, we're going to be friendly and the middle east is going to like us more. so much for that. right? >> we'll stop the rising of the oceans. >> the failure that is aleppo and syria right now and to watch john kerry talk, talk, talk and know it means nothing. >> there is also -- he campaigned on the idea he would be the repairer of the breach, fix washington, get past this era of partisanship, the opposite of that has happened. not entirely his fault. republican congress didn't want to deal with him. but the election of that republican congress was a result of the first half of the obama's first term. and where as polarized a point in our politics as we have ever been and that's a legacy of the obama white house, his fault or not, but it is the fact. >> i'm looking at a wall over here of the trump cabinet taking shape. a lot of individuals there. a lost peop a lot of people from the military. some of them are controversial

because they in some cases oppose the very mission of the enterprise that they have been selected to lead. we know about the controversy surrounding secretary of state designate tillerson and his relationship with putin and russia. which other ones of his selections may face the toughest hurdle in getting confirmation by the senate? >> i think by far tillerson is going to be the most controversial. but steve mnuchin at treasury, democrats will talk about his time in the private sector, his time in the mortgage finance business. elizabeth warren talking about that, calling them the king of foreclosures. that sort of thing. ben carson, housing, someone who doesn't know a lot about housing policy. that's troe

that's controversial. only one in question, would be -- would be tillerson who benefited by the fact you have a lot of traditional republican establishment types coming to his defense whether it is condi rice or jim baker. and i -- and something else comes out, i guess i expect him to get confirmed as well. >> expect the same? >> i think that's right. tillerson will face some questioning from republicans in the senate, mccain, rubio, about his close ties to putin and russia and mnuchin will get a lot of heat from democrats on the foreclosure stuff, even some republicans who represent states that a lot of people foreclosed on. he'll get confirmed. >> and from goldman sachs. >> right. i like to say we shouldn't hold against tillerson the fact he's not a goldman sachs executive. >> i know a lot of the russia stuff is getting a lot of attention, deservedly so, perhaps, we'll find out in the long-term. a lot of people worry about this unconventional pick that we just talked about. we all have private conversations with people. i've said to people what if it works? what if it works?

what if these policies, what if tax cuts, what if this kind of thing works? it changes the dynamic and face of washington for generations to come. what if it fails also? >> it works, it will -- they'll extend their hold on the senate, probably gain more power in the house. >> they're in big trouble in the senate in 2018. they could get hammered across the board. we can argue about debt and deficit and have that conversation. there is a good chance faster growth in the short-term, more job gains and that means more republican gains. >> we have to call a quick time-out here. don't go away. stick around. we are waiting for president obama's news conference. he's running as he often does a little bit late. we'll carry it live as soon as he begins.

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a quick market check. the dow is down 14 points as we await president obama's year end news conference. the press room is ready, the packages all wrapped in their bows, snow was -- not snowing in washington. we will go live there as soon as it begins, but, first, to sue

her rare why f herera for a news update. >> dozens of greeks protesting outside the greek ministry of interior affairs to call for better treatment of refugees. there has been a big rise in migrants and refugees trying to make their way through greece's border regions. a planned one day strike by workers at the i'eiffel tower stretched into the fourth day. about 140 workers have remained on strike leaving the iconic paris monument closed to tourists. the coast guard says it is one of the largest drug seizures in its history. more than 26 tons of cocaine off loaded at port everglades florida. it is valued at more than $700 million wholesale or 2 billion on the street. about 100 alleged drug smugglers were taken into custody. you may need to make whipped cream the old-fashioned way for the holidays. conagra, maker of reddy whip, confirming they have a limited

supply of nitrous oxide this year, which is used to create the aerosol topping. stock up. >> that is a crisis. i love reddy whip. >> i know. i knew you did. it is true. we did this -- >> put it on a spoon and eat it. >> everybody does that. it is just really good. >> thank you. >> stock up, michelle. >> what did devo say, when a problem comes along, you must whip it. >> you're dating yourself. >> i know i am. i'm proud to be old. thank you, sue. >> you're not old. you're welcome, brian. >> i just have a lot of makeup on. the oil market is closing for the day. to jackie deangelis at the nymex. >> i'm personally a frozen cool whip girl, but moving on to oil prices, a dollar gained today closing off of session highs, just under $52 a barrel. a little more confidence in the market after we tested some of the technical lows.

people are talking about the output cuts again and that they have confidence that he will happen. goldman sachs is saying beware. a ramp in libya could be a problem. goldman is sticking to the $52 target. oil rigs up for the seventh straight week in a row on the united states. we added 12 more rigs, double digit adds here. these will start to have an impact, may take a while, it is going to have an impact on u.s. production. for the week, we're looking at 1% gain in crude oil prices. seesawing but not much happening there. for the month, up 14%. thank you very much. don't worry, street talk is happening right now. we might have to dump out of it if the president walks out. analyst recommendations on stocks you need to know about. >> first stock is general electric, our former parent company. big upgrade. they move the rating from market perform to outperform. few reasons. one, the analyst likes the tran

formation of the company. they announced a deal. relative underperformance of the stock this year. price target to 40 from 33. that's more than a 25% up side. >> the next stock is two stocks in one, night transport and swift transport. coverage on the trucking secretary, buy rating on these two truckers, neutrals on the rest. early stages of recovery and note there has never been a one year recovery, most are two to three years. $42 target on night, both imply 52% upside. >> sotheby's, new higher $45 price target on the stock. the analyst likes the ongoing modern transformation of the company. moving toward a more asset light business mod. they note the company has new management, strong brand equity and improving fundamentals. $45 price target, 15% upside if

it gets there. >> small cap call, seidel kinetics. just under 500 million. overweight and $21 target, the company has three late stage programs of quality partners that will begin to read out next year. the company is going after treatment for things like lou gehrig's disease and a stedisea called sma. be careful, the company restated financials a fu dew days ago. but i reached out and they wrote back it is very small, and had to do with a third party provider, noncash, was comfortable with it. >> 21 the price target. that would be a huge, huge -- >> that's cytk. let's bring -- this is the real chart. >> i feel better.

>> all right. >> still a 66% gain. >> how happy are you about that ge upgrade? you're the ge days. >> i don't have any left. >> gone. >> a lot of new jewelry lately. >> stock has gone up. >> we're waiting for the president to hold his final news conference of the year before he heads off on vacation. what's critical thinking like? a basketball costs $14.

what's team spirit worth? (cheers) what's it worth to talk to your mom? what's the value of a walk in the woods? the value of capital is to create, not just wealth, but things that matter. morgan stanley

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comcast business. built for speed. built for business. we have just gotten the two minute warning that the president is about to arrive in the press briefing room. let's go to john harwood who is there. john. >> one of the things i'm going to be watching for is the president's mood going into the holidays. this is an incredibly bitt bittersweet time. everybody in the white house is alarmed at the prospect of all the work they have done for eight years as you all were discussing before the break is vulnerable to being reversed. taken in a direction they believe is the wrong direction for the country and elections have consequences, so that's why that's going to happen. but it is a tough moment for everybody at the white house. tough moment for president obama too. >> jimmy and ben, final thought there.

you first. >> how much is he going to talk about russia? we have china, and is he going to outline some economic challenges that have yet to be finished. >> i would say, if we did know so much about what the russians were doing in this hack, i think a lost democrt of democrats wan, a lot of people are unhappy with how the white house handles it. >> just breaking, nbc news confirmed the fbi backs the cia view that russia did it to help donald trump. a lot of skepticism, by the way, in the world that that's true about that his motivation was. but certainly on the left they could ask president obama why didn't you do more at certain -- >> why did you -- just assume. >> here is the president. >> good afternoon. this is the most wonderful press conference of the year. i've got a list of who has been naughty and nice to call on. but let me first make a couple of quick points, then i'll take your questions.

typically i use this year end press conference to review how far we have come over the course of the year. today understandably i'm going to talk a little bit about how far we have come over the past eight years. as i was preparing to take office, the unemployment rate was on it way to 10%. today it is at 4.6%, the lowest in nearly a decade. we have seen the longest streak of job growth on record, and wages have grown faster over the past few years than at any time in the past 40. when i came into office, 44 million people were uninsured. today, we covered more than 20 million of them. for the first time in our history, more than 90% of americans are insured. yesterday was the biggest day ever for health care.gov, more than 670,000 americans signed up to get covered. and more are signing up by the day. we have cut our dependence on

foreign i'oil by more than half doubled production of energy. none of these action s stifled growth. the stock market nearly tripled. since i signed obamacare into law, our business has batted more than 50 million new jobs and the economy is more durable than it was in the days when we relied on oil from unstable nations and banks took risky bets with your money. add it all up, and last year the poverty rate fell at the fastest rate in almost 50 years. while the median household income grew at the fastest rate on record. in fact, income gains were actually larger for households at the bottom and the middle than for those at the top. and we have done all this while cutting our deficits by nearly

two-thirds and protecting vital investments that grow the middle class. foreign policy, when i came into office, we were in the midst of two wars, now nearly 180,000 troops are down to 15,000. bin laden, rather than being at large, has been taken off the battlefield along with thousands of other terrorists. over the past eight years, no foreign terrorist organization has successfully executed an attack on our homeland that was directed from overseas. through diplomacy, we have ensured that iran cannot obtain a nuclear weapon. without going to war with iran. we opened up a new chapter with the people of cuba. and we brought nearly 200 nations together around a climate agreement that could very well save this planet for

our kids. and almost every country on earth sees america as stronger and more respected today than they did eight years ago. in other words, by so many measures our country is stronger and more prosperous than it was when we started. it is a situation that i'm proud to leave for my successor. and it is thanks to the american people, to the hard work you put in, the sacrifices you made for your families and communities, the businesses, that you starred or invested in, the way you looked out for one another. and i could not be prouder to be your president. of course, to tout this progress doesn't mean we're not mindful of how much more there is to do. in the season in particular, we're reminded there are people who are still hungry, people who are still homeless, people who still have trouble paying the bills or finding work after being laid off. there are communities still

mourning those who have been stolen from us by senseless gun violence, and parents who still are wondering how to protect their kids. and after i leave office, i intend to continue to work with organizations and citizens doing good across the country on these and other pressing issues to build on the progress that we have made. around the world as well, there are hot spots where disputes have been intractable, conflicts flared up and people, innocent people are suffering as a result. nowhere is this more terribly true than in the city of aleppo. for years, we have worked to stop the civil war in syria and alleviate human suffering. it is one of the hardest issues i faced as president. the world as we speak is united in horror at the savage assault by the syrian re jgime. we have seen a deliberate

strategy of surrounding, bese l besieging and starving nint civ innocent civilians. we have seen entire neighborhoods reduced to rubble and dust. there are continuing reports of civilians being executed. and these are all horrific violations of international law. responsibility for this brutality lies in one place alone, with the assad regime and its allies, russia and iran. this blood and these atrocities are on their hands. we all know what needs to happen. there needs to be an impartial international observer force in aleppo, they can help coordinate an orderly evacuation through safe corridors. has to be full access for humanitarian aid, even as the united states continues to be the world's largest donor of humanitarian to the syrian people and beyond that, there needs to be a broader cease-fire

that can sv erve as the basis. that's what the united states is going to continue to push for, both with our partners and through multilateral institutions like the u.n. regretfully but unsurprisingly, russia has repeatedly blocks the security council from taking action on these issues, so we're going to keep pressing the security council to help improve the delivery of humanitarian to those who are in such desperate need and to ensure accountability including continuing to monitor any potential use of chemical weapons in syria. and we're going to work in the u.n. general assembly as well, both on accountability and to advance a political settlement. it should be clear that although you may achieve tactical victories over the long-term, the assad regime cannot slaughter its way to legitimacy. that's why i will continue to press for a transition to a more representative government and that's why the world must not

avert our eyes to the terrible events that are unfolding. the syrian regime and its russian and iranian allies are trying to obfuscate the truth. the world should not be fooled. and the world will not forget. so, even in the season where the incredible blessings that we know as americans are all around us, even as we enjoy family and friends and are reminded of how lucky we are, we should be reminded that to be an american involves bearing burdens and meeting obligations to others. american values, and american ideals are what will lead the way to a safer an more prosperous 2017, here and abroad. and by the way, if you embody those values and ideals like our brave men and women in uniform

and their families. so i just want to close by wishing all of them a very merry christmas and a happy new year. with that, i will take some questions and i'm going to start with josh letterman of ap. >> thank you, mr. president. there is a perception that you're letting president putin get away with interfering with the u.s. election, and that a response that nobody knows about or will look back review just don't cut it. are you prepared to call out president putin by name for ordering -- and do you agree with what hillary clinton now says that the hacking was actually partially responsible for her loss? and is your administration's open -- with trump and his team on this issue tarnishing the smooth transition of power that you have promised? >> well, first of all, with respect to the transition, i think they would be the first to acknowledge that we have done

everything we can to make sure that they are successful as i promised and that will continue. and it is just been a few days since i last talked to the president-elect about a whole range of transition issues, that cooperation issues. that cooperation is going to continue. there hasn't been a lot of squabbling. what we simply said is the facts which are that based on uniform intelligence assessments the russians were responsible for hacking the dnc. and that as a consequence it is important for us to review all elements of that and make sure that we are preventing that kind of interference through cyber attacks in the future. that should be a bipartisan issue. that shouldn't be a partisan

issue. my hope is that the president-elect is going to similarly be concerned with making sure that we don't have potential foreign influence in our election process. i don't think any american wants that. and that shouldn't be a source of an argument. i think that part of the challenge is that it gets caught up in the carry over from election season. i think it is very important for us to distinguish between the politics of the election and the need for us as a country both from a national security perspective but also in terms of the integrity of our election system and our democracy to make sure that we don't create a political football here. now, with respect to how this

unfolded last year let's look to facts. at the beginning of the summer we were alerted to the penalty that dnc had been hacked. i alerted to find out everything about it, investigate it thoroughly, to brief the potential victims of this hacking, to brief on a bipartisan basis the leaders of both the house and the senate and the relevant intelligence committees and once we had clarity and certainty around when it happened we publically announced that in fact russia had hacked into the dnc. and at that time we did not attribute motives or any

interpretations of why they had done so. we didn't discuss what the effects of it might be. we simply let people know, the public know just as we had let members of congress know that this had happened. and as a consequence all of you wrote a lot of stories about both what had happened and then you interpreted why that might have happened and what effect it was going to have on the election outcomes. we did not. and the reason we did not was because in this hyperpartisan atmosphere at a time when my primary concern was making sure that the integrity of the election process was not in any way damaged, at a time when anything that was said by me or

anybody in the white house would immediately be seen through a bipartisan lens, i wanted to make sure that everybody stood we were playing this thing straight. what we were trying to do is let people know that this is taking place. if you started seeing effects on the election, if you were trying to measure why this was happening and how you should consume the information being leaked, that you might want to take this into account. and that is how we should have handled it. imagine if we had done the opposite it would become one more political scrum. and part of the goal here was to make sure that we did not do the work of the leakers for them by raising more and more questions about the integrity of the election right before the election was taking place at a

time, by the way, when the president-elect was raising questions about the integrity of the election. and finally i think it is worth pointing out that the information was already out. it was in the hands of wiki leaks. that was going to come out no matter what. what i was concerned about in particular was making sure that that wasn't compounded by potential hacking that could hamper vote counting, effect the actual election process itself. so in early september when i saw president putin in china i felt that the most effective way to ensure that that didn't happen was to talk to him directly and tell him to cut it out and there would be serious consequences if he didn't. in fact, we did not see further tampering of the election process. but the leaks through wiki leaks

that had already occurred. so when i look back in terms of how we handled it i think we handled it the way it should have been handled. we allowed law enforcement to do its job without political influence. we briefed all relevant parties involved in terms of what was taking place when we had a consensus around what had happened we announced it not through the white house, not through me but rather through the intelligence communities that carried out the investigations. and then we allowed you and the american public to make an assessment as to how to weigh that going into the election. and the truth is that there was nobody here who didn't have some sense of what kind of effect it might have. i'm finding it a little curious

that everybody is acting surprised that this looked like it was disadvantaging hillary clinton because you guys wrote about it every day. every single week about every little juicy tidbit of political gossip including john podesta's recipe. this was an obsession that dominated news coverage. so i do think it is worth us reflecting how it is that a presidential election of such importance, of such moment with so many big issues at stake and such a contrast between the candidates came to be dominated by a bunch of these leaks. what is it about our political system that made us vulnerable to these kinds of potential

manipulations which as i have said publically before this was not some elaborate complicated espionage scheme. they hacked into some democratic party e-mails that contained pretty routine stuff. some of it embarrassing or uncomfortable because i suspect that if any of us got our e-mails hacked into there is something we wouldn't want on the front page of newspaper or telecast even if it wasn't illegal or controversial about it. and then it just took off. and that concerns me. it should concern all of us. but the truth of the matter is

that everybody had the information. it was out there. we handled it the way we should have. moving forward i think there are a couple of issues that this raises. number one is just the constant challenge that we are going to have with cyber security. throughout our economy and throughout our society we are a digitalized culture. and there is hacking going on every single day. there is not a company, not a major organization, not a financial institution, not a branch of our government where somebody is not fishing for something or trying to penetrate or put in a virus or malware. and this is why for the last eight years i have been obsessed with how do we continually upgrade our cyber security systems. and this particular concern around russian hacking is part of a broader set of concerns about how do we deal with cyber

issues being used in ways that can effect our infrastructure, effect the stability of our financial systems and effect the integrity of our institutions like our election process. i just received a couple weeks back -- it wasn't widely reported on, a report from our cyber security commission that outlines a whole range of strategies to do a better job on this. but it's difficult because it's not all housed. the target of cyber attacks is not one entity but widely disbursed and a lot of it is private like the dnc. it's not a branch of government. we can't tell people what to do. what we can do is inform them, get best